Apollo Investment Corporation Announces June 30, 2008 Quarterly Financial Results and September 2008 Quarterly Dividend of $0.52 per Share

SOURCE:

Apollo Investment Corporation

2008-08-06 15:15:00

Apollo Investment Corporation Announces June 30, 2008 Quarterly Financial Results and September 2008 Quarterly Dividend of $0.52 per Share

NEW YORK, NY–(EMWNews – August 6, 2008) – Apollo Investment Corporation (NASDAQ: AINV)

today announces financial results for its fiscal quarter ended June 30,

2008. Additionally, Apollo Investment Corporation announces that its Board

of Directors has declared its second fiscal quarter September 2008 dividend

of $0.52 per share, payable on September 29, 2008 to stockholders of record

as of September 18, 2008. The dividend will be paid from taxable

earnings whose specific tax characteristics will be reported to

stockholders on Form 1099 after the end of the calendar year.

HIGHLIGHTS:


At June 30, 2008:



     Total Assets:  $4.3 billion

     Investment Portfolio:  $3.3 billion

     Net Assets:  $2.3 billion

     Net Asset Value per share: $15.93



Portfolio Activity for the Quarter Ended June 30, 2008:



     Total investments made during the quarter: $185 million

     Sales and prepayments during the quarter: $89 million

     Number of new portfolio companies invested: 6

     Number of portfolio company exits: 3



Operating Results for the Quarter Ended June 30, 2008 (in thousands, except

per share amounts):



     Net investment income: $46,313

     Net realized gains (losses): ($29,818)

     Net change in unrealized appreciation (depreciation): $55,345

     Net increase (decrease) in net assets from operations: $71,840



     Net investment income per share: $0.35

     Net realized gains (losses) per share: ($0.22)

     Net change in unrealized appreciation (depreciation) per share: $0.42

     Earnings Per Share: $0.55

Conference Call/Webcast at 11:00 a.m. ET on August 7, 2008

The Company will host a conference call and webcast at 11:00 a.m. (Eastern

Time) on Thursday, August 7, 2008 to discuss its quarterly results. All

interested parties are welcome to participate. You can access the

conference call by dialing (888) 802-8579 approximately 5-10 minutes prior

to the call. International callers should dial (973) 633-6740. All callers

should reference Apollo Investment Corporation or “conference ID

#55482823”. An archived replay of the call will be available through

August 21, 2008 by calling (800) 642-1687. International callers please

dial (706) 645-9291. For all replays, please reference pin #55482823. In

addition, you can access our audio webcast within the Investor Relations

section of our website at www.apolloic.com. An archived replay of the

webcast will also be available on our website later that same day.

Portfolio and Investment Activity

During the three months ended June 30, 2008, we invested $184.7 million,

across 6 new and 8 existing portfolio companies. This compares to investing

$738.6 million in 13 new and 5 existing portfolio companies for the three

months ended June 30, 2007. Investments sold or prepaid during the three

months ended June 30, 2008 totaled $89.1 million versus $346.9 million for

the three months ended June 30, 2007.

At June 30, 2008, our net portfolio consisted of 74 portfolio companies and

was invested 23% in senior secured loans, 54% in subordinated debt, 7% in

preferred equity and 16% in common equity and warrants versus 64 portfolio

companies invested 22% in senior secured loans, 56% in subordinated debt,

6% in preferred equity and 16% in common equity and warrants at June 30,

2007.

The weighted average yields on our senior secured loan portfolio,

subordinated debt portfolio and total debt portfolio at our current cost

basis were 9.7%, 12.9% and 12.0%, respectively, at June 30, 2008. At June

30, 2007, the yields were 13.1%, 11.9%, and 12.8%, respectively.

Since the initial public offering of Apollo Investment Corporation in April

2004 and through June 30, 2008, total invested capital exceeds $5.3 billion

in 118 portfolio companies. Over the same period, Apollo Investment has

also completed transactions with 81 different financial sponsors.

Senior secured loans and European mezzanine loans typically accrue interest

at variable rates determined on the basis of a benchmark: LIBOR, EURIBOR,

GBP LIBOR, or the prime rate, with stated maturities at origination that

typically range from 5 to 10 years. While subordinated debt issued within

the United States will typically accrue interest at fixed rates, some of

these investments may include zero-coupon, PIK and/or step bonds that

accrue income on a constant yield to call or maturity basis. At June 30,

2008, 60% or $1.7 billion of our interest-bearing investment portfolio is

fixed rate debt and 40% or $1.1 billion is floating rate debt. At June 30,

2007, 66% or $1.6 billion of our interest-bearing investment portfolio was

fixed rate debt and 34% or $830.7 million was floating rate debt.

RESULTS OF OPERATIONS

Results comparisons are for the three months ended June 30, 2008 and June

30, 2007.

Investment Income

For the three months ended June 30, 2008 and June 30, 2007, gross

investment income totaled $91.0 million and $88.9 million, respectively.

The increase in gross investment income for the three months ended June 30,

2008 was primarily due to the growth of our investment portfolio as

compared to the previous period. Origination, closing and/or commitment

fees associated with investments in portfolio companies are accreted into

interest income over the respective terms of the applicable loans.

Expenses

Net expenses totaled $44.6 million and $34.2 million, respectively, for the

three months ended June 30, 2008 and June 30, 2007, of which $11.6 million

and $10.8 million, respectively, were performance-based incentive fees and

$13.9 million and $7.6 million, respectively, were interest and other

credit facility expenses. Net expenses exclusive of performance-based

incentive fees and interest and other credit facility expenses for the

three months ended June 30, 2008 and June 30, 2007 were $19.2 million and

$15.7 million, respectively. Of these expenses, general and administrative

expenses totaled $3.1 million and $2.8 million, respectively, for the three

months ended June 30, 2008 and 2007. Expenses consist of base investment

advisory and management fees, insurance expenses, administrative services

fees, professional fees, directors’ fees, audit and tax services expenses,

and other general and administrative expenses. The increases in net

expenses from the three month period ended June 30, 2007 to the three month

period ended June 30, 2008 were primarily related to increases in base

management fees and other general and administrative expenses from the

growth of our investment portfolio as compared to the previous periods.

Net Investment Income

The Company’s net investment income totaled $46.3 million and $54.8 million

or $0.35 per share and $0.53 per share, respectively, for the three months

ended June 30, 2008 and June 30, 2007.

Net Realized Gains (Losses)

The Company had investment sales and prepayments totaling $89.1 million and

$346.9 million, respectively, for the three months ended June 30, 2008 and

2007. Net realized losses for the three months ended June 30, 2008 and June

30, 2007 were $29.8 million and $20.7 million, respectively. During the

three months ended June 30, 2008, losses were derived primarily from the

sale of American Asphalt which realized a loss of $26.0 million, reversing

an unrealized loss of $25.4 million as of March 31, 2008.

Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents

and Foreign Currencies

For the three months ended June 30, 2008 the Company recognized net

unrealized appreciation on its investments, cash equivalents, foreign

currencies and other assets and liabilities totaling $55.3 million. For

the three months ended June 30, 2007, net unrealized appreciation on the

Company’s investments, cash equivalents, foreign currencies and other

assets and liabilities increased $143.7 million. At June 30, 2008, net

unrealized depreciation totaled $141.8 million versus net unrealized

appreciation of $235.9 million at June 30, 2007.

Net Increase (Decrease) in Net Assets From Operations

For the three months ended June 30, 2008, the Company had a net increase in

net assets resulting from operations of $71.8 million. For the three

months ended June 30, 2007 the Company had a net increase in net assets

resulting from operations of $177.7 million. The net increase in net

assets from operations per share was $0.55 for the three months ended June

30, 2008. For the three months ended June 30, 2007, the net increase in

net assets from operations per share was $1.72.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity and capital resources are generated and available

through periodic follow-on equity offerings, through its senior secured,

multi-currency $1.7 billion, five-year, revolving credit facility maturing

in April 2011, through investments in special purpose entities in which we

hold and finance particular investments on a non-recourse basis, as well as

from cash flows from operations, investment sales and prepayments of senior

and subordinated loans and income earned from investments and cash

equivalents. At June 30, 2008, the Company has $0.97 billion in

borrowings outstanding and $0.73 billion remaining unused. In the future,

the Company may raise additional equity or debt capital off its shelf

registration or may securitize a portion of its investments among other

considerations. The primary use of funds will be investments in portfolio

companies, cash distributions to our stockholders and for other general

corporate purposes. On May 16, 2008, the Company closed on its most recent

follow-on public equity offering of 22.3 million shares of common stock at

$17.11 per share raising approximately $369.6 million in net proceeds.

Dividends

Dividends paid to stockholders for the three months ended June 30, 2008 and

June 30, 2007 totaled $74.0 million or $0.52 per share versus $52.8 million

or $0.51 per share, respectively. Tax characteristics of all dividends

will be reported to shareholders on Form 1099 after the end of the calendar

year.

We intend to continue to distribute quarterly dividends to our

stockholders. Our quarterly dividends, if any, will be determined by our

Board of Directors.

We have elected to be taxed as a RIC under Subchapter M of the Internal

Revenue Code of 1986. To maintain our RIC status, we must distribute at

least 90% of our ordinary income and realized net short-term capital gains

in excess of realized net long-term capital losses, if any, out of the

assets legally available for distribution. In addition, although we

currently intend to distribute realized net capital gains (i.e., net

long-term capital gains in excess of short-term capital losses), if any, at

least annually, out of the assets legally available for such distributions,

we may in the future decide to retain such capital gains for investment.

We maintain an “opt out” dividend reinvestment plan for our common

stockholders. As a result, if we declare a dividend, then stockholders’

cash dividends will be automatically reinvested in additional shares of our

common stock, unless they specifically “opt out” of the dividend

reinvestment plan so as to receive cash dividends.

We may not be able to achieve operating results that will allow us to make

dividends and distributions at a specific level or to increase the amount

of these dividends and distributions from time to time. In addition, we may

be limited in our ability to make dividends and distributions due to the

asset coverage test for borrowings when applicable to us as a business

development company under the 1940 Act and due to provisions in future

credit facilities. If we do not distribute a certain percentage of our

income annually, we will suffer adverse tax consequences, including

possible loss of our RIC status. We cannot assure stockholders that they

will receive any dividends and distributions or dividends and distributions

at a particular level.




                  APOLLO INVESTMENT CORPORATION

              STATEMENTS OF ASSETS AND LIABILITIES

            (in thousands, except per share amounts)





                                                   June 30,     March 31,

                                                     2008         2008

                                                  (unaudited)

                                                  -----------  -----------

Assets

Non-controlled/non-affiliated investments, at

 value (cost--$3,108,743 and $3,139,047,

 respectively)                                    $ 3,027,822  $ 2,986,556

Controlled investments, at value (cost--$298,275

 and $247,400, respectively)                          281,042      246,992

Cash equivalents, at value (cost--$896,445 and

 $404,063, respectively)                              896,425      403,898

Cash                                                    4,149        8,954

Foreign currency (cost--$3,555 and $2,140,

 respectively)                                          3,553        2,130

Interest receivable                                    38,755       46,643

Dividends receivable                                   27,912       23,024

Prepaid expenses and other assets                       4,938        5,896

Receivable from investment adviser                          4          231

                                                  -----------  -----------

    Total assets                                  $ 4,284,600  $ 3,724,324

                                                  -----------  -----------



Liabilities

Payable for investments and cash equivalents

 purchased                                        $ 1,018,472  $   142,339

Credit facility payable                               965,689    1,639,122

Management and performance-based incentive fees

 payable                                               27,600       26,969

Dividends payable                                          --        9,368

Interest payable                                        6,261        6,178

Accrued administrative expenses                            90          288

Other liabilities and accrued expenses                  1,585        2,152

                                                  -----------  -----------

    Total liabilities                             $ 2,019,697  $ 1,826,416

                                                  -----------  -----------



Net Assets

Common stock, par value $.001 per share, 400,000

 and 400,000 common shares authorized,

 respectively, and 142,221 and 119,894 issued and

 outstanding, respectively                        $       142  $       120

Paid-in capital in excess of par                    2,352,883    1,983,795

Undistributed net investment income                        --       24,959

Distributions in excess of net investment income       (2,683)          --

Accumulated net realized gain                          56,318       86,136

Net unrealized depreciation                          (141,757)    (197,102)

                                                  -----------  -----------

    Total Net Assets                              $ 2,264,903  $ 1,897,908

                                                  -----------  -----------

    Total liabilities and net assets              $ 4,284,600  $ 3,724,324

                                                  -----------  -----------

Net Asset Value Per Share                         $     15.93  $     15.83

                                                  -----------  -----------







                     APOLLO INVESTMENT CORPORATION

                 STATEMENTS OF OPERATIONS (unaudited)

               (in thousands, except per share amounts)



                                                      --------------------

                                                       Three months ended

                                                      --------------------

                                                       June 30,   June 30,

                                                         2008      2007

                                                      ---------  ---------



INVESTMENT INCOME:

From non-controlled/non-affiliated investments:

    Interest                                          $  84,975  $  74,550

    Dividends                                             3,335      4,026

    Other income                                            197        320

From controlled investments:

    Dividends                                             2,452         50

    Other income                                             --     10,000

                                                      ---------  ---------

      Total Investment Income                            90,959     88,946

                                                      ---------  ---------



EXPENSES:

    Management fees                                   $  16,022  $  12,996

    Performance-based incentive fees                     11,578     10,835

    Interest and other credit facility expenses          13,917      7,607

    Administrative services expense                       1,868      1,461

    Other general and administrative expenses             1,347      1,350

                                                      ---------  ---------

      Total expenses                                     44,732     34,249

      Expense offset arrangement                            (86)       (61)

                                                      ---------  ---------

         Net expenses                                    44,646     34,188

                                                      ---------  ---------

         Net investment income                        $  46,313  $  54,758

                                                      ---------  ---------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,

 CASH EQUIVALENTS AND FOREIGN CURRENCIES:

    Net realized gain (loss):

      Investments and cash equivalents                  (29,230)   (17,000)

      Foreign currencies                                   (588)    (3,743)

                                                      ---------  ---------

         Net realized loss                              (29,818)   (20,743)

                                                      ---------  ---------

    Net change in unrealized gain (loss):

      Investments and cash equivalents                   54,889    149,922

      Foreign currencies                                    456     (6,215)

                                                      ---------  ---------

         Net change in unrealized gain                   55,345    143,707

                                                      ---------  ---------

    Net realized and unrealized gain from

     investments, cash equivalents and foreign

     currencies                                          25,527    122,964

                                                      ---------  ---------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS  $  71,840  $ 177,722

                                                      ---------  ---------

EARNINGS PER SHARE                                    $    0.55  $    1.72

                                                      ---------  ---------

About Apollo Investment Corporation

Apollo Investment Corporation is a closed-end investment company that has

elected to be treated as a business development company under the

Investment Company Act of 1940. The Company’s investment portfolio is

principally in middle-market private companies. From time to time, the

Company may also invest in public companies. The Company invests primarily

in senior secured loans and mezzanine loans and equity in furtherance of

its business plan. Apollo Investment Corporation is managed by Apollo

Investment Management, L.P., an affiliate of Apollo Management, L.P., a

leading private equity investor.

This press release contains forward-looking statements within the meaning

of the Private Securities Litigation Reform Act of 1995. Forward-looking

statements involve risks and uncertainties, including, but not limited to,

statements as to our future operating results; our business prospects and

the prospects of our portfolio companies; the impact of investments that we

expect to make; the dependence of our future success on the general economy

and its impact on the industries in which we invest; the ability of our

portfolio companies to achieve their objectives; our expected financings

and investments; the adequacy of our cash resources and working capital;

and the timing of cash flows, if any, from the operations of our portfolio

companies.

We may use words such as “anticipates,” “believes,” “expects,” “intends,”

“will,” “should,” “may” and similar expressions to identify forward-looking

statements. Such statements are based on currently available operating,

financial and competitive information and are subject to various risks and

uncertainties that could cause actual results to differ materially from our

historical experience and our present expectations. Undue reliance should

not be placed on such forward-looking statements as such statements speak

only as of the date on which they are made. We do not undertake to update

our forward-looking statements unless required by law.

CONTACT:
Richard L. Peteka
Apollo Investment Corporation
(212) 515-3488

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