Business & Finance
Business and Finance
Business and Finance 
Fri, November 6, 2009
Thu, November 5, 2009
Apollo Investment Corporation Announces September 30, 2009 Quarterly Financial Results and Quarterly Dividend of $0.28 per Shar
NEW YORK, NY--(Marketwire - November 5, 2009) - Apollo Investment Corporation (
HIGHLIGHTS:
At September 30, 2009: Total Assets: $2.7 billion Investment Portfolio: $2.6 billion Net Assets: $1.7 billion Net Asset Value per share: $10.29 Portfolio Activity for the Quarter Ended September 30, 2009: Net Investments made during the quarter: $39 million Net Investments sold or prepaid during the quarter: $30 million Operating Results for the Quarter Ended September 30, 2009 (in thousands, except per share amounts): Net investment income: $51,390 Net realized and unrealized gains: $57,766 Net increase in net assets from operations: $109,156 Net investment income per share: $0.34 Net realized and unrealized gains per share: $0.37 Earnings per share: $0.71
Conference Call/Webcast at 11:00 a.m. ET on November 6, 2009
The Company will host a conference call and audio webcast at 11:00 a.m. (Eastern Time) on Friday, November 6, 2009 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. Following the call you may access either an archived replay or audio webcast of the call. An archived replay will be available through November 20, 2009 by calling (800) 642-1687. International callers please dial (706) 645-9291. For all replays, please reference pin # 35049342. To access a replay of the audio webcast please visit the Event Calendar in the Investor Relations section of our website at [ www.apolloic.com ]; the replay will be available on our website later that same day.
PORTFOLIO AND INVESTMENT ACTIVITY
During the three months ended September 30, 2009, we invested $38.8 million across 6 existing portfolio companies. This compares to investing $225.8 million in 5 new and 6 existing portfolio companies for the three months ended September 30, 2008. Investments sold or prepaid during the three months ended September 30, 2009 totaled $30.2 million versus $21.3 million for the three months ended September 30, 2008.
At September 30, 2009, our portfolio consisted of 71 portfolio companies and was invested 26% in senior secured loans, 57% in subordinated debt, 4% in preferred equity and 13% in common equity and warrants measured at fair value versus 78 portfolio companies invested 23% in senior secured loans, 57% in subordinated debt, 4% in preferred equity and 16% in common equity and warrants at September 30, 2008.
The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio at our current cost basis were 7.9%, 13.2% and 11.5%, respectively, at September 30, 2009. At September 30, 2008, the yields were 10.2%, 13.4%, and 12.5%, respectively.
Since the initial public offering of Apollo Investment Corporation in April 2004 and through September 30, 2009, invested capital totals $5.7 billion in 124 portfolio companies. Over the same period, the Company completed transactions with more than 85 different financial sponsors.
RESULTS OF OPERATIONS
Results comparisons are for the three and six months ended September 30, 2009 and September 30, 2008.
Investment Income
For the three and six months ended September 30, 2009, gross investment income totaled $84.4 million and $167.0 million, respectively. For the three and six months ended September 30, 2008, gross investment income totaled $103.5 million and $194.5 million, respectively. The decrease in gross investment income for the three and six months ended September 30, 2009, was primarily due to two factors: the reduction of the size of the income producing portfolio for the three and six month periods as well as the reduction in the yield of the overall income producing portfolio with LIBOR decreasing over 300 basis points. 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 operating expenses totaled $33.0 million and $66.2 million, respectively, for the three and six months ended September 30, 2009, of which $26.1 million and $51.1 million, respectively, were base management fees and performance-based incentive fees and $4.4 million and $9.5 million, respectively, were interest and other credit facility expenses. Of these net operating expenses, general and administrative expenses totaled $2.5 million and $5.7 million, respectively, for the three and six months ended September 30, 2009. Net operating expenses totaled $47.1 million and $91.7 million, respectively, for the three and six months ended September 30, 2008, of which $30.5 million and $58.1 million, respectively, were base management fees and performance-based incentive fees and $14.4 million and $28.3 million, respectively, were interest and other credit facility expenses. Of these net operating expenses, general and administrative expenses totaled $2.2 million and $5.3 million, respectively, for the three and six months ended September 30, 2008. Net expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, legal fees, directors' fees, audit and tax services expenses, and other general and administrative expenses. The decrease in net expenses for the three and six month periods ended September 30, 2009 versus the three and six month periods ended September 30, 2008 was primarily related to the decrease in the weighted average interest expense on our revolving credit facility. This decrease in weighted average interest expense is due primarily to LIBOR decreasing over 300 basis points.
Net Investment Income
The Company's net investment income totaled $51.4 million and $100.7 million, or $0.34, and $0.68 on a per average share basis, respectively, for the three and six months ended September 30, 2009. For the three and six months ended September 30, 2008, net investment income totaled $56.5 million and $102.8 million or $0.40 per share and $0.75 per share, respectively.
Net Realized Losses
The Company had investment sales and prepayments totaling $30.2 million and $100.6 million, respectively, for the three and six months ended September 30, 2009. For the three and six months ended September 30, 2008, investment sales and prepayments totaled $21.3 million and $110.4 million, respectively. Net realized losses for the three and six months ended September 30, 2009 were $3.1 million and $101.3 million, respectively. For the three and six months ended September 30, 2008, net realized losses totaled $30.0 million and $59.8 million, respectively.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies
For the three and six months ended September 30, 2009, the Company's investments, cash equivalents, foreign currencies and other assets and liabilities had net appreciation of $60.9 million and $194.2 million, respectively. For the three and six months ended September 30, 2008, the Company's investments, cash equivalents, foreign currencies and other assets and liabilities had net depreciation of $264.5 million and $209.1 million, respectively. This net unrealized appreciation was primarily due to improving capital market conditions and net changes in specific portfolio company fundamentals. At September 30, 2009, the Company's net unrealized depreciation totaled $737.3 million versus net unrealized depreciation of $406.2 million at September 30, 2008.
Net Increase in Net Assets From Operations
For the three and six months ended September 30, 2009, the Company had a net increase in net assets resulting from operations of $109.2 million and $193.6 million, respectively. For the three and six months ended September 30, 2008, the Company had a net decrease in net assets resulting from operations of $238.0 million and $166.1 million, respectively. The earnings per share were $0.71 and $1.31 for the three and six months ended September 30, 2009, respectively. For the three and six months ended September 30, 2008, the loss per share was $1.67 and $1.21, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources are generated and generally 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 of liquid assets and prepayments of senior and subordinated loans and income earned from investments and cash equivalents. At September 30, 2009, the Company had $902 million in borrowings outstanding and $798 million of unused capacity. In the future, the Company may raise additional equity or debt capital off its shelf registration, among other considerations. The primary use of funds will be investments in portfolio companies, cash distributions to our stockholders, reductions in debt outstanding and other general corporate purposes. On August 18, 2009, the Company closed on its most recent follow-on public equity offering of 20.7 million shares of common stock at $8.75 per share raising approximately $173.0 million in net proceeds.
APOLLO INVESTMENT CORPORATION STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts) September 30, 2009 March 31, (unaudited) 2009 ------------ ------------ Assets Non-controlled/non-affiliated investments, at value (cost--$3,022,735 and $3,082,364, respectively) $ 2,512,435 $ 2,345,470 Controlled investments, at value (cost--$339,819 and $342,115, respectively) 133,834 141,421 Cash 2,491 5,914 Foreign currency (cost--$1,435 and $694, respectively) 1,422 693 Interest receivable 44,362 42,461 Dividends receivable 7,636 7,302 Receivable for investments sold 800 -- Miscellaneous income receivable -- 51 Receivable from investment adviser -- 393 Prepaid expenses and other assets 3,378 4,934 ------------ ------------ Total assets $ 2,706,358 $ 2,548,639 ------------ ------------ Liabilities Credit facility payable $ 902,312 $ 1,057,601 Dividends payable 45,838 36,978 Payable for investments purchased 45,567 27,555 Management and performance-based incentive fees payable 26,062 25,314 Interest payable 357 711 Accrued administrative expenses 1,021 1,547 Other liabilities and accrued expenses 1,021 2,795 ------------ ------------ Total liabilities $ 1,022,178 $ 1,152,501 ------------ ------------ Net Assets Common stock, par value $.001 per share, 400,000 and 400,000 common shares authorized, respectively, and 163,706 and 142,221 issued and outstanding, respectively $ 164 $ 142 Paid-in capital in excess of par 2,529,409 2,352,205 Undistributed net investment income 114,079 96,174 Accumulated net realized loss (222,143) (120,811) Net unrealized depreciation (737,329) (931,572) ------------ ------------ Total Net Assets $ 1,684,180 $ 1,396,138 ------------ ------------ Total liabilities and net assets $ 2,706,358 $ 2,548,639 ------------ ------------ Net Asset Value Per Share $ 10.29 $ 9.82 ------------ ------------ APOLLO INVESTMENT CORPORATION STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts) Three months ended Six months ended September 30, September 30, --------------------- --------------------- 2009 2008 2009 2008 --------- ---------- --------- ---------- INVESTMENT INCOME: From non-controlled/ non-affiliated investments: Interest $ 71,875 $ 90,225 $ 147,172 $ 175,200 Dividends 3,584 3,776 6,820 7,111 Other income 482 3,276 1,751 3,473 From controlled investments: Dividends 8,462 6,270 11,221 8,722 Other income -- -- -- -- --------- ---------- --------- ---------- Total Investment Income 84,403 103,547 166,964 194,506 --------- ---------- --------- ---------- EXPENSES: Management fees $ 13,214 $ 16,354 $ 25,936 $ 32,376 Performance-based incentive fees 12,848 14,123 25,180 25,701 Interest and other credit facility expenses 4,409 14,404 9,477 28,321 Administrative services expense 1,198 855 2,507 2,723 Other general and administrative expenses 1,344 1,366 3,144 2,713 --------- ---------- --------- ---------- Total expenses 33,013 47,102 66,244 91,834 Expense offset arrangement -- (46) -- (132) --------- ---------- --------- ---------- Net expenses 33,013 47,056 66,244 91,702 --------- ---------- --------- ---------- Net investment income $ 51,390 $ 56,491 $ 100,720 $ 102,804 --------- ---------- --------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS AND FOREIGN CURRENCIES: Net realized gain (loss): Investments and cash equivalents $ (3,321) $ (33,171) $(101,399) $ (62,401) Foreign currencies 224 3,195 67 2,607 --------- ---------- --------- ---------- Net realized loss (3,097) (29,976) (101,332) (59,794) --------- ---------- --------- ---------- Net change in unrealized gain (loss): Investments and cash equivalents 69,386 (307,592) 221,221 (252,703) Foreign currencies (8,523) 43,125 (26,978) 43,581 --------- ---------- --------- ---------- Net change in unrealized gain (loss) 60,863 (264,467) 194,243 (209,122) --------- ---------- --------- ---------- Net realized and unrealized gain (loss) from investments, cash equivalents and foreign currencies 57,766 (294,443) 92,911 (268,916) --------- ---------- --------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 109,156 $ (237,952) $ 193,631 $ (166,112) --------- ---------- --------- ---------- EARNINGS (LOSS) PER SHARE $ 0.71 $ (1.67) $ 1.31 $ (1.21) --------- ---------- --------- ----------
About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end, externally managed, non-diversified management 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 as well as public companies whose securities are thinly traded. 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.