AINV-2014.9.30-10Q
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2014
¨    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 814-00646
APOLLO INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
 
Maryland
52-2439556
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
9 West 57th Street
37th Floor
New York, N.Y.
10019
(Address of principal executive office)
(Zip Code)
(212) 515-3450
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes x  No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ¨  No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer  
¨
Smaller Reporting Company  
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨  No x
The number of shares of the registrant’s Common Stock, $.001 par value, outstanding as of November 6, 2014 was 236,741,351.
 
 
 
 



Table of Contents

APOLLO INVESTMENT CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2014
TABLE OF CONTENTS
 

 
 
PAGE  
 
PART I. FINANCIAL INFORMATION
 
 
 
 
Item 1.
FINANCIAL STATEMENTS
 
 
 
 
Statements of Assets and Liabilities as of September 30, 2014 and March 31, 2014
 

 
 
Statements of Operations for the three and six months ended September 30, 2014 and September 30, 2013
 

 
 
Statements of Changes in Net Assets for the six months ended September 30, 2014 and the year ended March 31, 2014
 

 
 
Statements of Cash Flows for the six months ended September 30, 2014 and September 30, 2013
 

 
 
Schedule of Investments as of September 30, 2014
 
 
 
 
Schedule of Investments as of March 31, 2014
 
 
 
 
Notes to Financial Statements
 
 
 
 
Report of Independent Registered Public Accounting Firm
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
 
Signatures


Table of Contents

PART I. FINANCIAL INFORMATION
In this Quarterly Report, “Apollo Investment”, the “Company”, “AIC”, “we”, “us” and “our” refer to Apollo Investment Corporation unless the context otherwise states.

Item 1. Financial Statements

APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
(in thousands, except per share amounts)
 
 
September 30, 2014

March 31, 2014
Assets
 
 
 
Non-controlled/non-affiliated investments, at fair value (cost — $2,862,751 and $2,714,971, respectively)
$
2,848,449


$
2,751,896

Non-controlled/affiliated investments, at fair value (cost — $151,273 and $153,721, respectively)
155,399


144,628

Controlled investments, at fair value (cost — $648,994 and $590,060, respectively)
661,378


582,147

Total investments (cost — $3,663,018 and $3,458,752, respectively)
3,665,226


3,478,671

Cash
9,255


13,413

Foreign currency (cost — $2,488 and $1,305, respectively)
2,427


1,323

Receivable for investments sold
87,538


72,918

Interest receivable
35,285


40,106

Dividends receivable
3,504


3,627

Deferred financing costs
28,900


31,601

Prepaid expenses and other assets
1,028


292

Total assets
$
3,833,163


$
3,641,951

Liabilities
 
 
 
Debt (see note 6 & 9)
$
1,577,472


$
1,372,261

Payable for investments purchased
85,232


119,577

Dividends payable
47,348


47,348

Management and performance-based incentive fees payable (see note 3)
38,371


31,108

Interest payable
14,704


14,318

Accrued administrative expenses
1,698


1,915

Other liabilities and accrued expenses
4,847


3,813

Total liabilities
$
1,769,672


$
1,590,340

Net Assets
 
 
 
Common stock, par value $.001 per share, 400,000,000 and 400,000,000 common shares authorized, respectively, 236,741,351 and 236,741,351 issued and outstanding, respectively
$
237


$
237

Paid-in capital in excess of par (see note 2)
3,221,802


3,221,829

Over-distributed net investment income (see note 2)
(29,451
)

(53,995
)
Accumulated net realized loss (see note 2)
(1,135,144
)

(1,133,405
)
Net unrealized gain
6,047


16,945

Total net assets
$
2,063,491


$
2,051,611

Total liabilities and net assets
$
3,833,163


$
3,641,951

Net asset value per share
$
8.72


$
8.67


See notes to financial statements.
3

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)
 
Three Months Ended
 
Six Months Ended
 
September 30, 2014
 
September 30, 2013
 
September 30, 2014
 
September 30, 2013
INVESTMENT INCOME:
 
 
 
 
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest
$
96,146

 
$
79,228

 
$
178,693

 
$
154,789

Dividends
1,275

 
430

 
2,116

 
4,694

Other income
4,038

 
2,217

 
6,294

 
6,693

From non-controlled/affiliated investments:
 
 
 
 

 
 
Interest
971

 
1,025

 
2,927

 
1,728

Dividends
4,128

 
4,738

 
8,074

 
9,564

From controlled investments:
 
 
 
 

 
 
Interest
10,104

 
5,668

 
19,224

 
10,577

Dividends
1,891

 
364

 
3,699

 
2,260

Other income
357

 
38

 
463

 
75

Total investment income
$
118,910

 
$
93,708

 
$
221,490

 
$
190,380

EXPENSES:
 
 
 
 

 
 
Management fees (see note 3)
$
18,878

 
$
15,356

 
$
36,989

 
$
30,113

Performance-based incentive fees (see note 3)
15,393

 
11,545

 
27,860

 
23,994

Interest and other debt expenses
18,946

 
17,472

 
37,848

 
33,316

Administrative services expense
1,525

 
1,109

 
2,958

 
2,206

Other general and administrative expenses
2,617

 
1,974

 
4,904

 
4,105

Total expenses
$
57,359

 
$
47,456

 
$
110,559

 
$
93,734

Management and performance-based incentive fees waived (see note 3)
$
(4,041
)
 
$
(3,326
)
 
$
(8,193
)
 
$
(5,299
)
Expense reimbursements (see note 3)
(96
)
 
(8
)
 
(116
)
 
(8
)
Net expenses
$
53,222

 
$
44,122

 
$
102,250

 
$
88,427

Net investment income
$
65,688

 
$
49,586

 
$
119,240

 
$
101,953

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS, FOREIGN CURRENCIES AND DERIVATIVES:
 
 
 
 
 
 
 
Net realized gain (loss):
 
 
 
 
 
 
 
Investments and cash equivalents
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
$
(173
)
 
$
(16,542
)
 
$
(11,889
)
 
$
(122,418
)
Non-controlled/affiliated investments
11,633

 

 
11,526

 

Controlled investments

 
(10,303
)
 

 
(2,338
)
Net realized gain (loss) from investments and cash equivalents
$
11,460

 
$
(26,845
)
 
$
(363
)
 
$
(124,756
)
Foreign currencies
 
 
 
 

 
 
Non-controlled/non-affiliated investments
$
7

 
$
77

 
$
387

 
$
(100
)
Non-controlled/affiliated investments

 

 

 

Controlled investments

 
47

 

 
36

Foreign debt
127

 
907

 
(1,763
)
 
3,071

Net realized gain (loss) from foreign currencies
$
134

 
$
1,031

 
$
(1,376
)
 
$
3,007

Derivatives

 
8,541

 

 
8,541

Net realized gain (loss)
$
11,594

 
$
(17,273
)
 
$
(1,739
)
 
$
(113,208
)
 
 
 
 
 
 
 
 

See notes to financial statements.
4

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (unaudited) (continued)
(in thousands, except per share amounts)
 
Three Months Ended
 
Six Months Ended
 
September 30, 2014
 
September 30, 2013
 
September 30, 2014
 
September 30, 2013
Net change in unrealized gain (loss):
 
 
 
 
 
 
 
Investments and cash equivalents
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
$
(51,169
)
 
$
35,919

 
$
(48,574
)
 
$
100,144

Non-controlled/affiliated investments
2,944

 
(1,389
)
 
10,653

 
(5,322
)
Controlled investments
5,795

 
25,880

 
20,296

 
22,782

Net change in unrealized gain (loss) from investments and cash equivalents
$
(42,430
)
 
$
60,410

 
$
(17,625
)
 
$
117,604

Foreign currencies
 
 
 
 


 
 
Non-controlled/non-affiliated investments
$
(258
)
 
$
308

 
$
(513
)
 
$
535

Non-controlled/affiliated investments

 

 

 

Controlled investments

 
22

 

 
21

Foreign debt
7,373

 
(9,773
)
 
7,240

 
(11,676
)
Net change in unrealized gain (loss) from foreign currencies
$
7,115

 
$
(9,443
)
 
$
6,727

 
$
(11,120
)
Derivatives
$

 
$
(6,855
)
 
$

 
$

Net change in unrealized gain (loss)
$
(35,315
)
 
$
44,112

 
$
(10,898
)
 
$
106,484

Net realized and unrealized gain (loss) from investments, cash equivalents, foreign currencies and derivatives
(23,721
)
 
26,839

 
(12,637
)
 
(6,724
)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$
41,967

 
$
76,425

 
$
106,603

 
$
95,229

EARNINGS PER SHARE — BASIC (see note 4)
$
0.18

 
$
0.34

 
$
0.45

 
$
0.43

EARNINGS PER SHARE — DILUTED (see note 4)
$
0.18

 
$
0.33

 
$
0.44

 
$
0.43


See notes to financial statements.
5

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
(in thousands, except shares)
 
 
Six Months Ended 
 September 30, 2014
 
Year ended March 31, 2014
Increase (decrease) in net assets from operations:
 
 
 
Net investment income
$
119,240

 
$
201,248

Net realized loss
(1,739
)
 
(106,507
)
Net change in unrealized gain (loss)
(10,898
)
 
176,131

Net increase in net assets resulting from operations
106,603

 
270,872

 
 
 
 
Dividends and distributions to stockholders (see note 2):
 
 
 
Distribution of income
(94,697
)
 
(182,193
)
Return of capital

 

Total dividends and distributions to stockholders
(94,697
)
 
(182,193
)
 
 
 
 
Capital share transactions:
 
 
 
Net proceeds from shares sold

 
286,553

Less offering costs
(26
)
 
(1,010
)
Reinvestment of dividends

 

Net increase (decrease) in net assets from capital share transactions
(26
)
 
285,543

 
 
 
 
Total increase net assets:
11,880

 
374,222

Net assets at beginning of period
2,051,611

 
1,677,389

Net assets at end of period
$
2,063,491

 
$
2,051,611

 
 
 
 
Capital share activity
 
 
 
Shares sold

 
33,850,000

Shares issued from reinvestment of dividends

 

Net capital share activity

 
33,850,000


See notes to financial statements.
6

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS (unaudited)
(in thousands) 
 
Six months ended September 30,
 
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net increase in net assets resulting from operations
$
106,603

 
$
95,229

Adjustments to reconcile net increase (decrease):
 
 
 
PIK interest and dividends capitalized (see note 5)
(17,058
)
 
(16,889
)
Net amortization on investments
(4,742
)
 
(3,560
)
Amortization of deferred financing costs
3,315

 
3,827

(Increase) decrease from foreign currency transactions
(1,953
)
 
3,489

Net change in unrealized (gain) loss on investments, cash equivalents, foreign currencies and derivatives
10,898

 
(106,484
)
Net realized loss on investments, cash equivalents, and foreign currencies
1,739

 
113,208

Changes in operating assets and liabilities:
 
 
 
Purchase of investments and cash equivalents
(1,230,604
)
 
(1,199,864
)
Proceeds from derivatives

 
4,156

Proceeds from the disposition of derivatives

 
4,384

Proceeds from disposition of investments and cash equivalents
1,047,924

 
1,033,942

Increase in receivables for investments sold
(14,620
)
 
(16,611
)
Decrease in interest receivable
4,821

 
9,391

(Increase) decrease in dividends receivable
123

 
(1,239
)
(Increase) in deferred financing costs
(225
)
 

Increase in prepaid expenses and other assets
(736
)
 
(539
)
Increase (decrease) in payable for investments purchased
(34,345
)
 
73,634

Increase in management and performance-based incentive fees payable
7,263

 
2,128

Increase in interest payable
386

 
2,943

Decrease in accrued administrative expenses
(217
)
 
(1,115
)
Increase in other liabilities and accrued expenses
1,034

 
86

Net cash (used in) provided by operating activities
$
(120,394
)
 
$
116

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net proceeds from the issuance of common stock
$

 
$
182,273

Offering costs for the issuance of common stock
(26
)
 
(350
)
Dividends paid in cash
(94,697
)
 
(85,527
)
Proceeds from debt
1,759,696

 
991,060

Repayments of debt
(1,547,163
)
 
(1,076,552
)
Deferred financing costs paid
(391
)
 
(11,139
)
Net cash provided by (used in) financing activities
$
117,419

 
$
(235
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
$
(2,975
)
 
$
(119
)
Effect of exchange rates on cash balances
(79
)
 
6

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
14,736

 
$
6,197

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
11,682

 
$
6,084

 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash interest paid during the period
$
33,091

 
$
25,465

PIK income (see note 5)
$
14,625

 
$
13,029


See notes to financial statements.
7

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2014
(in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
CORPORATE DEBT—125.3%
SECURED DEBT—95.2%
1st Lien Secured Debt—45.1%
 Alion Science & Technology Corporation
 
11.00% (L+1000, 1.00% Floor)
 
8/16/19
 
 Aerospace and Defense
 
$
32,164

 
$
31,110

 
$
31,842

 Archroma (17)
 
9.50% (L+825, 1.25% Floor)
 
10/1/18
 
 Chemicals
 
45,345

 
44,884

 
45,940

 Avaya, Inc., (Revolver) (16)
 
2.90% L+275 Funded, 0.50% Unfunded
 
10/26/16
 
 Telecommunications
 
16,553

 
16,553

 
15,208

 Aventine Renewable Energy Holdings, Inc.
 
15.00% PIK (15.00% PIK or 10.50% Cash)
 
9/22/17
 
 Chemicals
 
15,161

 
17,872

 
15,306

Aveta, Inc.
 
 9.75% (L+825, 1.50% Floor)
 
12/12/17
 
Healthcare
 
56,623

 
55,437

 
56,588

 Caza Petroleum, Inc.
 
12.00% (L+1000, 2.00% Floor)
 
5/23/17
 
 Oil and Gas
 
45,000

 
43,795

 
44,145

 Confie Seguros Holding II Co., (Revolver) (16)
 
6.75% (P+350, 3.25% Floor) Funded, 0.50% Unfunded
 
12/10/18
 
 Insurance
 
1,110

 
1,110

 
1,110

 Deep Gulf Energy II, LLC
 
11.50% ((11.50% or L+1000), 1.50% Floor)
 
3/31/17
 
 Oil and Gas
 
25,000

 
25,000

 
24,500

 Delta Educational Systems, Inc.
 
16.00% (8.00% Cash/8.00% PIK)
 
12/11/16
 
 Education
 
5,657

 
5,657

 
5,657

 Energy & Exploration Partners, Inc.
 
7.75% (L+675, 1.00% Floor)
 
1/22/19
 
 Oil and Gas
 
6,484

 
6,389

 
6,386

 Evergreen Tank Solutions, Inc.
 
9.50% (L+800, 1.50% Floor)
 
9/28/18
 
 Containers, Packaging, and Glass
 
40,657

 
40,208

 
40,556

 Extraction Oil & Gas Holdings, LLC
 
11.000%
 
5/29/19
 
 Oil and Gas
 
42,226

 
41,618

 
41,592

 GenCorp, Inc.(17)
 
9.50% (L+850, 1.00% Floor)
 
4/18/22
 
 Aerospace and Defense
 
44,500

 
44,500

 
44,500

 Great Bear Petroleum Operating, LLC
 
12.000%
 
10/1/17
 
 Oil and Gas
 
5,064

 
5,064

 
5,064

 Hunt Companies, Inc. (11)
 
9.625%
 
3/1/21
 
 Buildings and Real Estate
 
41,210

 
40,728

 
43,064

 M&G Chemicals, S.A. (17)
 
8.73% (L+850)
 
3/28/16
 
 Chemicals
 
5,000

 
5,000

 
5,000

 Magnetation, LLC (11)
 
11.000%
 
5/15/18
 
 Mining
 
38,454

 
40,074

 
39,079

 Maxus Capital Carbon SPE I, LLC (Skyonic Corp.)
 
13.000%
 
9/18/19
 
 Chemicals
 
79,046

 
79,046

 
79,046

 Molycorp, Inc. (17)
 
10.000%
 
6/1/20
 
 Diversified Natural Resources, Precious Metals and Minerals
 
50,424

 
50,003

 
35,150

 My Alarm Center, LLC (16)
 
8.50% (L+750, 1.00% Floor)
 
1/9/18
 
 Business Services
 
42,614

 
42,614

 
42,614

 My Alarm Center, LLC (16)
 
8.50% (L+750, 1.00% Floor)
 
1/9/18
 
 Business Services
 
6,738

 
6,738

 
6,738

 Osage Exploration & Development, Inc. (11)(17)
 
13.00% (L+1100, 2.00% Floor)
 
4/27/16
 
 Oil and Gas
 
25,000

 
24,637

 
24,250

 Panda Sherman Power, LLC
 
9.00% (L+750, 1.50% Floor)
 
9/14/18
 
 Energy
 
14,967

 
14,805

 
15,285

 Panda Temple Power, LLC
 
11.50% (L+1000, 1.50% Floor)
 
7/17/18
 
 Energy
 
25,500

 
25,136

 
26,138

 Pelican Energy, LLC (17)
 
10.00% (7.00% Cash / 3.00% PIK)
 
12/31/18
 
 Oil and Gas
 
26,339

 
25,361

 
26,865


See notes to financial statements.
8

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
1st Lien Secured Debt—45.1% (continued)
 Reichhold Holdings International B.V. (16)(17)
 
10.75% (L+975, 1.00% Floor)
 
12/19/16
 
 Chemicals
 
$
19,500

 
$
19,500

 
$
19,793

Reichhold Holdings International B.V., (Revolver) (16)(17)
 
7.00% (L+600 Funded, 1.50% Unfunded)
 
12/19/16
 
Chemicals
 
9,000

 
9,000

 
9,000

 SCM Insurance Services, Inc. (17)
 
9.250%
 
8/22/19
 
 Business Services
 
CAD 30,000
 
27,114

 
26,710

 Spotted Hawk Development, LLC
 
13.00% (12.00% Cash/ 1.00% PIK)
 
9/12/16
 
 Oil and Gas
 
$
80,493

 
79,206

 
78,883

 Sunrun Solar Owner IX, LLC
 
9.079%
 
12/31/24
 
 Energy
 
3,525

 
3,377

 
3,376

 UniTek Global Services, Inc., (Revolver)(16)
 
10.25% (L+925, 1.00% Floor) Funded, 2.00% Unfunded
 
4/15/16
 
 Telecommunications
 
38,731

 
38,731

 
38,731

 Walter Energy, Inc.(11)(16)(17)
 
9.500%
 
10/15/19
 
 Mining
 
35,061

 
35,439

 
31,730

Total 1st Lien Secured Debt
 
$
945,706

 
$
929,846


See notes to financial statements.
9

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
 
Unfunded Revolver Obligations—(0.4)%
 Avaya, Inc., (Unfunded Revolver) (8)(13)(16)
 
L+275 Funded, 0.50% Unfunded
 
10/26/16
 
 Telecommunications
 
$
20,231

 
$
(4,189
)
 
$
(1,644
)
 BMC Software, Inc., (Unfunded Revolver) (8)(13)
 
L+400 Funded, 0.50% Unfunded
 
9/10/18
 
 Business Services
 
20,760

 
(2,133
)
 
(1,661
)
 CIT Group, Inc., (Unfunded Revolver) (8)(13)(17)
 
 L+275
 
1/27/17
 
 Financial Services
 
25,000

 
(969
)
 
(1,063
)
 Confie Seguros Holding II Co., (Unfunded Revolver) (13)(16)
 
P+350 Funded, 0.50% Unfunded
 
12/10/18
 
 Insurance
 
2,724

 
(386
)
 

 Laureate Education, Inc., (Unfunded Revolver) (8)(13)(17)
 
L+375 Funded, 0.625% Unfunded
 
6/16/16
 
 Education
 
28,880

 
(2,888
)
 
(2,599
)
 Reichhold Holdings International B.V., (Unfunded Revolver) (13)(16)(17)
 
L+600 Funded, 1.50% Unfunded
 
12/19/16
 
 Chemicals
 
3,500

 

 

 Salix Pharmaceuticals, Ltd., (Unfunded Revolver) (8)(13)(16)(17)
 
L+300 Funded, 0.50% Unfunded
 
1/2/19
 
 Healthcare
 
24,867

 
(1,720
)
 
(249
)
 UniTek Global Services, Inc., (Unfunded Revolver) (13)(16)
 
L+925 Funded, 2.00% Unfunded
 
4/15/16
 
 Telecommunications
 
14,623

 

 

 Walter Energy, Inc., (Unfunded Revolver) (8)(13)(16)(17)
 
L+550 Funded, 0.625% Unfunded
 
10/1/17
 
 Mining
 
275

 
(185
)
 
(18
)
Total Unfunded Revolver Obligations
 
$
(12,470
)
 
$
(7,234
)
 
Letters of Credit— (0.0)%
 Confie Seguros Holding II Co., Letter of Credit (13)(16)
 
4.500%
 
10/27/14
 
 Insurance
 
$
600

 
$

 
$

 Confie Seguros Holding II Co., Letter of Credit (13)(16)
 
4.500%
 
1/13/15
 
 Insurance
 
66

 

 

 Salix Pharmaceuticals, Ltd., Letter of Credit (13)(16)(17)
 
3.000%
 
2/10/15
 
 Healthcare
 
8

 

 

 Salix Pharmaceuticals, Ltd., Letter of Credit (8)(13)(16)(17)
 
3.000%
 
2/10/15
 
 Healthcare
 
125

 

 
(1
)
 UniTek Global Services, Inc., Letter of Credit (13)(16)
 
9.250%
 
12/15/14
 
 Telecommunications
 
5,446

 

 

 UniTek Global Services, Inc., Letter of Credit (13)(16)
 
9.250%
 
3/18/15
 
 Telecommunications
 
1,000

 

 

 UniTek Global Services, Inc., Letter of Credit (13)(16)
 
9.250%
 
3/18/15
 
 Telecommunications
 
2,700

 

 

 UniTek Global Services, Inc., Letter of Credit (13)(16)
 
9.250%
 
3/26/15
 
 Telecommunications
 
12,500

 

 

 Walter Energy, Inc., Letter of Credit (8)(9)(13)(16)(17)
 
5.500%
 
9/18/14- 7/4/15
 
 Mining
 
86

 

 
(6
)
 Walter Energy, Inc., Letter of Credit (8)(9)(13)(16)(17)
 
5.500%
 
11/28/15-8/31/15
 
 Mining
 
CAD
192

 

 
(11
)
Total Letters of Credit
 
$

 
$
(18
)
 

See notes to financial statements.
10

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
2nd Lien Secured Debt—50.5%
 Active Network, Inc.
 
9.50% (L+850, 1.00% Floor)
 
11/15/21
 
 Business Services
 
$
20,419

 
$
20,325

 
$
20,553

 American Energy - Utica, LLC (10)
 
11.00% (L+950, 1.50% Floor)
 
9/30/18
 
 Oil and Gas
 
11,020

 
10,920

 
11,571

 Aptean, Inc.
 
8.50% (L+750, 1.00% Floor)
 
2/26/21
 
 Business Services
 
11,322

 
11,162

 
11,280

 Armor Holdings, Inc. (American Stock Transfer and Trust Company)
 
10.25% (L+900, 1.25% Floor)
 
12/26/20
 
 Financial Services
 
8,000

 
7,859

 
7,920

 Asurion Corporation
 
8.50% (L+750, 1.00% Floor)
 
3/3/21
 
 Insurance
 
90,400

 
89,123

 
91,756

 BancTec Group, LLC (17)
 
11.75% (L+1075, 1.00% Floor)
 
4/3/20
 
 Business Services
 
40,000

 
39,249

 
39,200

 Confie Seguros Holding II Co.
 
10.25% (L+900, 1.25% Floor)
 
5/8/19
 
 Insurance
 
33,844

 
33,599

 
34,140

 Consolidated Precision Products Corp.
 
8.75% (L+775, 1.00% Floor)
 
4/30/21
 
 Aerospace and Defense
 
8,940

 
8,899

 
8,974

 Del Monte Foods Co.
 
8.25% (L+725, 1.00% Floor)
 
8/18/21
 
 Beverage, Food, and Tobacco
 
2,146

 
2,126

 
1,959

 Deltek, Inc.
 
10.00% (L+875, 1.25% Floor)
 
10/10/19
 
 Business Services
 
27,273

 
27,041

 
27,546

 Elements Behavioral Health, Inc.
 
9.25% (L+825, 1.00% Floor)
 
2/11/20
 
 Healthcare
 
9,500

 
9,413

 
9,500

 Flexera Software, LLC
 
8.00% (L+700, 1.00% Floor)
 
4/2/21
 
 Business Services
 
4,250

 
4,230

 
4,186

 Garden Fresh Restaurant Corp. (16)
 
14.50% (L+1300 PIK, 1.50% Floor)
 
1/1/19
 
 Restaurants
 
37,075

 
35,046

 
32,997

 Garden Fresh Restaurant Corp. (16)
 
7.25% (L+575 PIK , 1.50% Floor)
 
1/1/19
 
 Restaurants
 
7,943

 
6,051

 
5,401

 GCA Services Group, Inc.
 
9.25% (L+800, 1.25% Floor)
 
11/1/20
 
 Diversified Service
 
22,838

 
22,933

 
22,838

 Genex Holdings, Inc.
 
8.75% (L+775, 1.00% Floor)
 
5/30/22
 
 Healthcare
 
2,320

 
2,294

 
2,308

 Grocery Outlet, Inc.
 
11.50% (L+925 or P+800, 3.50% Floor)
 
6/17/19
 
 Grocery
 
8,674

 
8,537

 
8,847

 GTCR Valor Companies, Inc.
 
9.50% (L+850, 1.00% Floor)
 
11/21/21
 
 Business Services
 
35,000

 
35,000

 
34,825

 HD Vest, Inc. (17)
 
9.25% (L+800, 1.25% Floor)
 
6/18/19
 
 Financial Services
 
9,396

 
9,304

 
9,396

 Institutional Shareholder Services, Inc.
 
8.50% (L+750, 1.00% Floor)
 
4/30/22
 
Financial Services
 
9,640

 
9,547

 
9,592

 inVentiv Health, Inc. (11)
 
10.00% (12.00% PIK Toggle)
 
8/15/18
 
Healthcare
 
11,682

 
11,682

 
10,835

 Kronos, Inc.
 
9.75% (L+850, 1.25% Floor)
 
4/30/20
 
 Business Services
 
92,516

 
91,593

 
95,523

 Learfield Communications, Inc.
 
8.75% (L+775, 1.00% Floor)
 
10/8/21
 
 Media
 
15,000

 
14,863

 
14,981

 Miller Energy Resources, Inc. (17)
 
11.75% (L+975, 2.00% Floor)
 
2/3/18
 
 Oil and Gas
 
87,500

 
85,983

 
85,750

 MSC Software Corp. (17)
 
8.50% (L+750, 1.00% Floor)
 
5/28/21
 
 Business Services
 
20,448

 
20,250

 
20,141

 NVA Holdings, Inc.
 
8.00% (L+700, 1.00% Floor)
 
8/14/22
 
 Healthcare
 
7,780

 
7,742

 
7,761

 Premier Trailer Leasing, Inc.
 
10.00% (L+900, 1.00% Floor)
 
9/24/20
 
 Financial Services
 
52,000

 
50,962

 
50,960


See notes to financial statements.
11

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
2nd Lien Secured Debt—50.5% (continued)
Ranpak Corp. (16)
 
8.50% (L+725, 1.25% Floor)
 
4/23/20
 
 Packaging
 
$
22,000

 
$
21,814

 
$
22,165

Ranpak Corp. (16)
 
8.25% (L+725, 1.00% Floor)
 
9/22/22
 
 Packaging
 
16,654

 
16,571

 
16,633

RegionalCare Hospital Partners, Inc.
 
10.50% (L+950, 1.00% Floor)
 
10/23/19
 
 Healthcare
 
7,000

 
6,646

 
7,070

River Cree Enterprises LP (11)(17)
 
11.000%
 
1/20/21
 
 Hotels, Motels, Inns and Gaming
 
CAD
33,000

 
31,110

 
32,076

SiTV, Inc. (11)
 
10.375%
 
7/1/19
 
 Cable Television
 
$
2,219

 
2,219

 
2,200

Sprint Industrial Holdings, LLC
 
11.25% (L+1000, 1.25% Floor)
 
11/14/19
 
 Containers, Packaging, and Glass
 
14,163

 
13,943

 
14,305

SquareTwo Financial Corp. (Collect America, Ltd.) (17)
 
11.625%
 
4/1/17
 
 Financial Services
 
66,079

 
65,040

 
66,244

Stadium Management Corp.
 
9.25% (L+825, 1.00% Floor)
 
2/27/21
 
 Business Services
 
19,900

 
19,900

 
20,099

TASC, Inc.
 
12.000%
 
5/21/21
 
 Aerospace and Defense
 
13,435

 
12,783

 
13,065

TMK Hawk Parent Corp.
 
8.50% (L+750, 1.00% Floor)
 
8/22/22
 
 Distribution
 
34,000

 
33,660

 
33,830

Transfirst Holdings, Inc.
 
8.00% (L+700, 1.00% Floor)
 
6/27/18
 
 Financial Services
 
12,500

 
12,472

 
12,438

U.S. Renal Care, Inc. (16)
 
10.25% (L+900, 1.25% Floor)
 
1/3/20
 
 Healthcare
 
11,927

 
11,977

 
12,091

U.S. Renal Care, Inc. (16)
 
8.50% (L+750, 1.00% Floor)
 
1/3/20
 
 Healthcare
 
12,120

 
11,944

 
12,302

Velocity Technology Solutions, Inc.
 
9.00% (L+775, 1.25% Floor)
 
9/28/20
 
 Business Services
 
16,500

 
16,189

 
16,170

Vertafore, Inc.
 
9.75% (L+825, 1.50% Floor)
 
10/27/17
 
 Business Services
 
50,436

 
50,199

 
50,877

Walter Energy, Inc. (11)(17)
 
11.000%
 
4/1/20
 
 Mining
 
22,554

 
21,182

 
10,713

Xand Operations, LLC
 
8.50% (L+750, 1.00% Floor)
 
5/13/20
 
 Telecommunications
 
20,000

 
19,810

 
19,800

Total 2nd Lien Secured Debt
 
$
1,043,192

 
$
1,042,818

TOTAL SECURED DEBT
 
$
1,976,428

 
$
1,965,412

UNSECURED DEBT—30.1%
 American Energy - Woodford LLC/AEW Finance Corp. (11)
 
9.000%
 
9/15/22
 
 Oil and Gas
 
$
5,000

 
$
4,796

 
$
4,654

 American Tire Distributors, Inc. (11)(16)
 
11.500%
 
6/1/18
 
 Distribution
 
25,000

 
25,000

 
25,500

 American Tire Distributors, Inc. (11)(16)
 
11.500%
 
6/1/18
 
 Distribution
 
40,000

 
39,386

 
40,800

 Artsonig Pty Ltd. (11)(17)
 
11.50% (12.00% PIK Toggle)
 
4/1/19
 
 Transportation
 
20,000

 
19,723

 
20,350

 BCA Osprey II Limited (British Car Auctions) (16)(17)
 
12.50% PIK
 
8/17/17
 
 Transportation
 
£
23,566

 
37,638

 
39,580

 BCA Osprey II Limited (British Car Auctions) (16)(17)
 
12.50% PIK
 
8/17/17
 
 Transportation
 
14,333

 
19,748

 
18,758

 Ceridian Corp. (11)
 
11.000%
 
3/15/21
 
 Diversified Service
 
$
34,000

 
34,000

 
38,831

 Delta Educational Systems, Inc.
 
16.00% (10.00% Cash/ 6.00% PIK)
 
5/12/17
 
 Education
 
22,334

 
22,046

 
21,608

 Denver Parent Corp. (Venoco)
 
12.25% (13.00% PIK Toggle)
 
8/15/18
 
 Oil and Gas
 
8,988

 
8,809

 
8,269

 First Data Corp.
 
11.250%
 
1/15/21
 
 Financial Services
 
43,601

 
43,581

 
49,773

 inVentiv Health, Inc. (11)
 
10.000%
 
8/15/18
 
 Healthcare
 
25,685

 
25,685

 
20,869


See notes to financial statements.
12

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
UNSECURED DEBT—30.1% (continued)
 My Alarm Center, LLC
 
16.25% (12.00% Cash / 4.25%PIK)
 
7/9/18
 
 Business Services
 
$
4,145

 
$
4,145

 
$
4,145

 Niacet Corporation
 
13.000%
 
8/28/18
 
 Chemicals
 
12,500

 
12,500

 
12,625

 PetroBakken Energy Ltd. (11)(17)
 
8.625%
 
2/1/20
 
 Oil and Gas
 
48,121

 
49,583

 
47,760

 Radio One, Inc. (11)(17)
 
9.250%
 
2/15/20
 
 Broadcasting & Entertainment
 
14,804

 
14,804

 
14,776

 Sorenson Communications Holdings, LLC (11)
 
13.00% PIK
 
10/31/21
 
 Consumer Products
 
68

 
45

 
69

 Symbion, Inc.
 
11.000%
 
8/23/15
 
 Healthcare
 
8,467

 
8,476

 
8,381

 U.S. Security Associates Holdings, Inc.
 
11.000%
 
7/28/18
 
 Business Services
 
135,000

 
135,000

 
137,430

 Univar, Inc.
 
10.500%
 
6/30/18
 
 Distribution
 
20,000

 
20,000

 
20,000

VWR Funding, Inc. (11)(16)
 
10.750%
 
6/30/17
 
 Distribution
 
22,204

 
21,947

 
22,204

 VWR Funding, Inc. (11)(16)
 
10.750%
 
6/30/17
 
 Distribution
 
11,574

 
15,080

 
14,621

 Venoco, Inc.
 
8.875%
 
2/15/19
 
 Oil and Gas
 
$
54,996

 
55,020

 
50,528

TOTAL UNSECURED DEBT
 
$
617,012

 
$
621,531

TOTAL CORPORATE DEBT
 
$
2,593,440

 
$
2,586,943

STRUCTURED PRODUCTS AND OTHER—8.3%
 Asset Repackaging Trust Six B.V., Credit-Linked Note (17)
 
N/A
 
5/15/27
 
 Utilities
 
$
58,411

 
$
24,842

 
$
30,391

 Craft 2013-1, Credit-Linked Note (11)(16)(17)
 
9.476% (L+925)
 
4/17/22
 
 Diversified Investment Vehicle
 
25,000

 
25,100

 
24,513

 Craft 2013-1, Credit-Linked Note (16)(17)
 
9.476% (L+925)
 
4/17/22
 
 Diversified Investment Vehicle
 
7,625

 
7,756

 
7,477

 Craft 2014-1A, Credit-Linked Note (11)(17)
 
9.891% (L+965)
 
5/15/21
 
 Diversified Investment Vehicle
 
42,500

 
42,496

 
41,982

 Dark Castle Holdings, LLC
 
N/A
 
N/A
 
 Media
 
24,395

 
1,189

 
2,862

 JP Morgan Chase & Co., Credit-Linked Note (17)
 
12.481% (L+1225)
 
12/20/21
 
 Diversified Investment Vehicle
 
43,250

 
42,548

 
43,584

 NXT Capital CLO 2014-1, LLC (11)(17)
 
5.804% (L+550)
 
4/23/26
 
 Diversified Investment Vehicle
 
5,000

 
4,660

 
4,652

 Renaissance Umiat, LLC, ACES Tax Receivable (15)(17)
 
N/A
 
N/A
 
 Oil and Gas
 

 
14,610

 
15,268

TOTAL STRUCTURED PRODUCTS AND OTHER
 
$
163,201

 
$
170,729

PREFERRED EQUITY—2.2%
 
Shares
 

 

 CA Holding, Inc. (Collect America, Ltd.), Series A Preferred Stock (13)(17)
 
N/A
 
N/A
 
 Financial Services
 
7,961

 
$
788

 
$
1,592

 Crowley Holdings, Series A Preferred Stock
 
12.00% (10.00% Cash/2.00% PIK)
 
N/A
 
 Cargo Transport
 
22,500

 
22,850

 
22,795

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Preferred Stock (Convertible) (14)
 
12.50% PIK
 
N/A
 
 Education
 
332,500

 
6,863

 

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Preferred Stock (14)
 
13.50% PIK
 
5/12/18
 
 Education
 
12,360

 
27,685

 
15,744

 Varietal Distribution Holdings, LLC, Class A Preferred Unit
 
8.00% PIK
 
N/A
 
 Distribution
 
3,097

 
5,502

 
4,326

TOTAL PREFERRED EQUITY
 
$
63,688

 
$
44,457


See notes to financial statements.
13

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par Amount(12)
 
Cost
 
Fair
Value (1)
EQUITY—2.2%
Common Equity/Interests—1.7%
 
 
 
 
 
 
 
Shares
 
 
 
 
 AHC Mezzanine, LLC (Advanstar), Common Stock (13)
 
N/A
 
N/A
 
 Media
 
25,016

 
$
1,063

 
$
620

 ATD Corporation (Accelerate Parent Corp.), Common Stock (13)
 
N/A
 
N/A
 
 Distribution
 
3,225,514

 
3,276

 
4,680

 CA Holding, Inc. (Collect America, Ltd.), Series A Common Stock (13)(17)
 
N/A
 
N/A
 
 Financial Services
 
25,000

 
2,500

 

 CA Holding, Inc. (Collect America, Ltd.), Series AA Common Stock (13)(17)
 
N/A
 
N/A
 
 Financial Services
 
4,294

 
429

 
208

 Caza Petroleum, Inc., Net Profits Interest (13)
 
N/A
 
N/A
 
 Oil and Gas
 

 
1,202

 
1,584

 Caza Petroleum, Inc., Overriding Royalty Interest (13)
 
N/A
 
N/A
 
 Oil and Gas
 

 
339

 
328

 Clothesline Holdings, Inc. (Angelica Corporation), Common Stock (13)
 
N/A
 
N/A
 
 Healthcare
 
6,000

 
6,000

 
1,600

 Explorer Coinvest, LLC (Booz Allen), Common Stock (13)(17)
 
N/A
 
N/A
 
 Business Services
 
295

 
2,259

 
6,423

 Garden Fresh Restaurant Holdings, LLC., Common Stock (13)
 
N/A
 
N/A
 
 Restaurants
 
50,000

 
5,000

 

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Common Stock (13)
 
N/A
 
N/A
 
 Education
 
17,500

 
175

 

 JV Note Holdco, LLC (DSI Renal, Inc.), Common Equity / Interest (13)
 
N/A
 
N/A
 
 Healthcare
 
9,303

 
85

 

 Pelican Energy, LLC, Net Profit Interest (13)(17)
 
N/A
 
N/A
 
 Oil and Gas
 
1,048,811

 
1,050

 
1,245

 RC Coinvestment, LLC (Ranpak Corp.), Common Stock (13)
 
N/A
 
N/A
 
 Packaging
 
50,000

 
5,000

 
9,750

 Sorenson Communications Holdings, LLC, Class A Common Stock (13)
 
N/A
 
N/A
 
 Consumer Products
 
587

 

 
71

 Univar, Inc., Common Stock (13)
 
N/A
 
N/A
 
 Distribution
 
900,000

 
9,000

 
9,040

 Varietal Distribution Holdings, LLC, Class A Common Unit (13)
 
N/A
 
N/A
 
 Distribution
 
28,028

 
28

 

Total Common Equity/Interests
 
$
37,406

 
$
35,549


See notes to financial statements.
14

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except warrants)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS—138.0% (18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Warrants
 
Cost
 
Fair
Value (1)
Warrants—0.5%
 CA Holding, Inc. (Collect America, Ltd.), Common Stock Warrants (13)(17)
 
N/A
 
N/A
 
 Financial Services
 
7,961

 
$
8

 
$

 Energy & Exploration Partners, Inc., Common Stock Warrants (13)
 
N/A
 
N/A
 
 Oil and Gas
 
60,778

 
2,374

 
1,075

 Fidji Luxco (BC) S.C.A., Common Stock Warrants (2)(13)(17)
 
N/A
 
N/A
 
 Electronics
 
18,113

 
182

 
4,646

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Class A-1 Preferred Stock Warrants (13)
 
N/A
 
N/A
 
 Education
 
45,947

 
459

 

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Class B-1 Preferred Stock Warrants (13)
 
N/A
 
N/A
 
 Education
 
104,314

 
1,043

 

 Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Common Stock Warrants (13)
 
N/A
 
N/A
 
 Education
 
9,820

 
98

 

 Osage Exploration & Development, Inc., Common Stock Warrants (13)(17)
 
N/A
 
N/A
 
 Oil and Gas
 
1,496,843

 

 
814

 Spotted Hawk Development, LLC, Common Stock Warrants (13)
 
N/A
 
N/A
 
 Oil and Gas
 
54,545

 
852

 
4,236

Total Warrants
 
$
5,016

 
$
10,771

TOTAL EQUITY
 
$
42,422

 
$
46,320

Total Investments in Non-Controlled/ Non-Affiliated Investments
 
$
2,862,751

 
$
2,848,449


See notes to financial statements.
15

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
September 30, 2014
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/AFFILIATED
INVESTMENTS—7.5%(4)(18)
 
Interest Rate
 
Maturity Date
 
Industry
 
Par
Amount (12)
 
Cost
 
Fair
Value (1)
STRUCTURED PRODUCTS AND OTHER—7.1%
 Golden Bear Warehouse LLC, Equity (3)(17)
 
N/A
 
N/A
 
 Diversified Investment Vehicle
 
$
965

 
$
965

 
$

 Golden Hill CLO I, LLC, Equity (3)(17)
 
N/A
 
N/A
 
 Diversified Investment Vehicle
 
31,349

 
31,883