AINV-2013.12.31-10Q
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 December 31, 2013
¨    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 February 6, 2014 was 224,741,351.
 
 
 
 


Table of Contents

APOLLO INVESTMENT CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2013
TABLE OF CONTENTS
 
 
 
PAGE  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2

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
(in thousands, except per share amounts)
 
 
December 31, 2013 (unaudited)
 
March 31, 2013
Assets
 
 
 
Non-controlled/non-affiliated investments, at fair value (cost—$2,620,699 and $2,550,091, respectively)
$
2,643,893

 
$
2,414,307

Non-controlled/affiliated investments, at fair value (cost—$164,914 and $124,006, respectively)
156,038

 
125,674

Controlled investments, at fair value (cost—$394,787 and $345,204, respectively)
383,680

 
310,418

Total investments
3,183,611

 
2,850,399

 
 
 
 
Cash
12,612

 
3,902

Foreign currency (cost—$2,211 and $2,293, respectively)
2,235

 
2,295

Receivable for investments sold
99,600

 
5,713

Interest receivable
40,626

 
51,990

Dividends receivable
6,848

 
2,703

Deferred financing costs
33,171

 
26,990

Prepaid expenses and other assets
997

 
320

Total assets
$
3,379,700

 
$
2,944,312

 
 
 
 
Liabilities
 
 
 
Debt (see notes 8 & 11)
$
1,261,292

 
$
1,156,067

Payable for investments purchased
99,134

 
26,021

Dividends payable
44,948

 
40,578

Management and performance-based incentive fees payable (see note 3)
29,344

 
26,509

Interest payable
14,150

 
12,012

Accrued administrative expenses
1,315

 
2,219

Other liabilities and accrued expenses
4,178

 
3,517

Total liabilities
$
1,454,361

 
$
1,266,923

 
 
 
 
Net Assets
 
 
 
Common stock, par value $.001 per share, 400,000,000 and 400,000,000 common shares authorized, respectively, and 224,741,351 and 202,891,351 issued and outstanding,
respectively
$
225

 
$
203

Paid-in capital in excess of par (see note 2f)
3,115,442

 
2,933,636

Over-distributed net investment income (see note 2f)
(27,392
)
 
(44,183
)
Accumulated net realized loss (see note 2f)
(1,162,621
)
 
(1,053,080
)
Net unrealized depreciation
(315
)
 
(159,187
)
Total net assets
$
1,925,339

 
$
1,677,389

Total liabilities and net assets
$
3,379,700

 
$
2,944,312

Net asset value per share
$
8.57

 
$
8.27

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  
 
Nine months ended  
 
December 31,
2013
 
December 31,
2012
 
December 31,
2013
 
December 31,
2012
INVESTMENT INCOME:
 
 
 
 
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest
$
76,347

 
$
73,186

 
$
231,136

 
$
215,905

Dividends
1,172

 
84

 
5,866

 
4,680

Other income
2,983

 
5,121

 
9,675

 
13,577

From non-controlled/affiliated investments:
 
 
 
 
 
 
 
Interest
1,001

 
59

 
2,730

 
59

Dividends
5,964

 
2,647

 
15,528

 
4,147

From controlled investments:
 
 
 
 
 
 
 
Interest
5,767

 
1,772

 
16,345

 
4,559

Dividends
914

 
343

 
3,174

 
4,407

Other income
413

 

 
487

 
43

Total investment income
$
94,561

 
$
83,212

 
$
284,941

 
$
247,377

EXPENSES:
 
 
 
 
 
 
 
Management fees (see note 3)
$
15,932

 
$
13,855

 
$
46,044

 
$
41,539

Performance-based incentive fees (see note 3)
11,469

 
10,346

 
35,464

 
30,804

Interest and other debt expenses
17,366

 
14,651

 
50,682

 
42,757

Administrative services expense
1,410

 
1,118

 
3,616

 
2,637

Other general and administrative expenses
2,097

 
1,860

 
6,203

 
6,424

Total expenses
48,274

 
41,830

 
142,009

 
124,161

Management and performance-based incentive fees waived (see note 3)
(3,375
)
 
(698
)
 
(8,675
)
 
(2,078
)
Expense reimbursements (see note 3)
(21
)
 

 
(29
)
 

Net expenses
44,878

 
41,132

 
133,305

 
122,083

Net investment income
$
49,683

 
$
42,080

 
$
151,636

 
$
125,294

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS, DERIVATIVES AND FOREIGN CURRENCIES:
 
 
 
 
 
 
 
Net realized gain/(loss):
 
 
 
 
 
 
 
Investments and cash equivalents
$
4,205

 
$
(10,366
)
 
$
(120,551
)
 
$
(69,380
)
Foreign currencies
(538
)
 
1,061

 
2,469

 
669

Derivatives

 

 
8,541

 

Net realized gain/(loss)
3,667

 
(9,305
)
 
(109,541
)
 
(68,711
)
Net change in unrealized depreciation/appreciation:
 
 
 
 
 
 
 
Investments and cash equivalents
54,395

 
(51,309
)
 
172,000

 
(14,426
)
Foreign currencies
(2,007
)
 
(4,210
)
 
(13,128
)
 
(3,506
)
Derivatives

 

 

 

Net change in unrealized depreciation/appreciation
52,388

 
(55,519
)
 
158,872

 
(17,932
)
Net realized and unrealized gain (loss) from investments, cash equivalents, derivatives and foreign currencies
56,055

 
(64,824
)
 
49,331

 
(86,643
)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   
$
105,738

 
$
(22,744
)
 
$
200,967

 
$
38,651

EARNINGS PER SHARE—BASIC (see note 5)   
$
0.47

 
$
(0.11
)
 
$
0.90

 
$
0.19

EARNINGS PER SHARE—DILUTED (see note 5)   
$
0.45


$
(0.11
)

$
0.88


0.19

See notes to financial statements.

4

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
(in thousands, except shares)
 
 
Nine months ended December 31, 2013 (unaudited)
 
Year ended
March 31, 2013
 
Increase in net assets from operations:
 
 
 
Net investment income
$
151,636

 
$
167,360

Net realized loss
(109,541
)
 
(74,673
)
Net change in unrealized depreciation/appreciation
158,872

 
11,784

Net increase in net assets resulting from operations
200,967

 
104,471

 
 
 
 
Dividends and distributions to stockholders:
 
 
 
From net investment income
(134,845
)
 
(159,629
)
Return of capital

 
(2,684
)
Total dividends and distributions to stockholders
(134,845
)
 
(162,313
)
 
 
 
 
Capital share transactions:
 
 
 
Proceeds from shares sold
182,273

 
50,000

Less offering costs
(445
)
 

Net increase in net assets from capital share transactions
181,828

 
50,000

 
 
 
 
Total increase (decrease) in net assets:
247,950

 
(7,842
)
Net assets at beginning of period
1,677,389

 
1,685,231

Net assets at end of period
$
1,925,339

 
$
1,677,389

 
 
 
 
Capital share activity:
 
 
 
Shares sold
21,850,000

 
5,847,953

Net increase in capital share activity
21,850,000

 
5,847,953

 See notes to financial statements.
 

5

Table of Contents

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
 
 
Nine months ended December 31,
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net increase in net assets resulting from operations
$
200,967

 
$
38,651

Adjustments to reconcile net increase:
 
 
 
PIK interest and dividends
(21,008
)
 
(15,012
)
Net amortization on investments
(25,201
)
 
(18,051
)
Amortization of deferred financing costs
5,497

 
7,089

Increase from foreign currency transactions
2,975

 
940

Net change in unrealized appreciation/depreciation on investments, cash equivalents, derivatives and foreign currencies
(158,872
)
 
17,932

Net realized loss on investments, cash equivalents, derivatives and foreign currencies
109,541

 
68,711

Changes in operating assets and liabilities:
 
 
 
Purchase of investments
(1,830,368
)
 
(1,109,290
)
Proceeds from purchase of derivatives
4,156

 

Proceeds from disposition of derivatives
4,385

 

Proceeds from disposition of investments and cash equivalents
1,594,910

 
1,108,555

Increase in receivable for investments sold
(93,887
)
 
(16,522
)
Decrease in interest receivable
11,364

 
11,460

(Increase) decrease in dividends receivable
(4,145
)
 
2,897

(Increase) decrease in prepaid expenses and other assets
(677
)
 
197

Increase in payable for investments purchased
73,113

 
4,000

Increase in management and performance-based incentive fees payable
2,835

 
811

Increase in interest payable
2,138

 
1,976

Decrease in accrued administrative expenses
(904
)
 
(2,035
)
Increase (decrease) in other liabilities and accrued expenses
661

 
(209
)
Net cash provided by (used in) operating activities
$
(122,520
)
 
$
102,100

 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from the issuance of common stock
$
182,273

 
$
50,000

Offering costs from the issuance of common stock
(445
)
 

Dividends paid in cash
(130,475
)
 
(120,565
)
Proceeds from debt
1,609,313

 
852,939

Payments on debt
(1,517,840
)
 
(825,063
)
Deferred financing costs paid
(11,678
)
 
(18,400
)
Net cash provided by (used in) financing activities
$
131,148

 
$
(61,089
)
 
 
 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
$
8,628

 
$
41,011

Effect of exchange rates on cash balances
22

 
1

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   
$
6,197

 
$
2,678

CASH AND CASH EQUIVALENTS, END OF PERIOD   
$
14,847

 
$
43,690

 
  
See notes to financial statements.

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Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited)
December 31, 2013
(in thousands)
 
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS —137.3% 
 
Industry 
 
Par Amount* 
 
Cost
 
Fair
Value (1)
CORPORATE DEBT—127.9%
 
 
 
 
 
 
 
 
SECURED DEBT—74.3%
 
 
 
 
 
 
 
 
1st Lien Secured Debt—35.6%
 
 
 
 
 
 
 
 
Archroma, L+825, 10/1/18 ‡
 
Chemicals
 
$
35,511

 
$
34,819

 
$
35,422

Avanti Communications Group PLC, 10.00%, 10/1/19 t
 
Telecommunications
 
11,000

 
11,000

 
11,468

Avaya, Inc., 9.00%, 4/1/19 t  
 
Telecommunications
 
6,973

 
7,134

 
7,304

Aveta, Inc., L+825, 12/12/17
 
Healthcare
 
61,623

 
60,087

 
62,123

Caza Petroleum Inc., L+1000, 5/23/17
 
Oil & Gas
 
35,000

 
33,892

 
33,548

Charming Charlie LLC, L+800, 12/18/19
 
Retail
 
11,615

 
11,441

 
11,441

Delta Educational Systems, Inc., 16.00% (8.00% Cash/8.00% PIK), 12/11/16
 
Education
 
5,327

 
5,327

 
5,327

Endeavour Energy UK Limited, 9.75%, 12/31/15 ‡
 
Oil & Gas
 
12,500

 
12,500

 
12,500

Endeavour International Corp., 12.00%, 3/1/18 †‡
 
Oil & Gas
 
14,621

 
14,147

 
15,115

Endeavour International Corp., 13.00%, 6/30/14 †‡
 
Oil & Gas
 
30,000

 
30,320

 
30,825

Evergreen Tank Solutions, Inc., L+800, 9/28/18 †
 
Containers,
Packaging, and
Glass
 
36,920

 
36,375

 
36,874

Evergreen Tank Solutions, Inc., L+800, 9/28/18 †
 
Containers,
Packaging, and
Glass
 
5,408

 
5,408

 
5,401

Magnetation, LLC, 11.00%, 5/15/18 t   
 
Mining
 
25,750

 
25,903

 
28,582

Maxus Capital Carbon SPE I, LLC (Skyonic Corp.), 13.00%, 9/18/19
 
Chemicals
 
60,000

 
60,000

 
60,000

Miller Energy Resources, Inc., 18.00% (15.00% Cash/3.00% PIK Option), 6/29/17 †
 
Oil & Gas
 
55,307

 
55,307

 
58,625

Miller Energy Resources, Inc., 9.00%, 6/29/17 †
 
Oil & Gas
 
20,000

 
20,000

 
20,800

Molycorp, Inc., 10.00%, 6/1/20 ‡
 
Diversified Natural
Resources,
Precious Metals
and Minerals
 
40,268

 
39,809

 
40,067

New Publishing Holdings, LLC (F&W Media), L+650, 6/30/19
 
Printing &
Publishing
 
15,920

 
14,720

 
15,363

Osage Exploration & Development, Inc., L+1500, 4/27/15 ‡
 
Oil & Gas
 
20,000

 
19,701

 
20,000

Panda Sherman Power, LLC, L+750, 9/14/18
 
Energy
 
15,000

 
14,813

 
15,450

Panda Temple Power, LLC, L+1000, 7/17/18
 
Energy
 
25,500

 
25,081

 
26,265

Pelican Energy, LLC, 10.00% (7.00% Cash / 3.00% PIK), 12/31/18 ‡
 
Oil & Gas
 
16,455

 
15,881

 
16,784

Reichhold Holdings International B.V., L+975, 12/19/16 ‡
 
Financial Services
 
22,500

 
22,500

 
22,500

Spotted Hawk Development LLC, 14.00% (13.00% Cash/ 1.00% PIK), 6/30/16 ‡
 
Oil & Gas
 
24,247

 
23,597

 
23,556

Sunrun Solar Owner IX, LLC, 9.079%, 12/31/24
 
Energy
 
3,671

 
3,510

 
3,500

Travel Leaders Group, LLC, L+600, 12/5/18
 
Business Services
 
19,600

 
18,436

 
19,355

UniTek Global Services Inc., (Revolver) L+925, 4/15/16
 
Telecommunications
 
48,054

 
48,054

 
48,054

Total 1st Lien Secured Debt   
 
 
 
 
 
$
669,762

 
$
686,249

See notes to financial statements.

7

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS —137.3% 
 
Industry
 
Par Amount*
 
Cost
 
Fair
Value (1)
2nd Lien Secured Debt—39.1%
 
 
 
 
 
 
 
 
Active Network, Inc., L+850, 11/15/21
 
Business Services
 
$
25,000

 
$
24,876

 
$
25,281

Allied Security Holdings, LLC, L+825, 2/2/18
 
Business Services
 
31,000

 
30,793

 
31,349

Ardent Medical Services, Inc., L+950, 1/2/19
 
Healthcare
 
12,000

 
11,727

 
12,165

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

 
7,847

 
8,020

Bennu Oil & Gas, LLC, L+900, 11/1/18
 
Oil & Gas
 
12,098

 
11,992

 
12,219

BJ's Wholesale Club, Inc, L+750, 3/26/20
 
Retail
 
20,000

 
19,901

 
20,463

Brock Holdings III, Inc., L+825, 3/16/18
 
Environmental
Services
 
19,500

 
19,233

 
19,866

Confie Seguros Holding II Co., L+900, 5/8/19
 
Insurance
 
27,344

 
27,086

 
27,617

Consolidated Precision Products Corp., L+775, 4/30/21
 
Aerospace & Defense
 
8,940

 
8,896

 
9,108

Del Monte Foods Co, L+725, 7/26/21
 
Beverage, Food & Tobacco
 
15,140

 
14,989

 
15,348

Deltek, Inc., L+875, 10/10/19
 
Business Services
 
27,273

 
27,015

 
27,682

Digital Insight Corporation, L+775, 8/1/20
 
Business Services
 
7,820

 
7,743

 
7,986

Garden Fresh Restaurant Corp., 7.25% PIK, 1/1/19 †
 
Restaurants
 
7,525

 
5,410

 
5,117

Garden Fresh Restaurant Corp., 14.50% PIK, 1/1/19 †
 
Restaurants
 
33,305

 
31,044

 
29,641

GCA Services Group, Inc., L+800, 11/1/20
 
Diversified Service
 
22,838

 
22,942

 
23,194

Grocery Outlet Inc., L+925, 6/17/19
 
Grocery
 
8,674

 
8,521

 
8,847

HD Vest Inc., L+800, 6/18/19 ‡
 
Financial Services
 
9,396

 
9,287

 
9,302

Healogics, Inc., L+800, 2/5/20
 
Healthcare
 
10,000

 
10,113

 
10,225

Insight Pharmaceuticals, LLC, L+1175, 8/25/17
 
Consumer Products
 
15,448

 
15,232

 
15,217

Kronos, Inc., L+850, 4/30/20
 
Business Services
 
76,920

 
75,985

 
79,997

Learfield Communications, Inc., L+775, 10/8/21
 
Media
 
15,000

 
14,852

 
15,375

Ranpak Corp., L+725, 4/23/20
 
Packaging
 
22,000

 
21,795

 
22,660

River Cree Enterprises LP, 11.00%, 1/20/21 t
 
Hotels, Motels, Inns & Gaming
 
CAD
35,000

 
32,996

 
34,176

Sedgwick Holdings, Inc., L+700, 12/12/18
 
Business Services
 
$
15,225

 
15,154

 
15,510

SESAC Holdco II LLC, L+875, 7/12/19
 
Broadcasting &
Entertainment
 
10,750

 
10,882

 
11,019

Sprint Industrial Holdings, LLC, L+1000, 11/14/19
 
Containers,
Packaging, and
Glass
 
14,163

 
13,921

 
14,305

SquareTwo Financial Corp. (Collect America, Ltd.), 11.625%, 4/1/17 ‡
 
Financial Services
 
51,079

 
49,713

 
53,218

Transfirst Holdings Inc., L+975, 6/27/18
 
Financial Services
 
64,750

 
63,258

 
65,681

TriNet HR Corporation, L+775, 2/20/21
 
Business Services
 
7,130

 
6,992

 
7,170

U.S. Renal Care, Inc., L+900, 1/3/20 †
 
Healthcare
 
11,927

 
11,982

 
12,151

U.S. Renal Care, Inc., L+750, 7/3/20 †
 
Healthcare
 
10,100

 
9,904

 
10,264

Valerus Compression Services, LP, 11.50%, 3/26/18
 
Manufacturing
 
40,000

 
40,000

 
41,200

Vertafore, Inc., L+825, 10/29/17
 
Business Services
 
50,436

 
50,152

 
51,445

Total 2nd Lien Secured Debt
 
 
 
 
 
$
732,233

 
$
752,818

See notes to financial statements.

8

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS —137.3% 

Industry 

Par
Amount*
 

Cost 

Fair
Value (1)
 
Unfunded Revolver Obligations— (0.4)%
 
 
 
 
 
 
 
 
Advantage Sales & Marketing, Inc., (Revolver) L+400, 12/17/15 (8)
 
Grocery
 
$
5,500

 
$

 
$
(413
)
Avaya, Inc., (Revolver) L+275, 10/26/16 (8)
 
Telecommunications
 
36,785

 
(5,702
)
 
(3,035
)
BMC Software Inc., (Revolver), L+400, 9/10/18 (8)
 
Business Services
 
30,760

 
(3,677
)
 
(2,153
)
Confie Seguros Holding II Co., (Revolver), L+525, 11/9/17 (8)
 
Insurance
 
4,500

 
(450
)
 
(495
)
Reichhold Holdings International B.V., (Revolver) L+600, 12/19/16 ‡
 
Financial Services
 
12,500

 

 

Salix Pharmaceuticals, Ltd., (Revolver) L+300, 1/2/19 ‡(8)
 
Healthcare
 
25,000

 
(2,000
)
 
(2,000
)
UniTek Global Services Inc., (Revolver) L+925, 4/15/16
 
Telecommunications
 
26,946

 

 

Total Unfunded Revolver Obligations
 
 
 
 
 
$
(11,829
)
 
$
(8,096
)
TOTAL SECURED DEBT
 
 
 
 
 
$
1,390,166

 
$
1,430,971

 
 
 
 
 
 
 
 
 
UNSECURED DEBT—53.6%
 
 
 
 
 
 
 
 
Allied Nevada Gold Corp., 8.75%, 6/1/19 t‡ 
 
Diversified Natural
Resources, Precious
Metals and Minerals
 
CAD
16,981

 
$
15,350

 
$
10,229

Altegrity, Inc., 0.00%, 8/2/16 †
 
Diversified Service
 
$
3,545

 
2,584

 
1,276

Altegrity, Inc., 12.00%, 11/1/15 †t  
 
Diversified Service
 
44,000

 
44,000

 
40,095

American Tire Distributors, Inc., 11.50%, 6/1/18
 
Distribution
 
25,000

 
25,000

 
25,670

BCA Osprey II Limited (British Car Auctions), 12.50% PIK,
8/17/17 †‡ 
 
Transportation
 
£
20,948

 
33,142

 
34,764

BCA Osprey II Limited (British Car Auctions), 12.50% PIK,
8/17/17 †‡ 
 
Transportation
 
12,721

 
17,473

 
17,564

Ceridian Corp., 12.25% Cash or 13.00% PIK, 11/15/15 †
 
Diversified Service
 
$
14,420

 
14,420

 
14,555

Ceridian Corp., 11.25%, 11/15/15 †
 
Diversified Service
 
35,800

 
35,800

 
36,136

Ceridian Corp., 11.00%, 3/15/21 †t    
 
Diversified Service
 
34,000

 
34,000

 
39,100

CRC Health Corp., 10.75%, 2/1/16
 
Healthcare
 
13,000

 
13,088

 
13,073

Delta Educational Systems, Inc., 16.00% (10.00% Cash/ 6.00% PIK), 5/12/17
 
Education
 
21,361

 
21,010

 
20,218

Denver Parent Corp.(Venoco), 12.25%, 8/15/18 t    
 
Oil & Gas
 
25,000

 
24,363

 
24,563

Energy & Exploration Partners, Inc., 15.00%, 4/8/18 †
 
Oil & Gas
 
25,000

 
22,304

 
23,823

Energy & Exploration Partners, Inc., 15.00%, 12/12/18 †
 
Oil & Gas
 
4,464

 
4,256

 
4,254

Exova Limited, 10.50%, 10/15/18 †‡t      
 
Business Services
 
£
18,000

 
27,202

 
32,347

Exova Limited, 10.50%, 10/15/18 †‡
 
Business Services
 
4,655

 
6,194

 
8,365

First Data Corp., 11.25%, 1/15/21 †t    
 
Financial Services
 
$
67,000

 
66,977

 
74,161

First Data Corp., 10.625%, 6/15/21 †t     
 
Financial Services
 
10,000

 
10,000

 
10,941

First Data Corp., 11.25%, 3/31/16 †
 
Financial Services
 
17,941

 
17,105

 
18,019

First Data Corp., 12.625%, 1/15/21 †
 
Financial Services
 
5,000

 
5,642

 
5,888

inVentiv Health, Inc., 11.00%, 8/15/18 t 
 
Healthcare
 
146,000

 
146,000

 
129,757

Lonestar Intermediate Super Holdings, LLC (Asurion), L+950,
9/2/19
 
Insurance
 
55,125

 
55,630

 
57,054

Niacet Corporation, 13.00%, 8/28/18
 
Chemicals
 
12,500

 
12,500

 
12,500

PetroBakken Energy Ltd. (Lightstream Resources Ltd), 8.625%, 2/1/20 ‡t    
 
Oil & Gas
 
59,082

 
59,800

 
60,042

Prospect Holding Co LLC, 10.25%, 10/1/18 ‡t  
 
Financial Services
 
7,500

 
7,129

 
7,087


See notes to financial statements.


9

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS —137.3% 
 
Industry
 
Par
Amount*
 
Cost
 
Fair
Value (1)
UNSECURED DEBT (continued)—53.6%
 
 
 
 
 
 
 
 
Symbion Inc., 11.00%, 8/23/15
 
Healthcare
 
$
8,508

 
$
8,523

 
$
8,550

Tervita Corporation, 10.875%, 2/15/18 t
 
Environmental Services
 
26,000

 
25,150

 
26,390

U.S. Security Associates Holdings, Inc., 11.00%, 7/28/18
 
Business Services
 
135,000

 
135,000

 
138,510

Univar Inc., 10.50%, 6/30/18
 
Distribution
 
20,000

 
20,000

 
20,000

Varietal Distribution, 10.75%, 6/30/17 †t 
 
Distribution
 
11,574

 
15,098

 
16,267

Varietal Distribution, 10.75%, 6/30/17 †t 
 
Distribution
 
$
22,204

 
21,890

 
22,648

Venoco, Inc., 8.875%, 2/15/19
 
Oil & Gas
 
38,050

 
38,473

 
37,859

Wind Acquisition Holdings, 12.25% PIK, 7/15/17 ‡t    
 
Telecommunications
 
37,500

 
38,413

 
39,813

TOTAL UNSECURED DEBT   
 
 
 
 
 
$
1,023,516

 
$
1,031,518

TOTAL CORPORATE DEBT   
 
 
 
 
 
$
2,413,682

 
$
2,462,489

 
 
 
 
 
 
 
 
 
STRUCTURED PRODUCTS AND OTHER—4.8%
 
 
 
 
 
 
 
 
Craft CLO Ltd., L+925, 4/17/20 ‡
 
Diversified
Investment Vehicle
 
$
20,000

 
$
20,000

 
$
20,171

Dark Castle Holdings, LLC
 
Media
 
32,415

 
9,306

 
10,058

JP Morgan Chase & Co, Credit-Linked Note, L+1225, 12/20/21 ‡
 
Diversified
Investment Vehicle
 
43,250

 
43,250

 
43,250

Renaissance Umiat, LLC, ACES, Tax Receivable ****‡
 
Oil & Gas
 

 
7,977

 
8,816

Westbrook CLO Ltd., Series 2006-1A, Class E, L+370, 12/20/20 ‡
 
Diversified
Investment Vehicle
 
11,000

 
7,583

 
10,395

TOTAL STRUCTURED PRODUCTS AND OTHER      
 
 
 
 
 
$
88,116

 
$
92,690

 
 
 
 
 
 
 
 
 
PREFERRED EQUITY—2.1%
 
 
 
Shares
 
 
 
 
CA Holding, Inc. (Collect America, Ltd.) Series A **‡
 
Financial Services
 
7,961

 
$
788

 
$
1,592

Crowley Holdings, Series A, 12.00% (10.00% Cash / 2.00% PIK)

Cargo Transport

22,500


22,500


22,500

Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 13.50% PIK, ***
 
Education
 
12,360

 
27,686

 
13,192

Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 12.50% PIK ***
 
Education
 
332,500

 
6,863

 

Varietal Distribution Holdings, LLC, Class A, 8.00% PIK
 
Distribution
 
3,097

 
5,185

 
2,976

TOTAL PREFERRED EQUITY   
 
 
 
 
 
$
63,022

 
$
40,260


See notes to financial statements.














10

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED INVESTMENTS —137.3% 
 
Industry 
 
Shares
 
Cost 
 
Fair 
Value (1)
EQUITY—2.5%
 
 
 
 
 
 
 
 
Common Equity/Interests—1.8%
 
 
 
 
 
 
 
 
Accelerate Parent Corp. (American Tire Distributors) **
 
Distribution
 
3,125,000

 
$
3,125

 
$
4,340

AHC Mezzanine, LLC (Advanstar) **
 
Media
 

 
1,063

 
590

Altegrity Holding Corp. **
 
Diversified Service
 
353,399

 
13,797

 
338

CA Holding, Inc. (Collect America, Ltd.) Series A **‡
 
Financial Services
 
25,000

 
2,500

 
1,731

CA Holding, Inc. (Collect America, Ltd.) Series AA **‡
 
Financial Services
 
4,294

 
429

 
859

Caza Petroleum, Inc., Net Profits Interest **
 
Oil & Gas
 

 
940

 
886

Caza Petroleum, Inc., Overriding Royalty Interest **
 
Oil & Gas
 

 
265

 
266

Clothesline Holdings, Inc. (Angelica Corporation) **
 
Healthcare
 
6,000

 
6,000

 
3,348

Explorer Coinvest, LLC (Booz Allen) **‡
 
Business Services
 
373

 
2,856

 
6,645

Garden Fresh Restaurant Holding, LLC **
 
Restaurants
 
50,000

 
5,000

 

Gryphon Colleges Corporation (Delta Educational Systems, Inc.) **
 
Education
 
17,500

 
175

 

GS Prysmian Co-Invest L.P. (Prysmian Cables & Systems) (2,3) **‡
 
Manufacturing
 

 

 
28

JV Note Holdco, LLC (DSI Renal Inc.) **
 
Healthcare
 
9,303

 
85

 

Pelican Energy, LLC, Net Profits Interest **‡
 
Oil & Gas
 

 
551

 
286

RC Coinvestment, LLC (Ranpak Corp.) **
 
Packaging
 
50,000

 
5,000

 
7,060

Sorenson Communications Holdings, LLC, Class A **
 
Consumer Products
 
454,828

 
46

 
230

Univar, Inc. **
 
Distribution
 
900,000

 
9,000

 
8,480

Varietal Distribution Holdings, LLC, Class A **
 
Distribution
 
28,028

 
28

 

Total Common Equity/Interests   
 
 
 
 
 
$
50,860

 
$
35,087

 
 
 
 
 
 
 
 
 
Warrants—0.7%
 
 
 
Warrants 
 
 
 
 
CA Holding, Inc. (Collect America, Ltd.), Common **‡
 
Financial Services
 
7,961

 
$
8

 
$

Energy & Exploration Partners, Inc., Common **
 
Oil & Gas
 
48,077

 
2,232

 
2,021

Energy & Exploration Partners, Inc., Common **

Oil & Gas

5,684


76


80

Fidji Luxco (BC) S.C.A., Common (FCI) (2) **‡
 
Electronics
 
24,862

 
250

 
6,956

Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Common **
 
Education
 
9,820

 
98

 

Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class A-1 Preferred **
 
Education
 
45,947

 
460

 

Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class B-1 Preferred **
 
Education
 
104,314

 
1,043

 

Osage Exploration & Development, Inc., Common **‡
 
Oil & Gas
 
1,496,843

 

 
1,171

Spotted Hawk Development LLC, Common **‡
 
Oil & Gas
 
54,545

 
852

 
3,139

Total Warrants   
 
 
 
 
 
$
5,019

 
$
13,367

TOTAL EQUITY   
 
 
 
 
 
$
55,879

 
$
48,454

Total Investments in Non-Controlled/ Non-Affiliated Investments   
 
 
 
 
 
$
2,620,699

 
$
2,643,893


See notes to financial statements.
 

11

Table of Contents

 APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/ AFFILIATED
INVESTMENTS—8.1% (4)
 
Industry

Par
Amount*

Cost

Fair
Value (1)
CORPORATE DEBT—0.9%
 
 
 
 
 
 
 
 
SECURED DEBT—0.9%
 
 
 
 
 
 
 
 
1st Lien Secured Debt—0.9%
 
 
 
 
 
 
 
 
Aventine Renewable Energy Holdings, Inc., 15.00% (12.00% Cash/3.00% PIK), 9/23/16
 
Chemicals
 
$
4,031

 
$
3,915

 
$
3,476

Aventine Renewable Energy Holdings, Inc., 10.50% Cash or 15.00% PIK, 9/22/17
 
Chemicals
 
13,559

 
16,881

 
8,241

Aventine Renewable Energy Holdings, Inc., 25.00% PIK, 9/23/16
 
Chemicals
 
5,126

 
5,126

 
5,126

Total 1st Lien Secured Debt
 
 
 
 
 
$
25,922

 
$
16,843

TOTAL CORPORATE DEBT
 
 
 
 
 
$
25,922

 
$
16,843

 
 
 
 
 
 
 
 
 
STRUCTURED PRODUCTS AND OTHER—7.2%
 
 
 
 
 
 
 
 
Highbridge Loan Management 3-2014, Ltd, Class D Notes, L+500, 1/18/25 †‡¢
 
Diversified
Investment Vehicle
 
$
5,000

 
$
4,633

 
$
4,633

Highbridge Loan Management 3-2014, Ltd, Class E Notes, L+600, 1/18/25 †‡¢

Diversified
Investment Vehicle

2,485


2,261


2,261

Highbridge Loan Management 3-2014, Ltd, Subordinated Notes, 1/18/25 †‡¢

Diversified
Investment Vehicle

8,163


7,527


7,527

Jamestown CLO I LTD, Subordinated
Notes, 11/5/24 ‡¢
 
Diversified
Investment Vehicle
 
15,075

 
12,384

 
13,599

MCF CLO I LLC, Class E Notes, L+575, 4/20/23 †‡¢
 
Diversified
Investment Vehicle
 
13,000

 
12,317

 
12,357

MCF CLO I LLC, Membership Interests ‡¢

Diversified
Investment Vehicle
 
38,918

 
38,320

 
40,280

MCF CLO III LLC, Class E Notes L+445, 1/20/24 †‡¢
 
Diversified
Investment Vehicle
 
12,750

 
11,325

 
11,325

MCF CLO III LLC, Membership Interests, 1/20/24 ‡¢

Diversified
Investment Vehicle
 
39,183

 
39,183

 
39,183

Slater Mill Loan Fund LP, LP Certificates ‡¢
 
Diversified
Investment Vehicle
 
8,375

 
6,359

 
7,405

TOTAL STRUCTURED PRODUCTS AND OTHER   
 
 
 
 
 
$
134,309

 
$
138,570

 
 
 
 
 
 
 
 
 
EQUITY—0.0%
 
 
 
 
 
 
 
 
Common Equity/Interests—0.0%
 
 
 
Shares 
 
 
 
 
Aventine Renewable Energy Holdings, Inc. **
 
Chemicals
 
262,036

 
$
688

 
$
92

Total Common Equity/Interests   
 
 
 
 
 
$
688

 
$
92

 
 
 
 
 
 
 
 
 
Warrants—0.0%
 
 
 
Warrants
 
 
 
 
Aventine Renewable Energy Holdings, Inc., Common **
 
Chemicals
 
1,521,193

 
$
3,995

 
$
533

Total Warrants   
 
 
 
 
 
$
3,995

 
$
533

TOTAL EQUITY   
 
 
 
 
 
$
4,683

 
$
625

Total Investments in Non-Controlled/Affiliated Investments   
 
 
 
 
 
$
164,914

 
$
156,038

 

See notes to financial statements.


12

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands, except shares)
INVESTMENTS IN CONTROLLED INVESTMENTS—19.9% (5)
 
Industry
 
Par
Amount*
 
Cost
 
Fair
Value (1)
CORPORATE DEBT—8.9%
 
 
 
 
 
 
 
 
SECURED DEBT—8.9%
 
 
 
 
 
 
 
 
1st Lien Secured Debt —8.4%
 
 
 
 
 
 
 
 
Merx Aviation Finance Holdings, LLC, (Revolver) 12.00%, 10/31/18
 
Aviation
 
$
161,834

 
$
161,834


$
161,834

Total 1st Lien Secured Debt   
 
 
 
 
 
$
161,834


$
161,834

 
 
 
 
 
 
 
 
 
Unfunded Revolver Obligation —0.0%
 
 
 
 
 
 
 
 
Merx Aviation Finance Holdings, LLC, (Revolver) 12.00%, 10/31/18
 
Aviation
 
$
138,166

 
$

 
$

Total Unfunded Revolver Obligation
 
 
 
 
 
$

 
$

 
 
 
 
 
 
 
 
 
2nd Lien Secured Debt—0.5%
 
 
 
 
 
 
 
 
LVI Services, Inc., 12.50%, 3/6/18
 
Environmental
Services
 
$
10,000

 
$
9,836

 
$
10,000

Total 2nd Lien Secured Debt
 
 
 
 
 
$
9,836

 
$
10,000

TOTAL SECURED DEBT

 



$
171,670


$
171,834

TOTAL CORPORATE DEBT
 
 
 
 
 
$
171,670


$
171,834

 
 
 
 
 
 
 
 
 
PREFERRED EQUITY—2.6%
 
 
 
Shares 
 
 
 
 
Playpower Holdings, Inc., Series A, 14.00% PIK, 11/15/20

Leisure

49,178


49,178


49,178

TOTAL PREFERRED EQUITY
 
 
 
 
 
$
49,178

 
$
49,178

 
 
 
 
 
 
 
 
 
EQUITY—8.4%
 
 
 
 
 
 
 
 
Common Equity/Interests—8.4%
 
 
 
 
 
 
 
 
Generation Brands Holdings, Inc. (Quality Home Brands) **
 
Home and Office Furnishings and Durable Consumer Products
 
9,007

 
$

 
$
1,891

Generation Brands Holdings, Inc. Series H (Quality Home Brands) **
 
Home and Office Furnishings and Durable Consumer Products
 
7,500

 
2,297

 
1,575

Generation Brands Holdings, Inc. Series 2L (Quality Home Brands) **
 
Home and Office Furnishings and Durable Consumer Products
 
36,700

 
11,242

 
7,705

LVI Parent Corp. (LVI Services, Inc.) **
 
Environmental
Services
 
14,981

 
16,096

 
33,483

Merx Aviation Finance Holdings, LLC **
 
Aviation
 
689

 
66,582

 
72,027

Playpower Holdings, Inc. **
 
Leisure
 
1,000

 
77,722

 
45,987

Total Common Equity/Interests   
 
 
 
 
 
$
173,939

 
$
162,668

TOTAL EQUITY   
 
 
 
 
 
$
173,939

 
$
162,668

Total Investments in Controlled Investments   
 
 
 
 
 
$
394,787

 
$
383,680

Total Investments—165.3% (6,7)   
 
 
 
 
 
$
3,180,400


$
3,183,611

Liabilities in Excess of Other Assets—(65.4%)   
 
 
 
 
 
 
 
(1,258,272
)
Net Assets—100.0%   
 
 
 
 
 
 
 
$
1,925,339

______________
(1)
Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2).
(2)
Denominated in foreign currency. GS Prysmian Co-Invest L.P. and Fidji Luxco (BC) S.C.A. are EUR denominated investments.
(3)
The Company is the sole Limited Partner in GS Prysmian Co-Invest L.P.
See notes to financial statements.

13

Table of Contents

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (unaudited) (continued)
December 31, 2013
(in thousands) 

(4)
Denotes investments in which we are an “Affiliated Person”, as defined in the 1940 Act, due to owning or holding the power to vote 5% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of March 31, 2013 and December 31, 2013 along with transactions during the nine months ended December 31, 2013 in these Affiliated investments are as follows:
Name of Issue 
Fair Value at March 31, 2013
Gross
Additions (Cost)*
Gross
Reductions (Cost)**
 
Change in Unrealized Gain (Loss)
Fair Value at December 31, 2013
Net Realized Gain (Loss)
Interest/Dividend/
Other Income
 
Aventine Renewable Energy Holdings, Inc., 15.00% (12.00% Cash/3.00% PIK), 9/23/16
$
3,866

$
65

$

$
(455
)
$
3,476

$

$
430

Aventine Renewable Energy Holdings, Inc., 10.50% Cash or 15.00% PIK, 9/22/17
9,682

873


(2,314
)
8,241


880

Aventine Renewable Energy Holdings, Inc., 25.00% PIK, 9/23/16
N/A

5,126



5,126


638

Aventine Renewable Energy Holdings, Inc. **
2,347


(3,995
)
1,740

92



Aventine Renewable Energy Holdings, Inc., Common **
N/A

3,995


(3,462
)
533



Highbridge Loan Management 3-2014, Ltd, Class D Notes, L+500, 1/18/25 †‡¢
N/A

4,633



4,633



Highbridge Loan Management 3-2014, Ltd, Class E Notes, L+600, 1/18/25 †‡¢
N/A

2,261



2,261



Highbridge Loan Management 3-2014, Ltd, Subordinated Notes, 1/18/25 †‡¢
N/A

7,527



7,527



Highbridge Loan, Ltd., Preference Shares**‡¢
6,174

6,655

(12,829
)



1,518

Jamestown CLO I LTD, Class C L+400, 11/5/24 †‡¢
1,109

3

(1,027
)
(85
)

71

30

Jamestown CLO I LTD, Class D L+550, 11/5/24 †‡¢
3,537

13

(3,386
)
(164
)

250

139

Jamestown CLO I LTD, Subordinated
Notes, 11/5/24 ‡¢
13,568

(34
)
(1,636
)
1,701

13,599


1,313

Kirkwood Fund II LLC, Common Interest ‡¢
43,144


(41,067
)
(2,077
)


5,923

MCF CLO I LLC, Class E Notes, L+575, 4/20/23 †‡¢
12,273

39


45

12,357


646

MCF CLO I LLC, Membership Interests ‡¢
38,918