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Form 8-K APOLLO INVESTMENT CORP For: Nov 08

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November 8, 2016 7:23 AM EST



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):  November 8 , 2016
 
Apollo Investment Corporation
(Exact Name of Registrant as Specified in Charter)
 

Maryland
 
814-00646
 
52-2439556
(State or Other
Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
9 West 57th Street,
New York, NY 10019
(Address of Principal Executive Offices) (Zip Code)
 
(212) 515-3450
(Registrant’s telephone number, including area code)
 
None
(Former Name or Former Address, if Changed Since
Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





 
Item 8.01
Other Events
On November 8, 2016, Apollo Investment Corporation issued a press release. A copy of the Registrant’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
 
 
 
 
Exhibit
Number
  
Exhibit
 
 
99.1
  
Press Release, dated November 8, 2016.





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
APOLLO INVESTMENT CORP.
 
 
 
 
 
 
By:
/s/ Joseph D. Glatt
 
 
 
Name: Joseph D. Glatt
 
 
 
Title: Secretary
Date: November 8, 2016





INDEX TO EXHIBITS
 
 
 
 
Exhibit
Number
  
Exhibit
99.1
  
Press Release, dated November 8, 2016




apolloinvestmentlogo.jpg
Apollo Investment Corporation
Reports Financial Results for the Quarter Ended September 30, 2016

Fiscal Second Quarter and Other Recent Highlights:
•
Net investment income per share for the quarter was $0.18, compared to $0.16 for the quarter ended June 30, 2016
•
Net asset value per share as of the end of the quarter was $6.95 compared to $6.90 as of June 30, 2016, a 0.7% increase
•
Declared a dividend of $0.15 per share
•
Net leverage as of the end of the quarter was 0.63 x, compared to 0.66 x as of June 30, 2016
•
Continued to make steady progress toward the successful execution of our portfolio repositioning strategy including reducing exposure to oil & gas and structured credit investments
•
Expanded the share repurchase program by $50 million in September which increased the total amount available to be repurchased to $150 million, and continued to actively repurchase stock during the quarter
New York, NY — November 8, 2016 — Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its second fiscal quarter ended September 30, 2016. The Company’s net investment income was $0.18 per share for the quarter ended September 30, 2016, compared to $0.16 per share for the quarter ended June 30, 2016. The Company’s net asset value (“NAV”) was $6.95 per share as of September 30, 2016 compared to $6.90 as of June 30, 2016.
On November 7, 2016, the Board of Directors declared a dividend of $0.15 per share, payable on January 5, 2017 to shareholders of record as of December 21, 2016.
Mr. James Zelter, Apollo Investment’s Chief Executive Officer, commented, “We continue to make steady progress toward the successful execution of the strategy that we outlined last quarter. During the period, we reduced our exposure to certain existing verticals including oil and gas and structured credit and closed two life sciences co-investment transactions. Given the competitive environment, we were disciplined investors and reduced our net leverage ratio during the period which provides us with dry powder to deploy in more proprietary asset classes when attractive opportunities become available.” Mr. Zelter continued, “During the quarter, we continued to actively repurchase our stock below NAV which is a component of our strategy to deliver value to our shareholders.”



1


FINANCIAL HIGHLIGHTS
($ in billions, except per share data)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Total assets
$
2.65

 
$
2.79

 
$
3.09

 
$
3.22

 
$
3.30

Investment portfolio (fair value)
$
2.55

 
$
2.62

 
$
2.92

 
$
3.07

 
$
3.19

Debt outstanding (1)
$
1.01

 
$
1.10

 
$
1.31

 
$
1.38

 
$
1.37

Net assets
$
1.54

 
$
1.55

 
$
1.65

 
$
1.72

 
$
1.83

Net asset value per share
$
6.95

 
$
6.90

 
$
7.28

 
$
7.56

 
$
7.83

 
 
 
 
 
 
 
 
 
 
Debt-to-equity ratio (1)
0.66
 x
 
0.71
 x
 
0.80
 x
 
0.80
 x
 
0.75 x

Net leverage ratio (1) (2)
0.63
 x
 
0.66
 x
 
0.75
 x
 
0.76
 x
 
0.73 x

___________________
(1)
Numbers for March 31, 2016 were updated due to the retrospective application of the new accounting pronouncements (ASU 2015-03 and ASU 2015-15) adopted as of April 1, 2016.
(2)
The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash, less foreign currencies, divided by net assets.

PORTFOLIO AND INVESTMENT ACTIVITY
(in millions)*
Three Months Ended September 30, 2016
 
Six Months Ended September 30, 2016
Investments made in portfolio companies
$
127.6

 
$
250.4

Investments sold
(17.9
)
 
(164.0
)
Net activity before repaid investments
109.7

 
86.4

Investments repaid
(197.1
)
 
(390.5
)
Net investment activity
$
(87.4
)
 
$
(304.1
)
 
 
 
 
Portfolio companies at beginning of period
81

 
89

Number of new portfolio companies
6

 
11

Number of exited portfolio companies
(5
)
 
(18
)
Portfolio companies at end of period
82

 
82

 
 
 
 
Number of investments in existing portfolio companies
10

 
22

____________________
* Totals may not foot due to rounding.

2


OPERATING RESULTS
(in millions)
Three Months Ended September 30, 2016
 
Six Months Ended September 30, 2016
Net investment income
$
39.5

 
$
75.6

Net realized and change in unrealized gains (losses)
1.6

 
(76.6
)
Net increase (decrease) in net assets resulting from operations
$
41.1

 
$
(1.0
)
 
 
 
 
(per share)
 
 
 
Net investment income on per average share basis
$
0.18

 
$
0.34

Net realized and change in unrealized gain (loss) per share
0.00

 
(0.34
)
Earnings per share — basic
$
0.18

 
$
0.00



3


SHARE REPURCHASE PROGRAM
In September, the Company announced that its Board of Directors expanded the Company’s stock repurchase program by $50 million which increased the total amount available to be repurchased to $150 million.
During the three months ended September 30, 2016, the Company repurchased 3,072,926 shares at a weighted average price per share of $5.95, inclusive of commissions, for a total cost of $18.3 million.
Since the end of September (1), the Company repurchased 2,215,616 shares at a weighted average price per share of $5.90 inclusive of commissions, for a total cost of $13.1 million
Since the inception of the share repurchase program (1), the Company repurchased 16,962,197 shares at weighted average price per share of $5.89 inclusive of commissions, for a total cost of $99.8 million.
____________________
(1)Through November 7, 2016.





4


CONFERENCE CALL / WEBCAST AT 10:00 AM EST ON NOVEMBER 8, 2016
The Company will host a conference call on Tuesday, November 8, 2016 at 10:00 a.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call; international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID #88541620 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Event Calendar in the Investor Relations section of our website at www.apolloic.com. Following the call you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available approximately two hours after the live call and through November 22, 2016 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID # 88541620. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of the Company’s website at www.apolloic.com.
SUPPLEMENTAL INFORMATION
The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available on the Investor Relations section of the Company’s website at www.apolloic.com.

5


Our portfolio composition and weighted average yields as of September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015 were as follows:
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Portfolio composition, at fair value:
 
 
 
 
 
 
 
 
 
Secured debt
64
%
 
65
%
 
65
%
 
67
%
 
63
%
Unsecured debt
9
%
 
9
%
 
9
%
 
9
%
 
9
%
Structured products and other
12
%
 
12
%
 
11
%
 
11
%
 
13
%
Preferred equity
3
%
 
3
%
 
3
%
 
3
%
 
5
%
Common equity/interests and warrants
12
%
 
11
%
 
12
%
 
10
%
 
10
%
Weighted average yields, at amortized cost basis, exclusive of securities on non-accrual status (1):
 
 
 
 
 
 
 
 
 
Secured debt portfolio
11.0
%
 
11.0
%
 
11.0
%
 
11.4
%
 
11.3
%
Unsecured debt portfolio
10.8
%
 
10.8
%
 
10.7
%
 
11.2
%
 
11.3
%
Total debt portfolio
11.0
%
 
11.0
%
 
11.0
%
 
11.4
%
 
11.6
%
Income-bearing investment portfolio composition, at fair value:
 
 
 
 
 
 
 
 
 
Fixed rate amount
$
1.0
 billion
 
$
1.0
 billion
 
$
1.1
 billion
 
$
1.2
 billion
 
$
1.0
 billion
Floating rate amount
$
1.1
 billion
 
$
1.1
 billion
 
$
1.2
 billion
 
$
1.3
 billion
 
$
1.5
 billion
Fixed rate, as percentage of total
48
%
 
48
%
 
47
%
 
48
%
 
42
%
Floating rate, as percentage of total
52
%
 
52
%
 
53
%
 
52
%
 
58
%
Income-bearing investment portfolio composition, at amortized cost:
 
 
 
 
 
 
 
 
 
Fixed rate amount
$
1.2
 billion
 
$
1.0
 billion
 
$
1.1
 billion
 
$
1.3
 billion
 
$
1.1
 billion
Floating rate amount
$
1.2
 billion
 
$
1.1
 billion
 
$
1.3
 billion
 
$
1.3
 billion
 
$
1.5
 billion
Fixed rate, as percentage of total
50
%
 
49
%
 
47
%
 
49
%
 
42
%
Floating rate, as percentage of total
50
%
 
51
%
 
53
%
 
51
%
 
58
%
____________________
(1)
An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.


6


APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)

 
September 30, 2016
 
March 31, 2016
 
(Unaudited)
 
 
Assets
 
 
 
Investments at fair value:
 
 
 
Non-controlled/non-affiliated investments (cost — $1,605,296 and $2,052,896, respectively)
$
1,410,698

 
$
1,790,294

Non-controlled/affiliated investments (cost — $363,985 and $216,202, respectively)
287,569

 
272,558

Controlled investments (cost — $859,936 and $829,029, respectively)
850,301

 
853,977

Total investments at fair value (cost — $2,829,217 and $3,098,127, respectively)
2,548,568

 
2,916,829

Cash
65,744

 
16,521

Foreign currencies (cost — $4,369 and $2,354, respectively)
4,368

 
2,384

Receivable for investments sold
71

 
79,625

Interest receivable
15,323

 
29,749

Dividends receivable
6,992

 
9,509

Deferred financing costs
12,447

 
14,497

Prepaid expenses and other assets
1,051

 
9,523

Total Assets
$
2,654,564

 
$
3,078,637

 
 
 
 
Liabilities
 
 
 
Debt
$
1,014,794

 
$
1,312,960

Payable for investments purchased
24,126

 
25,091

Distributions payable
33,314

 
45,231

Management and performance-based incentive fees payable
22,350

 
31,124

Interest payable
7,034

 
7,444

Accrued administrative services expense
1,412

 
2,015

Other liabilities and accrued expenses
9,596

 
9,191

Total Liabilities
$
1,112,626

 
$
1,433,056

 
 
 
 
Net Assets
$
1,541,938

 
$
1,645,581

 
 
 
 
Net Assets
 
 
 
Common stock, $0.001 par value (400,000,000 shares authorized; 221,994,770 and 226,156,496 shares issued and outstanding, respectively)
$
222

 
$
226

Paid-in capital in excess of par
3,002,583

 
3,026,922

Accumulated underdistributed net investment income
68,504

 
71,231

Accumulated net realized loss
(1,282,620
)
 
(1,288,141
)
Net unrealized loss
(246,751
)
 
(164,657
)
Net Assets
$
1,541,938

 
$
1,645,581

 
 
 
 
Net Asset Value Per Share
$
6.95

 
$
7.28



7


APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Investment Income
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest income
$
42,406

 
$
70,255

 
$
90,750

 
$
143,829

Dividend income
1,069

 
911

 
2,173

 
1,787

Other income
349

 
2,828

 
2,047

 
6,145

Non-controlled/affiliated investments:
 
 
 
 
 
 
 
Interest income
369

 
224

 
630

 
451

Dividend income
4,656

 
9,503

 
7,703

 
18,670

Other income
—

 
70

 
70

 
227

Controlled investments:
 
 
 
 
 
 
 
Interest income
17,427

 
10,629

 
34,672

 
21,183

Dividend income
2,750

 
4,000

 
7,450

 
7,731

Other income
—

 
—

 
—

 
63

Total Investment Income
$
69,026

 
$
98,420

 
$
145,495

 
$
200,086

Expenses
 
 
 
 
 
 
 
Management fees
$
13,302

 
$
16,727

 
$
27,700

 
$
34,079

Performance-based incentive fees
1,943

 
10,774

 
10,393

 
22,641

Interest and other debt expenses
14,438

 
21,764

 
31,231

 
44,200

Administrative services expense
2,642

 
1,650

 
4,168

 
3,083

Other general and administrative expenses
2,550

 
2,725

 
7,589

 
4,889

Total expenses
34,875

 
53,640

 
81,081

 
108,892

Management and performance-based incentive fees waived
(5,302
)
 
(4,722
)
 
(11,019
)
 
(9,237
)
Expense reimbursements
(84
)
 
(59
)
 
(168
)
 
(117
)
Net Expenses
$
29,489

 
$
48,859

 
$
69,894

 
$
99,538

Net Investment Income
$
39,537

 
$
49,561

 
$
75,601

 
$
100,548

Net Realized and Change in Unrealized Gains (Losses)
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
$
17,348

 
$
(34,124
)
 
$
(40,127
)
 
$
(76,785
)
Non-controlled/affiliated investments
(21,257
)
 
—

 
44,574

 
(67
)
Controlled investments
—

 
3,148

 
(191
)
 
(39,714
)
Foreign currency transactions
905

 
819

 
1,265

 
5,483

Net realized gains (losses)
(3,004
)
 
(30,157
)
 
5,521

 
(111,083
)
Net change in unrealized losses:
 
 
 
 
 
 

Non-controlled/non-affiliated investments
46,305

 
(48,094
)
 
65,026

 
(43,863
)
Non-controlled/affiliated investments
(36,007
)
 
12,916

 
(129,794
)
 
28,733

Controlled investments
(10,284
)
 
7,980

 
(34,583
)
 
34,753

Foreign currency translations
4,567

 
6,047

 
17,257

 
(4,444
)
Net change in unrealized losses
4,581

 
(21,151
)
 
(82,094
)
 
15,179

Net Realized and Change in Unrealized Gains (Losses)
$
1,577

 
$
(51,308
)
 
$
(76,573
)
 
$
(95,904
)
Net Increase (Decrease) in Net Assets Resulting from Operations
$
41,114

 
$
(1,747
)
 
$
(972
)
 
$
4,644

Earnings (Loss) Per Share — Basic
$
0.18

 
$
(0.01
)
 
$
0.00

 
$
0.02

Earnings (Loss) Per Share — Diluted
N/A

 
$
(0.01
)
 
N/A

 
$
0.02


8



About Apollo Investment Corporation
Apollo Investment Corporation (NASDAQ: AINV) 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 invests primarily in various forms of debt investments, including secured and unsecured debt, loan investments, and/or equity in private middle-market companies. The Company may also invest in the securities of public companies and structured products and other investments such as collateralized loan obligations and credit-linked notes. The Company seeks to provide private financing solutions for private companies that do not have access to the more traditional providers of credit. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, LLC, a leading global alternative investment manager. For more information, please visit www.apolloic.com.
Forward-Looking Statements
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; our contractual arrangements and relationships with third parties; 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. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. 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
Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
(212) 822-0625

9

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