UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 8, 2004
Apollo Investment Corporation
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(Exact name of registrant as specified in its charter)
Maryland 333-112591 52-2439556
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(State or other jurisdiction Commission (IRS Employer
of incorporation) File Number) Identification No.)
9 West 57th Street, 43rd Floor, New York, NY 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-515-3200
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(Former address: 1301 Avenue of the Americas, New York, NY 10019)
Item 9.01. Financial Statements and Exhibits.
The following press release was issued by Apollo Investment Corporation on
November 8, 2004:
Apollo Investment Corporation Announces September 30, 2004 Financial Results
NEW YORK--November 8, 2004--Apollo Investment Corporation (NASDAQ: AINV)
today announced financial results for its second fiscal quarter ended September
30, 2004. AINV commenced operations on April 8, 2004 after closing its initial
public offering of 62,000,000 shares of common stock at $15.00 per share. After
deducting underwriting discounts, commissions and offering expenses, AINV
received net proceeds of $870.15 million or $14.035 per share. At September 30,
2004, our net asset value was $14.10 per share. The primary purpose of the
initial public offering was to obtain capital with which to invest primarily in
mezzanine loans, senior secured loans and equity investments in U.S.
middle-market companies.
Highlights:
Stockholders' Equity: $875.1 million
Net Asset Value per share: $14.10
2nd Fiscal Quarter Operating Results (in thousands):
Net increase in stockholders' equity from operations: $5,786
Net investment income: $2,263
Net realized and unrealized gains: $3,523
YTD Operating Results (in thousands):
Net increase in stockholders' equity from operations: $6,649
Net investment income: $786
Net realized and unrealized gains: $5,863
2nd Fiscal Quarter Portfolio Activity
Cost of investments made during period: $161 million
Number of portfolio company investments made during the quarter ended September
30, 2004: 9
YTD Portfolio Activity:
Cost of investments made during period: $404 million
Number of portfolio companies at September 30, 2004: 19
Portfolio and Investment Activity
September 30, 2004 marks the completion of our second fiscal quarter of
operations. During the three months, we invested approximately $161 million in
the aggregate across seven new portfolio companies and increased our investment
in two others. More specifically, we invested $65 million in the aggregate in
the mezzanine debt of Anthony International and the mezzanine debt and equity of
N.E.W. Customer Service Companies and TDS Logistics. Anthony International is a
leading manufacturer of glass refrigerator and freezer doors and related
accessories. N.E.W. Customer Service Companies is the nation's leading
independent provider of extended service warranties for retailers, utilities,
manufacturers, credit card issuers, and other service providers. TDS Logistics
is a diversified automotive logistics company. The weighted average yield on
these mezzanine debt investments is 14.9%. Our subordinated debt/corporate note
investments yielded 10.6% at June 30, 2004. We also invested $95 million in the
aggregate in the senior secured debt of Grand Vehicle Works Holding Corp., NES
Rentals Holdings,
Inc., Anthony International, Phillips Health, LLC, Ripplewood Phosphorus, LLC
and added to our investment in United Industries Corporation. These senior
secured debt investments had a weighted average yield of 7.6%. Our senior
secured debt investments yielded 6.3% at June 30, 2004.
The weighted average yield on all our debt investments (excluding cash
equivalents) was 8.78% at September 30, 2004 versus 7.35% at June 30, 2004. The
weighted average yield on our bank debt/senior secured debt was 6.9% at
September 30, 2004 versus 6.3% at June 30, 2004. Our subordinated debt/corporate
notes yielded 12.8% at September 30, 2004 versus 10.6% at June 30, 2004. Yields
are computed using interest rates as of the balance sheet date and include
amortization of loan origination fees, original issue discount and market
premium or discount, weighted by their respective costs when averaged.
Through September 30, 2004, we invested approximately $404 million of the net
proceeds from our initial public offering. Net proceeds were invested 13.5% in
subordinated debt/corporate notes, 0.5% in common stock/warrants and 32.4% in
bank debt/senior secured debt. The remaining initial capital was invested in
cash equivalents.
Bank debt/senior secured debt typically accrues interest at variable rates
determined on the basis of a benchmark LIBOR or prime rate with stated
maturities at origination that range from 5 to 10 years. While subordinated
debt/corporate notes will typically accrue interest at fixed rates, some of
these investments may include zero coupon, PIK and/or step bonds that accrue
income on a constant yield to call or maturity basis.
Chairman and CEO, Michael Gross said, "We are quite pleased with the progress
we've made in building our portfolio over our first two quarters and remain
confident that we will meet the objectives we described at the time of the IPO.
Additionally, our strong deal flow gives us the conviction that during the
balance of our first year ramp up period, we will continue to experience
quarterly sequential growth in yield."
Results of Operations
Operating Income
Investment income totaled $7.9 million for the quarter ended September 30, 2004
versus $3.8 million for the quarter ended June 30, 2004. For the period April 8,
2004 (commencement of operations) through September 30, 2004, gross investment
income totaled $11.7 million. As we continue investing the net proceeds from the
initial offering, we expect to continue generating additional income at rates
greater than the rates we receive on cash and cash equivalents.
Operating Expenses
Operating expenses totaled $5.6 million for the quarter ended September 30, 2004
versus $5.3 million for the quarter ended June 30, 2004. For the period April 8,
2004 (commencement of operations) through September 30, 2004, operating expenses
totaled $10.9 million. This amount consisted of investment advisory and
management fees, insurance expenses, administrative services fees, professional
fees, directors' fees and other general and administrative expenses. The
investment advisory fee for the quarter was $4.4 million versus $4.0 million for
the quarter ended June 30, 2004 and represented the base fee as provided for in
the investment advisory and management agreement. Administrative services fees
accrued for the quarter was $273,000 versus $175,000 for the quarter ended June
30, 2004.
Net Operating Income
The Company's net operating income was $2.26 million for the quarter ended
September 30, 2004 versus a net operating loss of $1.48 million for the quarter
ended June 30, 2004. For the period April 8, 2004 (commencement of operations)
through September 30, 2004, net operating income was $785,968.
Net Unrealized Appreciation on Investments and Cash Equivalents
For the quarter ended September 30, 2004, the Company's investments had an
increase in net unrealized appreciation of $3.52 million versus $2.34 million
for the quarter ended June 30, 2004. At September 30, 2004, net unrealized
appreciation totaled $5.86 million of which $2.18 million was attributable to
net unrealized appreciation on our bank debt/senior secured debt and $3.76
million was attributable to our subordinated debt/corporate notes. The Company's
cash equivalents had net unrealized depreciation of approximately $77,000.
Net Realized Losses on Repayments
The Company had partial principal repayments of $347,011 for the quarter ended
September 30, 2004 versus $125,000 for the quarter ended June 30, 2004. Net
losses for the quarter totaled $322 versus $368 for the quarter ended June 30,
2004. For the period April 8, 2004 (commencement of operations) through
September 30, 2004, the Company had total principal repayments of $472,011 and
net realized losses of $690.
Net Increase in Stockholders' Equity From Operations
For the quarter ended September 30, 2004, the Company had a net increase in
stockholders' equity resulting from operations of $5.79 million versus $863,000
for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement
of operations) through September 30, 2004, the Company had a total net increase
in stockholders' equity resulting from operations of $6.65 million. Based on a
weighted-average shares outstanding of 62,000,100, our net change in
stockholders' equity from operations per share was $0.093 for the quarter ended
September 30, 2004 versus $0.014 for the quarter ended June 30, 2004. Our net
change in stockholders' equity from operations was $0.107 per share for the
period April 8, 2004 (commencement of operations) through September 30, 2004.
Conference Call at 10:00 a.m. ET on November 9, 2004
The company will host a conference call at 10:00 a.m. (ET) on Tuesday,
November 9, 2004 to discuss second fiscal quarter financial results. All
interested parties are welcome to participate. You can access the conference
call by dialing (877) 780-2271 approximately 5-10 minutes prior to the call.
International callers should dial (973) 582-2773. All callers should reference
"Apollo Investment Corporation". An archived replay of the call will be
available through November 23, 2004 by calling (877) 519-4471. International
callers please dial (973) 341-3080. For all replay, please reference pin #
5230463.
BALANCE SHEET (unaudited) September 30,
(in thousands, except per share amounts) 2004
Assets
Cash $ 644
Cash equivalents, at fair value (cost - $1,141,697) 1,141,620
Investments, at fair value (cost - $403,152) 409,093
Interest receivable 4,950
Other assets 799
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Total assets $ 1,557,106
Liabilities
Payable for investments purchased $ 679,595
Management fee payable 1,434
Accrued expenses 945
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Total liabilities $ 681,974
Stockholders' Equity
Common stock, par value $.001 per share, 100,000,000
common shares authorized, 62,079,760 issued and
outstanding $ 62
871,211
Paid-in capital in excess of par
Accumulated net investment income 786
Dividends paid to stockholders (2,790)
Accumulated net realized losses (1)
Net unrealized appreciation 5,864
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Total stockholders' equity $ 875,132
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Total liabilities and stockholders' equity $ 1,557,106
Quarter Ended April 8, 2004*
STATEMENT OF OPERATIONS (unaudited) September 30, 2004 through
(in thousands, except per share amounts) September 30, 2004
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Operating Income
Interest income $7,865 $11,670
Other income 24 26
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Total operating income 7,889 11,696
Operating Expenses
Management fees $4,398 $8,411
Insurance expenses 404 773
General and administrative expenses 824 1,726
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Total operating expenses 5,626 10,910
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Net operating income before investment gains and losses $2,263 $786
Net realized loss on investments (1) (1)
Net change in unrealized appreciation 3,524 5,864
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Net increase in stockholders' equity resulting from operations $5,786 $6,649
Earnings per common share $0.093 $0.107
April 8, 2004*
through
PER SHARE DATA (unaudited) September 30, 2004
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Net asset value, beginning of period $ 14.06
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Net investment income 0.01
Net unrealized appreciation on investments 0.10
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Net increase in stockholders' equity resulting from operations 0.11
Dividends to shareholders (0.04)
Costs related to the initial public offering (0.03)
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Net asset value at end of period $ 14.10
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Per share market value at end of period $ 14.15
Total return (1) (5.36%)
Shares outstanding at end of period 62,079,760
Ratio/Supplemental Data:
Net assets at end of period (in millions) $ 875.1
Ratio of operating expenses to average net assets (2) 2.60%
Ratio of net operating income to average net assets (2) 0.19%
* Commencement of operations
(1) Total return is based on the change in market price per share assuming an
investment at the initial offering price of $15.00 per share. Total return
also takes into account dividends and distributions, if any, reinvested in
accordance with the Company's dividend reinvestment plan. Interim periods
are not annualized.
(2) Annualized
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About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end investment company that has
elected to be treated as a business development company under the Investment
Company Act of 1940. The Company's investment portfolio will be principally in
middle-market private companies. From time to time, the Company may also invest
in public companies. The Company expects to primarily invest in senior secured
loans and mezzanine loans and equity in furtherance of its business plan. Apollo
Investment Corporation is managed by Apollo Investment Management, L.P., an
affiliate of Apollo Management, L.P., a leading private equity investor.
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks and uncertainties, including, but not limited to, statements as to
our future operating results; our business prospects and the prospects of our
portfolio companies; the impact of investments that we expect to make; the
dependence of our future success on the general economy and its impact on the
industries in which we invest; the ability of our portfolio companies to achieve
their objectives; our expected financings and investments; the adequacy of our
cash resources and working capital; and the timing of cash flows, if any, from
the operations of our portfolio companies.
We may use words such as "anticipates," "believes," "expects," "intends",
"will", "should," "may" and similar expressions to identify forward-looking
statements. Such statements are based on currently available operating,
financial and competitive information and are subject to various risks and
uncertainties that could cause actual results to differ materially from our
historical experience and our present expectations. Undue reliance should not be
placed on such forward-looking statements as such statements speak only as of
the date on which they are made. We do not undertake to update our
forward-looking statements unless required by law.
CONTACT: Richard L. Peteka of Apollo Investment Corporation, 212-515-3423
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SIGNATURES
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 Corporation
/s/ Richard L. Peteka
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(Signature)
By: Richard L. Peteka
Title: Chief Financial Officer
Date: November 8, 2004