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Apollo Global Management, LLC Reports Third Quarter 2012 Results

Stocks in this article: APO

As of September 30, 2012, Apollo’s real estate AUM was $8.1 billion, compared to $7.9 billion at September 30, 2011.

Capital and Liquidity

As of September 30, 2012, Apollo had $752.5 million of cash and cash equivalents and $738.0 million of debt. These amounts exclude cash and debt associated with Apollo’s consolidated funds and consolidated variable interest entities. As of September 30, 2012, Apollo had a $1,627.9 million carried interest receivable and corresponding profit sharing payable of $825.6 million as well as total investments in its private equity, credit and real estate funds of $464.2 million, excluding consolidated variable interest entities ("VIEs") and consolidated funds.

Distribution

Apollo Global Management, LLC has declared a third quarter 2012 cash distribution of $0.40 per Class A share, which comprises a regular distribution of $0.07 per Class A share and a quarterly distribution of $0.33 per Class A share primarily attributable to fund realizations and interest and dividend income earned by our funds. This distribution will be paid on November 30, 2012 to holders of record at the close of business on November 23, 2012.

Apollo intends to distribute to its shareholders on a quarterly basis substantially all of its net after-tax cash flow in excess of amounts determined by its manager to be necessary or appropriate to provide for the conduct of its business. However, Apollo cannot assure its shareholders that they will receive any distributions.

Conference Call

Apollo will host a conference call on Friday, November 9, 2012 at 10:00 a.m. ET. During the call, Marc Spilker, President, Martin Kelly, Chief Financial Officer and Gary Stein, Head of Corporate Communications will review Apollo’s financial results for the third quarter of 2012. The conference call may be accessed by dialing (888) 868-4188 (U.S. domestic) or +1 (615) 800-6914 (international), and providing conference call ID 38103255 when prompted by the operator. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Investor Relations section of Apollo's website at www.agm.com.

Following the call a replay of the event may be accessed either telephonically or via audio webcast. A telephonic replay of the live broadcast will be available approximately two hours after the live broadcast by dialing (800) 585-8367 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 38103255. To access the audio webcast, please visit Events in the Investor Relations section of Apollo’s website at www.agm.com.

About Apollo

Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of approximately $110 billion as of September 30, 2012, in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. For more information about Apollo, please visit www.agm.com.

Forward-Looking Statements

This press release may contain forward looking statements that are within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, discussions related to Apollo’s expectations regarding the performance of its business, its liquidity and capital resources and the other non-historical statements in the discussion and analysis. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions, including risks relating to our dependence on certain key personnel, our ability to raise new private equity, credit or real estate funds, market conditions, generally, our ability to manage our growth, fund performance, changes in our regulatory environment and tax status, the variability of our revenues, net income and cash flow, our use of leverage to finance our businesses and investments by our funds and litigation risks, among others. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 9, 2012, and such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in other filings. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law. This release does not constitute an offer of any Apollo fund.

 

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(dollars in thousands, except share data)

       
Three Months Ended September 30, Nine Months Ended September 30,
 
  2012     2011   2012     2011
Revenues:
Advisory and transaction fees from affiliates $ 15,149 $ 16,837 $ 112,162 $ 59,809
Management fees from affiliates 147,611 122,666 418,115 362,003
Carried interest income (loss) from affiliates   549,613     (1,619,083 )   1,170,467     (896,174 )
Total Revenues   712,373     (1,479,580 )   1,700,744     (474,362 )
 
Expenses:
Compensation and benefits:
Equity-based compensation 144,407 288,208 435,387 859,173
Salary, bonus and benefits 64,647 68,433 204,666 204,788
Profit sharing expense 237,433 (563,255 ) 506,308 (275,437 )
Incentive fee compensation   364     (3,876 )   372     2,689  
Total Compensation and Benefits 446,851 (210,490 ) 1,146,733 791,213
Interest expense 7,136 9,790 29,083 30,999
Professional fees 11,490 6,965 39,849 37,318
General, administrative and other 24,028 16,566 66,810 55,675
Placement fees 4,292 1,991 13,344 3,105
Occupancy 9,644 10,391 27,360 25,542
Depreciation and amortization   16,567     6,687     37,021     19,635  
Total Expenses   520,008     (158,100 )   1,360,200     963,487  
 
Other Income:
Net gains (losses) from investment activities 20,463 (371,647 ) 149,957 (150,407 )

Net (losses) gains from investment activities of

consolidated variable interest entities

(45,475 ) (4,760 ) (29,913 ) (41 )
Income (Loss) from equity method investments 40,779 (56,438 ) 83,191 (29,242 )
Interest and dividend income 3,277 670 7,093 1,540
Other income (loss), net   8,304     (10,135 )   1,959,669     11,039  
Total Other Income   27,348     (442,310 )   2,169,997     (167,111 )
Income (loss) before income tax provision 219,713 (1,763,790 ) 2,510,541 (1,604,960 )
Income tax (provision) Benefit   (21,917 )   19,847     (47,127 )   7,477  
Net Income (Loss) 197,796 (1,743,943 ) 2,463,414 (1,597,483 )
Net (income) loss attributable to Non-Controlling Interests   (115,005 )   1,277,017     (2,323,966 )   1,117,724  

Net Income (Loss) Attributable to

Apollo Global

Management, LLC

$ 82,791   $ (466,926 ) $ 139,448   $ (479,759 )
 
Distributions Declared per Class A Share $ 0.24   $ 0.24   $ 0.95   $ 0.63  
 
Net Income (Loss) Per Class A Share:
Net Income (Loss) Per Class A Share – Basic and Diluted $ 0.55   $ (3.86 ) $ 0.93   $ (4.33 )
Weighted Average Number of Class A Shares – Basic   128,980,438     122,381,069     126,909,962     113,941,869  
Weighted Average Number of Class A Shares – Diluted   131,635,202     122,381,069     129,309,716     113,941,869  
 
       

APOLLO GLOBAL MANAGEMENT, LLC

SEGMENT RESULTS (UNAUDITED)

(dollars in millions, except per share data)

 

 

Summary of Combined Segment Results for Management Business and Incentive Business:

 
Three Months Ended Nine Months Ended

March 31, 2011

 

June 30, 2011

 

September 30, 2011

 

December 31, 2011

 

March 31, 2012

   

June 30, 2012

   

September 30, 2012

September 30, 2011

 

September 30, 2012

Management Business:
 
Advisory and transaction fees from affiliates $ 19.4 $ 23.6 $ 17.2 $ 22.1 $ 27.3 $ 70.0 $ 15.2 $ 60.2 $ 112.5
Management fees from affiliates 118.2 121.2 123.0 127.8 130.0 156.4 160.2 362.4 446.6
Carried interest income from affiliates:
Realized gains   12.5     11.2     11.3     9.5     9.6     9.2     9.7     35.0     28.5  
Total management business revenues 150.1 156.0 151.5 159.4 166.9 235.6 185.1 457.6 587.6
 
Equity-based compensation (1) 13.2 17.0 18.0 20.0 18.9 14.1 16.7 48.2 49.7
Salary, bonus and benefits 72.1 64.3 68.4 46.3 65.1 74.9 64.6 204.8 204.6
 
Interest expense 10.9 10.3 9.8 9.9 11.4 10.2 7.5 31.0 29.1
Professional fees 17.1 12.8 6.8 21.6 11.3 16.5 10.9 36.7 38.7
General, administrative and other 16.2 22.1 16.3 19.4 18.7 23.1 23.9 54.6 65.7
Placement fees 0.5 0.6 2.0 0.8 0.9 8.1 4.3 3.1 13.3
Occupancy 7.2 7.9 10.4 10.3 8.7 9.0 9.7 25.5 27.4
Depreciation and amortization (2)   2.9     2.6     3.0     2.6     2.4     2.4     2.8     8.5     7.6  
Total non-compensation expenses 54.8 56.3 48.3 64.6 53.4 69.3 59.1 159.4 181.8
 
Total management business expenses 140.1 137.6 134.7 130.9 137.4 158.3 140.4 412.4 436.1
 
Other income (loss) 8.3 13.7 (9.5 ) 2.3 7.0 (4.5 ) 11.1 12.5 13.6
 
Non-controlling interest (3)   (3.6 )   (1.6 )   (4.1 )   (2.8 )   (1.4 )   (2.4 )   (2.7 )   (9.3 )   (6.5 )
 
Management Business Economic Net Income   14.7     30.5     3.2     28.0     35.1     70.4     53.1     48.4     158.6  
 
Incentive Business:
 
Carried interest income (loss):
Unrealized gains (losses) 411.4 (25.8 ) (1,683.2 ) 211.0 474.3 (52.8 ) 344.2 (1,297.6 ) 765.7
Realized gains   134.8     178.7     52.9     278.2     149.8     56.0     229.8     366.4     435.6  
Total carried interest income (loss) 546.2 152.9 (1,630.3 ) 489.2 624.1 3.2 574.0 (931.2 ) 1,201.3
 
Profit sharing expense:
Unrealized profit sharing expense 167.6 (9.6 ) (582.7 ) 54.1 178.4 (10.8 ) 124.7 (424.7 ) 292.3
Realized profit sharing expense   49.5     80.4     19.3     157.8     70.7     30.7     112.7     149.2     214.1  
Total profit sharing expense 217.1 70.8 (563.4 ) 211.9 249.1 19.9 237.4 (275.5 ) 506.4
 
Incentive fee compensation 10.1 (3.6 ) (3.8 ) 0.7

 

 

0.4 2.7 0.4
 
Net gains (losses) from investment activities 17.8 2.3 (33.4 ) 7.4 3.4 (13.1 ) 2.1 (13.3 ) (7.6 )
Income (loss) from equity method investments   25.1     6.8     (65.7 )   44.6     48.5     1.4     42.1     (33.8 )   92.0  
Other income (loss) 42.9 9.1 (99.1 ) 52.0 51.9 (11.7 ) 44.2 (47.1 ) 84.4
 
Incentive Business Economic Net Income (Loss)   361.9     94.8     (1,162.2 )   328.6     426.9     (28.4 )   380.4     (705.5 )   778.9  
 
Total Economic Net Income (Loss)   376.6     125.3     (1,159.0 )   356.6     462.0     42.0     433.5     (657.1 )   937.5  
 
Income Tax (Provision) Benefit on Economic Net Income (4)   (25.2 )   (7.8 )   66.5     (54.6 )   (39.7 )   (23.3 )   (54.5 )   33.5     (117.5 )
 
Total Economic Net Income (Loss) After Taxes $ 351.4   $ 117.5   $ (1,092.5 ) $ 302.0   $ 422.3   $ 18.7     379.0   $ (623.6 )   820.0  
Non-GAAP Weighted average diluted shares outstanding (in millions)   353.6     376.0     378.0     379.3     383.6     386.0     386.9     369.3     385.5  
Total ENI After Taxes per Share $ 0.99   $ 0.31   $ (2.89 ) $ 0.80   $ 1.10   $ 0.05   $ 0.98   $ (1.69 )   2.13  
 
(1)   The combined amounts relate to RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options. Excludes equity-based compensation expense comprising amortization of Apollo Operating Group (“AOG”) units.
(2) Includes amortization of leasehold improvements.
(3) Reflects the remaining interest held by certain individuals who receive an allocation of income from certain of the credit management companies.
(4) See the definition of ENI after taxes in the non-GAAP financial information and definitions section of this press release.
       

Private Equity Segment:

 
Three Months Ended Nine Months Ended
March 31, 2011   June 30, 2011   September 30, 2011   December 31, 2011   March 31, 2012   June 30, 2012   September 30, 2012 September 30, 2011   September 30, 2012
Management Business:
 
Advisory and transaction fees from affiliates $ 15.1 $ 21.6 $ 14.8 $ 15.4 $ 25.9 $ 65.1 $ 13.3 $ 51.5 $ 104.3
Management fees from affiliates   65.5   65.4     65.3     67.0     67.0   69.2     68.5   196.2     204.7
Total management business revenues 80.6 87.0 80.1 82.4 92.9 134.3 81.8 247.7 309.0
 
Equity-based compensation 7.2 7.5 8.1 9.0 7.8 7.4 7.2 22.8 22.4
Salary, bonus and benefits 37.8 27.8 32.4 27.1 30.8 37.8 25.7 98.0 94.3
Other expenses   23.6   26.6     24.8     24.3     20.8   23.9     17.3   75.0     62.0
Total management business expenses 68.6 61.9 65.3 60.4 59.4 69.1 50.2 195.8 178.7
 
Other income (loss)   5.1   3.7     (1.0 )   (0.7 )   3.3   (3.2 )   2.9   7.8     3.0
Management Business Economic Net Income   17.1   28.8     13.8     21.3     36.8   62.0     34.5   59.7     133.3
 
Incentive Business:
 
Carried interest income (loss):
Unrealized gains (losses) 323.1 (32.4 ) (1,399.1 ) 88.7 326.0 (37.7 ) 152.4 (1,108.4 ) 440.7
Realized gains   118.6   171.4     40.5     240.0     122.1   43.4     188.2   330.5     353.7
Total carried interest income (loss) 441.7 139.0 (1,358.6 ) 328.7 448.1 5.7 340.6 (777.9 ) 794.4
 
Profit sharing expense:
Unrealized profit sharing expense 147.1 (17.4 ) (513.1 ) 13.1 153.7 (9.1 ) 70.2 (383.4 ) 214.8
Realized profit sharing expense   45.1   77.4     15.8     131.6     50.6   22.9     89.6   138.3     163.1
Total profit sharing expenses 192.2 60.0 (497.3 ) 144.7 204.3 13.8 159.8 (245.1 ) 377.9
 
Income (losses) from equity method investments   15.8   4.5     (39.4 )   27.1     30.6   1.9     24.9   (19.1 )   57.4
Total other income (loss) 15.8 4.5 (39.4 ) 27.1 30.6 1.9 24.9 (19.1 ) 57.4
 
Incentive Business Economic Net Income (Loss)   265.3   83.5     (900.7 )   211.1     274.4   (6.2 )   205.7   (551.9 )   473.9
 
Total Economic Net Income (Loss) $ 282.4 $ 112.3   $ (886.9 ) $ 232.4   $ 311.2 $ 55.8   $ 240.2 $ (492.2 ) $ 607.2
 
       

Credit Segment:

 
Three Months Ended Nine Months Ended
March 31, 2011   June 30, 2011   September 30, 2011   December 31, 2011   March 31, 2012     June 30, 2012     September 30, 2012 September 30, 2011   September 30, 2012
Management Business:
 
Advisory and transaction fees from affiliates $ 4.3 $ 2.0 $ 1.9 $ 6.5 $ 1.4 $ 4.3 $ 1.9 $ 8.2 $ 7.6
Management fees from affiliates 43.4 46.1 47.2 50.0 52.6 74.3 80.8 136.7 207.7
Carried interest income from affiliates:
Realized gains   12.5     11.2     11.3     9.5     9.6     9.2     9.7     35.0     28.5  
Total management business revenues 60.2 59.3 60.4 66.0 63.6 87.8 92.4 179.9 243.8
 
Equity-based compensation 3.5 6.3 6.4 7.1 8.1 4.3 6.9 16.2 19.3
Salary, bonus and benefits 24.5 28.6 29.1 10.7 27.6 31.2 31.7 82.2 90.5
Other expenses   26.0     23.8     17.5     27.7     25.9     39.2     37.4     67.3     102.5  
Total management business expenses 54.0 58.7 53.0 45.5 61.6 74.7 76.0 165.7 212.3
 
Other income (loss) 2.7 0.5 (8.3 ) 3.1 2.9 (0.7 ) 7.5 (5.1 ) 9.7
 
Non-controlling interest   (3.6 )   (1.6 )   (4.1 )   (2.8 )   (1.4 )   (2.4 )   (2.7 )   (9.3 )   (6.5 )
 
Management Business Economic Net Income (Loss)   5.3     (0.5 )   (5.0 )   20.8     3.5     10.0     21.2     (0.2 )   34.7  
 
Incentive Business:
 
Carried interest income (loss):
Unrealized gains (losses) 88.3 6.6 (284.1 ) 122.3 148.3 (16.7 ) 187.0 (189.2 ) 318.6
Realized gains   16.2     7.3     12.4     38.2     26.0     10.0     41.6     35.9     77.6  
Total carried interest income (loss) 104.5 13.9 (271.7 ) 160.5 174.3 (6.7 ) 228.6 (153.3 ) 396.2
 
Profit sharing expense:
Unrealized profit sharing expense 20.5 7.8 (69.6 ) 41.0 24.7 (2.9 ) 51.1 (41.3 ) 72.9
Realized profit sharing expense   4.4     3.0     3.5     24.8     18.6     6.8     22.3     10.9     47.7  
Total profit sharing expense 24.9 10.8 (66.1 ) 65.8 43.3 3.9 73.4 (30.4 ) 120.6
 
Incentive fee compensation 10.1 (3.6 ) (3.8 ) 0.7

 

 

0.4 2.7 0.4
 
Net gains (losses) from investment activities 17.8 2.3 (33.4 ) 7.4 3.4 (13.1 ) 2.1 (13.3 ) (7.6 )
Income (loss) from equity method investments   9.1     2.0     (26.4 )   17.4     17.7     (0.7 )   16.9     (15.3 )   33.9  
Total other income (loss) 26.9 4.3 (59.8 ) 24.8 21.1 (13.8 ) 19.0 (28.6 ) 26.3
 
Incentive Business Economic Net Income (Loss)   96.4     11.0     (261.6 )   118.8     152.1     (24.4 )   173.8     (154.2 )   301.5  
 
Total Economic Net Income (Loss) $ 101.7   $ 10.5   $ (266.6 ) $ 139.6   $ 155.6   $ (14.4 ) $ 195.0   $ (154.4 ) $ 336.2  
 
       

Real Estate Segment:

 
Three Months Ended   Nine Months Ended
March 31, 2011   June 30, 2011   September 30, 2011   December 31, 2011   March 31, 2012     June 30 2012   September 30, 2012   September 30, 2011   September 30, 2012
Management Business:
 
Advisory and transaction fees from affiliates $

$

$

0.5

$

0.2

$

$ 0.6

$

$

0.5

$

0.6

Management fees from affiliates   9.3     9.7   10.5     10.8     10.4     12.9     10.9     29.5     34.2  
Total management business revenues 9.3 9.7 11.0 11.0 10.4 13.5 10.9 30.0 34.8
 
Equity-based compensation 2.5 3.2 3.5 3.9 3.0 2.4 2.6 9.2 8.0
Salary, bonus and benefits 9.8 7.9 6.9 8.5 6.7 5.9 7.2 24.6 19.8
Other expenses   5.2     5.9   6.0     12.6     6.7     6.2     4.4     17.1     17.3  
Total management business expenses 17.5 17.0 16.4 25.0 16.4 14.5 14.2 50.9 45.1
 
Other income (loss)   0.5     9.5   (0.2 )   (0.1 )   0.8     (0.6 )   0.7     9.8     0.9  
 
Management Business Economic Net (Loss) Income   (7.7 )   2.2   (5.6 )   (14.1 )   (5.2 )   (1.6 )   (2.6 )   (11.1 )   (9.4 )
 
Incentive Business:
 
Carried interest income:
Unrealized gains

 

1.6

4.8

 

6.4
Realized gains            

   

1.7

 

  2.6  

 

 

 

    4.3  
Total carried interest income

1.7 4.2 4.8

 

10.7
 
Profit sharing expense:
Unrealized profit sharing expense

 

 

 

 

1.2 3.4

 

4.6
Realized profit sharing expense             1.4     1.5     1.0     0.8  

 

    3.3  
Total profit sharing expense 1.4 1.5 2.2 4.2

 

7.9
 
Income from equity method investments   0.1     0.3   0.2     0.1     0.2     0.2     0.3     0.6     0.7  
 
Incentive Business Economic Net Income (Loss)   0.1     0.3   0.2     (1.3 )   0.4     2.2     0.9     0.6     3.5  
 
Total Economic Net (Loss) Income $ (7.6 ) $ 2.5 $ (5.4 ) $ (15.4 ) $ (4.8 ) $ 0.6   $ (1.7 ) $ (10.5 ) $ (5.9 )
 
       

APOLLO GLOBAL MANAGEMENT, LLC

RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO ECONOMIC NET INCOME (LOSS) (UNAUDITED)

(dollars in millions)

 

Reconciliation of U.S. GAAP Net Income (Loss) to Economic Net Income (Loss):

 
Three Months Ended Nine Months Ended
March 31, 2011   June 30, 2011   September 30, 2011   December 31, 2011   March 31, 2012   June 30, 2012     September 30, 2012 September 30, 2011   September 30, 2012
Net Income (Loss) Attributable to Apollo Global Management, LLC $ 38.2 $ (51.0 ) $ (467.0 ) $ 11.0 $ 98.0 $ (41.3 ) $ 82.7 $ (479.8 ) $ 139.4
Impact of non-cash charges related to equity-based compensation:
AOG units 258.2 258.2 258.2 258.2 116.2 116.1 116.2 774.6 348.5
RSUs Private placement awards (1) 11.9 11.9 11.4 11.8 13.3 11.0 10.9 35.2 35.2
ARI restricted stock awards, ARI RSUs and AMTG RSUs 0.2 0.2 0.4 0.5 0.4 0.4 0.5 0.8 1.3
AAA RDUs   0.1   0.1     0.2     0.1     0.1   0.3     0.3   0.4     0.7
Total non-cash charges related to equity-based compensation 270.4 270.4 270.2 270.6 130.0 127.8 127.9 811.0 385.7
 
Income tax provision (benefit) 8.8 3.6 (19.9 ) 19.4 14.6 10.6 21.9 (7.5 ) 47.1
Income (loss) from consolidated VIEs

0.7 (0.7 )

 

 

 

0.7

 

Amortization of intangible assets associated with the 2007 Reorganization and acquisitions 3.2 4.3 3.6 4.0 6.1 9.6 13.7 11.1 29.4
Net income (loss) attributable to Non-Controlling Interests in Apollo Operating Group   56.0   (102.0 )   (946.6 )   52.3     213.3   (64.7 )   187.3   (992.6 )   335.9
 
Economic Net Income (Loss) $ 376.6 $ 125.3   $ (1,159.0 ) $ 356.6   $ 462.0 $ 42.0   $ 433.5 $ (657.1 ) $ 937.5
 
(1)   Represents awards granted in connection with the 2007 private placement.

APOLLO GLOBAL MANAGEMENT, LLC

ASSETS UNDER MANAGEMENT

(UNAUDITED)

Assets Under Management—Fee-Generating and Non-Fee Generating

The table below sets forth fee-generating and non-fee generating AUM by segment as of September 30, 2012 and 2011 and December 31, 2011. Changes in market conditions, the additional funds raised and strategic acquisitions have had significant impacts to our AUM:

       
As of September 30, As of December 31,
  2012     2011 2011
(in millions)
Total Assets Under Management $

109,702

(1)

$ 65,085 $ 75,222
Fee-generating 77,676 49,651 58,121
Non-fee generating

32,026

(1)

15,434 17,101
 
Private Equity 38,983 34,779 35,384
Fee-generating 28,146 27,786 28,031
Non-fee generating 10,837 6,993 7,353
 
Credit 60,107 22,406 31,867
Fee-generating 45,302 18,507 26,553
Non-fee generating 14,805 3,899 5,314
 
Real Estate 8,129 7,900 7,971
Fee-generating 4,228 3,358 3,537
Non-fee generating 3,901 4,542 4,434
 
(1)   Includes $2.5 billion of commitments that have yet to be deployed to an Apollo fund within our three segments.

The following tables summarize changes in total AUM and total AUM for each of our segments for the three and nine months ended September 30, 2012 and 2011:

       
For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2012      

2011 (1)

  2012      

2011 (1)

(in millions)
Change in Total AUM:
Beginning of Period $

104,893

(2)

$ 71,714 $ 75,222 $ 67,551
Income (Loss) 3,616 (8,395 ) 8,453 (4,096 )
Subscriptions/Capital raised 1,538 1,054 8,130 2,940
Other inflows/Acquisitions

 

1,396 19,928 1,396
Distributions (2,367 ) (645 ) (5,950 ) (3,782 )
Redemptions (283 ) (156 ) (1,036 ) (295 )
Leverage   2,305     117     4,955     1,371  
End of Period $

109,702

(2)

$ 65,085   $

109,702

(2)

$ 65,085  
Change in Private Equity AUM:
Beginning of Period $ 38,228 $ 40,430 $ 35,384 $ 38,799
Income (Loss) 2,017 (5,829 ) 5,765 (3,159 )
Subscriptions/Capital raised 247 157 275 157
Distributions (1,438 ) (202 ) (3,016 ) (2,411 )
Net segment transfers 110 64 267 228
Leverage   (181 )   159     308     1,165  
End of Period $ 38,983   $ 34,779   $ 38,983   $ 34,779  
Change in Credit AUM:
Beginning of Period $ 56,108 $ 23,684 $ 31,867 $ 22,283
Income (Loss) 1,346 (2,454 ) 2,281 (1,208 )
Subscriptions/Capital raised 1,207 741 4,335 2,546
Other inflows/Acquisitions

 

1,396 19,928 1,396
Distributions (633 ) (344 ) (1,878 ) (965 )
Redemptions (283 ) (156 ) (763 ) (295 )
Net segment transfers (99 ) (469 ) (738 ) (1,226 )
Leverage   2,461     8     5,075     (125 )
End of Period $ 60,107   $ 22,406   $ 60,107   $ 22,406  
Change in Real Estate AUM:
Beginning of Period $ 7,861 $ 7,600 $ 7,971 $ 6,469
Income (Loss) 253 (112 ) 407 271
Subscriptions/Capital raised 84 156 473 237
Distributions (296 ) (99 ) (1,056 ) (406 )
Redemptions (3)

 

 

(273

) (3)

 

Net segment transfers 202 405 1,035 998
Leverage   25     (50 )   (428 )   331  
End of Period $ 8,129   $ 7,900   $ 8,129   $ 7,900  
 
(1)   Reclassified to conform to current period’s presentation.
(2) Includes $2.7 billion and $2.5 billion of commitments that have yet to be deployed to an Apollo fund within our three segments at the end of the second quarter and third quarter, respectively.
(3) Includes $273 million of released unfunded commitments primarily related to two legacy CPI real estate funds that were past their investment periods.

The following tables summarize changes in total fee-generating AUM and fee-generating AUM for each of our segments for the three and nine months ended September 30, 2012 and 2011:

       
For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2012     2011   2012     2011
(in millions)
Change in Total Fee-Generating AUM:
Beginning of Period $ 77,449 $ 48,851 $ 58,121 $ 47,037
Income (Loss) 352 (1,535 ) 641 (541 )
Subscriptions/Capital raised 1,328 1,041 4,351 1,870
Other inflows/Acquisitions

 

1,396 17,576 1,396
Distributions (966

)

(148 ) (2,420 ) (600 )
Redemptions (278 ) (137 ) (738 ) (255 )
Net movements between Fee Generating and Non-Fee Generating 72 150 (546 ) 250
Leverage   (281 )   33     691     494  
End of Period $ 77,676   $ 49,651   $ 77,676   $ 49,651  
Change in Private Equity Fee-Generating AUM:
Beginning of Period $ 27,754 $ 27,729 $ 28,031 $ 27,874
(Loss) Income (2 ) (152 ) 132 (180 )
Subscriptions/Capital raised 240 151 268 151
Distributions (365 ) (22 ) (716 ) (256 )
Net segment transfers

 

(93 )

 

(28 )
Net movements between Fee Generating and Non-Fee Generating 121 150 360 150
Leverage   398     23     71     75  
End of Period $ 28,146   $ 27,786   $ 28,146   $ 27,786  
Change in Credit Fee-Generating AUM:
Beginning of Period $ 45,509 $ 18,064 $ 26,553 $ 16,484
Income (Loss) 320 (1,319 ) 449 217
Subscriptions/Capital raised 1,028 736 3,809 1,477
Other inflows/Acquisitions

 

1,396 17,576 1,396
Distributions (418 ) (39 ) (1,322 ) (270 )
Redemptions (278 ) (137 ) (738 ) (255 )
Net segment transfers (129 ) (204 ) (718 ) (530 )
Net movements between Fee Generating and Non-Fee Generating (51 )

 

(927 )

 

Leverage   (679 )   10     620     (12 )
End of Period $ 45,302   $ 18,507   $ 45,302   $ 18,507  
Change in Real Estate Fee-Generating AUM:
Beginning of Period $ 4,186 $ 3,058 $ 3,537 $ 2,679
Income (Loss) 34 (64 ) 60 (578 )
Subscriptions/Capital raised 60 154 274 242
Distributions (183 ) (87 ) (382 ) (74 )
Net segment transfers 129 297 718 558
Net movements between Fee Generating and Non-Fee Generating 2

 

21 100
Leverage

 

 

 

 

 

    431  
End of Period $ 4,228   $ 3,358   $ 4,228   $ 3,358  
 

APOLLO GLOBAL MANAGEMENT, LLC

FUND PERFORMANCE (UNAUDITED)

Investment Record

Private Equity

The following table summarizes the investment record of our private equity fund portfolios. All amounts are as of September 30, 2012, unless otherwise noted:

                   
Vintage Year Committed Capital Total Invested Capital Realized Unrealized (1) Total Value As of September 30, 2012 As of December 31, 2011
Gross IRR   Net IRR Gross IRR   Net IRR

 

($ in millions)

ANRP (2) 2012 $ 915 $ 195

$

$

189

$

189

NM

(2)

NM

(2)

N/A N/A
Fund VII 2008 14,676 13,188

8,134

13,508

21,642 35

%

26 % 31 % 22 %
Fund VI 2006 10,136 11,807

5,422

10,435

15,857 9 8 6 5
Fund V 2001 3,742 5,192

11,602

 

1,168

12,770 61 44 61 44
Fund IV 1998 3,600 3,481

6,757

53

6,810 12 9 12 9
Fund III 1995 1,500 1,499

2,654

43

2,697 18 11 18 12
Fund I, II & MIA (3) 1990/92   2,220   3,773

7,924

 

  7,924

 

47 37 47 37
Totals $ 36,789 $ 39,135

$

42,493

$

25,396

$ 67,889 39

% (4)

25 % (4) 39 % (4) 25 % (4)
 
      (1)   Figures include the market values, estimated fair value of certain unrealized investments and capital committed to investments.
(2) Apollo Natural Resources Partners, L.P. (“ANRP”) commenced investing capital less than 24 months prior to the period indicated. Given the limited investment period and overall longer investment period for private equity funds, the return information was deemed not meaningful.
(3) Fund I and Fund II were structured such that investments were made from either fund depending on which fund had available capital. We do not differentiate between Fund I and Fund II investments for purposes of performance figures because they are not meaningful on a separate basis and do not demonstrate the progression of returns over time. The general partners and managers of Funds I, II and MIA, as well as the general partner of Fund III were excluded assets in connection with the 2007 reorganization of Apollo Global Management, LLC. As a result, Apollo Global Management, LLC did not receive the economics associated with these entities. The investment performance of these funds is presented to illustrate fund performance associated with our managing partners and other investment professionals.
(4) Total IRR is calculated based on total cash flows for all funds presented.

Credit

The following table summarizes the investment record for certain funds with a defined maturity date and internal rate of return since inception, which is computed for the purposes of this table based on the actual dates of capital contributions, distributions and ending limited partners’ capital as of the specified date. All amounts are as of September 30, 2012, unless otherwise noted:

                     
As of September 30, 2012 As of December 31, 2011
Strategy

Vintage Year

Committed Capital

Total Invested Capital

Realized Unrealized (1)

Total Value

Gross IRR   Net IRR Gross IRR   Net IRR
(in millions)
ACRF II (2) Other 2012 85.2 68.2 1.4 75.3 76.7

NM

(4)

NM

(4)

NM

(4)

NM

(4)

EPF II (3)(5)

Non-Performing

2012 2,562.0 134.4 11.0 140.2 151.2

NM

(4)

NM

(4)

NM

(4)

NM

(4)

FCI (3) Other 2012 558.8 322.7 15.0 318.1 333.1

NM

(4)

NM

(4)

NM

(4)

NM

(4)

AESI (3)(5) Senior Credit 2011 457.1 331.5 115.2 249.2 364.4

NM

(4)

NM

(4)

NM

(4)

NM

(4)

AEC (3) Senior Credit 2011 270.3 146.5 65.3 111.5 176.8

NM

(4)

NM

(4)

NM

(4)

NM

(4)

AIE II (5) Mezzanine 2008 265.5 822.9 873.5 327.5 1,201.0 19.3 % 15.5 % 18.2 % 14.2 %
COF I Senior Credit 2008 1,484.9 1,611.3 1,387.2 2,426.8 3,814.0 30.2 27.2 25.0 22.4
COF II Senior Credit 2008 1,583.0 2,176.4 1,598.6 1,398.9 2,997.5 14.0 11.7 10.3 8.5
EPF I (5) Non-Performing 2007 1,665.2 1,842.9 1,157.2 1,276.3 2,433.5 18.5 11.2 16.6 8.8
ACLF Senior Credit 2007 984.0 1,448.5 1,804.6 319.7 2,124.3 11.9 11.1 10.1 9.2
Artus Senior Credit 2007   106.6   190.1   74.1   139.8   213.9 4.7 4.6 3.6 3.4
Totals $ 10,022.6 $ 9,095.4 $ 7,103.1 $ 6,783.3 $ 13,886.4
 
      (1)   Figures include the market values, estimated fair value of certain unrealized investments and capital committed to investments.
(2) As part of the Stone Tower acquisition, Apollo acquired the manager of Apollo Structured Credit Recovery Master Fund II, Ltd. (“ACRF II”). Apollo became the manager of this fund upon completing the acquisition on April 2, 2012.
(3) Apollo European Principal Finance Fund II, L.P. (“EPF II”), Apollo European Strategic Investment, L.P. (“AESI”) and Apollo European Credit Master Fund, L.P. (“AEC”) were launched during 2011 and have not established their vintage year. Financial Credit Investment I, L.P. (“FCI”) had its final capital raise in 2012, establishing its vintage year.
(4) Returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.
(5) Certain funds are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.29 as of September 30, 2012.

The following table summarizes the investment record for certain funds with no maturity date, except AP Investment Europe Limited (“AIE I”), which is winding down and is therefore expected to have a finite life. All amounts are as of September 30, 2012, unless otherwise noted:

            Net Return
Strategy Vintage Year

Current Net Asset Value as of September 30, 2012

Since Inception to September 30, 2012

 

For the Nine Months Ended September 30, 2012

 

For the Nine Months Ended September 30, 2011

 

Since Inception to December 31, 2011

 

For the Year Ended December 31, 2011

(in millions)
ACSF (2)

Other

2011 161.2

NM

(1)

NM

(1)

NM

(1)

NM

(1)

NM

(1)

STCS (2) Other 2010 92.6

NM

(1)

NM

(1)

NM

(1)

NM

(1)

NM

(1)

ACF (2) Other 2005 1,632.1

NM

(1)(2)

NM

(1)(2)

NM

(1)(2)

NM

(1)(2)

NM

(1)(2)

ACSP (1)(3) Senior Credit 2012 201.7

NM

(1)

NM

(1)

N/A

NM

(1)

NM

(1)

AMTG (1)(4)

Other

2011

691.4

(4)

NM

(1)

NM

(1)

N/A

NM

(1)

NM

(1)

AFT (1)(5) Senior Credit 2011 292.6

NM

(1)

NM

(1)

NM

(1)

NM

(1)

NM

(1)

AAOF Distressed and Event Driven 2007 60.8 (1.0 )% (7.8 )% (4.8 ) 7.4 % (7.3 )%
SOMA (6) Distressed and Event Driven 2007 830.7 43.6

14.1

(11.1 ) 25.9 (10.5 )
AIE I (7) Mezzanine Fund 2006 5.4 (57.4 ) (0.5 ) 3.5 (50.0 ) (4.4 )
AINV (8) Mezzanine Fund 2004 1,715.5 49.2 11.8 (8.7 ) 34.1 (5.1 )
Value Funds (9) Distressed and Event Driven 2003/2006   797.9   65.2 10.1 (10.7 ) 50.0 (9.6 )
Totals $ 6,481.9  
 
      (1)   Returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.
(2)

As part of the Stone Tower acquisition, Apollo acquired the manager of Apollo Credit Strategies Master Fund Ltd. (“ACSF”), Stone Tower Credit Solutions Master Fund Ltd. (“STCS”), and Apollo Credit Master Fund Ltd (“ACF”). As of September 30, 2012, the net return from inception for ACF was (10.1)%, which was primarily achieved during a period in which Apollo did not make the initial investment decisions. Apollo became the manager of these funds upon completing the acquisition on April 2, 2012.

(3) Apollo Centre Street Partnership, L.P. (“ACSP”) is a strategic investment account with $615.0 million of committed capital.
(4)

In July 2011, Apollo Residential Mortgage, Inc. (“AMTG”) completed its initial public offering raising approximately $203.0 million in net proceeds. Amount presented represents stockholders’ equity. Refer to www.apolloresidentialmortgage.com for the most recent financial information on AMTG.

(5)

The Apollo Senior Floating Rate Fund Inc. (“AFT”) completed its initial public offering during the first quarter of 2011. Refer to www.agmfunds.com for the most recent financial information on AFT.

(6) SOMA’s NAV and returns are for the primary mandate, which follows similar strategies as the Value Funds and excludes SOMA’s investments in other Apollo funds.
(7) Fund is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.29 as of September 30, 2012.
(8)

Net return for AINV represents NAV return including reinvested dividends. Results are presented as of September 30, 2012. Refer to www.apolloic.com for the most recent public financial information on AINV.

(9) Value Funds consist of Apollo Strategic Value Master Fund, L.P., together with its feeder funds (“SVF”) and Apollo Value Investment Master Fund, L.P., together with its feeder funds (“VIF”).

Real Estate

The following table summarizes the investment record for certain funds with a defined maturity date and internal rate of return since inception, which for the purposes of this table is computed based on the actual dates of capital contributions, distributions and ending limited partners’ capital as of the specified date. All amounts are as of September 30, 2012, unless otherwise noted:

                     
As of September 30, 2012 As of December 31, 2011

Vintage Year

Raised Capital

Current Net Asset Value

Total Invested Capital

Realized Unrealized (1) Total Value Gross IRR   Net IRR Gross IRR   Net IRR
(in millions)

AGRE U.S. Real Estate Fund, L.P. (2)(3)

2012 $ 785.2 $ 136.4

$

142.7

 

$

$ 142.1 $ 142.1

NM

(2)

NM

(2)

NM

(2)

NM

(2)

AGRE Debt Fund I, L.P. (2)

2011 155.5 155.7 155.0

 

155.0 155.0

NM

(2)

NM

(2)

NM

(2)

NM

(2)

2011 A4 Fund, L.P. (2) 2011 234.7 241.4 930.8

 

960.2 960.2

NM

(2)

NM

(2)

NM

(2)

NM

(2)

AGRE CMBS Fund, L.P. 2009 418.8 168.2 1,572.9

 

701.3 701.3

14.0

%

11.6

%

NM

(2)

 

NM

(2)

CPI Capital Partners North America (4) 2006 600.0 132.3 451.9 240.5 102.5 343.0

NM

(4)

NM

(4)

NM

(4)

NM

(4)

CPI Capital Partners Asia Pacific (4) 2006 1,291.6 424.5 1,113.3 1,054.3 420.8 1,475.1

NM

(4)

NM

(4)

NM

(4)

NM

(4)

CPI Capital Partners Europe (4)(5) 2006 1,494.2 468.7 951.6 67.0 457.8 524.8

NM

(4)

NM

(4)

NM

(4)

NM

(4)

CPI Other Various   3,175.5   993.2

 

N/A

(6)

 

N/A

(6)

 

N/A

(6)

 

N/A

(6)

NM

(6)

NM

(6)

NM

(4)

NM

(4)

Totals $ 8,155.5 $ 2,720.4 $ 5,318.2 $ 1,361.8 $ 2,939.7 $ 4,301.5
 
      (1)   Figures include estimated fair value of unrealized investments.
(2) Returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.
(3) AGRE U.S. Real Estate Fund, L.P., a newly formed closed-end private investment fund that intends to make real estate-related investments principally located in the United States, held closings in January 2011, June 2011 and April 2012 for a total of $263.2 million in base capital commitments and $450 million in additional capital commitments. Additionally, there was $72.0 million of co-invest commitments raised for an investment in the first quarter of 2012, which is included in the figures in the table above.
(4) As part of the CPI acquisition, Apollo acquired general partner interests in fully invested funds. The net IRRs from the inception of the respective fund to September 30, 2012 were (10.3)%, 6.0% and (13.8)% for the CPI Capital Partners North America, Asia Pacific and Europe funds, respectively. These net IRRs were primarily achieved during a period in which Apollo did not make the initial investment decisions and Apollo only became the general partner or manager of these funds upon completing the acquisition on November 12, 2010.
(5) CPI Capital Partners Europe is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.29 as of September 30, 2012.
(6) CPI Other consists of funds or individual investments of which we are not the general partner or manager and only receive fees pursuant to either a sub-advisory agreement or an investment management and administrative agreement. CPI Other fund performance is a result of invested capital prior to Apollo’s management of these funds. Return and certain other performance data is therefore not considered meaningful as we perform primarily an administrative role.

Apollo also manages Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI), which as of September 30, 2012 had total raised capital and total stockholders' equity of $440.4 million and $427.4 million, respectively.

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