Apollo Global Management, LLC Reports First Quarter 2014 Results

• Apollo declares a distribution of $0.84 per Class A share for the first quarter of 2014
• Total economic net income (“ENI”) after taxes of $219 million for the first quarter ended March 31, 2014, compared to $764 million for the comparable period in 2013
• ENI after taxes per share of $0.55 for the first quarter ended March 31, 2014, compared to $1.95 per share for the comparable period in 2013
• Total assets under management (“AUM”) of $159.3 billion as of March 31, 2014, compared to $114.3 billion as of March 31, 2013
• U.S. GAAP net income attributable to Apollo Global Management, LLC of $72 million for the first quarter ended March 31, 2014, compared to $249 million for the same period in 2013
• Apollo returned $4.4 billion and $23.6 billion of capital and realized profits to limited partner investors during the first quarter and last twelve months ended March 31, 2014, respectively

NEW YORK--(BUSINESS WIRE)--May 8, 2014-- Apollo Global Management, LLC (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”) today reported results for the first quarter ended March 31, 2014.

Apollo reported ENI after taxes of $218.6 million for the first quarter ended March 31, 2014, compared to $763.6 million for the same period in 2013. The $545.0 million decrease in ENI was driven by Apollo's Incentive Business, which reported ENI of $117.2 million for the first quarter ended March 31, 2014, compared to $726.4 million for the same period in 2013. The $609.2 million year-over-year decrease in ENI for the Incentive Business was largely the result of lower carried interest income from Apollo's private equity segment during the first quarter of 2014 compared to the same period in 2013.

Apollo’s total AUM was $159.3 billion as of March 31, 2014, an increase of $45.0 billion, or 39%, compared to $114.3 billion as of March 31, 2013. Fee-generating AUM was $128.5 billion as of March 31, 2014, an increase of $46.9 billion, or 57%, compared to $81.6 billion as of March 31, 2013. The increase in total AUM and fee-generating AUM was driven by growth in Apollo's credit and private equity segments.

U.S. GAAP results for the first quarter ended March 31, 2014 included net income attributable to Apollo Global Management, LLC of $72.2 million, or $0.32 per Class A share, compared to $249.0 million, or $1.60 per Class A share, for the first quarter ended March 31, 2013.

“Our solid first quarter results highlight Apollo’s continued success in building a truly global alternative investment management firm with an outstanding team and investment track record,” said Leon Black, Chairman and Chief Executive Officer. “The favorable secular tailwinds in our industry - including the search for yield, increasing allocations to alternatives, consolidation of general partner relationships and a shifting financial services landscape - all play to our strengths. We believe Apollo is well-positioned to navigate the investment landscape across market cycles, and we expect our limited partners and shareholders to benefit from Apollo’s integrated investment platform for many years to come.”

Combined Segments

Total revenue for Apollo's combined segments was $509.3 million for the first quarter ended March 31, 2014, a decrease of $828.0 million, or 62%, compared to the same period in 2013, driven primarily by a $955.7 million decrease in total carried interest income offset by a $127.7 million increase in management business revenues. Total expenses for Apollo’s combined segments were $303.4 million for the first quarter ended March 31, 2014, a decrease of $278.6 million, or 48%, compared to the same period in 2013, primarily driven by a decrease in profit sharing expense.

Total revenue for Apollo's Management Business was $348.4 million for the first quarter ended March 31, 2014, an increase of $127.7 million, or 58%, from the same period in 2013. This includes management fee revenues of $223.8 million for the first quarter ended March 31, 2014, an increase of $59.5 million, or 36%, from the same period in 2013 primarily due to an increase in fee-generating AUM. In addition, there was $116.1 million of advisory and transaction fees for the first quarter ended March 31, 2014, an increase of $68.7 million, or 145%, from the same period in 2013. The significant increase in advisory and transaction fee revenue during the first quarter of 2014 was driven by the termination payment related to the initial public offering of EP Energy Corporation, transaction fees associated with certain capital deployment activities in the period, and higher monitoring fees related to Athene Holding Ltd. (together with its subsidiaries, "Athene").

Total expenses for Apollo's Management Business were $199.4 million for the first quarter ended March 31, 2014, an increase of $41.0 million, or 26%, from the same period in 2013. Total compensation expenses, including salary and benefits and equity-based compensation, were $138.6 million for the first quarter of 2014, an increase of $47.8 million from the same period in 2013. The significant increase was driven by non-cash expense of $45.6 million, or approximately $0.11 of pre-tax ENI per share, related to equity-based compensation in connection with the departure of an executive officer.

Non-compensation expenses for Apollo's Management Business were $60.8 million during the first quarter ended March 31, 2014, a decrease of $6.8 million from the same period in 2013 primarily due to lower placement fees.

Apollo's Incentive Business reported $160.9 million of total carried interest income for the first quarter ended March 31, 2014, a decrease of $955.7 million from the same period in 2013. In connection with the year-over-year decrease in carried interest income, Apollo reported total profit sharing expense of $104.0 million for the first quarter ended March 31, 2014, a decrease of $319.6 million from the same period in 2013. The decrease in total carried interest income during the period was driven by the absence of "catch-up" unrealized carried interest income from Apollo Investment Fund VI, L.P. ("Fund VI") in the first quarter of 2014 that was earned in the first quarter of 2013 as the fund crossed its preferred return hurdle, as well as lower portfolio appreciation in the first quarter of 2014 versus the same period in 2013. During the first quarter ended March 31, 2014, the Incentive Business generated $462.7 million of realized gains, which was largely attributable to dispositions relating to a number of investments held by funds managed by Apollo, including Rexnord Corporation, Athlon Energy Inc., Constellium N.V., Norwegian Cruise Line Holdings Ltd., Berry Plastics Group Inc., and Noranda Aluminum Holding Corporation.

Private Equity Segment

Apollo's private equity segment generated ENI of $111.0 million for the first quarter ended March 31, 2014, compared to $660.4 million for the same period in 2013. The year-over-year decrease in ENI was largely driven by lower carried interest income of $103.3 million for the first quarter of 2014, compared to $991.0 million for the first quarter of 2013.

Apollo's private equity funds continued to perform well as measured by internal rate of return (“IRR”) and appreciated by 2% during the first quarter ended March 31, 2014. From its inception in 2008 through March 31, 2014, Apollo Investment Fund VII, L.P. ("Fund VII") generated an annual gross and net IRR of 39% and 30%, respectively. Fund VI, which began investing in 2006, generated an annual gross and net IRR of 14% and 12%, respectively, since its inception through March 31, 2014. The combined fair value of Apollo's private equity funds, including AP Alternative Assets, L.P. (“AAA”), was 55% above cost as of March 31, 2014.

Management fees from Apollo's private equity segment were $79.4 million for the first quarter ended March 31, 2014, which increased by $13.1 million compared to the same period in 2013 due to the commencement of Apollo Investment Fund VIII, L.P.’s ("Fund VIII") investment period, partially offset by significant realizations in Funds VI and VII as well as a step-down in fee basis with respect to Fund VII. Total Management Business expenses within the private equity segment were $65.4 million for the first quarter of 2014, which increased by $7.7 million compared to the same period in 2013, primarily due to the allocation of the aforementioned equity-based compensation.

Uncalled commitments within our private equity segment were $23.7 billion as of March 31, 2014, and $0.6 billion of capital was deployed by these funds during the first quarter ended March 31, 2014. As of March 31, 2014, Apollo's private equity segment AUM was $48.1 billion, compared to $39.2 billion at March 31, 2013.

Credit Segment

Apollo's credit segment generated ENI of $161.8 million for the first quarter ended March 31, 2014, compared to ENI of $132.8 million for the first quarter of 2013. The year-over-year increase in ENI resulted from an increase in the Management Business, which generated ENI of $103.2 million for the first quarter of 2014, compared to $32.5 million for the same period in 2013 as a result of higher management fees and advisory and transaction fees.

Management fees from Apollo's credit segment were $131.6 million for the first quarter ended March 31, 2014, which increased by $47.2 million, or 56%, compared to the same period in 2013 primarily due to higher fee-generating AUM from Athene. Total Management Business expenses within the credit segment were $115.4 million for the first quarter of 2014, which increased by $31.7 million compared to the same period in 2013, primarily due to the allocation of the aforementioned equity-based compensation.

Uncalled commitments within our credit segment were $6.4 billion as of March 31, 2014, and $1.7 billion of capital was deployed by our credit funds and strategic investment accounts ("SIAs") with a defined maturity date during the first quarter ended March 31, 2014. As of March 31, 2014, Apollo's credit segment AUM was $101.2 billion, compared to $63.5 billion at March 31, 2013.

Real Estate Segment

Apollo's real estate segment had an economic net loss of $3.5 million for the first quarter of 2014, compared to an economic net loss of $0.9 million for the same period in 2013. Total revenues for the real estate segment during the first quarter of 2014 were $13.4 million, a decrease of $2.2 million, compared to the same period in 2013. Total expenses for the real estate segment during the first quarter of 2014 were $18.0 million, an increase of $0.5 million compared to the same period in 2013.

Uncalled commitments within our real estate segment were $983 million as of March 31, 2014, and $494 million of capital was deployed by our real estate funds and SIAs with a defined maturity date and funds and SIAs in our real estate debt strategy during the first quarter ended March 31, 2014. As of March 31, 2014, Apollo's real estate segment AUM was $8.9 billion, compared to $9.4 billion at March 31, 2013.

Capital and Liquidity

As of March 31, 2014, Apollo had $1,126 million of cash and cash equivalents and $750 million of debt (which does not include a $500 million undrawn revolving credit facility). These amounts exclude cash and debt associated with Apollo's consolidated funds and consolidated variable interest entities (“VIEs”). As of March 31, 2014, Apollo had a $1,999 million carried interest receivable on an unconsolidated basis and corresponding profit sharing payable of $894 million, as well as total investments on an unconsolidated basis in its private equity, credit and real estate funds of $557 million.

Distribution

Apollo Global Management, LLC has declared a first quarter 2014 cash distribution of $0.84 per Class A share, which comprises a regular quarterly distribution of $0.15 per Class A share and a distribution of $0.69 per Class A share attributable to additional carried interest earned by our funds through realizations and Management Business earnings. This distribution will be paid on May 30, 2014 to holders of record at the close of business on May 20, 2014. 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 Thursday, May 8, 2014 at 11:00 a.m. Eastern Time. During the call, Leon Black, Chairman & CEO, Martin Kelly, Chief Financial Officer, and Gary Stein, Head of Corporate Communications, will review Apollo's financial results for the first quarter ended March 31, 2014. 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 34213342 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 34213342. 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, Toronto, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of approximately $159 billion as of March 31, 2014 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 press 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 Apollo's Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 3, 2014, as 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 press 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 press release does not constitute an offer of any Apollo fund.