Apollo Global Management, LLC Reports Second Quarter 2014 Results

• U.S. GAAP net income attributable to Apollo Global Management, LLC of $72 million for the second quarter ended June 30, 2014, compared to $59 million for the comparable period in 2013
• Apollo declares a distribution of $0.46 per Class A share for the second quarter of 2014
• Total economic net income (“ENI”) after taxes of $208 million for the second quarter ended June 30, 2014, compared to $220 million for the comparable period in 2013
• ENI after taxes per share of $0.52 for the second quarter ended June 30, 2014, compared to $0.56 per share for the comparable period in 2013
• Total distributable earnings (“DE”) after taxes and related payables of $227 million for the second quarter ended June 30, 2014, compared to $604 million for the comparable period in 2013
• Total assets under management (“AUM”) of $168 billion as of June 30, 2014, compared to $113 billion as of June 30, 2013

NEW YORK--(BUSINESS WIRE)--Aug. 6, 2014-- Apollo Global Management, LLC (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”) today reported results for the second quarter ended June 30, 2014.

U.S. GAAP results for the second quarter ended June 30, 2014 included net income attributable to Apollo Global Management, LLC of $71.7 million, or $0.33 per Class A share, compared to $58.7 million, or $0.32 per Class A share, for the same period in 2013.

Apollo reported ENI after taxes of $207.5 million for the second quarter ended June 30, 2014, compared to $220.1 million for the same period in 2013. The $12.6 million decrease in ENI after taxes was driven by a higher tax provision and increased profit sharing expense, partially offset by higher Management Business ENI.

Apollo reported DE after taxes and related payables of $227.1 million for the second quarter ended June 30, 2014, compared to $603.9 million for the same period in 2013. The $376.8 million decrease in DE was driven by lower net realized carried interest income from Apollo's private equity segment compared to the same period in 2013.

Apollo’s total AUM was $167.5 billion as of June 30, 2014, an increase of $54.4 billion, or 48%, compared to $113.1 billion as of June 30, 2013. Fee-generating AUM was $130.3 billion as of June 30, 2014, an increase of $51.0 billion, or 64%, compared to $79.3 billion as of June 30, 2013. The increase in total AUM and fee-generating AUM was driven by growth in Apollo's credit and private equity segments.

"In the current market environment, just as we have done throughout all market cycles since Apollo’s founding in 1990, we remain disciplined and patient as we seek attractive opportunities by utilizing the firm’s integrated global platform and value-oriented investment approach. During the first half of 2014, the funds we manage have already invested or committed more than $7 billion in aggregate across Apollo’s businesses,” said Leon Black, Chairman and Chief Executive Officer. “We also continue to opportunistically monetize the portfolio of investment funds we manage, and during the first half of 2014 these funds have returned more than $6 billion to Apollo's fund investors.”

Combined Segments

Total revenue for Apollo's combined segments was $579.1 million for the second quarter ended June 30, 2014, an increase of $69.0 million, or 14%, compared to the same period in 2013, due to a $55.2 million increase in Management Business revenues and a $13.8 million increase in Incentive Business revenues. Total expenses for Apollo’s combined segments were $330.0 million for the second quarter ended June 30, 2014, an increase of $45.4 million, or 16%, compared to the same period in 2013, primarily driven by an increase in profit sharing expense.

Total revenue for Apollo's Management Business was $299.7 million for the second quarter ended June 30, 2014, an increase of $55.2 million, or 23%, from the same period in 2013. This includes management fee revenues of $228.9 million for the second quarter ended June 30, 2014, an increase of $59.6 million, or 35%, from the same period in 2013 primarily due to an increase in fee-generating AUM. In addition, there was $60.8 million of advisory and transaction fees for the second quarter ended June 30, 2014, a decrease of $4.3 million, or 7%, from the same period in 2013.

Total expenses for Apollo's Management Business were $169.4 million for the second quarter ended June 30, 2014, an increase of $12.0 million, or 8%, from the same period in 2013. Total compensation expenses, including salary and benefits and equity-based compensation, were $103.6 million for the second quarter of 2014, an increase of $17.5 million, or 20%, from the same period in 2013. This increase was driven by increased headcount to support growth in fee generating AUM. Non-compensation expenses for Apollo's Management Business were $65.8 million during the second quarter ended June 30, 2014, a decrease of $5.5 million from the same period in 2013 primarily due to lower interest expense.

Apollo's Incentive Business reported $279.4 million of total carried interest income for the second quarter ended June 30, 2014, an increase of $13.8 million from the same period in 2013. Apollo reported total profit sharing expense of $160.6 million for the second quarter ended June 30, 2014, an increase of $33.4 million from the same period in 2013. Total profit sharing expense increased more than total carried interest income primarily due to the mix of funds that generated carried interest income during the period. During the second quarter ended June 30, 2014, the Incentive Business generated $241.7 million of realized gains, which was largely attributable to dispositions relating to a number of investments held by funds managed by Apollo, including Sprouts Farmers Market, Inc., Rexnord Corporation, Berry Plastics Group Inc., and Brit PLC.

Private Equity Segment

Apollo's private equity segment generated ENI of $119.1 million for the second quarter ended June 30, 2014, compared to $175.7 million for the same period in 2013. The year-over-year decrease in ENI was largely driven by lower carried interest income of $187.6 million for the second quarter of 2014, compared to $228.5 million for the second quarter of 2013.

Apollo's traditional private equity funds continued to perform well as measured by internal rate of return (“IRR”) and the funds appreciated by approximately 5% during the second quarter ended June 30, 2014. From its inception in 2008 through June 30, 2014, Apollo Investment Fund VII, L.P. ("Fund VII") generated an annual gross and net IRR of 39% and 30%, respectively. Apollo Investment Fund VI, L.P. ("Fund VI"), which began investing in 2006, generated an annual gross and net IRR of 14% and 11%, respectively, since its inception through June 30, 2014. The combined fair value of Apollo's private equity funds, including AP Alternative Assets, L.P. (“AAA”), was 58% above cost as of June 30, 2014.

Management fees from Apollo's private equity segment were $82.1 million for the second quarter ended June 30, 2014, which increased by $16.4 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 change in the fee basis with respect to Fund VII. Advisory and transaction fees were $5.2 million for the second quarter ended June 30, 2014, which decreased by $36.6 million compared to the same period in 2013 due to the absence of a one-time termination fee in connection with the initial public offering of Taminco Corporation and other portfolio company transaction fees that did not recur in the current period. Total Management Business expenses within the private equity segment were $54.3 million for the second quarter of 2014, which decreased by $5.7 million compared to the same period in 2013.

Uncalled commitments within Apollo's private equity segment were $23.5 billion as of June 30, 2014, and $0.4 billion of capital was deployed by these funds during the second quarter ended June 30, 2014. As of June 30, 2014, Apollo's private equity segment AUM was $51.6 billion, compared to $40.2 billion at June 30, 2013.

Credit Segment

Apollo's credit segment generated ENI of $144.3 million for the second quarter ended June 30, 2014, compared to ENI of $67.4 million for the second quarter of 2013. The year-over-year increase in ENI resulted from an increase in ENI in the Management Business, which generated ENI of $99.3 million for the second quarter of 2014, compared to $41.6 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 $134.6 million for the second quarter ended June 30, 2014, which increased by $44.2 million, or 49%, compared to the same period in 2013 primarily due to higher fee-generating AUM from Athene Holding Ltd. and its subsidiaries ("Athene"). Total Management Business expenses within the credit segment were $101 million for the second quarter of 2014, which increased by $19.3 million compared to the same period in 2013, primarily due to costs associated with managing a greater amount of fee-generating AUM.

Uncalled commitments within our credit segment were $7.4 billion as of June 30, 2014, and $1.0 billion of capital was deployed by Apollo's credit funds and strategic investment accounts ("SIAs") with a defined maturity date during the second quarter ended June 30, 2014. As of June 30, 2014, Apollo's credit segment AUM was $105.7 billion, compared to $62.2 billion at June 30, 2013.

Real Estate Segment

Apollo's real estate segment had an economic net income of $3.6 million for the second quarter of 2014, compared to an economic net loss of $1.4 million for the same period in 2013. Total revenues for the real estate segment during the second quarter of 2014 were $17.1 million, an increase of $8.8 million, compared to the same period in 2013. Total expenses for the real estate segment during the second quarter of 2014 were $16.9 million, an increase of $6.1 million compared to the same period in 2013. Income from equity method investments for the real estate segment during the second quarter of 2014 was $3.2 million, an increase of $2.4 million compared to the same period in 2013.

Uncalled commitments within Apollo's real estate segment were $875 million as of June 30, 2014, and $882 million of capital was deployed by Apollo's real estate funds and SIAs with a defined maturity date and funds and SIAs in Apollo's real estate debt strategy during the second quarter ended June 30, 2014. As of June 30, 2014, Apollo's real estate segment AUM was $9.1 billion, compared to $9.5 billion at June 30, 2013.

Capital and Liquidity

As of June 30, 2014, Apollo had $1,094 million of cash and cash equivalents and $999 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”).

On May 30, 2014, Apollo Management Holdings, L.P., a subsidiary of Apollo Global Management, LLC, issued $500 million of 4.000% senior notes due 2024. The senior notes are rated A and A- by Standard and Poor’s and Fitch, respectively.

As of June 30, 2014, Apollo had a $2,050 million carried interest receivable on an unconsolidated basis and corresponding profit sharing payable of $964 million, as well as total investments on an unconsolidated basis in its private equity, credit and real estate funds of $797 million.

Distribution

Apollo Global Management, LLC has declared a second quarter 2014 cash distribution of $ 0.46 per Class A share, which comprises a regular quarterly distribution of $0.15 per Class A share and a distribution of $0.31 per Class A share attributable to additional carried interest earned by Apollo's funds through realizations and Management Business earnings. This distribution will be paid on August 29, 2014 to holders of record at the close of business on August 22, 2014. Apollo intends to distribute to its shareholders on a quarterly basis substantially all of its distributable earnings after taxes and related payables 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 Wednesday, August 6, 2014 at 11:00 a.m. Eastern Time. During the call, members of Apollo’s senior management team will review Apollo's financial results for the second quarter ended June 30, 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 71623183 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 71623183. 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 $168 billion as of June 30, 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

In this press release, references to “Apollo,” “we,” “us,” “our” and the “Company” refer collectively to Apollo Global Management, LLC, together with its consolidated subsidiaries. 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.

APOLLO GLOBAL MANAGEMENT, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(dollars in thousands, except share data)