Apollo Global Management, LLC Reports Third Quarter 2014 Results

• U.S. GAAP net income attributable to Apollo Global Management, LLC of $2.2 million for the third quarter ended September 30, 2014, compared to $192.5 million for the comparable period in 2013
• Apollo declares a distribution of $0.73 per Class A share for the third quarter of 2014
• Total economic net income (“ENI”) after taxes of $48.0 million for the third quarter ended September 30, 2014, compared to $550.9 million for the comparable period in 2013
• ENI after taxes per share of $0.12 for the third quarter ended September 30, 2014, compared to $1.40 per share for the comparable period in 2013
• Total distributable earnings (“DE”) after taxes and related payables of $342.7 million for the third quarter ended September 30, 2014, compared to $455.6 million for the comparable period in 2013
• Total assets under management (“AUM”) of $163.9 billion as of September 30, 2014, compared to $112.7 billion as of September 30, 2013

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

U.S. GAAP results for the third quarter ended September 30, 2014 included net income attributable to Apollo Global Management, LLC of $2.2 million and net loss per Class A share of $0.05, compared to $192.5 million, or $1.13 per Class A share, for the same period in 2013. The net loss per Class A share during the current quarter is a result of undistributed GAAP losses in excess of distributions paid to Class A shareholders during the quarter.

Apollo reported ENI after taxes of $48.0 million for the third quarter ended September 30, 2014, compared to $550.9 million for the same period in 2013. The $502.9 million decrease in ENI after taxes was driven by lower Incentive Business ENI, partially offset by an increase in Management Business ENI.

Apollo reported DE after taxes and related payables of $342.7 million for the third quarter ended September 30, 2014, compared to $455.6 million for the same period in 2013. The $112.9 million decrease in DE after taxes and related payables was primarily driven by lower net realized carried interest income compared to the same period in 2013.

Apollo’s total AUM was $163.9 billion as of September 30, 2014, an increase of $51.2 billion, or 45%, compared to $112.7 billion as of September 30, 2013. Fee-generating AUM was $129.6 billion as of September 30, 2014, an increase of $50.3 billion, or 63%, compared to $79.3 billion as of September 30, 2013. The increase in total AUM and fee-generating AUM was driven by growth in Apollo’s credit and private equity segments.

“During the third quarter, we sustained our pace of significant realization activity and distributed nearly $4.6 billion to Apollo’s fund investors, bringing the total to $16.5 billion in the last four quarters,” said Leon Black, Chairman and Chief Executive Officer. “In the current market environment, we continue to leverage Apollo’s integrated global platform to raise and deploy capital across all of our businesses, while maintaining our strong investment performance.”

Combined Segments

Total revenue for Apollo’s combined segments was $241.1 million for the third quarter ended September 30, 2014, a decrease of $912.3 million, or 79%, compared to the same period in 2013, due to a decrease in Incentive Business revenues of $1.0 billion due primarily to a $871.6 million decrease in unrealized carried interest, partially offset by an increase in Management Business revenues of $107.9 million. Total expenses for Apollo’s combined segments were $171.5 million for the third quarter ended September 30, 2014, a decrease of $413.4 million, or 71%, compared to the same period in 2013, primarily driven by a decrease in profit sharing expense.

Total revenue for Apollo's Management Business was $311.1 million for the third quarter ended September 30, 2014, an increase of $107.9 million, or 53%, from the same period in 2013. This includes management fee revenues of $227.7 million for the third quarter ended September 30, 2014, an increase of $62.5 million, or 38%, from the same period in 2013, primarily due to an increase in fee-generating AUM. In addition, there was $71.3 million of advisory and transaction fees for the third quarter ended September 30, 2014, an increase of $42.4 million, or 147%, from the same period in 2013 primarily due to a higher capital and surplus fee earned from Athene Holding Ltd and its subsidiaries ("Athene").

Total expenses for Apollo's Management Business were $177.2 million for the third quarter ended September 30, 2014, an increase of $16.9 million, or 11%, from the same period in 2013. Total compensation expenses, including salary and benefits and equity-based compensation, were $107.1 million for the third quarter ended September 30, 2014, an increase of $9.3 million, or 10%, from the same period in 2013. This increase was principally driven by increased headcount to support growth in fee-generating AUM. Non-compensation expenses for Apollo's Management Business were $70.1 million during the third quarter ended September 30, 2014, an increase of $7.6 million from the same period in 2013 primarily due to placement fees.

Apollo's Incentive Business reported total carried interest loss of $70.0 million for the third quarter ended September 30, 2014, a decrease of $1.0 billion from the same period in 2013. Apollo reported a net reversal of total profit sharing expense of $5.7 million for the third quarter ended September 30, 2014, resulting in a decrease in total profit sharing expense of $430.3 million from the same period in 2013. The decrease in total profit sharing expense was driven by the corresponding decrease in carried interest income from the same period in 2013. During the third quarter ended September 30, 2014, the Incentive Business generated $490.3 million of realized gains, which was largely attributable to partial dispositions relating to a number of investments held by funds managed by Apollo, including Sprouts Farmers Market, Inc., Rexnord Corporation, and Athlon Energy, Inc., and a final disposition of Berry Plastics Group Inc.

Private Equity Segment

Apollo's private equity segment reported an economic net loss of $23.1 million for the third quarter ended September 30, 2014, compared to an economic net income of $538.5 million for the same period in 2013. Apollo’s private equity segment had a net unrealized carried interest loss of $79.5 million for the third quarter ended September 30, 2014, which included realized carried interest income of $370.0 million that was largely driven by dispositions in Apollo Investment Fund VI, L.P. ("Fund VI") and Apollo Investment Fund VII, L.P. ("Fund VII").

Apollo's traditional private equity funds depreciated by approximately 2% during the third quarter ended September 30, 2014. From its inception in 2008 through September 30, 2014, Fund VII generated an annual gross and net IRR of 38% and 29%, respectively. Fund VI, which began investing in 2006, generated an annual gross and net IRR of 13% and 11%, respectively, since its inception through September 30, 2014.

Management fees from Apollo's private equity segment were $76.8 million for the third quarter ended September 30, 2014, which increased by $12.0 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 Fund VI and Fund VII as well as a change in the fee basis with respect to Fund VII. Advisory and transaction fees were $11.8 million for the third quarter ended September 30, 2014, which increased by $6.2 million compared to the same period in 2013 primarily due to a transaction fee associated with a recent acquisition. Total Management Business expenses within the private equity segment were $51.1 million for the third quarter of 2014, which decreased by $5.4 million compared to the same period in 2013.

Uncalled commitments within Apollo's private equity segment were $22.4 billion as of September 30, 2014, and $901 million of capital was deployed by these funds and co-investment vehicles during the third quarter ended September 30, 2014. As of September 30, 2014, Apollo's private equity segment total AUM was $46.2 billion, compared to $42.8 billion at September 30, 2013.

Credit Segment

Apollo's credit segment generated ENI of $109.2 million for the third quarter ended September 30, 2014, compared to ENI of $79.5 million for the third quarter of 2013. The $29.7 million year-over-year increase in ENI resulted from an increase in ENI in the Management Business, which generated ENI of $97.7 million for the third quarter ended September 30, 2014, compared to $47.6 million for the same period in 2013 as a result of higher management fees and advisory and transaction fees. This was offset by a reduction in ENI in the Incentive Business, which generated ENI of $11.5 million for the third quarter ended September 30, 2014, compared to $31.9 million for the same period in 2013 as a result of lower net carried interest income.

Management fees from Apollo's credit segment were $139.7 million for the third quarter ended September 30, 2014, which increased by $52.7 million, or 61%, 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 $111.2 million for the third quarter of 2014, which increased by $26.9 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 $9.2 billion as of September 30, 2014, and $917 million of capital was deployed by Apollo's credit funds and strategic investment accounts ("SIAs") with a defined maturity date during the third quarter ended September 30, 2014. As of September 30, 2014, Apollo's credit segment total AUM was $107.7 billion, compared to $59.4 billion at September 30, 2013.

Real Estate Segment

Apollo's real estate segment had an economic net loss of $2.9 million for the third quarter of 2014, compared to an economic net loss of $3.1 million for the same period in 2013. Total revenues for the real estate segment during the third quarter of 2014 were $8.5 million, a decrease of $8.2 million, compared to the same period in 2013, primarily due to lower carried interest compared to the same period in 2013. Total expenses for the real estate segment during the third quarter of 2014 were $11.6 million, a decrease of $9.8 million compared to the same period in 2013 due to lower profit share expense and lower Management Business compensation compared to the same period in 2013.

Uncalled commitments within Apollo's real estate segment were $898 million as of September 30, 2014, and $369 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 third quarter ended September 30, 2014. As of September 30, 2014, Apollo's real estate segment total AUM was $9.0 billion, compared to $9.3 billion at September 30, 2013.

Capital and Liquidity

As of September 30, 2014, Apollo had $1.4 billion of cash and cash equivalents and $1.0 billion 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 September 30, 2014, Apollo had a $1.5 billion carried interest receivable on an unconsolidated basis and corresponding profit sharing payable of $755.3 million, as well as total investments on an unconsolidated basis, including investments in its private equity, credit and real estate funds, of $822 million.

Distribution

Apollo Global Management, LLC has declared a third quarter 2014 cash distribution of $0.73 per Class A share. This distribution will be paid on November 21, 2014 to holders of record at the close of business on November 14, 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 in the future.

Conference Call

Apollo will host a conference call on Thursday, October 30, 2014 at 8:00 a.m. Eastern Time. During the call, members of Apollo’s senior management team will review Apollo's financial results for the third quarter ended September 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 12339063 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 12339063. 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 $164 billion as of September 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.