Apollo Global Management, LLC Reports Financial Results for the Fourth Quarter and Year Ended Decemb

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Apollo Global Management, LLC Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2012

  • Apollo declares a distribution of $1.05 per Class A share for the fourth quarter of 2012, bringing full year distributions to $1.94 per Class A share
  • Total economic net income ("ENI") of $697 million and $1,634 million for the fourth quarter and year ended December 31, 2012, respectively, compared to $357 million of ENI and a $301 million total economic net loss for the quarter and year ended December 31, 2011, respectively
  • ENI After Taxes per Share of $1.69 and $3.82 for the fourth quarter and year ended December 31, 2012, respectively, compared to $0.80 and ($0.86) per share for the comparable periods in 2011, respectively
  • Total realized gains from carried interest income of $562 million and $997 million for the fourth quarter and year ended December 31, 2012, respectively, compared to $278 million and $645 million for the quarter and year ended December 31, 2011, respectively
  • Total assets under management ("AUM") of $113 billion as of December 31, 2012, compared to AUM of $75 billion as of December 31, 2011
  • U.S. GAAP net income attributable to Apollo Global Management, LLC of
    $172 million and $311 million for the fourth quarter and year ended December 31, 2012, respectively, compared to $11 million and $(469) million for the comparable periods in 2011, respectively

NEW YORK--(BUSINESS WIRE)-- Apollo Global Management, LLC (NYS: APO) and its consolidated subsidiaries (collectively, "Apollo") today reported results for the fourth quarter and year ended December 31, 2012.

Apollo reported ENI of $696.9 million for the fourth quarter ended December 31, 2012, compared to $356.6 million for the same period of 2011. The 95% increase in ENI was driven by favorable performance in both Apollo's Management and Incentive Businesses, which reported ENI of $64.3 million and $632.6 million for the fourth quarter ended December 31, 2012, respectively, compared to $28.0 million and $328.6 million, respectively, for the same period in 2011.


Apollo reported ENI of $1,634.4 million for the year ended December 31, 2012, compared to an economic net loss of $300.5 million for the same period of 2011. The year over year change in ENI was driven by favorable performance in both Apollo's Management and Incentive Businesses, which reported ENI of $222.9 million and $1,411.5 million for the year ended December 31, 2012, respectively, compared to $76.4 million and an economic net loss of $376.9 million, respectively, for the same period in 2011.

Apollo's total AUM was $113.4 billion as of December 31, 2012, an increase of $38.2 billion, or 51%, compared to $75.2 billion as of December 31, 2011. The increase in total AUM was primarily driven by both organic and strategic growth in the credit segment, which had $64.4 billion of AUM as of December 31, 2012, an increase of $32.5 billion, or 102%, compared to $31.9 billion as of December 31, 2011. Fee-generating AUM was $81.9 billion as of December 31, 2012, an increase of $23.8 billion, or 41%, compared to $58.1 billion as of December 31, 2011. The increase in fee-generating AUM was also primarily driven from both organic and strategic growth in Apollo's credit segment.

U.S. GAAP results for the fourth quarter ended December 31, 2012 included net income attributable to Apollo of $171.5 million, or $1.12 per Class A share, compared to $10.9 million, or $0.05 per Class A share, for the fourth quarter ended December 31, 2011. For the year ended December 31, 2012, net income attributable to Apollo was $311.0 million, or $2.06 per Class A share, compared to a net loss of $468.8 million, or $(4.18) per Class A share, for the year ended December 31, 2011.

"Our results for the fourth quarter of 2012 completed an outstanding year for Apollo and we believe further demonstrate the significant earnings and cash generating power inherent in our integrated global investment platform," said Leon Black, Chairman and Chief Executive Officer. "During 2012 we returned $11 billion to our fund investors across all of Apollo's business segments, and we generated $1.94 in cash distributions for our shareholders. As we look to 2013 and beyond, we believe Apollo is well-positioned to continue to pursue a range of alternative investment strategies and deliver strong returns to our investors."

Combined Segments

Total revenue for Apollo's Management Business was $223.2 million for the fourth quarter ended December 31, 2012, an increase of $63.8 million, or 40%, from the same period in 2011. This includes management fee revenues of $176.4 million for the fourth quarter ended December 31, 2012, an increase of $48.6 million, or 38%, from the same period in 2011, which was primarily driven by growth in fee-generating AUM within Apollo's credit segment.

Total revenue for Apollo's Management Business was $810.8 million for the year ended December 31, 2012, an increase of $193.8 million, or 31%, from the same period in 2011. This includes management fee revenues of $623.0 million for the year ended December 31, 2012, which increased $132.8 million, or 27%, from the same period in 2011, and advisory and transaction fee revenue of $150.0 million for the year ended December 31, 2012, which increased $67.7 million, or 82%, from the same period in 2011.

Apollo's Incentive Business reported $962.3 million of total carried interest income for the fourth quarter ended December 31, 2012, an increase of $473.1 million, or 97%, from the same period in 2011. As previously mentioned, there was $561.6 million of realized gains from carried interest income for the fourth quarter of 2012, an increase of $283.4 million, or 102%, compared to the same period in 2011. The increase in realized gains from carried interest income was largely attributable to dispositions of investments held in LyondellBasell and Charter Communications, Inc. by funds managed by Apollo during the fourth quarter of 2012.

Apollo's Incentive Business reported $2,163.6 million of total carried interest income for the year ended December 31, 2012, compared to ($442.0) million for the same period in 2011. There were $997.2 million of realized gains from carried interest income for the year ended December 31, 2012, an increase of $352.6 million, or 55%, compared to the same period in 2011.

Total expenses for Apollo's Management Business were $164.1 million for the fourth quarter ended December 31, 2012, an increase of $33.2 million, or 25%, from the same period in 2011. Total expenses for Apollo's Management Business were $600.2 million for the year ended December 31, 2012, an increase of $56.9 million, or 10%, compared to the same period in 2011. The increase in total expenses for the quarter and year ended December 31, 2012 was partially driven by $8.2 million and $18.4 million of higher placement fees, respectively, primarily due to the larger amount of capital that was raised in 2012 compared to 2011.

Private Equity Segment

ENI from Apollo's private equity segment was $609.0 million for the fourth quarter of 2012, compared to $232.4 million for the fourth quarter of 2011. The significant quarter over quarter increase was largely driven by total carried interest income of $873.1 million for the fourth quarter of 2012, compared to $328.7 million for the fourth quarter of 2011.

Apollo's private equity funds, as measured by internal rate of return ("IRR"), continued to perform well during the fourth quarter of 2012. From its inception in 2008 through December 31, 2012, Fund VII generated an annual gross and net IRR of 35% and 26%, respectively. Fund VI, which began investing in 2006, generated an annual gross and net IRR of 11% and 9%, respectively, since its inception through December 31, 2012. The combined fair value of Apollo's private equity funds, excluding A.P. Alternative Assets, L.P. ("AAA") was 57% above cost as of December 31, 2012 and appreciated by 9% during the fourth quarter of 2012. Uncalled private equity commitments were $7.5 billion as of December 31, 2012, which includes over $1 billion from Apollo's natural resources fund.

The favorable performance of the underlying investments in Fund VII and Fund VI had a meaningful impact on Apollo's carried interest income for the fourth quarter of 2012. There was $200.9 million and $592.8 million of total carried interest income related to Fund VII and Fund VI, respectively, for the fourth quarter ended December 31, 2012, compared to $356.4 million and $2.6 million, respectively, for the same period in 2011. The significant increase in total carried interest income for Fund VI was largely impacted by the 80-20 "catch-up" of unrealized carried interest income. The 80-20 catch-up went into effect after Fund VI fully reversed the related $170.2 million general partner obligation to return previously distributed carried interest income that existed as of September 30, 2012. The reversal of this general partner obligation primarily resulted from the unrealized appreciation of Fund VI's public portfolio company holdings during the fourth quarter ended December 31, 2012, including both Realogy and LyondellBasell.

Credit Segment

ENI from Apollo's credit segment was $90.0 million for the fourth quarter ended December 31, 2012, compared to $139.6 million for the fourth quarter of 2011. The quarter over quarter decline in ENI was largely driven by total carried interest income of $84.8 million during the fourth quarter of 2012, compared to $160.5 million during the fourth quarter of 2011. In addition, the income from equity method investments and net gains from investment activities was collectively $18.7 million for the fourth quarter ended December 31, 2012, compared to $24.8 million for the same period in 2011.

Management fees from Apollo's credit segment were $92.0 million for the fourth quarter ended December 31, 2012, which increased by $42.0 million compared to the same period in 2011. Total Management Business expenses within the credit segment were $86.6 million for the fourth quarter of 2012, which increased by $41.1 million compared to the same period in 2011. The increases in both management fees and expenses were largely driven by the acquisitions of Stone Tower Capital LLC and Gulf Stream Asset Management LLC which closed on April 2, 2012 and October 24, 2011, respectively. During the fourth quarter of 2012, $1.2 billion of additional capital was raised across Apollo's credit platform, including over $900 million dedicated to Apollo's European loan strategies.

Real Estate Segment

Apollo's real estate segment had an economic net loss of $2.1 million for the fourth quarter of 2012, compared to a $15.4 million loss for the fourth quarter of 2011. Total revenues for the real estate segment during the fourth quarter of 2012 were $16.6 million, an increase of $5.6 million or 51% compared to $11.0 million for the same period in 2011. The increase in revenues during the fourth quarter of 2012 was largely due to a $4.4 million increase in total carried interest income. As of December 31, 2012, Apollo's real estate AUM was $8.8 billion, compared to $8.0 billion at December 31, 2011.

Capital and Liquidity

As of December 31, 2012, Apollo had $946 million of cash and cash equivalents and $738 million of debt. These amounts exclude cash and debt associated with Apollo's consolidated funds and consolidated variable interest entities ("VIEs"). As of December 31, 2012, Apollo had a $1,878.3 million carried interest receivable and corresponding profit sharing payable of $857.7 million as well as total investments in its private equity, credit and real estate funds of $444 million, excluding investments held by consolidated VIEs and consolidated funds.

Distribution

Apollo Global Management, LLC has declared a fourth quarter 2012 cash distribution of $1.05 per Class A share, which comprises a regular distribution of $0.07 per Class A share and a quarterly distribution of $0.98 per Class A share primarily attributable to fund realizations and interest and dividend income earned by our funds. This distribution will be paid on February 28, 2013 to holders of record at the close of business on February 20, 2013.

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.

2012 Schedule K-1 Distribution

The 2012 schedules K-1 will be available on or about March 15, 2013 and can be accessed via www.partnerdatalink.com/Apollo. You can visit this site now to register your email address to be notified when the 2012 schedules K-1 are available to be downloaded. Please note that the income, gain, loss, deduction, or credit reported to you on schedule K-1 is independent of the annual cash generated and the annual cash distributions made by Apollo. As a partnership for U.S. federal income tax purposes, investors in Apollo are required to report their share of the income, gain, loss, deduction, or credit that is allocated to them from Apollo. The U.S. federal taxable income of Apollo is determined by using the applicable U.S. federal income tax rules, and these amounts may vary from year to year depending on the nature of the income of Apollo and the activity of its subsidiaries.

Conference Call

Apollo will host a conference call on Friday, February 8, 2013 at 10:00 a.m. EST. 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 fourth quarter and full year 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 87404740 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 87404740. 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 $113 billion as of December 31, 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
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(dollars in thousands, except share data)
 
Three Months Ended
December 31,
 2012   2011 
Revenues:
Advisory and transaction fees from affiliates$37,382$22,144
Management fees from affiliates162,488125,556
Carried interest income from affiliates 959,351  498,294 
Total Revenues 1,159,221  645,994 
 
Expenses:
Compensation and benefits:
Equity-based compensation163,267290,580
Salary, bonus and benefits69,90846,307
Profit sharing expense

365,086

211,984
Incentive fee compensation 

367

  694 
Total Compensation and Benefits598,628549,565
Interest expense8,0339,851
Professional fees24,83321,959
General, administrative and other21,15119,883
Placement fees8,927806
Occupancy9,85810,274
Depreciation and amortization 16,215  6,625 
Total Expenses 687,645  618,963 
 
Other Income:
Net gains from investment activities138,28720,580

Net (losses) gains from investment activities of consolidated

variable interest entities

(41,791)24,242
Income from equity method investments26,98243,165
Interest and dividend income2,6003,191
Other income (loss), net 5,010  (973)
Total Other Income 131,088  90,205 
Income before income tax provision602,664117,236
Income tax provision (18,283) (19,406)
Net Income584,38197,830
Net (income) attributable to Non-Controlling Interests (412,872) (86,897)

Net Income Attributable to Apollo Global

Management, LLC


$

171,509
 
$

10,933
 
 
Distributions Declared per Class A Share$0.40 $0.20 
 
Net Income Per Class A Share:
Net Income Available to Class A Share - Basic and Diluted$1.12 $0.05 
Weighted Average Number of Class A Shares - Basic 130,027,037  123,551,847 
Weighted Average Number of Class A Shares - Diluted 132,678,221  123,551,847 
 
     
APOLLO GLOBAL MANAGEMENT, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(dollars in thousands, except share data)
 
 2012  2011  2010 
Revenues:
Advisory and transaction fees from affiliates$149,544$81,953$79,782
Management fees from affiliates580,603487,559431,096
Carried interest (loss) income from affiliates 2,129,818  (397,880) 1,599,020 
Total Revenues 2,859,965  171,632  2,109,898 
 
Expenses:
Compensation and benefits:
Equity-based compensation598,6541,149,7531,118,412
Salary, bonus and benefits274,574251,095249,571
Profit sharing expense

871,394

(63,453)555,225
Incentive fee compensation 

739

  3,383  20,142 
Total Compensation and benefits1,745,3611,340,7781,943,350
 
Interest expense37,11640,85035,436
Professional fees64,68259,27761,919
General, administrative and other87,96175,55865,107
Placement fees22,2713,9114,258
Occupancy37,21835,81623,067
Depreciation and amortization 53,236  26,260  24,249 
Total Expenses 2,047,845  1,582,450  2,157,386 
 
Other Income:
Net gains (losses) from investment activities288,244(129,827)367,871
Net (losses) gains from investment activities of consolidated variable interest entities(71,704)24,20148,206
Income from equity method investments110,17313,92369,812
Interest and dividend income9,6934,7311,528
Other income, net 1,964,679  205,520  195,032 
Total Other Income 2,301,085  118,548  682,449 
Income (loss) before income tax provision3,113,205(1,292,270)634,961
Income tax provision (65,410) (11,929) (91,737)
Net Income (Loss)3,047,795(1,304,199)543,224
Net (income) loss attributable to Non-Controlling Interests (2,736,838) 835,373  (448,607)
Net Income (Loss) Attributable to Apollo Global Management, LLC$310,957 $(468,826) Read Full Story

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