-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A63JebkwGdHhbvCE0qMQcDY6mVr7PgEgriwiZ5rVbBer+8OQWYTL3Js45x2n9wy/ OKcJjS9aW+CO2LHTuEU3Hw== 0000947871-04-002502.txt : 20041108 0000947871-04-002502.hdr.sgml : 20041108 20041108171659 ACCESSION NUMBER: 0000947871-04-002502 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041108 DATE AS OF CHANGE: 20041108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APOLLO INVESTMENT CORP CENTRAL INDEX KEY: 0001278752 IRS NUMBER: 522439556 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 814-00646 FILM NUMBER: 041126654 MAIL ADDRESS: STREET 1: 1301 AVENUE OF THE AMERICAS STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: APOLLO CAPITAL CORP DATE OF NAME CHANGE: 20040204 10-Q 1 f10q_110604.txt FORM 10-Q FORM 10-Q - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended September 30, 2004 | | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 333-112591 APOLLO INVESTMENT CORPORATION (Exact name of registrant as specified in its charter) Maryland 52-2439556 [GRAPHIC OMITTED] [GRAPHIC OMITTED] (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9 West 57th Street, 43rd floor, New York, N.Y. 10019 (Address of principal executive office) (Zip Code) (212) 515-3200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes |_| No |X| Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of September 30, 2004 was 62,079,760. - ------------------------------------------------------------------------------- APOLLO INVESTMENT CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2004 TABLE OF CONTENTS PART I FINANCIAL INFORMATION PAGE Item 1. FINANCIAL STATEMENTS (unaudited) 3 Balance Sheet as of September 30, 2004 3 Statement of Operations for the quarter ended September 30, 2004 and for the period April 8, 2004* through September 30, 2004 4 Statement of Stockholders' Equity for the period April 8, 2004* through September 30, 2004 5 Statement of Cash Flows for the period April 8, 2004* through September 30, 2004 6 Schedule of Investments as of September 30, 2004 7 Notes to Financial Statements 9 Report of Independent Registered Public Accounting Firm 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 Item 4. Controls and Procedures 18 PART II OTHER INFORMATION Item 1. Legal Proceedings 18 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities 18 Item 3. Defaults upon Senior Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20 * Commencement of operations 2 - ------------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION In this Quarterly Report, "Company", "AIC", "Fund", "we", "us" and "our" refer to Apollo Investment Corporation unless the context otherwise states. Item 1. Financial Statements (unaudited) Apollo Investment Corporation Balance Sheet (unaudited) (in thousands, except per share amounts) September 30, 2004 (unaudited) Assets Cash $ 644 Cash equivalents, at fair value (cost - $1,141,697) 1,141,620 Investments, at fair value (cost - $403,152) 409,093 Interest receivable 4,950 Other assets 799 ----------- Total assets $ 1,557,106 Liabilities Payable for investments purchased $ 679,595 Management fee payable 1,434 Accrued expenses 945 ----------- Total liabilities $ 681,974 Stockholders' Equity Common stock, par value $.001 per share, 100,000,000 common shares authorized, 62,079,760 issued and outstanding $ 62 Paid-in capital in excess of par 871,211 Accumulated net investment income 786 Dividends paid to stockholders (2,790) Accumulated net realized losses (1) Net unrealized appreciation 5,864 ----------- 875,132 Total stockholders' equity $ ----------- Total liabilities and stockholders' equity $ 1,557,106 See notes to financial statements. 3 - ------------------------------------------------------------------------------- Apollo Investment Corporation Statement of Operations (unaudited) (in thousands, except per share amounts) Quarter April 8, 2004* Ended through September 30, 2004 September 30, 2004 ------------------ ------------------ Operating Income Interest income $7,865 $11,670 Other income 24 26 -------- ---------- Total operating income 7,889 11,696 Operating Expenses Management fees $4,398 $8,411 Insurance expenses 404 773 General and administrative expenses 824 1,726 -------- ---------- Total operating expenses 5,626 10,910 -------- ---------- Net operating income before investment gains and losses $2,263 $786 Net realized loss on investments (1) (1) Net change in unrealized appreciation 3,524 5,864 -------- ---------- Net increase in stockholders' equity resulting from operations $5,786 $6,649 Earnings per common share (see note 6) $0.093 $0.107 * Commencement of operations See notes to financial statements. 4 - -------------------------------------------------------------------------------- Apollo Investment Corporation Statement of Stockholders' Equity (unaudited) For the period April 8, 2004* through September 30, 2004 (in thousands, except shares)
Common Stock Paid-in Capital Total in Excess Accumulated Stockholders' Shares Amount of Par Earnings Equity ------ ------ -------------- ----------- -------------- Balance at April 8, 2004* 100 $0 $1 $0 $1 Issuance of common stock from public offering (net of underwriting costs) 62,000,000 62 871,813 871,875 Offering costs (1,722) (1,722) Net increase in stockholders' equity resulting from operations 6,649 6,649 Shares issued in connection with dividend reinvestment plan 79,660 0 1,119 1,119 Dividends declared (2,790) (2,790) ------------ --------- ----------- ----------- ---------- Balance at September 30, 2004 62,079,760 $62 $871,211 $3,859 $875,132
* Commencement of operations See notes to financial statements. 5 - ------------------------------------------------------------------------------- Apollo Investment Corporation Statement of Cash Flows (unaudited) (in thousands) For the period April 8, 2004* through September 30, 2004 Cash Flows from Operating and Investing Activities: Net Increase in Stockholders' Equity Resulting from Operations $6,649 Adjustments to reconcile net increase: Increase in interest receivable (4,950) Increase in pre-paid assets (799) Increase in management fee payable 1,434 Increase in accrued expenses 945 Payable for cash equivalents purchased 649,595 Payable for investments purchased 30,000 Purchase of investment securities (403,152) Unrealized appreciation on investments (5,941) Net realized loss on investments 1 ---------- Net Cash Used by Operating and Investing Activities $273,782 Cash Flows from Financing Activities: Net proceeds from the issuance of common stock $871,875 Offering costs from the issuance of common stock (1,722) Dividends paid in cash (1,672) --------- Net Cash Provided by Financing Activities $868,481 NET INCREASE IN CASH AND CASH EQUIVALENTS $1,142,263 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1 ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,142,264 * Commencement of operations See notes to financial statements. 6 - ------------------------------------------------------------------------------- Apollo Investment Corporation Schedule of Investments (unaudited) September 30, 2004 (in thousands, except warrants/shares)
Principal Portfolio Company (1) Industry Amount Cost Fair Value (2) --------------------- -------- ------ ---- -------------- Subordinated Debt/Corporate Notes - 13.7% - ------------------------------------------ Anthony International, 13.50%, due 09/01/12 Manufacturing $9,500 $9,359 $9,500 Invista Corporation, 9.25%, due 05/01/12 Chemicals 35,000 35,000 37,450 Language Line Holdings, Inc., 0% / 14.125%, due 06/15/13 Business Services 16,867 8,954 9,108 Language Line Inc., 11.125%, due 06/15/12 Business Services 14,500 14,187 14,935 N.E.W. Customer Service Companies Inc., 12.50%, due 08/17/11 Consumer Services 26,680 23,309 23,276 N.E.W. Customer Service Companies Inc., 14.00% Convertible, due 08/17/13 Consumer Services 8,320 8,320 8,320 TDS Logistics, Inc., 14.75%, due 02/26/10 Logistics 17,500 17,199 17,500 ----------- -------------- Total Subordinated Debt/Corporate Notes $116,328 $120,089 ----------- -------------- Common Stock/Warrants- .7% Warrants/Shares N.E.W. Customer Service Companies Inc. Consumer Services 1,105,961 wts. $3,404 $3,404 TDS Logistics Inc. Logistics 250,000 shs. 2,500 2,500 ----------- -------------- $5,904 $5,904 Principal Amount Bank Debt/Senior Secured Debt (3) - 32.3% Amerco Corp., due 02/27/09 Transportation $14,925 $15,145 $15,270 Anthony International, due 09/01/11 Manufacturing 13,000 12,871 13,000 Charter Communications, due 04/21/11 Cable TV 24,937 24,937 24,776 Cygnus Business Media, Inc., due 07/12/09 Media 15,000 14,929 14,962 Cygnus Business Media, Inc., due 01/12/10 Media 10,000 9,905 9,975 Directed Electronics, due 06/17/10 Electronics 4,988 4,987 5,025 EuroFresh, due 05/14/10 Agriculture 25,000 24,668 24,875 Grand Vehicle Works Holding Corp., due 07/23/11 Manufacturing 10,000 10,000 9,950 Language Line Inc., due 06/11/11 Business Services 6,908 6,891 6,990 Mueller Group Inc., due 11/01/11 [diamond symbol] Industrial 17,000 17,000 17,425 NES Rentals Holdings Inc., due 08/17/10 Equipment Rental 25,000 25,000 25,094 Vitamins, Phillips Health, LLC, due 08/23/10 Supplements 15,000 15,000 15,000 Vitamins, Phillips Health, LLC, due 08/20/11 Supplements 15,000 15,000 15,000 Prestige Brands Inc., due 10/06/11 Consumer Products 20,000 20,000 20,467 RanPak Corporation, due 03/31/10 Packaging 4,875 4,875 4,881 RanPak Corporation, due 11/26/10 Packaging 18,000 17,830 17,910 Ripplewood Phosphorus, LLC, due 07/20/11 Chemicals 6,982 6,982 7,052 Sealy Mattress Co., due 04/06/13 Consumer Products 10,000 10,000 10,163 United Industries Corporation, due 04/30/11 Consumer Products 14,925 14,925 15,135 United Industries Corporation, due 10/31/11 Consumer Products 9,975 9,975 10,150 ----------- ------------ Total Bank Debt/Senior Secured Debt $280,920 $283,100 ----------- ------------ Total Investments $403,152 $409,093 ----------- ------------
See notes to financial statements. 7 - ------------------------------------------------------------------------------- Apollo Investment Corporation Schedule of Investments (unaudited) (continued) September 30, 2004 (in thousands, except shares)
Cash Equivalents - 130.5% U.S. Treasury Bill, 1.03%, due 10/07/04 Government $204,000 $203,966 $203,945 U.S. Treasury Bill, 1.62%, due 10/15/04 Government 650,000 649,595 649,595 U.S. Treasury Bill, 1.50%, due 11/26/04 Government 140,000 139,679 139,650 U.S. Treasury Bill, 1.61%, due 12/23/04 Government 149,000 148,457 148,430 ------------ -------------- Total Cash Equivalents $1,141,697 $1,141,620 ------------ -------------- Total Investments & Cash Equivalents - 177.2% $1,544,849 $1,550,713 Liabilities in excess of other assets - (77.2%) (675,581) -------------- Net Assets - 100% $875,132
(1) None of our portfolio companies are controlled or affiliated as defined by the Investment Company Act of 1940. (2) Fair value is determined by or under the direction of the Board of Directors of the Company (see Note 2). (3) Represent floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the LIBOR (London Interbank Offer Rate) or the Prime Rate. [diamond symbol] These securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. See notes to financial statements. 8 - ------------------------------------------------------------------------------- Apollo Investment Corporation Notes To Financial Statements (unaudited) (in thousands except share and per share amounts) Note 1. Organization and Interim Financial Statements Apollo Investment Corporation ("Apollo Investment"), a Maryland corporation organized on February 2, 2004, is a newly organized closed-end, non-diversified management investment company that has filed an election to be treated as a business development company ("BDC") under the Investment Company Act of 1940. In addition, for tax purposes we have elected to be treated as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We intend to invest primarily in middle-market companies in the form of mezzanine and senior secured loans, each of which may include an equity component, and, to a lesser extent, by making direct equity investments in such companies. On April 5, 2004, Apollo Investment closed its initial public offering and sold 62,000,000 shares of its common stock at a price of $15.00 per share, less an underwriting discount and commissions totaling $0.9375 per share. We commenced operations on April 8, 2004 as we received $870.2 million in total net proceeds from the offering. Interim financial statements are prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ended March 31, 2005. Note 2. Significant Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. The significant accounting policies consistently followed by Apollo Investment are: (a) Security transactions are accounted for on the trade date; (b) Investments for which market quotations are readily available are valued at such market quotations; debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by or under the direction of our Board of Directors. Bank debt, senior secured debt and other debt securities with maturities greater than 60 days are valued by an independent pricing service or at the mean between the bid and ask prices from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). With respect to private equity securities, each investment is valued using comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public. The value is then discounted to reflect the illiquid nature of the investment. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we will use the pricing indicated by the external event to corroborate our private equity valuation. Because we expect that there will not be a readily available market value for most of the investments in our portfolio, we expect to value substantially all of our portfolio investments at fair value as determined in good faith by or under the direction of our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. 9 - ------------------------------------------------------------------------------- Apollo Investment Corporation Notes To Financial Statements (unaudited) (continued) (in thousands except share and per share amounts) With respect to our investments for which market quotations are not readily available, our Board of Directors undertakes a multi-step valuation process each quarter, as described below: (1) Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment. (2) Preliminary valuation conclusions are then documented and discussed with our senior management. (3) An independent valuation firm engaged by our Board of Directors reviews these preliminary valuations. (4) The audit committee of our Board of Directors comments on the preliminary valuation and our investment adviser and independent valuation firm responds and supplements the preliminary valuation based upon those comments. (5) The Board of Directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of our investment adviser, independent valuation firm and audit committee. The types of factors that we may take into account in fair value pricing our investments include, as relevant, the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. Determination of fair values involves subjective judgments and estimates. Accordingly, these notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements. (c) Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates value; (d) Gains or losses on the sale of investments are calculated by using the specific identification method; (e) Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis; (f) The Company intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies to make distributions of taxable income sufficient to relieve it from substantially all Federal income and excise taxes; (g) In accordance with Statement of Position 93-2 Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, book and tax basis differences relating to stockholder distributions and other permanent book and tax differences are reclassified to paid-in capital. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America; (h) Dividends and distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually. (i) Origination, facility, commitment, consent and other upfront fees received by the Company on loan agreements or other investments are typically accreted over the remaining term of the loan. 10 - ------------------------------------------------------------------------------- Apollo Investment Corporation Notes To Financial Statements (unaudited) (continued) (in thousands except share and per share amounts) Note 3. Agreements Apollo Investment has entered into an Investment Advisory and Management Agreement with the Investment Adviser, Apollo Investment Management, L.P., under which the Investment Adviser, subject to the overall supervision of Apollo Investment's Board of Directors, will manage the day-to-day operations of, and provide investment advisory services to, Apollo Investment. For providing these services, the Investment Adviser receives a fee from Apollo Investment, consisting of two components--a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 2.00% of Apollo Investment's gross assets. For services rendered under the Investment Advisory and Management Agreement during the period commencing from the closing of Apollo Investment's initial offering through and including the first six months of operations, the base management fee is payable monthly in arrears. For services rendered under the Investment Advisory and Management Agreement after that time, the base management fee is payable quarterly in arrears. For the first quarter of our operations, the base management fee is calculated based on the initial value of Apollo Investment's gross assets. Subsequently, the base management fee will be calculated based on the average value of Apollo Investment's gross assets at the end of the two most recently completed calendar quarters (we consider the date we commenced operations as a quarter end), and will be appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter are appropriately pro rated. The incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on Apollo Investment's pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus Apollo Investment's operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income does not include any realized capital gains computed net of all realized capital losses and unrealized capital depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of Apollo Investment's net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 2% base management fee. Apollo Investment pays the Investment Adviser an incentive fee with respect to the Apollo Investment's pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which Apollo Investment's pre-incentive fee net investment income does not exceed the hurdle rate; (2) 100% of Apollo Investment's pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter; and (3) 20% of the amount of Apollo Investment's pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately pro rated for any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter. The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), commencing on December 31, 2004, and will equal 20.0% of Apollo Investment's realized capital gains for the calendar year computed net of all realized capital losses and unrealized capital depreciation at the end of such year. The incentive fee determined as of December 31, 2004 will be calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation for the period ending December 31, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, the Investment Adviser received $8,410,772 in base investment advisory and management fees from Apollo Investment. 11 - ------------------------------------------------------------------------------- Apollo Investment Corporation Notes To Financial Statements (unaudited) (continued) (in thousands except share and per share amounts) Apollo Investment has also entered into an Administration Agreement with Apollo Investment Administration, LLC (the "Administrator") under which the Administrator provides administrative services for Apollo Investment. For providing these services, facilities and personnel, Apollo Investment reimburses the Administrator for Apollo Investment's allocable portion of overhead and other expenses incurred by Apollo Administration in performing its obligations under the Administration Agreement, including rent and Apollo Investment's allocable portion of its chief compliance officer and chief financial officer and their respective staffs. The Administrator will also provide on Apollo Investment's behalf managerial assistance to these portfolio companies to which Apollo Investment is required to provide such assistance. For the period April 8, 2004 (commencement of operations) through September 30, 2004, the Administrator was reimbursed $187,160 in administrative services fees from Apollo Investment. Note 4. Organizational and Offering Expenses A portion of the net proceeds of our initial public offering of 62,000,000 shares of common stock was used for organizational and offering expenses of $252,311 and $1,722,565, respectively. Organizational expenses were expensed as incurred. Offering expenses have been charged against paid-in capital in excess of par. All organizational and offering expenses were borne by Apollo Investment. Note 5. Net Asset Value Per Share At September 30, 2004, the Company's total net assets and net asset value per share were $875,131,731 and $14.10, respectively. Note 6. Earnings Per Share The following information sets forth the computation of basic and diluted net increase (decrease) in stockholders' equity per share resulting from operations for the period April 8, 2004 (commencement of operations) through September 30, 2004: Numerator for basic and diluted gain per share: $6,648,589 Denominator for basic and diluted weighted average shares: 62,000,100 Basic and diluted net increase in stockholders' equity per share resulting from operations: $0.107 Note 7. Investments As of September 30, 2004, investments and cash equivalents consisted of the following: September 30, 2004 (in thousands) --------------------------------- Cost Fair Value Subordinated Debt/Corporate Notes $116,328 $120,089 Common Stock/Warrants 5,904 5,904 Bank Debt/Senior Secured Debt 280,920 283,100 Cash Equivalents 1,141,697 1,141,620 ------------ ------------ Totals $1,544,849 $1,550,713 12 - -------------------------------------------------------------------------------- Apollo Investment Corporation Notes To Financial Statements (unaudited) (concluded) (in thousands except share and per share amounts) Note 8. Cash Equivalents Pending investment in longer-term portfolio holdings, Apollo Investment will make temporary investments in U.S. Treasury bills (of varying maturities) and repurchase agreements as outlined in our prospectus. These temporary investments will be deemed cash equivalents by us and are included in our Schedule of Investments. U.S. Treasury bills with maturities of greater than 60 days from the time of purchase will be marked-to-market as per our valuation policy. Note 9. Financial Highlights The following is a schedule of financial highlights for the period April 8, 2004 (commencement of operations) through September 30, 2004: Per Share Data: Net asset value, beginning of period $ 14.06 ---------- Net investment income 0.01 Net unrealized appreciation on investments 0.10 ---------- Net increase in stockholders' equity resulting from operations 0.11 Dividends to shareholders (0.04) Costs related to the initial public offering (0.03) ---------- Net asset value at end of period $ 14.10 ========== Per share market value at end of period $ 14.15 Total return (1) (5.36%) Shares outstanding at end of period 62,079,760 Ratio/Supplemental Data: Net assets at end of period (in millions) $ 875.1 Ratio of operating expenses to average net assets (2) 2.60% Ratio of net operating income to average net assets (2) 0.19% (1) Total return is based on the change in market price per share assuming an investment at the initial offering price of $15.00 per share. Total return also takes into account dividends and distributions, if any, reinvested in accordance with the Company's dividend reinvestment plan. Interim periods are not annualized. (2) Annualized 13 - ------------------------------------------------------------------------------- Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Apollo Investment Corporation: We have reviewed the accompanying balance sheet of Apollo Investment Corporation (the "Company") as of September 30, 2004, including the schedule of investments, and the related statements of operations for the three-month period ended September 30, 2004, and for the period April 8, 2004 (commencement of operations) through September 30, 2004, and of stockholders' equity, and the statement of cash flows for the period April 8, 2004 (commencement of operations) through September 30, 2004. These interim financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. /s/ PricewaterhouseCoopers LLP New York, New York November 8, 2004 14 - ------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements in this report that relate to estimates or expectations of our future performance or financial condition may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to: >> our future operating results; >> our business prospects and the prospects of our portfolio companies; >> the impact of investments that we expect to make; >> the dependence of our future success on the general economy and its impact on the industries in which we invest; >> the ability of our portfolio companies to achieve their objectives; >> our expected financings and investments; >> the adequacy of our cash resources and working capital; and >> the timing of cash flows, if any, from the operations of our portfolio companies. We may use words such as "anticipates," "believes," "expects," "intends", "will", "should," "may" and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made. Additional information regarding these and other risks and uncertainties is contained in our periodic filings with the Securities and Exchange Commission. Overview Apollo Investment was incorporated under the Maryland General Corporation Law in February 2004. We have elected to be treated as a business development company under the 1940 Act. As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in "qualifying assets," including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. On April 5, 2004, we completed our initial public offering and became an externally managed, non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940. In addition, for tax purposes we have elected to be treated as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended. Pursuant to these elections, we generally will not have to pay corporate-level taxes on any income we distribute to our stockholders. Portfolio and Investment Activity September 30, 2004 marks the completion of our second fiscal quarter of operations. During the three months, we invested approximately $161 million in the aggregate across seven new portfolio companies and increased our investment in two others. More specifically, we invested $65 million in the aggregate in the mezzanine debt of Anthony International and the mezzanine debt and equity of N.E.W. Customer Service Companies and TDS Logistics. Anthony International is a leading manufacturer of glass refrigerator and freezer doors and related accessories. N.E.W. Customer Service Companies is the nation's leading independent provider of extended service warranties for retailers, utilities, manufacturers, credit card issuers, and other service providers. TDS Logistics is a diversified automotive logistics company. The weighted average yield on these mezzanine debt investments is 14.9%. Our subordinated debt/corporate note investments yielded 10.6% at June 30, 2004. We also invested $95 million in the aggregate in the senior 15 - ------------------------------------------------------------------------------- secured debt of Grand Vehicle Works Holding Corp., NES Rentals Holdings, Inc., Anthony International, Phillips Health, LLC, Ripplewood Phosphorus, LLC and added to our investment in United Industries Corporation. These senior secured debt investments had a weighted average yield of 7.6%. Our senior secured debt investments yielded 6.3% at June 30, 2004. The weighted average yield on all our debt investments (excluding cash equivalents) was 8.78% at September 30, 2004 versus 7.35% at June 30, 2004. The weighted average yield on our bank debt/senior secured debt was 6.9% at September 30, 2004 versus 6.3% at June 30, 2004. Our subordinated debt/corporate notes yielded 12.8% at September 30, 2004 versus 10.6% at June 30, 2004. Yields are computed using interest rates as of the balance sheet date and include amortization of loan origination fees, original issue discount and market premium or discount, weighted by their respective costs when averaged. Through September 30, 2004, we invested approximately $404 million of the net proceeds from our initial public offering. Net proceeds were invested 13.5% in subordinated debt/corporate notes, 0.5% in common stock/warrants and 32.4% in bank debt/senior secured debt. The remaining initial capital was invested in cash equivalents. Bank debt/senior secured debt typically accrues interest at variable rates determined on the basis of a benchmark LIBOR or prime rate with stated maturities at origination that range from 5 to 10 years. While subordinated debt/corporate notes will typically accrue interest at fixed rates, some of these investments may include zero coupon, PIK and/or step bonds that accrue income on a constant yield to call or maturity basis. As a business development company, we must not acquire any assets other than "qualifying assets" specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). If we invest in an issuer that, at the time we make the investment, has outstanding securities as to which a broker or dealer may extend or maintain margin credit or "marginable securities," these acquired assets cannot normally be treated as qualifying assets. This results from the definition of "eligible portfolio company" under the 1940 Act, which in part looks to whether a company has outstanding securities that are eligible for margin credit. Amendments promulgated in 1998 by the Board of Governors of the Federal Reserve System to Regulation T under the Securities Exchange Act of 1934, as amended, or the Exchange Act, expanded the definition of marginable security to include any non-equity security. These amendments have raised questions as to whether a private company that has outstanding debt securities would qualify as an eligible portfolio company. We note that under applicable self-regulatory organization rules that govern the ability of brokers and dealers to extend margin credit, many non-equity securities issued by private companies may not be effectively marginable. To date, we do not believe that either the SEC or its staff has taken any public position with respect to the issues discussed above. We continue to monitor this issue closely and intend to adjust our investment focus as needed to comply with and/or take advantage of any future administrative position, judicial decision or legislative action. Our board of directors approved an amendment to our investment policy to eliminate the 5% limitation on investments on foreign securities. Any such investments are included in our 30% "non-qualifying assets" bucket. This change was implemented as of August 14, 2004. Results of Operations Operating Income Investment income totaled $7.9 million for the quarter versus $3.8 million for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, gross investment income totaled $11.7 million. Non-recurring other fee income of $933,750, representing closing and/or commitment fees associated with investments in portfolio companies, is accreted into operating income over the respective terms of the applicable loans. For the period April 8, 2004 (commencement of operations) through September 30, 2004, $25,837 of the $933,750 received was recognized as other income. As we continue investing the net proceeds from the initial offering, we expect to continue generating additional income at rates greater than the rates we receive on cash and cash equivalents. 16 - ------------------------------------------------------------------------------- Operating Expenses Operating expenses totaled $5.6 million for the quarter ended September 30, 2004 versus $5.3 million for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, operating expenses totaled $10.9 million. This amount consisted of investment advisory and management fees, insurance expenses, administrative services fees, professional fees, directors' fees and other general and administrative expenses. It also included a non-recurring charge of $252,311 in expenses related to the organization of the Company. The investment advisory fee for the quarter was $4.4 million versus $4.0 million for the quarter ended June 30, 2004 and represented the base fee as provided for in the investment advisory and management agreement. Administrative services fees accrued for the quarter were $273,000 versus $175,000 for the quarter ended June 30, 2004. Net Operating Income The Company's net operating income was $2.26 million for the quarter ended September 30, 2004 versus a net operating loss of $1.48 million for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, net operating income was $785,968. Net Unrealized Appreciation on Investments and Cash Equivalents For the quarter ended September 30, 2004, the Company's investments had an increase in net unrealized appreciation of $3.52 million versus $2.34 million for the quarter ended June 30, 2004. At September 30, 2004, net unrealized appreciation totaled $5.86 million of which $2.18 million was attributable to net unrealized appreciation on our bank debt/senior secured debt and $3.76 million was attributable to our subordinated debt/corporate notes. The Company's cash equivalents had net unrealized depreciation of approximately $77,000. Net Realized Losses on Repayments The Company had partial principal repayments of $347,011 for the quarter ended September 30, 2004 versus $125,000 for the quarter ended June 30, 2004. Net losses for the quarter totaled $322 versus $368 for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, the Company had total principal repayments of $472,011 and net realized losses of $690. Net Increase in Stockholders' Equity From Operations For the quarter ended September 30, 2004, the Company had a net increase in stockholders' equity resulting from operations of $5.79 million versus $863,000 for the quarter ended June 30, 2004. For the period April 8, 2004 (commencement of operations) through September 30, 2004, the Company had a total net increase in stockholders' equity resulting from operations of $6.65 million. Based on a weighted-average shares outstanding of 62,000,100, our net change in stockholders' equity from operations per share was $0.093 for the quarter ended September 30, 2004 versus $0.014 for the quarter ended June 30, 2004. Our net change in stockholders' equity from operations was $0.107 per share for the period April 8, 2004 (commencement of operations) through September 30, 2004. Financial Condition, Liquidity and Capital Resources We generated cash primarily from the net proceeds of our initial offering as well as cash flows from operations, including income earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. We may also fund a portion of our investments through borrowings from banks and issuances of senior securities. In the future, we may also securitize a portion of our investments in mezzanine or senior secured loans or other assets. Our primary use of funds will be investments in portfolio companies and cash distributions to holders of our common stock. 17 - ------------------------------------------------------------------------------- Dividends We have elected to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986. In order to maintain our status as a regulated investment company, we are required to (1) distribute at least 90% of our investment company taxable income and (2) distribute at least 98% of our income (both ordinary income and net capital gains) to avoid an excise tax. We intend to make distributions to our stockholders on a quarterly basis of substantially all of our net operating income. We also intend to make distributions of net realized capital gains, if any, at least annually. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings when applicable to us as a business development company under the Investment Company Act of 1940 and due to provisions in our credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of our status as a regulated investment company. We cannot assure stockholders that they will receive any distributions or distributions at a particular level. Item 3. Quantitative and Qualitative Disclosures about Market Risk We are subject to financial market risks, including changes in interest rates. We expect that many of the loans in our portfolio will have floating rates. To date, a significant percentage of our assets is invested in short-term U.S. Treasury bills. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio of investments. During the period April 8, 2004 (commencement of operations) through September 30, 2004, we did not engage in hedging activities. Item 4. Controls and Procedures As of the end of the period covered by this report, Apollo Investment carried out an evaluation, under the supervision and with the participation of AIC's management, including AIC's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of AIC's disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that AIC's current disclosure controls and procedures are effective in timely alerting them of material information relating to AIC that is required to be disclosed by AIC in the reports it files or submits under the Securities Exchange Act of 1934. There have been no changes in AIC's internal control over financial reporting that occurred during the period April 8, 2004 (commencement of operations) through September 30, 2004 that have materially affected, or are reasonably likely to materially affect, AIC's internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal Proceedings We are not a defendant in any material pending legal proceeding, and no such material proceedings are known to be contemplated. Item 2. Changes in Securities and Use of Proceeds On April 5, 2004, our registration statement on Form N-2 (SEC File No. 333-112591), for the initial public offering of 62,000,000 shares of our common stock became effective. All 62,000,000 shares were sold upon completion of the initial public offering at an aggregate offering price of $930.0 million, reflecting an initial offering price of $15.00 per share. UBS Investment Bank, Citigroup and JPMorgan acted as Joint Book-Running Managers. Wachovia Securities, Banc of America Securities LLC, Legg Mason Wood Walker and RBC Capital Markets also acted as underwriters for the initial public offering. In connection with the initial public offering, we registered and offered the underwriters an option to purchase an additional 9.3 million shares of common stock at the $15 per share offering price. The underwriters did not exercise this option. 18 - ------------------------------------------------------------------------------- Underwriting discounts and commissions for the shares sold in the initial public offering totaled $58.1 million. In connection with the initial public offering, we incurred expenses of approximately $1.7 million. None of these expenses were paid directly or indirectly to our directors, officers or associates, or to persons owning 10% or more of our common stock or that of other affiliates. After deducting underwriting discounts and commissions and other expenses, we received net proceeds of $870.2 million from the initial public offering. The primary purpose of the initial public offering was to obtain capital with which to invest primarily in mezzanine loans and senior secured loans of U.S. middle-market companies. (These companies typically have annual revenues between $50 million and $1 billion.) We have invested the net proceeds from the initial public offering primarily in short-term U.S. Treasury securities while we execute the investment strategy as outlined in our Registration Statement on Form N-2. As of September 30, 2004, we had invested approximately $404 million in bank debt, subordinated debt/ corporate notes, equity and warrants as disclosed within our Schedule of Investments included in this report under Item 1 of Part 1 and our Notes to Financial Statements. We did not repurchase any shares of our common stock during the period April 8, 2004 (commencement of operations) through September 30, 2004. Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K): Exhibit Number Description of Document - ------------ -------------------------------------------------------------- 3.1 Articles of Amendment and Restatement (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 3.2 Amended and Restated Bylaws (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 4.1 Form of Stock Certificate (Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on form N-2 (File No. 333-112591) filed on March 12, 2004. 10.1 Investment Advisory and Management Agreement between Registrant and Apollo Investment Management, L.P. (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 10.2 Custodian Agreement between Registrant and JPMorgan Chase Bank (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 10.3 Administration Agreement between Registrant and Apollo Investment Administration, LLC (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 10.4 Form of Transfer Agency and Service Agreement between Registrant and American Stock Transfer & Trust Company (Incorporated by reference to Pre-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 (File No. 333-112591) filed on April 1, 2004). 10.5 License Agreement between Registrant and Apollo Management, L.P. (Incorporated by reference to the Registrant's Quarterly Report filed on Form 10-Q (File No. 814-00646) filed on August 11, 2004). 11.1 Computation of Per Share Earnings (included in notes to the financial statements included in this report). 31.1* Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. 31.2* Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. 32.1* Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.1350). 32.2* Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.1350). * Submitted herewith 19 - ------------------------------------------------------------------------------- (b) Reports on Form 8-K On July 29, 2004, we filed a current report on Form 8-K, pursuant to Item 9 reporting the issuance of a press release, announcing a scheduled earnings release on August 10, 2004. On August 10, 2004, we filed a current report on Form 8-K, pursuant to Item 12 reporting financial results for the period ended June 30, 2004. On September 10, 2004, we filed a current report on Form 8-K, pursuant to Item 7.01 reporting the issuance of a press release announcing the declaration of a stockholder dividend of $0.045 per share. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 8, 2004. APOLLO INVESTMENT CORPORATION By: /s/ MICHAEL S. GROSS ------------------------- Michael S. Gross President, Chief Executive Officer and Chairman of the Board By: /s/ RICHARD L. PETEKA ------------------------- Richard L. Peteka Chief Financial Officer and Treasurer 20 - ------------------------------------------------------------------------------- EX-31.1 2 ex31-1_110604.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Michael S. Gross, President, Chief Executive Officer and Chairman of the Board of Apollo Investment Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Apollo Investment Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over the financial reporting; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated this 8th day of November, 2004 /s/ MICHAEL S. GROSS - ---------------------------------- Chief Executive Officer EX-31.2 3 ex31-2_110604.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Richard L. Peteka, Chief Financial Officer and Treasurer of Apollo Investment Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Apollo Investment Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over the financial reporting; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated this 8th day of November, 2004 /s/ RICHARD L. PETEKA - ------------------------------------ Chief Financial Officer EX-32.1 4 ex32-1_110604.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350) In connection with the Quarterly Report on Form 10-Q for the periods ended September 30, 2004 (the "Report") of APOLLO INVESTMENT CORPORATION (the "Registrant"), as filed with the Securities and Exchange Commission on the date hereof, I, MICHAEL S. GROSS, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ Michael S. Gross --------------------------------- Name: Michael S. Gross Date: November 8, 2004 EX-32.2 5 ex32-2_110604.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350) In connection with the Quarterly Report on Form 10-Q for the periods ended September 30, 2004 (the "Report") of APOLLO INVESTMENT CORPORATION (the "Registrant"), as filed with the Securities and Exchange Commission on the date hereof, I, RICHARD L. PETEKA, the Chief Financial Officer and Treasurer of the Registrant, hereby certify, to the best of my knowledge, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ Richard L. Peteka --------------------------------- Name: Richard L. Peteka Date: November 8, 2004 -----END PRIVACY-ENHANCED MESSAGE-----