10-Q 1 ainv2021q110-q.htm 10-Q Document

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 quarterly period ended June 30, 2020
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 814-00646
APOLLO INVESTMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland52-2439556
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9 West 57th Street
37th Floor
New York, New York
10019
(Address of principal executive offices)(Zip Code)
(212) 515-3450
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueAINVNASDAQ Global Select Market
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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x  No ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ¨  No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨  No x
The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of August 5, 2020 was 67,259,176.



APOLLO INVESTMENT CORPORATION
Table of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



PART I. FINANCIAL INFORMATION
In this report, the terms the “Company,” “Apollo Investment,” “AIC,” “we,” “us,” and “our” refer to Apollo Investment Corporation unless the context specifically states otherwise.
Item 1. Financial Statements

APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)
June 30, 2020March 31, 2020
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliated investments (cost — $2,200,352 and $2,298,548, respectively)
$2,103,741  $2,191,327  
Non-controlled/affiliated investments (cost — $135,313 and $135,346, respectively)
51,204  60,241  
Controlled investments (cost — $655,198 and $655,719, respectively)
516,095  533,865  
Cash and cash equivalents35,255  37,301  
Foreign currencies (cost — $9,138 and $6,369, respectively)
9,139  6,375  
Receivable for investments sold56,144  978  
Interest receivable16,161  19,151  
Dividends receivable5,379  5,034  
Deferred financing costs14,898  16,054  
Prepaid expenses and other assets959  732  
Total Assets$2,808,975  $2,871,058  
Liabilities
Debt$1,755,104  $1,794,617  
Payable for investments purchased499  —  
Distributions payable29,367  29,367  
Management and performance-based incentive fees payable9,524  10,289  
Interest payable7,096  2,887  
Accrued administrative services expense2,158  2,796  
Other liabilities and accrued expenses7,284  6,787  
Total Liabilities$1,811,032  $1,846,743  
Commitments and contingencies (Note 8)
Net Assets$997,943  $1,024,315  
Net Assets
Common stock, $0.001 par value (130,000,000 shares authorized; 65,259,176 and 65,259,176 shares issued and outstanding, respectively)
$65  $65  
Capital in excess of par value2,099,876  2,099,876  
Accumulated under-distributed (over-distributed) earnings(1,101,998) (1,075,626) 
Net Assets$997,943  $1,024,315  
Net Asset Value Per Share$15.29  $15.70  
See notes to financial statements.
1


APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended June 30,
20202019
Investment Income
Non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind (“PIK”) interest income)$47,726  $47,004  
Dividend income—  62  
PIK interest income786  4,706  
Other income384  937  
Non-controlled/affiliated investments:
Interest income (excluding PIK interest income) —  
Dividend income345  319  
PIK interest income—  —  
Other income—  —  
Controlled investments:
Interest income (excluding PIK interest income)5,892  12,638  
Dividend income800  —  
PIK interest income728  850  
Other income—  —  
Total Investment Income$56,669  $66,516  
Expenses
Management fees$9,524  $9,539  
Performance-based incentive fees—  —  
Interest and other debt expenses15,392  17,511  
Administrative services expense1,188  1,725  
Other general and administrative expenses2,446  3,305  
Total expenses28,550  32,080  
Management and performance-based incentive fees waived—  —  
Expense reimbursements(110) (98) 
Net Expenses$28,440  $31,982  
Net Investment Income$28,229  $34,534  
Net Realized and Change in Unrealized Gains (Losses)
Net realized gains (losses):
Non-controlled/non-affiliated investments$(8,629) $(9) 
Non-controlled/affiliated investments—  1,089  
Controlled investments—  —  
Foreign currency transactions212  202  
Net realized gains (losses)(8,417) 1,282  
Net change in unrealized gains (losses):
Non-controlled/non-affiliated investments10,607  (4,046) 
Non-controlled/affiliated investments(9,002) 910  
Controlled investments(17,248) (9,696) 
Foreign currency translations(1,174) 845  
Net change in unrealized gains (losses)(16,817) (11,987) 
Net Realized and Change in Unrealized Gains (Losses)$(25,234) $(10,705) 
Net Increase (Decrease) in Net Assets Resulting from Operations$2,995  $23,829  
Earnings (Loss) Per Share — Basic$0.05  $0.35  
See notes to financial statements.
2


APOLLO INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
(In thousands, except share data)
Three Months Ended June 30,
20202019
Operations
Net investment income$28,229  $34,534  
Net realized gains (losses)(8,417) 1,282  
Net change in unrealized gains (losses)(16,817) (11,987) 
Net Increase (Decrease) in Net Assets Resulting from Operations$2,995  $23,829  
Distributions to Stockholders
Distribution of net investment income$(29,367) $(30,624) 
Distribution of return of capital—  —  
Net Increase (Decrease) in Net Assets Resulting from Distributions to Stockholders$(29,367) $(30,624) 
Capital Share Transactions
Repurchase of common stock$—  $(15,122) 
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions$—  $(15,122) 
Net Assets
Net decrease in net assets during the period$(26,372) $(21,917) 
Net assets at beginning of period1,024,315  1,312,627  
Net Assets at End of Period$997,943  $1,290,710  
Capital Share Activity
Shares repurchased during the period—  (949,633) 
Shares issued and outstanding at beginning of period65,259,176  68,876,986  
Shares Issued and Outstanding at End of Period65,259,176  67,927,353  
See notes to financial statements.
3


APOLLO INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended June 30,
20202019
Operating Activities
Net increase (decrease) in net assets resulting from operations$2,995  $23,829  
Net realized (gains) losses8,417  (1,282) 
Net change in unrealized (gains) losses16,817  11,987  
Net amortization of premiums and accretion of discounts on investments(2,949) (2,125) 
Accretion of discount on notes148  148  
Amortization of deferred financing costs1,250  1,266  
Increase in gains (losses) from foreign currency transactions212  201  
PIK interest and dividends capitalized(1,610) (4,883) 
Changes in operating assets and liabilities:
Purchases of investments(137,390) (435,936) 
Proceeds from sales and repayments of investments177,403  217,988  
Decrease (increase) in interest receivable3,008  (1,402) 
Decrease (increase) in dividends receivable(345) (319) 
Decrease (increase) in prepaid expenses and other assets(227) 68  
Increase (decrease) in management and performance-based incentive fees payable(765) 659  
Increase (decrease) in interest payable4,209  4,586  
Increase (decrease) in accrued administrative services expense(638) (688) 
Increase (decrease) in other liabilities and accrued expenses497  174  
Net Cash Used in/Provided by Operating Activities$71,032  $(185,729) 
Financing Activities
Issuances of debt$40,000  $333,892  
Payments of debt(80,943) (112,497) 
Financing costs paid and deferred—  (184) 
Repurchase of common stock—  (15,122) 
Distributions paid(29,367) (31,040) 
Net Cash Used in/Provided by Financing Activities$(70,310) $175,049  
Cash, Cash Equivalents, Foreign Currencies and Collateral on Option Contracts
Net increase (decrease) in cash, cash equivalents, foreign currencies and collateral on option contracts during the period$722  $(10,680) 
Effect of foreign exchange rate changes on cash and cash equivalents(4) 61  
Cash, cash equivalents, foreign currencies and collateral on option contracts at beginning of period43,676  41,189  
Cash, Cash Equivalents, Foreign Currencies and Collateral on Option Contracts at the End of Period$44,394  $30,570  
Supplemental Disclosure of Cash Flow Information
Cash interest paid$9,818  $11,528  
Non-Cash Activity
PIK income$1,514  $5,556  
See notes to financial statements.
4

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
June 30, 2020
(In thousands, except share data)
Industry / CompanyInvestment TypeInterest Rate (20)Maturity DatePar/Shares (12)Cost (29)Fair Value (1)(30)
Advertising, Printing & Publishing
Learfield Communications
A-L Parent LLCSecond Lien Secured Debt8.25% (1M L+725, 1.00% Floor)12/02/24$5,536  $5,505  $4,307  
Simplifi Holdings, Inc.
Simplifi Holdings, Inc.First Lien Secured Debt6.75% (3M L+575, 1.00% Floor)08/02/2538,732  38,121  37,291  (9)
First Lien Secured Debt - Revolver6.75% (3M L+575, 1.00% Floor)08/02/251,200  1,200  1,155  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded08/02/251,200  (47) (45) (8)(9)
(21)(23)
39,274  38,401  
Total Advertising, Printing & Publishing$44,779  $42,708  
Aerospace & Defense
Erickson Inc
Erickson IncFirst Lien Secured Debt - Revolver9.00% (3M L+750, 1.50% Floor)04/28/22$32,479  $32,479  $31,748  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded04/28/224,274  (178) (96) (8)(9)
(21)(23)
First Lien Secured Debt - Letters of Credit7.50%07/04/20 - 07/15/222,247   (50) (8)(9)
(23)
Total Aerospace & Defense$32,302  $31,602  
Automotive
Accelerate Parent Corp. (American Tire)
Accelerate Parent Corp.Common Equity - Common StockN/AN/A1,664,046 Shares$1,714  $—  (13)(19)
Arlington
Arlington Industries Group LimitedFirst Lien Secured Debt5.75% (1M E+525, 0.50% Floor)03/29/242,653  2,975  2,793  (9)(17)
First Lien Secured Debt5.75% (1M GBPL+525, 0.50% Floor)03/29/24£3,627  4,601  4,201  (9)(17)
7,576  6,994  
Crowne Automotive
Vari-Form Group, LLCFirst Lien Secured DebtL+11.00% (7.00% Cash plus 4.00% PIK)02/02/235,859  901  762  (9)(13)
(14)
Vari-Form Inc.First Lien Secured DebtL+11.00% (7.00% Cash plus 4.00% PIK)02/02/232,110  391  274  (9)(13)
(14)
1,292  1,036  
K&N Parent, Inc.
K&N Parent, Inc.Second Lien Secured Debt9.82% (6M L+875, 1.00% Floor)10/21/2423,765  23,504  21,388  
Truck-Lite Co., LLC
Truck-Lite Co., LLCFirst Lien Secured Debt7.32% (6M L+625, 1.00% Floor)12/14/2625,085  24,532  24,558  (9)
First Lien Secured Debt - Revolver7.32% (6M L+625, 1.00% Floor)12/13/24654  654  643  (9)(23)
First Lien Secured Debt - Revolver7.25% (6M L+625, 1.00% Floor)12/13/24436  436  429  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded12/13/241,868  (64) (31) (8)(9)
(21)(23)
First Lien Secured Debt - Letters of Credit6.25%11/30/20 - 12/21/2094  —  (2) (8)(9)
(23)
First Lien Secured Debt - Unfunded Delayed Draw1.00% Unfunded12/14/263,707  (80) (78) (8)(9)
(21)(23)
TL Lighting Holdings, LLCCommon Equity - EquityN/AN/A350 Shares350  321  (9)(13)
(28)
25,828  25,840  
Total Automotive$59,914  $55,258  
See notes to financial statements.
5

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
June 30, 2020
(In thousands, except share data)
Industry / CompanyInvestment TypeInterest Rate (20)Maturity DatePar/Shares (12)Cost (29)Fair Value (1)(30)
Aviation and Consumer Transport
Merx Aviation Finance, LLC
Merx Aviation Finance, LLC (5)First Lien Secured Debt - Revolver10.00%10/31/23$200,000  $200,000  $200,000  (23)
First Lien Secured Debt - Letter of Credit2.25%07/13/20177  —  —  (23)
Common Equity - Membership InterestsN/AN/AN/A120,300  129,481  (28)
320,300  329,481  
Primeflight
PrimeFlight Aviation Services, Inc.First Lien Secured Debt6.50% (1M L+550, 1.00% Floor)05/09/2414,731  14,549  14,177  (9)
First Lien Secured Debt - Unfunded Delayed Draw0.50% Unfunded05/09/242,842  (93) (107) (8)(9)
(21)(23)
14,456  14,070  
Total Aviation and Consumer Transport$334,756  $343,551  
Beverage, Food & Tobacco
Bolthouse Farms
Wm. Bolthouse Farms, Inc.Common Equity - Common StockN/AN/A1,000,000 Shares$1,000  $940  (13)
Eagle Foods
Eagle Foods Family Group, LLCFirst Lien Secured Debt7.75% (3M L+675, 1.00% Floor)06/14/2424,501  24,318  23,765  (9)
First Lien Secured Debt - Revolver7.75% (1M L+675, 1.00% Floor)06/14/23167  167  162  (9)(23)
First Lien Secured Debt - Revolver7.75% (3M L+675, 1.00% Floor)06/14/231,167  1,167  1,132  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded06/14/232,417  (25) (73) (8)(9)
(21)(23)
25,627  24,986  
Florida Food Products, Inc.
Florida Food Products, Inc.First Lien Secured Debt7.75% (3M L+675, 1.00% Floor)09/08/2522,880  22,455  22,651  (9)
Florida Food Products, LLCFirst Lien Secured Debt - Revolver7.75% (3M L+675, 1.00% Floor)09/06/231,712  1,685  1,695  (9)(23)
24,140  24,346  
Orgain, Inc.
Butterfly Fighter Co-Invest, L.P.Common Equity - Membership InterestsN/AN/A1,000,000 Shares1,000  1,026  (13)(28)
TNT Crust LLC
TNT Crust LLCFirst Lien Secured Debt7.75% (1M L+675, 1.00% Floor)11/06/2326,408  26,003  25,747  (9)
First Lien Secured Debt - Revolver7.75% (1M L+675, 1.00% Floor)11/06/23260  260  254  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded11/06/232,992  (47) (75) (8)(9)
(21)(23)
Common Equity - Series A UnitsN/AN/A244 Shares30  280  (9)(13)
26,246  26,206  
Turkey Hill
IC Holdings LLCCommon Equity - Series A UnitsN/AN/A169 Shares169  233  (9)(13)
THLP CO. LLCFirst Lien Secured Debt6.50% (1M L+550, 1.00% Floor)05/30/2519,562  19,241  19,366  (9)
First Lien Secured Debt7.75% (P+450)05/30/2522  22  22  (9)
See notes to financial statements.
6

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
June 30, 2020
(In thousands, except share data)
Industry / CompanyInvestment TypeInterest Rate (20)Maturity DatePar/Shares (12)Cost (29)Fair Value (1)(30)
First Lien Secured Debt6.50% (12M L+550, 1.00% Floor)05/30/252,786  2,759  2,759  (9)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded05/31/244,494  (70) (45) (8)(9)
(21)(23)
First Lien Secured Debt - Unfunded Delayed Draw1.00% Unfunded05/30/252,809  (46) (28) (8)(9)
(21)(23)
22,075  22,307  
Total Beverage, Food & Tobacco$100,088  $99,811  
Business Services
Access Information
Access CIG, LLCSecond Lien Secured Debt7.92% (1M L+775)02/27/26$15,900  $15,794  $15,542  
Ambrosia Buyer Corp.
Ambrosia Buyer Corp.Second Lien Secured Debt9.08% (6M L+800, 1.00% Floor)08/28/2521,429  21,082  16,815  
Claritas
Claritas, LLCFirst Lien Secured Debt7.00% (3M L+600, 1.00% Floor)12/21/233,820  3,792  3,763  (9)
First Lien Secured Debt - Revolver7.00% (1M L+600, 1.00% Floor)12/21/23258  258  254  (9)(23)
First Lien Secured Debt - Revolver7.00% (3M L+600, 1.00% Floor)12/21/23232  232  228  (9)(23)
First Lien Secured Debt - Revolver7.00% (2M L+600, 1.00% Floor)12/21/23258  258  254  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded12/21/23284  (7) (4) (8)(9)
(21)(23)
4,533  4,495  
Continuum
Continuum Global Solutions, LLCFirst Lien Secured Debt - Revolver6.50% (1M L+550, 1.00% Floor)02/15/222,851  2,851  2,766  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded02/15/2217,149  (264) (514) (8)(9)
(21)(23)
Preferred Equity - Preferred EquityN/AN/A775 Shares78  78  (9)(13)
2,665  2,330  
CT Technologies Intermediate Holdings, Inc
CT Technologies Intermediate Holdings, IncSecond Lien Secured Debt10.00% (3M L+900, 1.00% Floor)12/01/2231,253  30,845  28,753  (9)
Education Personnel
Education PersonnelFirst Lien Secured Debt5.25% (3M GBPL+475, 0.50% Floor)08/31/24£4,076  5,196  4,805  (9)(17)
First Lien Secured Debt - Revolver5.25% (3M GBPL+475, 0.50% Floor)08/31/24£1,471  1,875  1,732  (9)(17)
(23)
7,071  6,537  
Electro Rent Corporation
Electro Rent CorporationSecond Lien Secured Debt10.00% (3M L+900, 1.00% Floor)01/31/2534,235  33,576  33,208  (9)
Elo Touch
TGG TS Acquisition CompanyFirst Lien Secured Debt - Unfunded Revolver0.50% Unfunded12/14/231,750  —  (65) (8)(21)
(23)
Ensemble Health
EHL Merger Sub, LLCFirst Lien Secured Debt - Revolver5.50% (P+225)08/01/241,662  1,662  1,569  (23)
First Lien Secured Debt - Unfunded Revolver0.25% Unfunded08/01/242,493  (311) (140) (8)(21)
(23)
1,351  1,429  
See notes to financial statements.
7

APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
June 30, 2020
(In thousands, except share data)
Industry / CompanyInvestment TypeInterest Rate (20)Maturity DatePar/Shares (12)Cost (29)Fair Value (1)(30)
Jacent
Jacent Strategic MerchandisingFirst Lien Secured Debt6.75% (3M L+575, 1.00% Floor)04/23/2422,522  22,264  21,217  (9)
First Lien Secured Debt - Revolver6.82% (3M L+575, 1.00% Floor)04/23/24467  467  439  (9)(23)
First Lien Secured Debt - Revolver6.75% (3M L+575, 1.00% Floor)04/23/242,100  2,100  1,976  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded04/23/24933  (40) (55) (8)(9)
(21)(23)
Common Equity - Common StockN/AN/A5,000 Shares500  150  (9)(13)
JSM Equity Investors, L.P.Preferred Equity - Class P Partnership UnitsN/AN/A114 Shares11  11  (9)(13)
(28)
25,302  23,738  
Jones & Frank
JF Acquisition, LLCFirst Lien Secured Debt6.50% (12M L+550, 1.00% Floor)07/31/2413,139  12,923  12,772  (9)
First Lien Secured Debt6.50% (3M L+550, 1.00% Floor)07/31/24231  227  224  (9)
First Lien Secured Debt - Revolver6.50% (12M L+550, 1.00% Floor)07/31/24628  628  610  (9)(23)
First Lien Secured Debt - Unfunded Revolver0.50% Unfunded07/31/24941  (26) (27) (8)(9)
(21)(23)
13,752  13,579  
MAKS