Apollo Investment Corporation Announces Quarter and Fiscal Year Ended March 31, 2008 Financial Results and June 2008 Quarterly Dividend of $0.52 per Share

NEW YORK, NY -- (MARKET WIRE) -- 05/28/08 -- Apollo Investment Corporation (NASDAQ: AINV) today announces financial results for its quarter and the fiscal year ended March 31, 2008. Additionally, Apollo Investment Corporation announces that its Board of Directors has declared its first fiscal quarter June 2008 dividend of $0.52 per share, payable on June 26, 2008 to stockholders of record as of June 19, 2008. The dividend will be paid from taxable earnings whose specific tax characteristics will be reported to stockholders on Form 1099 after the end of the calendar year.

HIGHLIGHTS:

At March 31, 2008:

Total Assets: $3.7 billion Investment Portfolio: $3.2 billion Net Assets: $1.9 billion Net Asset Value per share: $15.83

Portfolio Activity for the Quarter Ended March 31, 2008:

Total investments made during the quarter: $203 million Sales and prepayments during the quarter: $103 million Number of new portfolio companies invested: 2 Number of portfolio company exits: 1

Portfolio Activity for the Fiscal Year Ended March 31, 2008:

Total investments made during the fiscal year: $1.8 billion Sales and prepayments during the fiscal year: $714 million Number of new portfolio companies invested: 27 Number of portfolio company exits: 13 Number of portfolio companies at end of fiscal year: 71

Operating Results for the Quarter Ended March 31, 2008 (in thousands, except per share amounts):

Net investment income: $43,725 Net realized gains (losses): ($4,573) Net change in unrealized appreciation (depreciation): ($201,529) Net increase (decrease) in net assets from operations: ($162,377)

Net investment income per share: $0.37 Net realized gains (losses) per share: ($0.04) Net change in unrealized appreciation (depreciation) per share: ($1.69)

Operating Results for the Fiscal Year Ended March 31, 2008 (in thousands, except per share amounts):

Net investment income: $201,606 Net realized gains (losses): $54,300 Net change in unrealized appreciation (depreciation): ($289,344) Net increase (decrease) in net assets from operations: ($33,348)

Net investment income per share: $1.82 Net realized gains (losses) per share: $0.43 Net change in unrealized appreciation (depreciation) per share: ($2.33)

Conference Call/Webcast at 11:00 a.m. ET on May 29, 2008

The Company will host a conference call and webcast at 11:00 a.m. (Eastern Time) on Thursday, May 29, 2008 to discuss its quarterly and fiscal year results. All interested parties are welcome to participate. You can access the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call. International callers should dial (973) 633-6740. All callers should reference Apollo Investment Corporation or "conference ID #45684793." An archived replay of the call will be available through June 12, 2008 by calling (800) 642-1687. International callers please dial (706) 645-9291. For all telephone replays, please reference pin #45684793. In addition, you can access our audio webcast within the Investor Relations section of our website at www.apolloic.com. An archived replay of the webcast will also be available on our website later that day.

Portfolio and Investment Activity

During the quarter ended March 31, 2008, we were cautious and patient investors, especially early in the quarter where we saw a prolonged, material weakness in the technical drivers of the credit markets. More importantly, the markets began to trough toward the back half of the quarter and we were able to make add-on investments to five existing portfolio company investments at attractive values. During the quarter we also invested in two new portfolio companies and participated in one existing portfolio company's refinancing in support of an acquisition. Investments totaled $203 million for the quarter. Sales and prepayments totaled $103 million for the quarter which included the full prepayment of one of our successful European mezzanine investments in early January 2008.

Total investments for the entire fiscal year ended March 31, 2008 amounted to $1.8 billion across 27 new and numerous existing portfolio companies. This compares to investing $1.4 billion in 24 new and several existing portfolio companies for the previous fiscal year ended March 31, 2007. Investments sold and prepaid during the fiscal year ended March 31, 2008 totaled $714 million versus $845 million for the fiscal year ended March 31, 2007.

At March 31, 2008, our net portfolio consisted of 71 portfolio companies and was invested 22% in senior secured loans, 57% in subordinated debt, 6% in preferred equity and 15% in common equity and warrants versus 57 portfolio companies invested 26% in senior secured loans, 61% in subordinated debt, 4% in preferred equity and 9% in common equity and warrants at March 31, 2007.

The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio at our current cost basis were 10.0%, 12.8% and 12.0%, respectively, at March 31, 2008. At March 31, 2007, the yields were 12.3%, 13.5%, and 13.1%, respectively.

Since the initial public offering of Apollo Investment Corporation in April 2004 and through March 31, 2008, total invested capital exceeds $5.2 billion in 112 portfolio companies. Over the same period, Apollo Investment has also completed transactions with 80 different financial sponsors.

Senior secured loans and European mezzanine loans typically accrue interest at variable rates determined on the basis of a benchmark: LIBOR, EURIBOR, GBP LIBOR, or the prime rate, with stated maturities at origination that typically range from 5 to 10 years. While subordinated debt issued within the United States will typically accrue interest at fixed rates, some of these investments may include zero-coupon and/or step bonds that accrue income on a constant yield to call or maturity basis. At March 31, 2008, 62% or $1.6 billion of our interest-bearing investment portfolio is fixed rate debt and 38% or $1.0 billion is floating rate debt. At March 31, 2007, 64% or $1.4 billion of our interest-bearing investment portfolio was fixed rate debt and 36% or $0.8 billion was floating rate debt.

RESULTS OF OPERATIONS

Results comparisons are for the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006.

Investment Income

For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, gross investment income totaled $357.9 million, $266.1 million and $152.8 million, respectively. The continued increase in gross investment income for fiscal years 2007 and 2008 was primarily due to the growth of our investment portfolio as compared to previous fiscal periods. Origination, closing and/or commitment fees associated with investments in portfolio companies are accreted into interest income over the respective terms of the applicable loans.

Expenses

Net expenses totaled $154.4 million, $139.7 million and $63.7 million, respectively, for the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, of which $30.4 million, $57.9 million and $22.3 million, respectively, were performance-based incentive fees and $55.8 million, $34.4 million and $13.0 million, respectively, were interest and other credit facility expenses. Net expenses exclusive of performance-based incentive fees and interest and other credit facility expenses for the years ended March 31, 2008, March 31, 2007 and March 31, 2006 were $68.2 million, $47.4 million and $28.4 million, respectively. Of these expenses, general and administrative expenses totaled $8.3 million, $6.8 million and $5.0 million, respectively, for the fiscal years ended March 31, 2008, 2007 and 2006. In addition, excise tax expense totaled $1.9 million, $1.1 million, and $0 for the fiscal years ended March 31, 2008, 2007 and 2006. Expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, professional fees, directors' fees, audit and tax services expenses, and other general and administrative expenses. The increases in net expenses from fiscal 2006 to 2007 and fiscal 2007 to 2008 were primarily related to increases in base management fees and other general and administrative expenses related to the growth of our investment portfolio as compared to the previous periods.

Net Investment Income

The Company's net investment income totaled $201.6 million, $125.3 million and $89.1 million, respectively, for the fiscal years ended March 31, 2008, 2007 and 2006.

Net Realized Gains

The Company had investment sales and prepayments totaling $714 million, $845 million and $452 million, respectively, for the fiscal years ended March 31, 2008, 2007 and 2006. Net realized gains for the fiscal years ended March 31, 2008, 2007 and 2006 were $54.3 million, $132.9 million and $11.2 million, respectively. The significant increase in net realized gains from fiscal year 2006 to fiscal year 2007 was primarily due to a gain of $107.6 million realized from GS Prysmian Co-Invest LP (pursuant to a sale and purchase agreement dated as of January 24, 2007, along with the GS Funds, GS Prysmian Co-Invest LP agreed to sell its remaining equity securities it owned in Prysmian (Lux) Sarl to a newly created entity for cash and equity securities consideration totaling EUR 85.6 million).

Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies

For the fiscal year ended March 31, 2008 net unrealized appreciation on the Company's investments, cash equivalents, foreign currencies and other assets and liabilities decreased $289.3 million. For the fiscal years ended March 31, 2007 and 2006, net unrealized appreciation on the Company's investments, cash equivalents, foreign currencies and other assets and liabilities increased $54.0 million and $20.1 million, respectively. At March 31, 2008, net unrealized depreciation totaled $197.1 million versus net unrealized appreciation of $92.2 million at March 31, 2007.

Net Increase (Decrease) in Net Assets From Operations

For the fiscal year ended March 31, 2008, the Company had a net decrease in net assets resulting from operations of $33.4 million. For the fiscal years ended March 31, 2007 and 2006, the Company had a net increase in net assets resulting from operations of $312.2 million and $120.4 million, respectively. The net decrease in net assets from operations per share was $0.30 for the year ended March 31, 2008. For the years ended March 31, 2007 and 2006, the net increase in net assets from operations per share was $3.64 and $1.90, respectively.

LIQUIDITY AND CAPITAL RESOURCES

On September 18, 2007, the Company closed on a public offering of 14.95 million shares of common stock at $20.00 per share raising approximately $285.5 million in net proceeds. The Company's liquidity and capital resources are also generated and available through its senior secured, multi-currency $1.7 billion, five-year, revolving credit facility maturing in April 2011 as well as from cash flows from operations, investment sales and prepayments of senior and subordinated loans and income earned from investments and cash equivalents. At March 31, 2008, the Company has $1.6 billion in borrowings outstanding and $0.1 billion remaining unused. In addition, the Company held cash and cash equivalents on its balance sheet totaling $415.0 million. In the future, the Company may raise additional equity or debt capital off its shelf registration or may securitize a portion of its investments among other considerations. The primary use of funds will be investments in portfolio companies, cash distributions to our stockholders and for other general corporate purposes. In addition, on May 16, 2008, the Company closed on a public offering of 22.3 million shares of common stock at $17.11 per share raising approximately $369.6 million in net proceeds.

Dividends

Dividends paid to stockholders for the fiscal years ended March 31, 2008, 2007 and 2006 totaled $230.9 million or $2.07 per share, $168.4 million or $1.93 per share, and $102.7 million or $1.63 per share, respectively. The following table summarizes our quarterly dividends paid to stockholders for the fiscal years ended March 31, 2008, 2007 and 2006, respectively:

Declared Dividends --------------------Fiscal Year Ending March 31, 2008 Fourth Fiscal Quarter $ 0.52 Third Fiscal Quarter $ 0.52 Second Fiscal Quarter $ 0.52 First Fiscal Quarter $ 0.51

Fiscal Year Ending March 31, 2007 Fourth Fiscal Quarter $ 0.51 Third Fiscal Quarter $ 0.50 Second Fiscal Quarter $ 0.47 First Fiscal Quarter $ 0.45

Fiscal Year Ending March 31, 2006 Fourth Fiscal Quarter $ 0.45 Third Fiscal Quarter $ 0.44 Second Fiscal Quarter $ 0.43 First Fiscal Quarter $ 0.31

The tax character of dividends paid during the fiscal year ended March 31, 2008 was as follows:

Ordinary income $ 130,394 Long-term capital gains 100,495 --------------------Total Dividends Paid $ 230,889

As of March 31, 2008, the components of accumulated losses on a tax basis were as follows:

Distributable ordinary income $ 137,112 Other book/tax temporary differences (18,210) Unrealized depreciation (204,909) --------------------Total accumulated losses $ (86,007)

As of March 31, 2008, we had a post-October currency loss deferral of $18,159.

APOLLO INVESTMENT CORPORATION STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts)

March 31, March 31, 2008 2007 ----------- ------------Assets Non-controlled/non-affiliated investments, at value (cost -- $3,139,047 and $2,244,400, respectively) $ 2,986,556 $ 2,348,981 Controlled investments, at value (cost -- $247,400 and $0, respectively) 246,992 --Cash equivalents, at value (cost -- $404,063 and $1,089,792, respectively) 403,898 1,089,792 Cash 8,954 7,326 Foreign currency (cost -- $2,140 and $832, respectively) 2,130 834 Interest receivable 46,643 35,217 Dividends receivable 23,024 6,987 Receivable for investments sold -- 28,248 Receivable from Investment Adviser 231 --Prepaid expenses and other assets 5,896 5,833 ----------- ------------ Total assets $ 3,724,324 $ 3,523,218 ----------- ------------ Liabilities Credit facility payable $ 1,639,122 $ 492,312 Payable for investments and cash equivalents purchased 142,339 1,134,561 Management and performance-based incentive fees payable 26,969 43,579 Dividends payable 9,368 --Interest payable 6,178 1,848 Accrued administrative expenses 288 200 Other liabilities and accrued expenses 2,152 970 ----------- ------------ Total liabilities $ 1,826,416 $ 1,673,470 ----------- ------------ Net Assets Common stock, par value $.001 per share, 400,000 and 400,000 common shares authorized, respectively, and 119,894 and 103,508 issued and outstanding, respectively $ 120 $ 104 Paid-in capital in excess of par 1,983,795 1,673,191 Undistributed net investment income 24,959 --Distributions in excess of net investment income -- (16,283) Accumulated net realized gain 86,136 100,494 Net unrealized appreciation (depreciation) (197,102) 92,242 ----------- ------------ Total Net Assets $ 1,897,908 $ 1,849,748 ----------- ------------ Total liabilities and net assets $ 3,724,324 $ 3,523,218 ----------- ------------Net Asset Value Per Share $ 15.83 $ 17.87

APOLLO INVESTMENT CORPORATION STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

Year Ended March 31, ----------------------------------- 2008 2007 2006 ---------- ----------- -----------INVESTMENT INCOME: From non-controlled/non-affiliated investments: Interest $ 321,684 $ 245,348 $ 139,376 Dividends 14,551 18,021 3,656 Other Income 4,643 2,732 9,795 From controlled investments: Dividends 7,000 -- -- Other Income 10,000 -- -- ---------- ----------- ----------- Total Investment Income 357,878 266,101 152,827 ---------- ----------- ----------- EXPENSES: Management fees $ 59,871 $ 40,569 $ 23,408 Performance-based incentive fees 30,449 57,912 22,285 Interest and other credit facility expenses 55,772 34,375 12,950 Administrative services expense 3,450 2,437 1,470 Insurance expense 776 819 844 Other general and administrative expenses 4,360 3,700 2,777 ---------- ----------- ----------- Total expenses 154,678 139,812 63,734 Expense offset arrangement (273) (128) (50) ---------- ----------- ----------- Net expenses 154,405 139,684 63,684 ---------- ----------- ----------- Net investment income before excise taxes 203,473 126,417 89,143 Excise tax expense (1,867) (1,099) -- ---------- ----------- ----------- Net investment income $ 201,606 $ 125,318 $ 89,143 ---------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS AND FOREIGN CURRENCIES: Net realized gain (loss): Investments and cash equivalents 93,261 149,653 7,146 Foreign currencies (38,961) (16,771) 4,019 ---------- ----------- ----------- Net realized gain 54,300 132,882 11,165 ---------- ----------- ----------- Net change in unrealized gain (loss): Investments and cash equivalents (257,645) 67,908 19,428 Foreign currencies (31,699) (13,942) 651 ---------- ----------- ----------- Net change in unrealized gain (loss) (289,344) 53,966 20,079 ---------- ----------- ----------- Net realized and unrealized gain (loss) from investments, cash equivalents and foreign currencies (235,044) 186,848 31,244 ---------- ----------- -----------NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (33,438) $ 312,166 $ 120,387 ---------- ----------- -----------EARNINGS (LOSS) PER COMMON SHARE $ (0.30) $ 3.64 $ 1.90 ---------- ----------- -----------

About Apollo Investment Corporation

Apollo Investment Corporation is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company's investment portfolio is principally in middle-market private companies. From time to time, the Company may also invest in public companies. The Company invests primarily in senior secured loans and mezzanine loans and equity in furtherance of its business plan. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Management, L.P., a leading private equity investor.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. We do not undertake to update our forward-looking statements unless required by law.

CONTACT: Richard L. Peteka Apollo Investment Corporation (212) 515-3488

2008-05-28 17:30:20 0372258 MARKETWIRE