MFIC 10-Q Quarterly Report Dec. 31, 2015 | Alphaminr
MidCap Financial Investment Corp
ALPHAMINR

MFIC 10-Q Quarter ended Dec. 31, 2015

Balance Sheet
Cash Flow
Income Statement
Debt
MIDCAP FINANCIAL INVESTMENT CORP
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10-Q 1 ainv2016q310-q.htm 10-Q 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 quarterly period ended December 31, 2015
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)
Maryland
52-2439556
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
9 West 57 th 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)
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 filer
x
Accelerated 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class of Common Stock
Outstanding at February 9, 2016
$0.001 par value
226,156,496


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.
Signatures


PART I. FINANCIAL INFORMATION
In this report, the terms “Apollo Investment,” the “Company,” “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)

December 31, 2015

March 31, 2015
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliated investments (cost — $2,353,855 and $2,514,328, respectively)
$
2,079,618

$
2,357,042

Non-controlled/affiliated investments (cost — $188,725 and $297,948, respectively)
249,607

327,218

Controlled investments (cost — $715,920 and $674,299, respectively)
739,768

665,567

Total investments at fair value (cost — $3,258,500 and $3,486,575, respectively)
3,068,993

3,349,827

Cash
10,414

3,766

Foreign currencies (cost — $2,125 and $4,856, respectively)
2,113

4,651

Receivable for investments sold
63,024

114,884

Interest receivable
32,603

43,312

Dividends receivable
8,874

5,425

Deferred financing costs
30,111

29,743

Prepaid expenses and other assets
3,162

9,283

Total Assets
$
3,219,294

$
3,560,891

Liabilities
Debt
$
1,384,719

$
1,498,759

Payable for investments purchased
5,282

10,736

Dividends payable
45,634

47,348

Management and performance-based incentive fees payable
30,086

37,361

Interest payable
17,292

15,851

Accrued administrative services expense
1,808

2,000

Other liabilities and accrued expenses
10,264

11,228

Total Liabilities
$
1,495,085

$
1,623,283

Net Assets
$
1,724,209

$
1,937,608

Net Assets
Common stock, $0.001 par value (400,000,000 shares authorized; 228,168,622 and 236,741,351 shares issued and outstanding, respectively)
$
228

$
237

Paid-in capital in excess of par
3,145,287

3,197,715

Over-distributed net investment income
(26,783
)
(35,589
)
Accumulated net realized loss
(1,222,886
)
(1,102,517
)
Net unrealized loss
(171,637
)
(122,238
)
Net Assets
$
1,724,209

$
1,937,608

Net Asset Value Per Share
$
7.56

$
8.18


See notes to financial statements.
1

APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

Three Months Ended
December 31,
Nine Months Ended
December 31,
2015
2014
2015
2014
Investment Income
Non-controlled/non-affiliated investments:
Interest income
$
61,756

$
87,606

$
205,585

$
266,300

Dividend income
1,037

991

2,824

3,106

Other income
677

4,533

6,822

10,827

Non-controlled/affiliated investments:
Interest income
182

283

633

3,479

Dividend income
9,594

4,393

28,263

12,467

Other income
70

—

297

87

Controlled investments:
Interest income
13,388

10,199

34,571

29,154

Dividend income
7,621

1,958

15,352

5,658

Other income
—

63

63

438

Total Investment Income
$
94,325

$
110,026

$
294,410

$
331,516

Expenses
Management fees
$
16,478

$
18,755

$
50,557

$
55,744

Performance-based incentive fees
11,142

13,215

33,783

41,075

Interest and other debt expenses
19,335

20,315

63,535

58,163

Administrative services expense
1,531

1,863

4,614

4,821

Other general and administrative expenses
2,806

3,014

7,695

7,919

Total expenses
51,292

57,162

160,184

167,722

Management and performance-based incentive fees waived
(4,999
)
(3,740
)
(14,237
)
(11,934
)
Expense reimbursements
(59
)
(58
)
(176
)
(174
)
Net Expenses
$
46,234

$
53,364

$
145,771

$
155,614

Net Investment Income
$
48,091

$
56,662

$
148,639

$
175,902

Net Realized and Change in Unrealized Gains (Losses)
Net realized gains (losses):
Non-controlled/non-affiliated investments
$
(6,112
)
$
(2,355
)
$
(82,896
)
$
(14,244
)
Non-controlled/affiliated investments
(1,575
)
(169
)
(1,642
)
11,357

Controlled investments
—

(57
)
(39,714
)
(57
)
Foreign currency transactions
(1,599
)
1,151

3,883

(225
)
Net realized losses
(9,286
)
(1,430
)
(120,369
)
(3,169
)
Net change in unrealized gains (losses):
Non-controlled/non-affiliated investments
(73,088
)
(100,749
)
(116,950
)
(149,322
)
Non-controlled/affiliated investments
2,879

13,320

31,612

22,189

Controlled investments
(2,173
)
9,687

32,579

31,767

Foreign currency translations
7,805

3,058

3,360

9,785

Net change in unrealized losses
(64,577
)
(74,684
)
(49,399
)
(85,581
)
Net Realized and Change in Unrealized Losses
$
(73,863
)
$
(76,114
)
$
(169,768
)
$
(88,750
)
Net Increase (Decrease) in Net Assets Resulting from Operations
$
(25,772
)
$
(19,452
)
$
(21,129
)
$
87,152

Earnings (Loss) Per Share — Basic
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36

Earnings (Loss) Per Share — Diluted
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36


See notes to financial statements.
2

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
(In thousands, except share data)

Nine Months Ended
December 31, 2015
Year Ended
March 31, 2015
(Unaudited)
Operations
Net investment income
$
148,639

$
227,973

Net realized losses
(120,369
)
(13,368
)
Net change in unrealized losses
(49,399
)
(139,183
)
Net Increase (Decrease) in Net Assets Resulting from Operations
$
(21,129
)
$
75,422

Distributions to Shareholders
Distribution of net investment income
$
(139,833
)
$
(165,626
)
Distribution of return of capital
—

(23,767
)
Net Decrease in Net Assets Resulting from Distributions to Shareholders
$
(139,833
)
$
(189,393
)
Capital Share Transactions
Offering costs for the issuance of common stock
$
—

$
(32
)
Repurchase of common stock
(52,437
)
—

Net Decrease in Net Assets Resulting from Capital Share Transactions
$
(52,437
)
$
(32
)
Net Assets
Net decrease in net assets during the period
$
(213,399
)
$
(114,003
)
Net assets at beginning of period
1,937,608

2,051,611

Net Assets at End of Period
$
1,724,209

$
1,937,608

Capital Share Activity
Shares repurchased during the period
(8,572,729
)
—

Shares issued and outstanding at beginning of period
236,741,351

236,741,351

Shares Issued and Outstanding at End of Period
228,168,622

236,741,351


See notes to financial statements.
3

APOLLO INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

Nine Months Ended December 31,
2015
2014
Operating Activities
Net increase (decrease) in net assets resulting from operations
$
(21,129
)
$
87,152

Net realized losses
120,369

3,169

Net change in unrealized losses
49,399

85,581

Net amortization of premiums and accretion of discounts on investments
(5,039
)
(7,860
)
Accretion of discount on notes
447

1

Amortization of deferred financing costs
5,278

4,966

Increase (decrease) from foreign currency transactions
4,477

(1,035
)
Changes in operating assets and liabilities:
Payment-in-kind interest and dividends capitalized
(34,090
)
(24,155
)
Purchases of investments
(923,719
)
(1,950,745
)
Proceeds from sales and repayments of investments
1,113,077

1,715,756

Decrease in interest receivable
10,709

10,093

Increase in dividends receivable
(3,449
)
(40
)
Decrease (increase) in prepaid expenses and other assets
6,121

(3,486
)
Increase (decrease) in management and performance-based incentive fees payable
(7,275
)
6,417

Increase in interest payable
1,441

1,619

Increase (decrease) in accrued administrative services expense
(192
)
317

Increase (decrease) in other liabilities and accrued expenses
(964
)
763

Net Cash Provided by (Used in) Operating Activities
$
315,461

$
(71,487
)
Financing Activities
Issuances of debt
$
1,624,754

$
2,423,577

Payments of debt
(1,736,668
)
(2,196,492
)
Financing costs paid and deferred
(5,646
)
(432
)
Offering costs for the issuance of common stock
—

(27
)
Repurchase of common stock
(52,437
)
—

Dividends paid
(141,547
)
(142,045
)
Net Cash Provided by (Used in) Financing Activities
$
(311,544
)
$
84,581

Cash and Foreign Currencies
Net increase in cash and foreign currencies during the period
$
3,917

$
13,094

Effect of foreign exchange rate changes
193

(160
)
Cash and foreign currencies at beginning of period
8,417

14,736

Cash and Foreign Currencies at End of Period
$
12,527

$
27,670

Supplemental Disclosure of Cash Flow Information
Cash interest paid
$
46,962

$
50,064

Non-Cash Activities
Payment-in-kind income
$
31,607

$
24,889

Non-cash reorganizations and restructuring of investments
$
268,250

$
17,141


See notes to financial statements.
4
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Non-Controlled/Non-Affiliated Investments—120.6% (10)
Corporate Debt—105.5%
Secured Debt—88.9%
First Lien Secured Debt—36.1%
First Lien Secured Debt (excluding Revolvers and Letters of Credit)—36.0%
Aventine Renewable Energy Holdings, Inc.
Chemicals, Plastics & Rubber
10.500% Cash (15.000% PIK Toggle)
9/22/17
$
16,339

$
17,970

$
15,685

Aveta, Inc.
Healthcare & Pharmaceuticals
9.750% (3M L+825, 1.50% Floor)
12/12/17
51,315

50,619

30,575

Belk, Inc.
Retail
5.750% (6M L+475, 1.00% Floor)
12/12/22
10,780

9,587

9,513

ChyronHego Corporation (18)
High Tech Industries
6.625% (3M L+563, 1.00% Floor)
3/9/20
32,431

31,858

31,783

Deep Gulf Energy II, LLC
Energy – Oil & Gas
14.500% (6M L+1300, 1.50% Floor)
9/30/18
50,000

50,000

45,625

Delta Educational Systems, Inc.
Education
16.000% PIK
12/11/16
6,509

6,509

6,496

Dodge Data & Analytics LLC
Business Services
9.750% (3M L+875, 1.00% Floor)
10/31/19
53,503

52,641

52,031

ECN Holding Company (18)
High Tech Industries
8.000% (3M L+700, 1.00% Floor)
6/12/21
22,388

22,077

21,850

Hunt Companies, Inc. (11)
Diversified Investment Vehicles, Banking, Finance, Real Estate
9.625%
3/1/21
34,008

32,665

30,862

Magnetation, LLC (11)(13)(14)(16)
Metals & Mining
11.000%
5/15/18
32,632

33,957

1,812

Magnetation, LLC (13)(14)(16)
Metals & Mining
12.000% PIK
3/7/16
13,070

12,427

6,607

Maxus Capital Carbon SPE I, LLC
Chemicals, Plastics & Rubber
13.000%
9/18/19
63,438

63,438

62,800

My Alarm Center, LLC (16)
Business Services
9.000% (12M L+800, 1.00% Floor)
1/9/19
42,614

42,614

42,614

My Alarm Center, LLC (16)(23)
Business Services
9.000% (12M L+800 Funded, 0.350% Unfunded, 1.00% Floor)
1/9/19
11,441

11,441

11,441

My Alarm Center, LLC (16)(23)
Business Services
9.000% (3M L+800 Funded, 0.350% Unfunded, 1.00% Floor)
1/9/19
3,880

3,880

3,880

Osage Exploration & Development, Inc. (11)(13)(14)(17)
Energy – Oil & Gas
13.000% (12M L+1100, 2.00% Floor), 13.000% PIK Toggle
4/27/16
25,840

24,856

4,489

Pelican Energy, LLC (17)
Energy – Oil & Gas
10.000% (7.000% Cash, 3.000% PIK)
12/31/18
28,313

27,524

22,878

Saba Software, Inc. (18)
High Tech Industries
9.750% (12M L+875, 1.00% Floor)
3/30/21
9,950

9,950

9,801

SCM Insurance Services, Inc. (17)
Business Services
9.250%
8/22/19
C$
39,480

32,960

25,863

Spotted Hawk Development, LLC
Energy – Oil & Gas
19.000% (13.000% Cash, 6.000% PIK)
9/12/16
84,380

84,380

68,001


See notes to financial statements.
5
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Telestream Holdings Corporation (18)
High Tech Industries
7.430% (3M L+643, 1.00% Floor)
1/15/20
$
31,891

$
31,891

$
31,444

UniTek Global Services Inc. (16)
Telecommunications
9.500% (3M L+750, 1.000% PIK, 1.00% Floor)
1/13/19
17,882

17,882

17,882

UniTek Global Services Inc. (16)
Telecommunications
8.500% (3M L+750, 1.00% Floor)
1/13/19
32,367

32,367

30,748

Venoco, Inc.
Energy – Oil & Gas
12.000%
2/28/19
40,517

40,517

36,465

Total First Lien Secured Debt (excluding Revolvers and Letters of Credit)
$
744,010

$
621,145

Funded and Unfunded Revolver Obligations—0.1%
Alliant Holdings, Unfunded Revolver (8)(21)(23)
Insurance
0.500% Unfunded
8/14/20
$
15,000

$
(1,575
)
$
(1,485
)
Avaya, Inc., Revolver
Telecommunications
2.963% (12M L+275)
10/26/16
3,303

3,152

3,105

CIT Group, Inc., Unfunded Revolver (8)(17)(21)(23)
Diversified Investment Vehicles, Banking, Finance, Real Estate
0.625% Unfunded
1/27/17
25,000

(3
)
(875
)
Confie Seguros Holding II Co., Revolver (16)(23)
Insurance
7.000% (3M P+350)
12/10/18
750

750

660

Confie Seguros Holding II Co., Revolver (16)(23)
Insurance
4.924% (3M L+450)
12/10/18
470

470

414

Confie Seguros Holding II Co., Unfunded Revolver (8)(16)(21)(23)
Insurance
0.500% Unfunded
12/10/18
3,194

(271
)
(384
)
My Alarm Center, LLC, Unfunded Revolver (16)(21)(23)
Business Services
0.350% Unfunded
1/9/19
6,250

—

—

Tibco Software Inc., Revolver (16)(23)
High Tech Industries
4.230% (12M L+400)
12/5/19
1,440

1,440

1,332

Tibco Software Inc., Unfunded Revolver (8)(21)(23)
High Tech Industries
0.500% Unfunded
12/5/19
4,560

(47
)
(342
)
Transfirst Holdings, Inc., Unfunded Revolver (8)(16)(21)(23)
Diversified Investment Vehicles, Banking, Finance, Real Estate
0.500% Unfunded
11/12/19
2,943

(12
)
(88
)
UniTek Global Services Inc., Unfunded Revolver (16)(21)(23)
Telecommunications
0.500% Unfunded
1/13/19
5,000

—

—

Total Funded and Unfunded Revolver Obligations
$
3,904

$
2,337

Letters of Credit—0.0%
Confie Seguros Holding II Co., Letter of Credit (8)(16)(23)
Insurance
4.500%
1/13/16
$
86

$
—

$
(10
)
Transfirst Holdings, Inc., Letter of Credit (8)(16)(23)
Diversified Investment Vehicles, Banking, Finance, Real Estate
3.750%
11/12/19
57

—

(2
)
UniTek Global Services Inc., Letter of Credit (16)(23)
Telecommunications
7.500%
1/13/19
8,813

—

—

UniTek Global Services Inc., Letter of Credit (16)(23)
Telecommunications
7.500%
1/13/19
1,850

—

—

Total Letters of Credit
$
—

$
(12
)
Total First Lien Secured Debt
$
747,914

$
623,470


See notes to financial statements.
6
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Second Lien Secured Debt—52.8%
1A Smart Start LLC
Consumer Services
9.500% (3M L+850, 1.00% Floor)
8/22/22
$
35,000

$
34,327

$
34,055

Access CIG, LLC
Business Services
9.750% (3M L+875, 1.00% Floor)
10/17/22
50,970

48,746

49,696

Active Network, Inc.
Business Services
9.500% (3M L+850, 1.00% Floor)
11/15/21
19,672

19,593

18,197

Appriss Holdings, Inc.
Business Services
9.250% (3M L+825, 1.00% Floor)
5/21/21
32,750

32,315

32,750

Armor Holding II LLC
Diversified Investment Vehicles, Banking, Finance, Real Estate
10.250% (3M L+900, 1.25% Floor)
12/26/20
8,000

7,881

7,800

Asurion Corporation
Insurance
8.500% (3M L+750, 1.00% Floor)
3/3/21
67,590

67,313

58,211

Confie Seguros Holding II Co.
Insurance
10.250% (3M L+900, 1.25% Floor)
5/8/19
22,344

22,242

22,149

Delta Educational Systems, Inc.
Education
35.000% PIK
6/10/18
1,182

1,182

2,301

Deltek, Inc.
Business Services
9.500% (3M L+850, 1.00% Floor)
6/26/23
28,086

27,696

27,735

Elements Behavioral Health, Inc.
Healthcare & Pharmaceuticals
11.750% (3M L+875 Cash, 2.000% PIK, 1.00% Floor)
2/11/20
9,534

9,464

9,482

Extraction Oil & Gas Holdings, LLC
Energy – Oil & Gas
11.000% & 10.000%
5/29/19
52,633

52,036

52,264

Garden Fresh Restaurant Corp. (16)
Hotel, Gaming, Leisure, Restaurants
7.750% (3M L+625 PIK, 1.50% Floor)
1/1/19
8,755

7,298

6,391

Garden Fresh Restaurant Corp. (16)
Hotel, Gaming, Leisure, Restaurants
15.000% (12M L+1350 PIK, 1.50% Floor)
1/1/19
44,687

43,116

35,750

GCA Services Group, Inc.
Business Services
9.250% (3M L+800, 1.25% Floor)
11/2/20
26,197

26,298

25,870

Grocery Outlet, Inc.
Food & Grocery
9.250% (3M L+825, 1.00% Floor)
10/21/22
28,000

27,624

27,580

GTCR Valor Companies, Inc.
Business Services
9.500% (3M L+850, 1.00% Floor)
11/30/21
35,000

34,695

33,644

Infiltrator Systems Integrated, LLC
Manufacturing, Capital Equipment
9.750% (3M L+875, 1.00% Floor)
5/26/23
13,889

13,625

13,819

Institutional Shareholder Services, Inc.
Business Services
8.500% (3M L+750, 1.00% Floor)
4/30/22
6,640

6,584

6,341

Kronos, Inc.
Business Services
9.750% (3M L+850, 1.25% Floor)
4/30/20
3,512

3,567

3,506

Miller Energy Resources, Inc. (13)(14)(17)
Energy – Oil & Gas
14.750% (3M L+1075 Cash, 2.000% PIK, 2.000% Floor)
2/3/18
89,021

88,568

63,757

MSC Software Corp. (17)
High Tech Industries
8.500% (3M L+750, 1.00% Floor)
5/31/21
13,448

13,337

11,834


See notes to financial statements.
7
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Novolex Holdings, Inc.
Containers, Packaging & Glass
9.750% (3M L+875, 1.00% Floor)
6/5/22
$
42,045

$
41,092

$
40,153

Pabst Brewing Company
Consumer Goods – Durable
9.250% (3M L+825, 1.00% Floor)
11/14/22
27,000

26,695

26,460

Poseidon Merger Sub, Inc.
Business Services
9.500% (3M L+850, 1.00% Floor)
8/15/23
18,000

17,485

18,000

Premier Trailer Leasing, Inc.
Transportation – Cargo, Distribution
10.000% (3M L+900, 1.00% Floor)
9/24/20
52,000

51,135

53,040

River Cree Enterprises LP (11)(17)
Hotel, Gaming, Leisure, Restaurants
11.000%
1/20/21
C$
23,000

21,684

16,516

SiTV, Inc. (11)
Broadcasting & Subscription
10.375%
7/1/19
2,219

2,219

1,786

SMG
Hotel, Gaming, Leisure, Restaurants
9.250% (3M L+825, 1.00% Floor)
2/27/21
19,900

19,900

20,000

Sprint Industrial Holdings, LLC
Containers, Packaging & Glass
11.250% (3M L+1000, 1.25% Floor)
11/14/19
16,163

15,469

12,365

SquareTwo Financial Corp. (17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
11.625%
4/1/17
65,152

64,619

37,462

STG-Fairway Acquisitions, Inc.
Business Services
10.250% (3M L+925, 1.00% Floor)
6/30/23
15,000

14,641

14,400

TASC, Inc.
Aerospace & Defense
12.000%
5/21/21
21,815

21,095

22,142

TMK Hawk Parent, Corp.
Transportation – Cargo, Distribution
8.500% (3M L+750, 1.00% Floor)
10/1/22
34,000

33,700

33,660

Transfirst Holdings, Inc.
Diversified Investment Vehicles, Banking, Finance, Real Estate
9.000% (3M L+800, 1.00% Floor)
11/11/22
27,840

27,570

27,283

U.S. Renal Care, Inc.
Healthcare & Pharmaceuticals
9.000% (3M L+800, 1.00% Floor)
12/29/23
3,000

2,940

2,948

Velocity Technology Solutions, Inc.
Business Services
9.000% (3M L+775, 1.25% Floor)
9/28/20
16,500

16,241

15,881

Venoco, Inc.
Energy – Oil & Gas
8.875% (12.000% PIK Toggle)
2/28/19
35,843

46,020

25,090

Total Second Lien Secured Debt
$
1,010,012

$
910,318

Total Secured Debt
$
1,757,926

$
1,533,788


See notes to financial statements.
8
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Unsecured Debt—16.6%
Aerojet Rocketdyne Holdings, Inc. (formerly GenCorp, Inc.) (17)
Aerospace & Defense
9.500% (3M L+850, 1.00% Floor)
4/18/22
$
6,500

$
6,500

$
6,500

American Tire Distributors, Inc. (11)
Transportation – Cargo, Distribution
10.250%
3/1/22
29,741

29,821

27,399

Canacol Energy Ltd. (17)(23)
Energy – Oil & Gas
9.500% (3M L+850, 1.000% Unfunded, 1.00% Floor)
12/31/19
75,000

73,339

71,400

Delta Educational Systems, Inc.
Education
16.000% PIK
5/12/17
27,181

27,016

18,862

Radio One, Inc. (11)
Broadcasting & Subscription
9.250%
2/15/20
15,804

15,721

12,367

Sorenson Holdings, LLC (11)
Consumer Goods – Durable
13.000% (13.000% PIK Toggle)
10/31/21
68

45

69

Tibco Software Inc. (11)
High Tech Industries
11.375%
12/1/21
6,984

6,803

5,849

U.S. Security Associates Holdings, Inc.
Business Services
11.000%
7/28/18
135,000

135,000

136,350

UniTek Global Services Inc.
Telecommunications
15.000% PIK
7/13/19
7,093

7,093

7,093

Total Unsecured Debt
$
301,338

$
285,889

Total Corporate Debt
$
2,059,264

$
1,819,677

Structured Products and Other—10.6%
Asset Repackaging Trust Six B.V., Credit-Linked Note (11)(17)(19)
Utilities – Electric
13.832%
5/18/27
$
58,411

$
25,215

$
32,224

Craft 2013-1, Credit-Linked Note (11)(16)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
9.565% (3M L+925)
4/17/22
25,000

25,066

23,754

Craft 2013-1, Credit-Linked Note (16)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
9.565% (3M L+925)
4/17/22
7,625

7,731

7,248

Craft 2014-1A, Credit-Linked Note (11)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
10.012% (3M L+965)
5/15/21
42,500

42,436

40,692

Craft 2015-2, Credit-Linked Note (11)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
9.567% (3M L+925)
1/16/24
26,000

25,956

24,981

Dark Castle Holdings, LLC
Media – Diversified & Production
31.240%
N/A
24,395

1,189

2,150

JP Morgan Chase & Co., Credit-Linked Note (17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
12.595% (12M L+1225)
12/20/21
43,250

41,587

42,594

NXT Capital CLO 2014-1, LLC, Class E Notes (11)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
5.816% (3M L+550)
4/23/26
5,000

4,686

4,072

Renaissance Umiat, LLC, ACES Tax Receivable (15)(17)
Energy – Oil & Gas
15.250% to 17.460%
N/A
—

5,393

5,522

Total Structured Products and Other
$
179,259

$
183,237


See notes to financial statements.
9
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Equity—4.5%
Preferred Equity—2.9%
Shares
Crowley Holdings, Series A Preferred Stock (11)
Transportation – Cargo, Distribution
12.000% (10.000% Cash, 2.000% PIK)
N/A
33,428

$
33,839

$
34,233

Gryphon Colleges Corp, Preferred Stock (13)(14)
Education
12.500% PIK
N/A
332,500

6,863

—

Gryphon Colleges Corp, Preferred Stock (13)(14)
Education
13.500% PIK
5/12/18
12,360

27,685

—

Sungevity Inc, Series D Preferred Stock (13)
Energy – Electricity
N/A
N/A
114,678,899

11,250

11,250

Varietal Distribution Holdings, LLC, Class A Preferred Unit
Transportation – Cargo, Distribution
8.000% PIK
N/A
3,097

4,207

4,207

Total Preferred Equity
$
83,844

$
49,690

Common Equity/Interests—1.1%
Shares
Accelerate Parent Corp, Common Stock
Transportation – Cargo, Distribution
N/A
N/A
1,664,046

$
1,714

$
2,570

AMP Solar Group, Inc., Class A Common Unit (13)(17)
Energy – Electricity
N/A
N/A
166,974

7,000

7,000

Clothesline Holdings, Inc., Common Stock (13)
Healthcare & Pharmaceuticals
N/A
N/A
6,000

6,000

701

Explorer Coinvest, LLC, Common Stock (17)
Business Services
N/A
N/A
133

1,021

3,826

Garden Fresh Restaurant Holdings, LLC, Common Stock (13)
Hotel, Gaming, Leisure, Restaurants
N/A
N/A
50,000

5,000

—

Gryphon Colleges Corp, Common Stock (13)
Education
N/A
N/A
17,500

175

—

Pelican Energy, LLC, Net Profits Interest (13)(17)
Energy – Oil & Gas
N/A
N/A
1,098,572

1,099

—

Skyline Data, News and Analytics LLC, Class A Common Unit (13)
Business Services
N/A
N/A
4,500

4,500

4,500

Sorenson Holdings, LLC, Membership Interests (13)
Consumer Goods – Durable
N/A
N/A
587

—

139

Varietal Distribution Holdings, LLC, Class A Common Unit (13)
Transportation – Cargo, Distribution
N/A
N/A
28,028

28

237

Total Common Equity/Interests
$
26,537

$
18,973

Warrants—0.5%
Warrants
Energy & Exploration Partners, Inc., Common Stock Warrants (13)
Energy – Oil & Gas
N/A
N/A
60,778

$
2,374

$
—

Fidji Luxco (BC) S.C.A., Common Stock Warrants (2)(13)(17)
High Tech Industries
N/A
N/A
12,427

125

8,041

Gryphon Colleges Corp, Class A-1 Preferred Stock Warrants (13)
Education
N/A
N/A
45,947

459

—

Gryphon Colleges Corp, Class B-1 Preferred Stock Warrants (13)
Education
N/A
N/A
104,314

1,043

—

Gryphon Colleges Corp, Common Stock Warrants (13)
Education
N/A
N/A
9,820

98

—

Osage Exploration & Development, Inc., Common Stock Warrants (13)(17)
Energy – Oil & Gas
N/A
N/A
1,496,843

—

—

Spotted Hawk Development, LLC, Common Stock Warrants (13)
Energy – Oil & Gas
N/A
N/A
54,545

852

—

Total Warrants
$
4,951

$
8,041

Total Equity
$
115,332

$
76,704

Total Non-Controlled/Non-Affiliated Investments
$
2,353,855

$
2,079,618


See notes to financial statements.
10
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Non-Controlled/Affiliated Investments—14.5% (4)(10)
Structured Products and Other—8.5%
Golden Bear Warehouse LLC, Membership Interests (3)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
N/A
N/A
$
26,438

$
26,438

$
35,409

Highbridge Loan Management 3-2014, Ltd., Subordinated Notes (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
17.510%
1/18/25
8,163

5,731

5,412

Ivy Hill Middle Market Credit Fund IX, Ltd., Subordinated Notes (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
17.200%
10/18/25
12,500

10,493

10,276

Ivy Hill Middle Market Credit Fund X, Ltd., Subordinated Notes (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
12.490%
7/18/27
14,000

12,457

10,807

Jamestown CLO I Ltd., Subordinated Notes (11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
0.000%
11/5/24
4,325

3,049

2,142

MCF CLO I, LLC, Membership Interests (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
20.270%
4/20/23
38,918

33,666

35,138

MCF CLO III, LLC, Class E Notes (3)(11)(17)
Diversified Investment Vehicles, Banking, Finance, Real Estate
4.737% (3M L+445)
1/20/24
12,750

11,541

10,523

MCF CLO III, LLC, Membership Interests (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
20.080%
1/20/24
41,900

35,059

35,384

Slater Mill Loan Fund LP, LP Certificates (3)(11)(17)(22)
Diversified Investment Vehicles, Banking, Finance, Real Estate
0.000%
N/A
8,375

5,335

1,424

Total Structured Products and Other
$
143,769

$
146,515

Equity—6.0%
Preferred Equity—2.0%
Shares
Renewable Funding Group, Inc., Series B Preferred Stock (13)
Diversified Investment Vehicles, Banking, Finance, Real Estate
N/A
N/A
1,505,868

$
8,343

$
20,450

Renewable Funding Group, Inc., Series D Preferred Stock (13)
Diversified Investment Vehicles, Banking, Finance, Real Estate
N/A
N/A
436,689

5,568

13,013

Total Preferred Equity
$
13,911

$
33,463

Common Equity/Interests—4.0%
Shares
Generation Brands Holdings, Inc., Basic Common Stock (3)(13)
Consumer Goods – Durable
N/A
N/A
9,007

$
—

$
8,314

Generation Brands Holdings, Inc., Series 2L Common Stock (3)(13)
Consumer Goods – Durable
N/A
N/A
36,700

11,242

33,878

Generation Brands Holdings, Inc., Series H Common Stock (3)(13)
Consumer Goods – Durable
N/A
N/A
7,500

2,298

6,924

LVI Group Investments, LLC, Common Units (13)
Environmental Industries
N/A
N/A
212,460

17,505

20,513

Total Common Equity/Interests
$
31,045

$
69,629

Total Equity
$
44,956

$
103,092

Total Non-Controlled/Affiliated Investments
$
188,725

$
249,607


See notes to financial statements.
11
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Investment
Industry (9)
Interest
Rate (20)
Maturity
Date
Par (12)
Cost
Fair
Value (1)
Controlled Investments—42.9% (5)(10)
Corporate Debt—29.6%
Secured Debt—29.6%
First Lien Secured Debt—29.6%
First Lien Secured Debt (excluding Revolvers and Letters of Credit)—8.4%
Solarplicity Group Limited (17)
Energy – Electricity
12.500% (12.500% PIK Toggle)
11/30/22
£
100,670

$
150,754

$
145,988

Total First Lien Secured Debt (excluding Revolvers and Letters of Credit)
$
150,754

$
145,988

Funded and Unfunded Revolver Obligations—21.2%
Merx Aviation Finance, LLC, Revolver (16)(23)
Aviation and Consumer Transport
12.000%
10/31/18
$
365,084

$
365,084

$
365,084

Merx Aviation Finance, LLC, Unfunded Revolver (16)(23)
Aviation and Consumer Transport
0.000% Unfunded
10/31/18
34,916

—

—

Total Funded and Unfunded Revolver Obligations
$
365,084

$
365,084

Letters of Credit—0.0%
Merx Aviation Finance, LLC, Letter of Credit (16)(23)
Aviation and Consumer Transport
2.250%
7/13/16
$
177

$
—

$
—

Merx Aviation Finance Assets Ireland Limited, Letter of Credit (16)(23)
Aviation and Consumer Transport
2.250%
9/30/16
1,800

—

—

Merx Aviation Finance Assets Ireland Limited, Letter of Credit (16)(23)
Aviation and Consumer Transport
2.250%
9/30/16
1,800

—

—

Total Letters of Credit
$
—

$
—

Total First Lien Secured Debt
$
515,838

$
511,072

Total Secured Debt
$
515,838

$
511,072

Total Corporate Debt
$
515,838

$
511,072

Equity—13.3%
Common Equity/Interests—13.3%
Shares
Dynamic Product Tankers, LLC, Class A Units (17)(24)
Transportation – Cargo, Distribution
N/A
N/A
N/A

$
38,756

$
38,714

Merx Aviation Finance, LLC, Membership Interests
Aviation and Consumer Transport
N/A
N/A
N/A

73,854

102,966

MSEA Tankers LLC, Class A Units (17)(25)
Transportation – Cargo, Distribution
N/A
N/A
N/A

85,000

84,622

Solarplicity Group Limited, Class B Common Shares (2)(13)(17)
Energy – Electricity
N/A
N/A
2,825

2,472

2,394

Total Common Equity/Interests
$
200,082

$
228,696

Total Equity
$
200,082

$
228,696

Total Controlled Investments
$
715,920

$
739,768

Total Investments—178.0% (6)(7)
$
3,258,500

$
3,068,993

Liabilities in Excess of Other Assets—(78.0)%
$
(1,344,784
)
Net Assets—100.0%
$
1,724,209

____________________
(1)
Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (Note 2).
(2)
Fidji Luxco (BC) S.C.A. is a EUR denominated investment. Solarplicity Group Limited is a GBP denominated investment.
(3)
Denotes investments in which the Company owns greater than 25% of the equity, where the governing documents of each entity preclude the Company from exercising a controlling influence over the management or policies of such entity and therefore the Company has determined that these entities are not controlled affiliates. As of December 31, 2015 , the Company had a 28%, 26%, 32%, 32%, 100%, 97%, 98%, and 26% equity ownership interest in Generation Brands Holdings, Inc., Highbridge Loan Management, Ltd., Ivy Hill Middle Market Credit Fund IX, Ltd., Ivy Hill Middle Market Credit Fund X, Ltd., LLC, Golden Bear Warehouse, LLC, MCF CLO I, LLC, MCF CLO III, LLC, and Slater Mill Loan Fund, LP, respectively. With respect to these portfolio companies,

See notes to financial statements.
12
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

shown under “Non-Controlled/Affiliated,” the Company does not have the right to elect or appoint more than 25% of the directors or another party has the right to elect or appoint more directors than the Company and has the right to appoint certain members of senior management. Therefore, the Company has determined that these entities are not controlled affiliates.
(4)
Denotes investments in which we are an “Affiliated Person,” as defined in the 1940 Act, due to holding the power to vote or owning 5% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of March 31, 2015 and December 31, 2015 along with transactions during the nine months ended December 31, 2015 in these Affiliated investments are as follows:
Name of Issue
Fair Value at March 31, 2015
Gross Additions (Cost) ●
Gross Reductions (Cost) ■
Net Change in Unrealized Gains (Losses)
Fair Value at December 31, 2015
Net Realized Losses
Interest/Dividend/Other Income
AMP Solar (UK) Limited, Class A Preference Shares
$
65,171

$
67,313

$
(133,668
)
$
1,184

$
—

$
(1,575
)
$
7,375

AMP Solar Group, Inc., Class A Common Unit
3,500

2,500

(6,000
)
—

—

—

—

Generation Brands Holdings, Inc., Basic Common Stock
6,699

—

—

1,615

8,314

—

—

Generation Brands Holdings, Inc., Series 2L Common Stock
27,294

—

—

6,584

33,878

—

—

Generation Brands Holdings, Inc., Series H Common Stock
5,578

—

—

1,346

6,924

—

—

Golden Bear Warehouse LLC, Equity
6,833

37,540

(15,335
)
6,371

35,409

—

905

Golden Hill CLO I, LLC, Equity
73,587

—

(71,478
)
(2,109
)
—

—

6,458

Highbridge Loan Management 3-2014, Ltd, Class E Notes
2,121

3

(2,280
)
156

—

(67
)
34

Highbridge Loan Management 3-2014, Ltd, Subordinated Notes
6,722

—

(806
)
(504
)
5,412

—

671

Ivy Hill Middle Market Credit Fund IX, Ltd, Subordinated Notes
11,375

—

(882
)
(217
)
10,276

—

1,293

Ivy Hill Middle Market Credit Fund X, Ltd, Subordinated Notes
—

12,457

—

(1,650
)
10,807

—

712

Jamestown CLO I LTD, Subordinated Notes
3,698

—

(384
)
(1,172
)
2,142

—

175

LVI Group Investments, LLC, Common Units
8,669

—

—

11,844

20,513

—

219

MCF CLO I, LLC, Membership Interests
38,490

—

(1,422
)
(1,930
)
35,138

—

5,267

MCF CLO III, LLC, Class E Notes
11,220

85

—

(782
)
10,523

—

546

MCF CLO III, LLC, Membership Interests
38,984

—

(1,897
)
(1,703
)
35,384

—

4,912

Renewable Funding Group, Inc., Promissory Note due 9/30/15
1,000

—

(1,000
)
—

—

—

—

Renewable Funding Group, Inc., Promissory Note due 6/3/16
—

2,068

(2,068
)
—

—

—

53

Renewable Funding Group, Inc., Series B Preferred Stock
9,309

1,000

(118
)
10,259

20,450

—

—

Renewable Funding Group, Inc., Series D Preferred Stock
—

5,568

—

7,445

13,013

—

—

Slater Mill Loan Fund LP, LP Certificates
6,968

—

(419
)
(5,125
)
1,424

—

573

$
327,218

$
128,534

$
(237,757
)
$
31,612

$
249,607

$
(1,642
)
$
29,193

____________________
● Gross additions includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
■ Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

See notes to financial statements.
13
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

(5)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Fair value as of March 31, 2015 and December 31, 2015 along with transactions during the nine months ended December 31, 2015 in these Controlled investments are as follows:
Name of Issue
Fair Value at March 31, 2015
Gross Additions (Cost) ●
Gross Reductions (Cost) ■
Net Change in Unrealized Gains (Losses)
Fair Value at December 31, 2015
Net Realized Losses
Interest/Dividend/Other Income
Dynamic Product Tankers, LLC, Class A Units
$
—

$
38,800

$
(45
)
$
(41
)
$
38,714

$
—

$
4,435

Merx Aviation Finance, LLC, Revolver
352,084

13,000

—

—

365,084

—

32,221

Merx Aviation Finance, LLC, Unfunded Revolver
—

—

—

—

—

—

—

Merx Aviation Finance, LLC, Letter of Credit
—

—

—

—

—

—

—

Merx Aviation Finance, LLC, Membership Interests
165,172

—

(78,227
)
16,021

102,966

—

3,000

Merx Aviation Finance Assets Ireland Limited, Letter of Credit
—

—

—

—

—

—

10

Merx Aviation Finance Assets Ireland Limited, Letter of Credit
—

—

—

—

—

—

10

MSEA Tankers LLC, Class A Units
33,000

52,000

—

(378
)
84,622

—

6,049

PlayPower Holdings, Inc., Common Stock
55,900

—

(77,722
)
21,822

—

(39,714
)
63

PlayPower Holdings, Inc., Series A Preferred
59,411

1,891

(61,302
)
—

—

—

1,869

Solarplicity Group Limited, First Lien Term Loan
—

150,755

—

(4,767
)
145,988

—

2,329

Solarplicity Group Limited, Class B Common Shares
—

2,472

—

(78
)
2,394

—

—

$
665,567

$
258,918

$
(217,296
)
$
32,579

$
739,768

$
(39,714
)
$
49,986

____________________
● Gross additions includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
■ Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of December 31, 2015 , the Company had a 85%, 100%, 98% and 28% equity ownership interest in Dynamic Product Tankers, LLC, Merx Aviation Finance, LLC, MSEA Tankers, LLC, and Solarplicity Group Limited, respectively.
(6)
Aggregate gross unrealized gain and loss for federal income tax purposes is $200,454 and $381,368, respectively. Net unrealized loss is $180,914 based on a tax cost of $3,249,907.
(7)
Substantially all securities are pledged as collateral to our multi-currency revolving credit facility (the “Senior Secured Facility”). As such, these securities are not available as collateral to our general creditors.
(8)
The negative fair value is the result of the revolver obligation being valued below par.
(9)
As a result of the amendment of our Senior Secured Facility on April 24, 2015, the industry classifications were updated in the Schedule of Investments as of December 31, 2015 .
(10)
The percentage is calculated over net assets.
(11)
These securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
(12)
Denominated in USD unless otherwise noted, Euro (“€”), British Pound (“£”), and Canadian Dollar (“C$”).
(13)
Non-income producing security.
(14)
Non-accrual status (Note 2).

See notes to financial statements.
14
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

(15)
The investment has a put option attached to it and the combined instrument has been recorded in its entirety at fair value as a hybrid instrument in accordance with ASC 815-15-25-4 with subsequent changes in fair value charged or credited to investment gains/losses for each period.
(16)
Denotes debt securities where the Company owns multiple tranches of the same broad asset type but whose security characteristics differ. Such differences may include level of subordination, call protection and pricing, and differing interest rate characteristics, among other factors. Such factors are usually considered in the determination of fair values.
(17)
Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis.
(18)
In addition to the interest earned based on the stated rate of this loan, the Company may be entitled to receive additional interest as a result of its arrangement with other lenders in a syndication.
(19)
This investment represents a leveraged subordinated interest in a trust that holds one foreign currency denominated bond and a derivative instrument.
(20)
Generally, the interest rate on variable interest rate investments is at benchmark rate plus spread. The borrower has an option to choose the benchmark rate which can be LIBOR, prime, or any other similarly defined rate. The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of reporting period. LIBOR loans are typically indexed to 30-day, 90-day, 180-day or 360-day LIBOR rates (1M L, 3M L, 6M L or 12M L, respectively), at the borrower’s option. Both LIBOR and prime loans are subject to interest floors. As of December 31, 2015 , rates for 1M L, 3M L, 6M L and 12M L are 0.4295%, 0.6127%, 0.8461% and 1.1780%, respectively.
(21)
The rates associated with these undrawn committed revolvers and delayed draw term loans represent rates for commitment and unused fees.
(22)
The collateralized loan obligation (“CLO”) equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield is based on the current projections of this excess cash flow taking into account assumptions such as expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.
(23)
As of December 31, 2015 , the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and letters of credit and there can be no assurance that such conditions will be satisfied. See Note 8 to the financial statements for further information on revolving and delayed draw loan commitments, including commitments to issue letters of credit, related to certain portfolio companies.
Portfolio Company
Total Commitment
Drawn Commitment
Letters of Credit
Undrawn Commitment
Alliant Holdings
$
15,000

$
—

$
—

$
15,000

Canacol Energy Ltd.
100,000

75,000

—

25,000

CIT Group, Inc.
25,000

—

—

25,000

Confie Seguros Holding II Co.
4,500

1,220

86

3,194

Merx Aviation Finance, LLC
177

—

177

—

Merx Aviation Finance Assets Ireland Limited
3,600

—

3,600

—

My Alarm Center, LLC
25,816

15,321

—

10,495

Tibco Software Inc.
6,000

1,440

—

4,560

Transfirst Holdings, Inc.
3,000

—

57

2,943

UniTek Global Services Inc.
15,663

—

10,663

5,000

Total Commitments
$
198,756

$
92,981

$
14,583

$
91,192

(24)
As of December 31, 2015 , Dynamic Product Tankers, LLC has various classes of limited liability interests outstanding of which Company holds Class A-1 and Class A-3 units which are identical except that Class A-1 unit is voting and Class A-3 unit is non-voting. The units entitle the Company to appoint three out of five managers to the board of managers.
(25)
As of December 31, 2015 , MSEA Tankers, LLC has various classes of limited liability interests outstanding of which the Company holds Class A-1 and Class A-2 units which are identical except that Class A-1 unit is voting and Class A-2 unit is non-voting. The units entitle the Company to appoint two out of three managers to the board of managers.

See notes to financial statements.
15
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (Unaudited)
December 31, 2015
(In thousands, except share data)

Industry Classification
Percentage of Total Investments (at Fair Value) as of December 31, 2015
Business Services
17.1%
Aviation and Consumer Transport
15.2%
Diversified Investment Vehicles, Banking, Finance, Real Estate
13.9%
Energy – Oil & Gas
12.9%
Transportation – Cargo, Distribution
9.1%
Energy – Electricity
5.4%
High Tech Industries
4.0%
Insurance
2.6%
Hotel, Gaming, Leisure, Restaurants
2.6%
Chemicals, Plastics & Rubber
2.6%
Consumer Goods – Durable
2.5%
Telecommunications
1.9%
Containers, Packaging & Glass
1.7%
Healthcare & Pharmaceuticals
1.4%
Consumer Services
1.1%
Utilities – Electric
1.0%
Aerospace & Defense
0.9%
Education
0.9%
Food & Grocery
0.9%
Environmental Industries
0.7%
Broadcasting & Subscription
0.5%
Manufacturing, Capital Equipment
0.4%
Retail
0.3%
Metals & Mining
0.3%
Media – Diversified & Production
0.1%
Total Investments
100.0%

See notes to financial statements.
16
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Non-Controlled/Non-Affiliated Investments—121.6% (10)
Corporate Debt—109.5%
Secured Debt—85.0%
First Lien Secured Debt (excluding Revolvers and Letters of Credit)—41.7%
Alion Science & Technology Corporation
11.000% (L+1000, 1.00% Floor)
8/16/19
Aerospace and Defense
$
32,003

$
31,038

$
31,843

Archroma (17)
9.500% (L+825, 1.25% Floor)
10/1/18
Chemicals
40,128

39,795

40,354

Aventine Renewable Energy Holdings, Inc.
15.00% PIK or 10.50% Cash
9/22/17
Chemicals
15,742

18,031

14,601

Aveta, Inc.
9.750% (L+825, 1.50% Floor)
12/12/17
Healthcare
53,296

52,331

43,169

Caza Petroleum, Inc.
12.000% (L+1000, 2.00% Floor)
5/23/17
Oil and Gas
45,000

43,992

42,660

ChyronHego Corp.
9.000% (L+800, 1.00% Floor)
3/9/20
Business Services
25,000

24,505

24,500

CITGO Holding, Inc. (11)
10.750%
2/15/20
Energy
25,000

23,792

25,781

CITGO Holding, Inc.
9.50% (L+850, 1.00% Floor)
5/12/18
Energy
19,435

18,306

19,344

Deep Gulf Energy II, LLC
14.000% (14.00% or L+1250, 1.50% Floor)
3/31/17
Oil and Gas
35,000

35,000

33,530

Delta Educational Systems, Inc.
16.00% (8.00% Cash / 8.00% PIK)
12/11/16
Education
5,892

5,892

5,892

Dodge Data & Analytics LLC
9.750% (L+875, 1.00% Floor)
10/31/19
Printing and Publishing
60,349

59,223

58,689

Extraction Oil & Gas Holdings, LLC
10.00% & 11.00%
5/29/19
Oil and Gas
52,633

51,932

51,843

Great Bear Petroleum Operating, LLC
12.000%
10/1/17
Oil and Gas
5,064

5,064

5,064

Hunt Companies, Inc. (11)
9.625%
3/1/21
Buildings and Real Estate
21,008

20,776

21,586

Magnetation, LLC (11)
11.000%
5/15/18
Mining
38,454

39,878

19,804

Maxus Capital Carbon SPE I, LLC (Skyonic Corp.)
13.000%
9/18/19
Chemicals
73,104

73,104

73,104

Molycorp, Inc. (17)
10.000%
6/1/20
Diversified Natural Resources, Precious Metals and Minerals
42,977

42,699

22,276

My Alarm Center, LLC (16)
8.500% (L+750, 1.00% Floor)
1/9/18
Business Services
42,614

42,614

42,613

My Alarm Center, LLC (16)
8.500% (L+750, 1.00% Floor)
1/9/18
Business Services
12,731

12,731

12,731

Osage Exploration & Development, Inc. (11)(17)
13.000% (L+1100, 2.00% Floor)
4/27/16
Oil and Gas
25,000

24,741

23,600

Pelican Energy, LLC (17)
10.00% (7.00% Cash / 3.00% PIK)
12/31/18
Oil and Gas
26,957

26,057

25,340

Saba Software, Inc.
12.417% (L+1142, 1.00% Floor)
3/26/21
Business Services
10,000

10,000

9,850

SCM Insurance Services, Inc. (17)
9.250%
8/22/19
Business Services
C$
30,000

27,135

23,569

Spotted Hawk Development, LLC
13.00% (12.00% Cash / 1.00% PIK)
9/12/16
Oil and Gas
80,900

79,911

78,878

Sunrun Solar Owner IX, LLC
9.079%
12/31/24
Energy
3,424

3,284

3,527

Telestream Holdings Corporation
10.254% (L+925, 1.00% Floor)
1/15/20
Business Services
32,500

32,500

31,769

UniTek Global Services Inc. (16)
9.500% (L+750, 1.00% PIK, 1.00% Floor)
1/13/19
Telecommunications
21,442

21,442

21,442

Total First Lien Secured Debt (excluding Revolvers and Letters of Credit)
$
865,773

$
807,359


See notes to financial statements.
17
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Funded and Unfunded Revolver Obligations—1.7%
Avaya, Inc., Revolver (16)
2.92% (L+275, 0.17% Floor) / 5.00% (P+175, 3.25% Floor) Funded
10/26/16
Telecommunications
$
16,553

$
16,553

$
15,436

Avaya, Inc., Unfunded Revolver (8)(16)
0.50% Unfunded
10/26/16
Telecommunications
10,431

(3,181
)
(704
)
BMC Software, Inc., Unfunded Revolver (8)
0.50% Unfunded
9/10/18
Business Services
20,760

(1,857
)
(1,868
)
CIT Group, Inc., Unfunded Revolver (8)(17)
L+275
1/27/17
Financial Services
25,000

(107
)
(1,250
)
Confie Seguros Holding II Co., Revolver (16)
4.67% (L+450, 0.17% Floor) / 6.75% (P+350, 3.25% Floor) Funded
12/10/18
Insurance
2,190

2,190

1,949

Confie Seguros Holding II Co., Unfunded Revolver (8)(16)
0.50% Unfunded
12/10/18
Insurance
1,625

(340
)
(179
)
Laureate Education Inc., Revolver (16)(17)
5.000% (L+375, 1.25% Floor) Funded
6/16/16
Education
23,566

23,566

21,445

Laureate Education, Inc., Unfunded Revolver (8)(16)(17)
0.625% Unfunded
6/16/16
Education
5,212

(1,833
)
(469
)
Salix Pharmaceuticals, Ltd., Unfunded Revolver (16)(17)
0.50% Unfunded
1/2/19
Healthcare
24,867

(1,519
)
—

Tibco Software Inc., Unfunded Revolver (8)
0.50% Unfunded
12/5/19
Business Services
6,000

(56
)
(30
)
Transfirst Holdings, Inc., Unfunded Revolver (8)(16)
0.50% Unfunded
11/12/19
Financial Services
2,943

(14
)
(88
)
UniTek Global Services, Inc., Unfunded Revolver (16)
0.50% Unfunded
1/13/19
Telecommunications
5,000

241

—

Walter Energy, Inc., Unfunded Revolver (8)(16)(17)
0.625% Unfunded
10/1/17
Mining
275

(176
)
(48
)
Total Funded and Unfunded Revolver Obligations
$
33,467

$
34,194

Letters of Credit—(0.0)%
Avaya, Inc., Letter of Credit (8)(9)(16)
2.750%
10/30/15- 4/6/16
Telecommunications
$
9,800

$
—

$
(662
)
Confie Seguros Holding II Co., Letter of Credit (8)(16)
4.500%
10/27/15
Insurance
600

—

(66
)
Confie Seguros Holding II Co., Letter of Credit (8)(16)
4.500%
1/13/16
Insurance
85

—

(9
)
Laureate Education Inc., Letter of Credit (8)(16)(17)
3.750%
6/16/16
Education
101

—

(9
)
Salix Pharmaceuticals, Ltd., Letter of Credit (16)(17)
3.000%
2/10/16
Healthcare
8

—

—

Salix Pharmaceuticals, Ltd., Letter of Credit (16)(17)
3.000%
2/10/16
Healthcare
125

—

—

Transfirst Holdings, Inc., Letter of Credit (8)(16)
4.500%
11/12/19
Financial Services
57

—

(2
)
UniTek Global Services Inc., Letter of Credit (16)
7.500%
1/13/19
Telecommunications
17,946

—

—

UniTek Global Services Inc., Letter of Credit (16)
7.500%
1/13/19
Telecommunications
1,850

—

—

Walter Energy, Inc., Letter of Credit (8)(9)(16)(17)
5.500%
9/18/15- 7/4/16
Mining
86

—

(15
)
Walter Energy, Inc., Letter of Credit (8)(9)(16)(17)
5.500%
8/31/15- 11/28/15
Mining
C$
192

—

(27
)
Total Letters of Credit
$
—

$
(790
)
Total First Lien Secured Debt
$
899,240

$
840,763


See notes to financial statements.
18
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Second Lien Secured Debt—41.6%
Access CIG, LLC
9.750% (L+875, 1.00% Floor)
10/17/22
Business Services
$
25,600

$
24,103

$
24,192

Active Network, Inc.
9.500% (L+850, 1.00% Floor)
11/15/21
Business Services
19,672

19,586

19,082

Appriss Holdings, Inc.
9.250% (L+825, 1.00% Floor)
5/21/21
Business Services
25,000

24,641

25,000

Armor Holdings, Inc. (American Stock Transfer and Trust Company)
10.250% (L+900, 1.25% Floor)
12/26/20
Financial Services
8,000

7,867

7,760

Asurion Corporation
8.500% (L+750, 1.00% Floor)
3/3/21
Insurance
40,622

40,163

40,876

Confie Seguros Holding II Co.
10.250% (L+900, 1.25% Floor)
5/8/19
Insurance
28,844

28,691

28,844

Consolidated Precision Products Corp.
8.750% (L+775, 1.00% Floor)
4/30/21
Aerospace and Defense
1,940

1,932

1,930

Deltek, Inc.
10.000% (L+875, 1.25% Floor)
10/10/19
Business Services
17,273

17,137

17,424

Elements Behavioral Health, Inc.
9.750% (L+875, 1.00% Floor)
2/11/20
Healthcare
9,500

9,420

9,434

Garden Fresh Restaurant Corp. (16)
7.750% (L+625 PIK, 1.50% Floor)
1/1/19
Restaurants
8,250

6,522

5,775

Garden Fresh Restaurant Corp. (16)
15.000% (L+1350 PIK, 1.50% Floor)
1/1/19
Restaurants
39,921

38,064

35,529

GCA Services Group, Inc.
9.250% (L+800, 1.25% Floor)
11/1/20
Diversified Service
17,838

17,961

17,882

Grocery Outlet, Inc.
9.250% (L+825, 1.00% Floor)
10/21/22
Grocery
28,000

27,592

27,580

GTCR Valor Companies, Inc.
9.500% (L+850, 1.00% Floor)
11/30/21
Business Services
35,000

34,666

33,775

Institutional Shareholder Services, Inc.
8.500% (L+750, 1.00% Floor)
4/30/22
Financial Services
6,640

6,579

6,540

Kronos, Inc.
9.750% (L+850, 1.25% Floor)
4/30/20
Business Services
13,525

13,466

13,931

Miller Energy Resources, Inc. (17)
14.750% (9.750% Cash / 2.000% PIK, 3.00% Floor)
2/3/18
Oil and Gas
88,123

88,123

82,527

MSC Software Corp. (17)
8.500% (L+750, 1.00% Floor)
5/28/21
Business Services
13,448

13,320

13,246

Novolex Holdings, Inc.
9.750% (L+875, 1.00% Floor)
6/5/22
Packaging
42,045

41,013

42,150

Pabst Brewing Company
9.25% (L+825, 1.00% Floor)
11/14/22
Consumer Products
27,000

26,665

27,203

Premier Trailer Leasing, Inc.
10.000% (L+900, 1.00% Floor)
9/24/20
Financial Services
52,000

51,029

52,000

River Cree Enterprises LP (11)(17)
11.000%
1/20/21
Hotels, Motels, Inns and Gaming
C$
33,000

31,111

26,952

SiTV, Inc. (11)
10.375%
7/1/19
Cable Television
2,219

2,219

2,003

SMG

9.250% (L+825, 1.00% Floor)
2/27/21
Business Services
19,900

19,900

20,000

Sprint Industrial Holdings, LLC
11.250% (L+1000, 1.25% Floor)
11/14/19
Containers, Packaging, and Glass
14,163

13,959

13,526

SquareTwo Financial Corp. (Collect America, Ltd.) (17)
11.625%
4/1/17
Financial Services
65,152

64,316

58,420

TASC, Inc.
12.000%
5/21/21
Aerospace and Defense
21,815

21,028

23,178

TMK Hawk Parent Corp.
8.500% (L+750, 1.00% Floor)
10/1/22
Distribution
34,000

33,675

34,000


See notes to financial statements.
19
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Transfirst Holdings, Inc.
9.000% (L+800, 1.00% Floor)
11/11/22
Financial Services
$
11,340

$
11,221

$
11,404

UniTek Global Services Inc. (16)
8.500% (L+750, 1.00% Floor)
1/13/19
Telecommunications
32,367

32,367

30,748

Velocity Technology Solutions, Inc.
9.000% (L+775, 1.25% Floor)
9/28/20
Business Services
16,500

16,209

16,005

Vertafore, Inc.
9.750% (L+825, 1.50% Floor)
10/27/17
Business Services
36,436

36,295

36,709

Total Second Lien Secured Debt
$
820,840

$
805,625

Total Secured Debt
$
1,720,080

$
1,646,388

Unsecured Debt—24.5%
American Energy - Woodford LLC/AEW Finance Corp. (11)
9.000%
9/15/22
Oil and Gas
$
5,000

$
4,805

$
2,850

American Tire Distributors, Inc. (11)
10.250%
3/1/22
Distribution
24,281

24,281

25,252

Artsonig Pty Ltd. (11)(17)
11.50% (12.00% PIK Toggle)
4/1/19
Transportation
21,227

20,974

17,830

BCA Osprey II Limited (British Car Auctions) (16)(17)
12.50% PIK
8/17/17
Transportation
£
23,566

37,704

36,033

BCA Osprey II Limited (British Car Auctions) (16)(17)
12.50% PIK
8/17/17
Transportation
€
14,333

19,779

15,855

Canacol Energy Ltd. (17)
9.500% (L+850, 1.00% Floor)
12/31/19
Oil and Gas
50,000

48,595

47,625

Ceridian Corp. (11)
11.000%
3/15/21
Diversified Service
16,760

16,760

17,430

Delta Educational Systems, Inc.
16.00% PIK or 10.00% Cash / 6.00% PIK
5/12/17
Education
24,172

23,929

21,416

Denver Parent Corp. (Venoco) (13)(14)(16)
12.25% (13.00% PIK Toggle)
8/15/18
Oil and Gas
9,572

9,411

1,460

GenCorp, Inc. (17)
9.500% (L+850, 1.00% Floor)
4/18/22
Aerospace and Defense
40,500

40,500

40,500

My Alarm Center, LLC
16.25% (12.00% Cash / 4.25 %PIK)
7/9/18
Business Services
4,236

4,236

4,236

PetroBakken Energy Ltd. (11)(17)
8.625%
2/1/20
Oil and Gas
34,980

35,972

25,361

Radio One, Inc. (11)(17)
9.250%
2/15/20
Broadcasting & Entertainment
15,804

15,709

15,160

Sorenson Holdings, LLC (11)
13.00% PIK
10/31/21
Consumer Products
68

45

68

Tibco Software Inc. (11)
11.375%
12/1/21
Business Services
11,389

11,069

11,595

U.S. Security Associates Holdings, Inc.
11.000%
7/28/18
Business Services
135,000

135,000

137,700

UniTek Global Services Inc.
15.000%
7/13/2019
Telecommunications
6,565

6,565

6,565

Univar, Inc.
10.500%
6/30/2018
Distribution
20,000

20,000

19,900

Venoco, Inc. (16)
8.875%
2/15/2019
Oil and Gas
54,996

55,032

28,598

Total Unsecured Debt
$
530,366

$
475,434

Total Corporate Debt
$
2,250,446

$
2,121,822

Structured Products and Other—9.0%
Asset Repackaging Trust Six B.V., Credit-Linked Note (11)(17)(20)
N/A
5/18/2027
Utilities
$
58,411

$
24,994

$
36,731

Craft 2013-1, Credit-Linked Note (11)(16)(17)
9.503% (L+925)
4/17/2022
Diversified Investment Vehicle
25,000

25,092

24,282

Craft 2013-1, Credit-Linked Note (16)(17)
9.503% (L+925)
4/17/2022
Diversified Investment Vehicle
7,625

7,753

7,412

Craft 2014-1A, Credit-Linked Note (11)(17)
9.882% (L+965)
5/15/2021
Diversified Investment Vehicle
42,500

42,460

41,898

Dark Castle Holdings, LLC
N/A
N/A
Media
24,395

1,189

2,565


See notes to financial statements.
20
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
JP Morgan Chase & Co., Credit-Linked Note (17)
12.520% (L+1225)
12/20/2021
Diversified Investment Vehicle
$
43,250

$
42,053

$
42,700

NXT Capital CLO 2014-1, LLC, Class E Notes (11)(17)
5.731% (L+550)
4/23/2026
Diversified Investment Vehicle
5,000

4,670

4,350

Renaissance Umiat, LLC, ACES Tax Receivable (15)(17)
N/A
N/A
Oil and Gas
—

13,014

14,432

Total Structured Products and Other
$
161,225

$
174,370

Preferred Equity—1.6%
Shares
CA Holding, Inc. (Collect America, Ltd.), Series A Preferred Stock (13)(17)
N/A
N/A
Financial Services
32,961

$
788

$
297

Crowley Holdings, Series A Preferred Stock (11)
12.00% (10.00% Cash / 2.00% PIK)
N/A
Cargo Transport
22,500

23,079

23,645

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Preferred Stock (Convertible) (13)(14)
12.50% PIK
N/A
Education
332,500

6,863

—

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Preferred Stock (13)(14)
13.50% PIK
5/12/2018
Education
12,360

27,685

1,613

Varietal Distribution Holdings, LLC, Class A Preferred Unit
8.00% PIK
N/A
Distribution
3,097

5,724

5,655

Total Preferred Equity
$
64,139

$
31,210

Equity—1.5%
Common Equity/Interests—1.2%
Shares
ATD Corporation (Accelerate Parent Corp.), Common Stock (11)
N/A
N/A
Distribution
1,664,046

$
1,714

$
2,690

CA Holding, Inc. (Collect America, Ltd.), Series A Common Stock (13)(17)
N/A
N/A
Financial Services
25,000

2,500

—

CA Holding, Inc. (Collect America, Ltd.), Series AA Common Stock (13)(17)
N/A
N/A
Financial Services
4,294

429

—

Caza Petroleum, Inc., Net Profits Interest (13)
N/A
N/A
Oil and Gas
—

1,202

1,290

Caza Petroleum, Inc., Overriding Royalty Interest
N/A
N/A
Oil and Gas
—

340

235

Clothesline Holdings, Inc. (Angelica Corporation), Common Stock (13)
N/A
N/A
Healthcare
6,000

6,000

519

Explorer Coinvest, LLC (Booz Allen), Common Stock (17)
N/A
N/A
Business Services
192

1,468

5,162

Garden Fresh Restaurant Holdings, LLC, Common Stock (13)
N/A
N/A
Restaurants
50,000

5,000

—

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Common Stock (13)
N/A
N/A
Education
17,500

175

—

JV Note Holdco, LLC (DSI Renal, Inc.), Common Equity / Interest (13)
N/A
N/A
Healthcare
9,303

85

—

Pelican Energy, LLC, Net Profits Interest (13)(17)
N/A
N/A
Oil and Gas
—

1,061

272

Skyline Data, News and Analytics LLC, Class A Common Unit (13)
N/A
N/A
Printing and Publishing
4,500

4,500

4,500

Sorenson Holdings, LLC, Membership Interests (13)
N/A
N/A
Consumer Products
587

—

81

Univar, Inc., Common Stock (13)
N/A
N/A
Distribution
900,000

9,000

9,320

Varietal Distribution Holdings, LLC, Class A Common Unit (13)
N/A
N/A
Distribution
28,028

28

—

Total Common Equity/Interests
$
33,502

$
24,069


See notes to financial statements.
21
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Warrants—0.3%
Warrants
CA Holding, Inc. (Collect America, Ltd.), Common Stock Warrants (13)(17)
N/A
N/A
Financial Services
12,255

$
8

$
—

Energy & Exploration Partners, Inc., Common Stock Warrants (13)
N/A
N/A
Oil and Gas
60,778

2,374

58

Fidji Luxco (BC) S.C.A., Common Stock Warrants (2)(13)(17)
N/A
N/A
Electronics
18,113

182

3,950

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Class A-1 Preferred Stock Warrants (13)
N/A
N/A
Education
45,947

459

—

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Class B-1 Preferred Stock Warrants (13)
N/A
N/A
Education
104,314

1,043

—

Gryphon Colleges Corp. (Delta Educational Systems, Inc.), Common Stock Warrants (13)
N/A
N/A
Education
9,820

98

—

Osage Exploration & Development, Inc., Common Stock Warrants (13)(17)
N/A
N/A
Oil and Gas
1,496,843

—

222

Spotted Hawk Development, LLC, Common Stock Warrants (13)
N/A
N/A
Oil and Gas
54,545

852

1,341

Total Warrants
$
5,016

$
5,571

Total Equity
$
38,518

$
29,640

Total Non-Controlled/Non-Affiliated Investments
$
2,514,328

$
2,357,042


See notes to financial statements.
22
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair Value (1)
Non-Controlled/Affiliated Investments—16.9% (4)(10)
Corporate Debt—0.0%
Secured Debt—0.0%
First Lien Secured Debt—0.0%
Renewable Funding Group, Inc., (4)(13)
0.00%
9/30/15
Finance
$
1,000

$
1,000

$
1,000

Total First Lien Secured Debt
$
1,000

$
1,000

Total Secured Debt
$
1,000

$
1,000

Total Corporate Debt
$
1,000

$
1,000

Structured Products and Other—10.3%
Golden Bear Warehouse, LLC, Equity (3)(4)(17)
N/A
N/A
Diversified Investment Vehicle
$
4,234

$
4,234

$
6,833

Golden Hill CLO I, LLC, Equity (3)(4)(17)
N/A
N/A
Diversified Investment Vehicle
70,944

71,478

73,587

Highbridge Loan Management 3-2014, Ltd., Class E Notes (3)(4)(11)(17)
6.257% (L+600)
1/18/25
Diversified Investment Vehicle
2,485

2,277

2,121

Highbridge Loan Management 3-2014, Ltd., Subordinated Notes (3)(4)(11)(17)
N/A
1/18/25
Diversified Investment Vehicle
8,163

6,537

6,722

Ivy Hill Middle Market Credit Fund IX, Ltd, Subordinated Notes (3)(4)(11)(17)
N/A
10/18/25
Diversified Investment Vehicle
12,500

11,375

11,375

Jamestown CLO I LTD, Subordinated Notes (3)(4)(11)(17)
N/A
11/5/24
Diversified Investment Vehicle
4,325

3,432

3,698

MCF CLO I, LLC, Membership Interests (3)(4)(11)(17)
N/A
4/20/23
Diversified Investment Vehicle
38,918

35,087

38,490

MCF CLO III, LLC, Class E Notes (3)(4)(11)(17)
4.681% (L+445)
1/20/24
Diversified Investment Vehicle
12,750

11,456

11,220

MCF CLO III, LLC, Membership Interests (3)(4)(11)(17)
N/A
1/20/24
Diversified Investment Vehicle
41,900

36,957

38,984

Slater Mill Loan Fund LP, LP Certificates (3)(4)(17)
N/A
N/A
Diversified Investment Vehicle
8,375

5,755

6,968

Total Structured Products and Other
$
188,588

$
199,998

Preferred Equity—3.9%
Shares
AMP Solar (UK) Limited, Class A Preference Shares (2)(5)(17)(21)
8.500%
10/31/49
Utilities
43,277,916

$
66,354

$
65,171

Renewable Funding Group, Inc., Series B Preferred Stock (4)(13)
N/A
N/A
Finance
1,505,868

7,461

9,309

Total Preferred Equity
$
73,815

$
74,480

Equity—2.7%
Common Equity/Interests—2.7%
Shares
AMP Solar Group, Inc., Class A Common Shares (3)(4)(17)
N/A
N/A
Energy
81,493

$
3,500

$
3,500

Generation Brands Holdings, Inc. (Quality Home Brands), Basic Common Stock (3)(4)(13)(18)
N/A
N/A
Home and Office Furnishings and Durable Consumer Products
9,007

—

6,699

Generation Brands Holdings, Inc. (Quality Home Brands), Series 2L Common Stock (3)(4)(13)(18)
N/A
N/A
Home and Office Furnishings and Durable Consumer Products
36,700

11,242

27,294

Generation Brands Holdings, Inc. (Quality Home Brands), Series H Common Stock (3)(4)(13)(18)
N/A
N/A
Home and Office Furnishings and Durable Consumer Products
7,500

2,298

5,578

LVI Group Investments, LLC, Common Units (3)(4)(13)(19)
N/A
N/A
Environmental Services
212,460

17,505

8,669

Total Common Equity/Interests
$
34,545

$
51,740

Total Equity
$
34,545

$
51,740

Total Non-Controlled/Affiliated Investments
$
297,948

$
327,218


See notes to financial statements.
23
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Investment
Interest Rate
Maturity Date
Industry
Par (12)
Cost
Fair
Value (1)
Controlled Investments—34.4% (5)(10)
Corporate Debt—18.2%
Secured Debt—18.2%
First Lien Secured Debt—18.2%
Merx Aviation Finance, LLC, Revolver (5)(16)
12.00% Funded
10/31/18
Aviation
$
352,084

$
352,084

$
352,084

Total First Lien Secured Debt
$
352,084

$
352,084

Unfunded Revolver Obligation—0.0%
Merx Aviation Finance, LLC, Unfunded Revolver (5)(16)
12.00% Funded, 0.00% Unfunded
10/31/18
Aviation
$
47,916

$
—

$
—

Total Unfunded Revolver Obligation
$
—

$
—

Letters of Credit—0.0%
Merx Aviation Finance Assets Ireland Limited, Letter of Credit (5)
2.250%
9/30/15
Aviation
$
1,800

$
—

$
—

Merx Aviation Finance Assets Ireland Limited, Letter of Credit (5)
2.250%
9/30/15
Aviation
1,800

—

—

Total Letters of Credit
$
—

$
—

Total Secured Debt
$
352,084

$
352,084

Total Corporate Debt
$
352,084

$
352,084

Preferred Equity—3.1%
Shares
PlayPower Holdings, Inc., Series A Preferred (5)
14.00% PIK
11/15/20
Leisure
49,178

$
59,411

$
59,411

Total Preferred Equity
$
59,411

$
59,411

Equity—13.1%
Common Equity/Interests—13.1%
Shares
Merx Aviation Finance, LLC, Membership Interest (5)(13)
N/A
N/A
Aviation
—

$
152,082

$
165,172

MSEA Tankers LLC, Membership Interest (5)(17)
N/A
N/A
Cargo Transport
—

33,000

33,000

PlayPower Holdings, Inc., Common Stock (5)(13)
N/A
N/A
Leisure
1,000

77,722

55,900

Total Common Equity/Interests
$
262,804

$
254,072

Total Equity
$
262,804

$
254,072

Total Controlled Investments
$
674,299

$
665,567

Total Investments—172.9% (6)(7)
$
3,486,575

$
3,349,827

Liabilities in Excess of Other Assets—(72.9)%
$
(1,412,219
)
Net Assets—100.0%
$
1,937,608

______________________
(1)
Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (Note 2).
(2)
Fidji Luxco (BC) S.C.A. is a EUR denominated investment and AMP Solar (UK) Limited is a GBP denominated investment.
(3)
Denotes investments where the governing documents of the entity preclude the Company from controlling management of the entity and therefore the Company has determined that the entity is not a controlled affiliate.

See notes to financial statements.
24
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


(4)
Denotes investments in which we are an “Affiliated Person,” as defined in the 1940 Act, due to owning or holding the power to vote 5% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of March 31, 2015 and March 31, 2014 along with transactions during the fiscal year ended March 31, 2015 in these Affiliated investments are as follows:
Name of Issue
Fair Value at March 31, 2014
Gross Additions (Cost) ●
Gross Reductions (Cost) ■
Change in Unrealized Gain (Loss)
Fair Value at March 31, 2015
Net Realized Gain (Loss)
Interest/Dividend/
Other Income
AMP Solar Group, Inc., Class A Common Shares
$
—

$
3,500

$
—

$
—

$
3,500

$
—

$
—

AMP Solar Group, Inc., 15.000%, 7/7/15
—

3,619

(3,619
)
—

—

(57
)
53

AMP Solar (UK) Limited, Class A Preference Shares (21)
—

66,355

—

(1,184
)
65,171

—

1,580

Aventine Renewable Energy Holdings, Inc., 15.00% (12.00% Cash / 3.00% PIK), 9/23/16
2,405

21

(2,642
)
216

—

116

184

Aventine Renewable Energy Holdings, Inc., 10.50% Cash or 15.00% PIK, 9/22/17
8,884

1,481

(15,306
)
4,941

—

—

1,496

Aventine Renewable Energy Holdings, Inc., 25.00% PIK, 9/24/16
3,769

238

(4,007
)
—

—

—

433

Aventine Renewable Energy Holdings, Inc., Common Stock
99

—

(688
)
589

—

1,804

—

Aventine Renewable Energy Holdings, Inc., Common Stock Warrants
574

—

(3,996
)
3,422

—

9,713

—

Generation Brands Holdings, Inc. (Quality Home Brands), Basic Common Stock (18)
—

1,615

—

5,084

6,699

—

—

Generation Brands Holdings, Inc. (Quality Homes Brands), Series H Common Stock (18)
—

1,345

—

4,233

5,578

—

—

Generation Brands Holdings, Inc. (Quality Homes Brands), Series 2L Common Stock (18)
—

6,582

—

20,712

27,294

—

—

Golden Bear Warehouse LLC, Equity
—

4,233

—

2,600

6,833

—

—

Golden Hill CLO I, LLC, Equity
1,097

69,847

—

2,643

73,587

—

1,515

Highbridge Loan Management 3-2014, Ltd., Class D Notes, L+500, 1/18/25
4,680

21

(4,659
)
(42
)
—

(169
)
205

Highbridge Loan Management 3-2014, Ltd., Class E Notes, L+600, 1/18/25
2,314

14

—

(207
)
2,121

—

171

Highbridge Loan Management 3-2014, Ltd., Subordinated Notes, 1/18/25
7,278

—

(989
)
433

6,722

—

652

Ivy Hill Middle Market Credit Fund IX, Ltd, Subordinated Notes, 10/18/25
—

11,375

—

—

11,375

—

414

Jamestown CLO I LTD, Subordinated Notes, 11/5/24
3,828

—

(121
)
(9
)
3,698

—

559

LVI Parent Corp. (LVI Services, Inc.), 12.50%, 4/20/14 (19)
—

10,387

(10,200
)
(187
)
—

—

269

LVI Group Investments, LLC, Common Units (formerly known as LVI Services, Inc.) (19)
—

35,429

—

(26,760
)
8,669

—

87

MCF CLO I LLC, Class E Notes, L+575, 4/20/23
12,357

13

(12,344
)
(26
)
—

(107
)
215

MCF CLO I LLC, Membership Interests
40,391

—

(2,471
)
570

38,490

—

7,176

MCF CLO III LLC, Class E Notes L+445, 1/20/24
11,325

107

—

(212
)
11,220

—

718

MCF CLO III LLC, Membership Interests, 1/20/24
38,266

—

(2,227
)
2,945

38,984

—

6,271

Renewable Funding Group, Inc. 0.00%, 9/30/15
—

1,000

—

—

1,000

—

—

Renewable Funding Group, Inc., Series B Preferred Stock
—

8,750

(1,289
)
1,848

9,309

—

—

Slater Mill Loan Fund LP, LP Certificates
7,361

—

(467
)
74

6,968

—

1,427

$
144,628

$
225,932

$
(65,025
)
$
21,683

$
327,218

$
11,300

$
23,425

______________________

See notes to financial statements.
25
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


● Gross additions includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
■ Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of March 31, 2015, the Company has a 28%, 100%, 100%, 26%, 32%, 36%, 97%, 98% and 26% equity ownership interest in Generation Brands Holdings, Inc., Golden Bear Warehouse LLC, Golden Hill CLO I, LLC, Highbridge Loan Management, Ltd., Ivy Hill Middle Market Credit Fund IX, Ltd, LVI Group Investments, LLC, MCF CLO I LLC, MCF CLO III LLC, and Slater Mill Loan Fund LP, respectively. Investments that the Company owns greater than 25% of the equity and are shown in “Non-Controlled/Affiliated” have governing documents that preclude the Company from controlling management of the entity and therefore the Company has determined that the entity is not a controlled affiliate.
(5)
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Fair value as of March 31, 2015 and March 31, 2014 along with transactions during the fiscal year ended March 31, 2015 in these Controlled investments are as follows:
Name of Issue
Fair Value at March 31, 2014
Gross Additions (Cost) ●
Gross Reductions (Cost) ■
Change in Unrealized Gain (Loss)
Fair Value at March 31, 2015
Net Realized Gain (Loss)
Interest/Dividend/
Other Income
Generation Brands Holdings, Inc. (Quality Home Brands), Basic Common Stock (18)
$
1,615

$
—

$
(1,615
)
$
—

$
—

$
—

$
—

Generation Brands Holdings, Inc. (Quality Homes Brands), Series H Common Stock (18)
1,345

—

(1,345
)
—

—

—

—

Generation Brands Holdings, Inc. (Quality Homes Brands), Series 2L Common Stock(18)
6,582

—

(6,582
)
—

—

—

—

LVI Parent Corp. (LVI Services, Inc.), 12.50%, 4/20/14 (19)
10,200

—

(10,200
)
—

—

—

—

LVI Group Investments, LLC, Common Units (formerly known as LVI Services, Inc.) (19)
34,020

—

(34,020
)
—

—

—

—

Merx Aviation Finance, LLC (formerly known as Merx Aviation Finance Holdings II, LLC), (Revolver) 12.00% Funded, 10/31/18
282,334

69,750

—

—

352,084

—

39,231

Merx Aviation Finance, LLC (formerly known as Merx Aviation Finance Holdings II, LLC), (Unfunded Revolver) 0.00% Unfunded, 10/31/18
—

—

—

—

—

—

—

Merx Aviation Finance Assets Ireland Limited, Letter of Credit, 2.25%, 9/30/15
—

—

—

—

—

—

—

Merx Aviation Finance Assets Ireland Limited, Letter of Credit, 2.25%, 9/30/15
—

—

—

—

—

—

—

Merx Aviation Finance, LLC (formerly known as Merx Aviation Finance Holdings II, LLC), Membership Interest
140,465

13,499

—

11,208

165,172

—

—

MSEA Tankers LLC, Membership Interest
—

33,000

—

—

33,000

—

—

PlayPower Holdings, Inc., Common Stock
53,813

—

—

2,087

55,900

—

—

PlayPower Holdings, Inc., Series A Preferred, 14.00% PIK, 11/15/20
51,773

7,638

—

—

59,411

—

7,891

$
582,147

$
123,887

$
(53,762
)
$
13,295

$
665,567

$
—

$
47,122

______________________
● Gross additions includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
■ Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of March 31, 2015, the Company has a 100% equity ownership interest in Merx Aviation Finance, LLC, MSEA Tankers LLC and PlayPower Holdings, Inc.

See notes to financial statements.
26
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


(6)
Aggregate gross unrealized gain for federal income tax purposes is $143,557; aggregate gross unrealized loss for federal income tax purposes is $302,058. Net unrealized loss is $158,501 based on a tax cost of $3,508,328.
(7)
Substantially all securities are pledged as collateral to our multi-currency revolving credit facility. As such, these securities are not available as collateral to our general creditors.
(8)
The negative fair value is the result of the unfunded commitment or letter of credit being valued below par.
(9)
These letters of credit represent multiple commitments made on various dates. As a result, maturity dates may vary and a maturity range has been provided.
(10)
The percentage is calculated over net assets.
(11)
These securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
(12)
Denominated in USD unless otherwise noted, Euro (“€”), British Pound (“£”), and Canadian Dollar (“C$”).
(13)
Non-income producing security.
(14)
Non-accrual status (Note 2).
(15)
The investment has a put option attached to it and the combined instrument has been recorded in its entirety at fair value as a hybrid instrument in accordance with ASC 815-15-25-4 with subsequent changes in fair value charged or credited to investment gains/losses for each period.
(16)
Denotes debt securities where the Company owns multiple tranches of the same broad asset type but whose security characteristics differ. Such differences may include level of subordination, call protection and pricing, and differing interest rate characteristics, among other factors. Such factors are usually considered in the determination of fair values.
(17)
Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis.
(18)
Generation Brands Holdings, Inc. was previously incorrectly reported as a controlled investment in the financial statements for the year ended March 31, 2014. After further assessment, the Company does not control more than 25% of the voting power and has no power to direct or cause the direction of the policies and management of the company. As such, $9,542 of the fair value of Generation Brands Holdings, Inc., Common Stock was transferred from “Controlled” to “Non-Controlled/Affiliated” in 2015 to correctly reflect Generation Brands Holdings, Inc. as a non-controlled/affiliated investment. Management evaluated the impact of the error to the financial statements and determined that this adjustment was not material to any prior annual or interim periods, and the resulting correction is not material to the current financial statements.
(19)
As a result of a restructuring in April 2014, the Company’s investment was moved to LVI Group Investments, LLC from LVI Services Inc. LVI Group Investments, LLC further invested in NorthStar Group Holdings. The Company no longer controls more than 25% of the voting power and has no power to direct or cause the direction of the policies and management of NorthStar Group Holdings. As such, $44,220 of the fair value of LVI Services, Inc., Common Stock, was transferred from “Controlled” to “Non-Controlled/Affiliated” in LVI Group Investments, LLC prior to the fiscal year ended March 31, 2015.
(20)
This investment represents a leveraged subordinated interest in a trust that holds one foreign currency denominated bond and a derivative instrument.
(21)
AMP Solar (UK) Limited was previously incorrectly reported as a controlled investment in the financial statements for the year ended March 31, 2015. After further assessment, it was determined that the Company does not control more than 25% of the voting power and has no power to direct or cause the direction of the policies and management of the company. As such, $65,171 of the ending fair value as of March 31, 2015 of AMP Solar (UK) Limited, Class A Preference Shares was reclassified from “Controlled” to “Non-Controlled/Affiliated” to correctly reflect AMP Solar (UK) Limited as a non-controlled/affiliated investment. Management evaluated the impact of the error to the financial statements and determined that this adjustment was not material to any prior annual or interim periods, and the resulting correction is not material to the current financial statements.

See notes to financial statements.
27
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2015
(In thousands, except share data)


Industry Classification
Percentage of Total Investments (at Fair Value) as of March 31, 2015
Business Services
15.6%
Aviation
15.4%
Oil and Gas
13.9%
Diversified Investment Vehicle
9.6%
Financial Services
4.0%
Chemicals
3.8%
Leisure
3.4%
Utilities
3.0%
Aerospace and Defense
2.9%
Distribution
2.9%
Telecommunications
2.2%
Insurance
2.1%
Transportation
2.1%
Printing and Publishing
1.9%
Cargo Transport
1.7%
Healthcare
1.6%
Energy
1.6%
Education
1.5%
Packaging
1.3%
Restaurants
1.2%
Home and Office Furnishings and Durable Consumer Products
1.2%
Diversified Service
1.1%
Grocery
0.8%
Consumer Products
0.8%
Hotels, Motels, Inns and Gaming
0.8%
Diversified Natural Resources, Precious Metals and Minerals
0.7%
Buildings and Real Estate
0.6%
Mining
0.6%
Broadcasting & Entertainment
0.4%
Containers, Packaging, and Glass
0.4%
Finance
0.3%
Environmental Services
0.3%
Electronics
0.1%
Media
0.1%
Cable Television
0.1%
Total Investments
100.0%



See notes to financial statements.
28
APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share and per share data)


Note 1. Organization
Apollo Investment Corporation (the “Company,” “Apollo Investment,” “AIC,” “we,” “us,” or “our”), a Maryland corporation incorporated on February 2, 2004, is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). In addition, for tax purposes we have elected to be treated as a regulated investment company (“RIC”), under the Internal Revenue Code of 1986, as amended (“the Code”). Our investment objective is to generate current income and capital appreciation.
Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”) is our investment adviser and an affiliate of Apollo Global Management, LLC and its consolidated subsidiaries (“AGM”). The Investment Adviser, subject to the overall supervision of our board of directors, manages the day-to-day operations of, and provides investment advisory services to the Company.
Apollo Investment Administration, LLC (the “Administrator” or “AIA”), an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Furthermore, AIA provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.
We invest primarily in various forms of debt investments, including secured and unsecured debt, loan investments, and/or equity in private middle-market companies. We may also invest in the securities of public companies and in structured products and other investments such as collateralized loan obligations (“CLOs”) and credit-linked notes (“CLNs”). Our portfolio is comprised primarily of investments in debt, including secured and unsecured debt of private middle-market companies that, in the case of senior secured loans, generally are not broadly syndicated and whose aggregate tranche size is typically less than $250 million. Our portfolio also includes equity interests such as common stock, preferred stock, warrants or options.
Apollo Investment commenced operations on April 8, 2004 receiving net proceeds of $870,000 from its initial public offering by selling 62 million shares of common stock at a price of $15.00 per share. Since then, and through December 31, 2015 , we have raised approximately $2,210,067 in net proceeds from additional offerings of common stock and repurchased common stock for $52,437 .
Note 2. Significant Accounting Policies
The following is a summary of the significant accounting and reporting policies used in preparing the financial statements.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the requirements on Form 10-Q, ASC 946, Financial Services — Investment Companies (“ASC 946”), and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of the financial statements for the interim period, have been included.
Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Consequently, as of December 31, 2015 , the Company did not consolidate any subsidiary, controlled entity or any special purpose entities through which the special purpose entity acquires and holds investments subject to financing with third parties.
These financial statements should be read in conjunction with the audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended March 31, 2015 .
Certain amounts have been reclassified on the Statement of Assets and Liabilities and Statements of Operations. As of March 31, 2015 , $65,171 of fair value and $66,354 of cost previously classified as controlled investments was reclassified to non-controlled/affiliated investments. For the three and nine months ended December 31, 2014 , $8,381 and $6,597, respectively, of net change in unrealized gain (loss) previously classified as net change in unrealized gain (loss) from controlled investments was reclassified to net change in unrealized gain (loss) from non-controlled/affiliated investments. For the three and nine months ended December 31, 2014 , $157 and $513, respectively, of investment income previously classified as investment income from controlled investments was reclassified to investment income from non-controlled/affiliated investments.

29

Use of Estimates
The preparation of financial statements in accordance with GAAP 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, expenses, gains and losses during the reported periods. Changes in the economic environment, financial markets, credit worthiness of our portfolio companies and any other parameters used in determining these estimates could cause actual results to differ materially.
Cash and Cash Equivalents
The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Company deems that certain U.S. Treasury bills, repurchase agreements, and other high-quality, short-term debt securities would qualify as cash equivalents.
Cash and cash equivalents are carried at cost which approximates fair value. There were no cash equivalents held as of December 31, 2015 and March 31, 2015.
Investment Transactions
Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains and losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Amounts for investments recognized or derecognized but not yet settled are reported as receivables for investments sold and payables for investments purchased, respectively, in the Statements of Assets and Liabilities.
Fair Value Measurements
The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the values that would be received upon an actual disposition of such investments.

30

Investment Valuation Process
Under procedures established by our board of directors, we value investments, including certain secured debt, unsecured debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within 15 days before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case such investments shall be valued at fair value as determined in good faith by or under the direction of our board of directors including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our board of directors. Such determination of fair values may involve subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our board of directors has approved 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 of our Investment Adviser which is responsible for the portfolio investment.
2.
Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser.
3.
Independent valuation firms are engaged by our board of directors to conduct independent appraisals by reviewing our Investment Adviser’s preliminary valuations and then making their own independent assessment.
4.
The audit committee of the board of directors reviews the preliminary valuation of our Investment Adviser and the valuation prepared by the independent valuation firms and responds, if warranted, to the valuation recommendation of the independent valuation firms to reflect any comments.
5.
The board of directors discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of our Investment Adviser, the applicable independent valuation firm, third party pricing services and the audit committee.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the nine months ended December 31, 2015 , there has been no change to the Company’s valuation techniques and related inputs considered in the valuation process.
Valuation of Other Financial Assets and Financial Liabilities
ASC 825, Financial Instruments , permits an entity to choose, at specified election dates, to measure certain assets and liabilities at fair value (the “Fair Value Option”). We have not elected the Fair Value Option to report selected financial assets and financial liabilities. The carrying value of all other financial assets and liabilities approximates fair value due to their short maturities or their close proximity of the originations to the measurement date. Debt issued by the Company is reported at amortized cost (see Note 6).

31

Realized Gains or Losses
Security transactions are accounted for on a trade date basis. Realized gains or losses on investments are calculated by using the specific identification method. Securities that have been called by the issuer are recorded at the call price on the call effective date at the call price.
Investment Income Recognition
The Company records interest and dividend income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Some of our loans and other investments, including certain preferred equity investments, may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate are accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company believes that PIK is expected to be realized.
Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon management’s judgment.
Loan origination fees, original issue discount (“OID”), and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable. Upon the prepayment of a loan, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. Other income generally includes amendment fees, bridge fees, and structuring fees which are recorded when earned.
The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults) of the underlying pool of assets. These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. A structured product investment typically has an underlying pool of assets. Payments on structured product investments are and will be payable solely from the cash flows from such assets. As such, any unforeseen event in these underlying pools of assets might impact the expected recovery of principal and future accrual of income.
Expenses
Expenses include management fees, performance-based incentive fees, insurance expenses, administrative service fees, legal fees, directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis.
Financing Costs
The Company records expenses related to shelf filings and applicable offering costs as deferred financing costs in the Statements of Assets and Liabilities. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of capital upon utilization, in accordance with ASC 946-20-25, or charged to expense if no offering is completed.
The Company records origination and other expenses related to its debt obligations as deferred financing costs in the Statements of Assets and Liabilities. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation which approximates the effective yield method.

32

Foreign Currency Translations
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Dividends and Distributions
Dividends and distributions to common shareholders are recorded as of the ex-dividend date. The amount to be paid out as dividends is determined by the board of directors each quarter. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually.
Share Repurchases
In connection with the Company’s share repurchase program, the cost of shares repurchased is charged to net assets on the trade date.
Federal and State Income Taxes
We have elected to be treated as a RIC under the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must (among other requirements) meet certain source-of-income and asset diversification requirements and timely distribute to its shareholders at least 90% of its investment company taxable income and net capital gain, as defined by the Code, for each year. The Company (among other requirements) has made and intends to continue to make the requisite distributions to its shareholders, which will generally relieve the Company from corporate-level income taxes. For income tax purposes, distributions made to shareholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to shareholders through December 31, 2015 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ending March 31, 2016. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to shareholder dividend and distributions and other permanent book and tax difference are reclassified to paid-in capital.
If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income and 98.2% of our capital gains in the calendar year earned, we will generally be required to pay excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated undistributed taxable income.
If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate rates. Distribution would generally be taxable to our individual and other non-corporate taxable shareholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits provided certain holding period and other requirements are met. Subject to certain limitation under the Code, corporate distributions would be eligible for the dividend-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our shareholders our accumulated earnings and profits payable by us as an additional tax. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of ten years.
We follow ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of December 31, 2015, and for the three and nine months ended, there were no uncertain tax positions. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although

33

we file both federal and state income tax returns, our major tax jurisdiction is federal. Our tax returns for each of our federal tax years since 2012 remain subject to examination by the Internal Revenue Service.
Derivative Instruments
The Company may make investments in derivative instruments. The derivative instruments are fair valued with changes to the fair value reflected in net unrealized gain/loss during the reporting period and recorded within realized gain/loss upon exit and settlement of the contract. The accrual of periodic payment settlements is recorded in net change in unrealized gain/loss and subsequently recorded as net realized gain or loss on the interest settlement date.
The Company may enter into forward exchange contracts in order to hedge against foreign currency risk. These contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized gain or loss. Realized gains or losses are recognized when contracts are settled.
Recent Accounting Pronouncements
In May 2014, the FASB issued guidance to establish a comprehensive and converged standard on revenue recognition to enable financial statement users to better understand and consistently analyze an entity’s revenue across industries, transactions, and geographies. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. The new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Qualitative and quantitative information is required to be disclosed about: (1) contracts with customers, (2) significant judgments and changes in judgments, and (3) assets recognized from costs to obtain or fulfill a contract. The new guidance will apply to all entities. In August 2015, the FASB approved a one-year deferral of the effective date of the new revenue guidance. The amended guidance permits public business entities to apply the new revenue guidance to interim reporting periods within annual reporting periods beginning after December 15, 2017 (i.e., beginning in the first interim period within the year of adoption). Public business entities would be permitted to apply the new revenue guidance early, but not before the original public business entity effective date (i.e., annual periods beginning after December 15, 2016). Public business entities choosing this option will apply the new revenue guidance to all interim reporting periods within the year of adoption. This guidance is not expected to have an impact on the financial statements of the Company.
In August 2014, the FASB issued guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new guidance requires that management evaluate each annual and interim reporting period whether conditions exist that give rise to substantial doubt about the entity’s ability to continue as a going concern within one year from the financial statement issuance date, and if so, provide related disclosures. Disclosures are only required if conditions give rise to substantial doubt, whether or not the substantial doubt is alleviated by management’s plans. No disclosures are required specific to going concern uncertainties if an assessment of the conditions does not give rise to substantial doubt. Substantial doubt exists when conditions and events, considered in the aggregate, indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the financial statement issuance date. If substantial doubt is alleviated as a result of the consideration of management’s plans, a company should disclose information that enables users of financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes): 1) principal conditions that initially give rise to substantial doubt, 2) management’s evaluation of the significance of those conditions in relation to the company’s ability to meet its obligations, and 3) management’s plans that alleviated substantial doubt. If substantial doubt is not alleviated after considering management’s plans, disclosures should enable investors to understand the underlying conditions, and include the following: 1) a statement indicating that there is substantial doubt about the company’s ability to continue as a going concern within one year after the issuance date, 2) the principal conditions that give rise to substantial doubt, 3) management’s evaluation of the significance of those conditions in relation to the company’s ability to meet its obligations, and 4) management plans that are intended to mitigate the adverse conditions. The new guidance applies to all companies. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. Early adoption is permitted. This guidance is not expected to have an impact on the financial statements of the Company.

34

In February 2015, the FASB issued new guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. Existing guidance includes different requirements for performing a consolidation analysis if, among other factors, the entity under evaluation is any one of the following: (1) a legal entity that qualifies for the indefinite deferral under the amended consolidation rules, (2) a legal entity that is within the scope of the amended consolidation rules, or (3) a limited partnership or similar entity that is considered a voting interest entity. Under the new guidance, all reporting entities are within the scope of the new standard, including limited partnerships and similar legal entities, unless a scope exception applies. The presumption that a general partner controls a limited partnership has been eliminated. In addition, fees paid to decision makers that meet certain conditions (e.g., are both customary and commensurate with the level of effort required for the services provided) no longer cause decision makers to consolidate variable interest entities (each a “VIE”) in certain instances. The new guidance places more emphasis in the consolidation evaluation on variable interests other than the fee arrangements such as principal investment risk (for example, debt or equity interests), guarantees of the value of the assets or liabilities of the VIE, written put options on the assets of the VIE, or similar obligations, including some liquidity commitments or agreements (explicit or implicit). Additionally, the new guidance reduces the extent to which related party arrangements cause an entity to be considered a primary beneficiary. The indefinite deferral of the amended consolidation rules for certain investment funds has been eliminated and a scope exception from the new consolidation standard has been added for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the 1940 Act for registered money market funds. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period, and adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. A reporting entity may apply the new guidance using either a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or by applying the amendments retrospectively. The Company is in the process of evaluating the impact that this new guidance will have on its financial statements.
In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability (i.e., versus being capitalized as an asset and amortized as required under existing guidance), consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the new guidance (i.e., debt issuance costs will continue to be amortized as an increase to interest expense). The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company is in the process of evaluating the impact that this new guidance will have on its financial statements.
In May 2015, the FASB issued guidance to eliminate diversity in practice related to how certain investments measured at net asset value are categorized within the fair value hierarchy. The guidance removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. A reporting entity should continue to disclose information on investments for which fair value is measured at net asset value (or its equivalent) as a practical expedient to help users understand the nature and risks of the investments and whether the investments, if sold, are probable of being sold at amounts different from net asset value. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. A reporting entity should apply the amendments retrospectively to all periods presented. The retrospective approach requires that an investment for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy in all periods presented in an entity’s financial statements. Earlier application is permitted. This guidance is not expected to have an impact on the financial statements of the Company.
Note 3. Related Party Agreements and Transactions
The Company has an investment advisory and management agreement with the Investment Adviser (the “Investment Advisory Agreement”) under which AIM receives a fee from the Company, consisting of two components — a base management fee and a performance-based incentive fee. The base management fee is determined by taking the average value of our gross assets, net of the average of any payable for investments at the end of the two most recently completed calendar quarters calculated at an annual rate of 2.00%. The incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on our 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 our operating expenses for the quarter (including the base management fee, any expenses payable under an administration agreement between the Company and the Administrator, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the

35

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 our net assets at the end of the immediately preceding calendar quarter, is compared to the rate of 1.75% per quarter (7% annualized). For the period between April 2, 2012 and March 31, 2016, AIM has agreed to voluntarily waive the management and incentive fees on the common shares issued on April 2, 2012 and May 20, 2013.
The Investment Adviser has also entered into an investment sub-advisory agreement with CION Investment Corporation (“CION”) (the “Sub-Advisory Agreement”) under which AIM receives management and incentive fees from CION in connection with the investment advisory services provided. For the period between April 1, 2014 and March 31, 2016, the Investment Adviser has agreed to waive all base management fees receivable under the Investment Advisory Agreement with the Company in the amount equal to the amount actually received by AIM from CION less the fully allocated incremental expenses accrued by AIM. The Sub-Advisory Agreement is subject to renewal annually and was last renewed in December 2015.
The Company pays the Investment Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed 1.75%, which we commonly refer to as the performance threshold; (2) 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds 1.75% but does not exceed 2.1875% in any calendar quarter; and (3) 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately prorated for any period of less than three months. The effect of the fee calculation described above is that if pre-incentive fee net investment income is equal to or exceeds 2.1875%, the Investment Adviser will receive a fee of 20% of our pre-incentive fee net investment income for the quarter.
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and will equal 20% of our cumulative realized capital gains less cumulative realized capital losses, unrealized capital loss (unrealized loss on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. For accounting purposes only, we are required under GAAP to accrue a theoretical capital gains incentive fee based upon net realized capital gains and unrealized capital gain and loss on investments held at the end of each period.
The accrual of this theoretical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a theoretical capital gains incentive fee that would be payable to the Investment Adviser at each measurement date. There was no accrual for theoretical capital gains incentive fee for the three and nine months ended December 31, 2015 and December 31, 2014 . It should be noted that a fee so calculated and accrued would not be payable under the Investment Advisers Act of 1940 (“Advisers Act”) or the Investment Advisory Agreement, and would not be paid based upon such computation of capital gains incentive fees in subsequent periods. Amounts actually paid to the Investment Adviser will be consistent with the Advisers Act and formula reflected in the Investment Advisory Agreement which specifically excludes consideration of unrealized capital gain.
For the period between April 1, 2013 and March 31, 2016, AIM has agreed to be paid the portion of the performance-based incentive fee that is attributable to deferred interest, such as PIK, when the Company receives such interest in cash. The accrual of incentive fees shall be reversed if such interest is reversed in connection with any write-off or similar treatment of the investment. Upon payment of the deferred incentive fee, AIM will also receive interest on the deferred interest at an annual rate of 3.25% for the period between the date in which the incentive fee is earned and the date of payment.
For the three and nine months ended December 31, 2015 , the Company recognized $16,478 and $50,557 , respectively, of base management fees and $11,142 and $33,783 , respectively, of performance-based incentive fees before impact of waived fees. For the three and nine months ended December 31, 2014 , the Company recognized $18,755 and $55,744 , respectively, of base management fees and $13,215 and $41,075 , respectively, of performance-based incentive fees before impact of waived fees. For the three and nine months ended December 31, 2015 , management fees waived were $3,729 and $10,307 , respectively. For the three and nine months ended December 31, 2014 , management fees waived were $2,194 and $7,143 , respectively. For the three and nine months ended December 31, 2015 , incentive fees waived were $1,270 and $3,930 , respectively. For the three and nine months ended December 31, 2014 , incentive fees waived were $1,546 and $4,791 , respectively.
As of December 31, 2015 and March 31, 2015 , management and performance-based incentive fees payable were $30,086 and $37,361 , respectively.
The amount of the incentive fees on PIK income for which payments have been deferred for the three and nine months ended December 31, 2015 were $3,181 and $6,065 , respectively. The amount of the incentive fees on PIK income for which payments have been deferred for the three and nine months ended December 31, 2014 were $1,813 and $4,395 , respectively. The cumulative

36

incentive fee on PIK income included in management and performance-based incentive fee payable line of the Statements of Assets and Liabilities as of December 31, 2015 and March 31, 2015 were $10,548 and $12,580 , respectively.
The Company has also entered into an administration agreement with the Administrator (the “Administration Agreement”) under which AIA provides administrative services for the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by the Administrator and requested to be reimbursed by the Administrator in performing its obligations under the Administration Agreement. The expenses include rent and the Company’s allocable portion of its chief financial officer and chief compliance officer and their respective staffs. For the three and nine months ended December 31, 2015 , the Company recognized expenses under the Administration Agreement of $1,531 and $4,614 , respectively. For the three and nine months ended December 31, 2014 , the Company recognized expenses under the Administration Agreement of $1,863 and $4,821 , respectively.
Merx Aviation Finance, LLC (“Merx”), a wholly-owned portfolio company of the Company, has also entered into an administration agreement with the Administrator (the “Merx Administration Agreement”) under which AIA provides administrative services to Merx for an annual fee of $150. The fee received from Merx by the Company is included in expense reimbursements in the Statements of Operations. For the three and nine months ended December 31, 2015 , the Company recognized expense reimbursements under the Merx Administration Agreement of $37 and $112 , respectively. For the three and nine months ended December 31, 2014 , the Company recognized expense reimbursements under the Merx Administration Agreement of $37 and $112 , respectively.
The Company has also entered into an expense reimbursement agreement with Merx Aviation Finance Assets Ireland, Limited, an affiliate of Merx that will reimburse the Company for reasonable out-of-pocket expenses incurred, including any interest, fees or other amounts incurred by the Company in connection with letters of credit issued on its behalf. For the three and nine months ended December 31, 2015 , the Company recognized expenses that were reimbursed under the expense reimbursement agreement of $22 and $64 , respectively. For the three and nine months ended December 31, 2014 , the Company recognized expenses that were reimbursed under the expense reimbursement agreement of $21 and $62 , respectively.
Note 4. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share, pursuant to ASC 260-10, for the three and nine months ended December 31, 2015 and December 31, 2014 :
Three Months Ended December 31,
Nine Months Ended December 31,
2015
2014
2015
2014
Basic Earnings Per Share
Net increase (decrease) in net assets resulting from operations
$
(25,772
)
$
(19,452
)
$
(21,129
)
$
87,152

Weighted average shares outstanding
231,537,374

236,741,351

234,709,883

236,741,351

Basic earnings (loss) per share
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36

Diluted Earnings Per Share (1)
Net increase (decrease) in net assets resulting from operations
$
(25,772
)
$
(19,452
)
$
(21,129
)
$
87,152

Adjustment for interest on convertible notes net of incentive fees
—

—

—

—

Net increase (decrease) in net assets resulting from operations, as adjusted
$
(25,772
)
$
(19,452
)
$
(21,129
)
$
87,152

Weighted average shares outstanding, as adjusted
231,537,374

236,741,351

234,709,883

236,741,351

Diluted earnings (loss) per share
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36

____________________
(1)
In applying the if-converted method, conversion is not assumed for purposes of computing diluted EPS if the effect would be anti-dilutive. For the three and nine months ended December 31, 2015 , anti-dilution would total $0.02 and $0.04 , respectively. For the three and nine months ended December 31, 2014 , anti-dilution would total $0.01 and $0.01 , respectively.

37

Note 5. Investments
Fair Value Measurement and Disclosures
The following table shows the composition of our investment portfolio as of December 31, 2015 , with the fair value disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820:
Fair Value Hierarchy

Cost

Fair Value
Level 1
Level 2
Level 3
First Lien Secured Debt
$
1,263,752

$
1,134,542

$
—

$
55,186

$
1,079,356

Second Lien Secured Debt
1,010,012

910,318

—

453,263

457,055

Unsecured Debt
301,338

285,889

—

45,684

240,205

Structured Products and Other
323,028

329,752

—

14,595

315,157

Preferred Equity
97,755

83,153

—

—

83,153

Common Equity/Interests
257,664

317,298

—

139

317,159

Warrants
4,951

8,041

—

—

8,041

Total Investments
$
3,258,500

$
3,068,993

$
—

$
568,867

$
2,500,126

The following table shows the composition of our investment portfolio as of March 31, 2015 , with the fair value disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820:
Fair Value Hierarchy
Cost
Fair Value
Level 1
Level 2
Level 3
First Lien Secured Debt
$
1,252,324

$
1,193,847

$
—

$
177,817

$
1,016,030

Second Lien Secured Debt
820,840

805,625

—

293,515

512,110

Unsecured Debt
530,366

475,434

—

123,463

351,971

Structured Products and Other
349,813

374,368

—

—

374,368

Preferred Equity
197,365

165,101

—

—

165,101

Common Equity/Interests
330,851

329,881

—

81

329,800

Warrants
5,016

5,571

—

—

5,571

Total Investments
$
3,486,575

$
3,349,827

$
—

$
594,876

$
2,754,951


38

The following table shows changes in the fair value of our Level 3 investments during the three months ended December 31, 2015 :
First Lien Secured Debt (2)
Second Lien Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of September 30, 2015
$
1,032,839

$
531,316

$
250,179

$
413,465

$
160,108

$
305,128

$
4,327

$
2,697,362

Net realized gains (losses)
(3,307
)
(2,165
)
—

—

(2,363
)
(3,218
)
3,571

(7,482
)
Net change in unrealized gains (losses)
(54,241
)
(7,909
)
(3,027
)
(6,692
)
11,428

3,116

3,779

(53,546
)
Net amortization on investments
221

465

110

111

—

—

—

907

Purchases, including capitalized PIK (3)
173,843

23,614

1,375

10,258

46,799

28,472

—

284,361

Sales (3)
(55,189
)
(490
)
(8,363
)
(87,389
)
(132,819
)
(16,199
)
(3,636
)
(304,085
)
Transfers out of Level 3 (1)
(14,810
)
(87,776
)
(69
)
(14,596
)
—

(140
)
—

(117,391
)
Transfers into Level 3 (1)
—

—

—

—

—

—

—

—

Fair value as of December 31, 2015
$
1,079,356

$
457,055

$
240,205

$
315,157

$
83,153

$
317,159

$
8,041

$
2,500,126

Net change in unrealized gains (losses) on Level 3 investments still held as of December 31, 2015
$
(93,807
)
$
(8,238
)
$
(3,028
)
$
(2,717
)
$
8,637

$
(380
)
$
5,002

$
(94,531
)
The following table shows changes in the fair value of our Level 3 investments during the nine months ended December 31, 2015 :
First Lien Secured Debt (2)
Second Lien Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of March 31, 2015
$
1,016,030

$
512,110

$
351,971

$
374,368

$
165,101

$
329,800

$
5,571

$
2,754,951

Net realized gains (losses)
(5,355
)
14

(40,602
)
(67
)
(2,363
)
(43,661
)
3,571

(88,463
)
Net change in unrealized gains (losses)
(71,682
)
(50,743
)
10,784

(17,830
)
17,661

60,546

2,535

(48,729
)
Net amortization on investments
2,048

1,338

351

325

—

—

—

4,062

Purchases, including capitalized PIK (3)
368,847

232,696

33,159

76,092

98,080

102,810

—

911,684

Sales (3)
(236,324
)
(52,299
)
(115,458
)
(103,136
)
(195,326
)
(132,336
)
(3,636
)
(838,515
)
Transfers out of Level 3 (1)
875

(186,061
)
—

(14,595
)
—

—

—

(199,781
)
Transfers into Level 3 (1)
4,917

—

—

—

—

—

—

4,917

Fair value as of December 31, 2015
$
1,079,356

$
457,055

$
240,205

$
315,157

$
83,153

$
317,159

$
8,041

$
2,500,126

Net change in unrealized gains (losses) on Level 3 investments still held as of December 31, 2015
$
129,187

$
62,369

$
9,527

$
(27,528
)
$
45,192

$
(80,992
)
$
(3,238
)
$
134,517

____________________
(1)
Transfers out of Level 3 are due to an increase in the quantity and reliability of broker quotes obtained and transfers into Level 3 are due to a decrease in the the quantity and reliability of broker quotes obtained as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded revolver obligations and letters of credit measured at fair value of $(2,311) .
(3)
Includes reorganizations and restructuring of investments.

39

The following table shows changes in the fair value of our Level 3 investments during the three months ended December 31, 2014 :
First Lien Secured Debt (2)
Second Lien Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of September 30, 2014
$
858,678

$
461,350

$
422,121

$
317,378

$
108,678

$
307,300

$
10,771

$
2,486,276

Net realized gains (losses)
297

(171
)
(367
)
(168
)
—

5,349

—

4,940

Net change in unrealized gains (losses)
(6,789
)
(6,263
)
(5,554
)
5,495

(2,895
)
13,639

(4,402
)
(6,769
)
Net amortization on investments
1,791

447

159

125

—

—

—

2,522

Purchases, including capitalized PIK (3)
195,591

120,965

54,246

41,573

32,815

42,909

—

488,099

Sales (3)
(128,688
)
(132,272
)
(40,281
)
(8,208
)
(1,169
)
(11,790
)
—

(322,408
)
Transfers out of Level 3 (1)
—

(7,499
)
—

—

—

—

—

(7,499
)
Transfers into Level 3 (1)
109,994

92,925

3,776

—

—

—

—

206,695

Fair value as of December 31, 2014
$
1,030,874

$
529,482

$
434,100

$
356,195

$
137,429

$
357,407

$
6,369

$
2,851,856

Net change in unrealized gains (losses) on Level 3 investments still held as of December 31, 2014
$
(9,209
)
$
(3,841
)
$
(10,306
)
$
5,425

$
(2,895
)
$
18,643

$
(4,402
)
$
(6,585
)
The following table shows changes in the fair value of our Level 3 investments during the nine months ended December 31, 2014 :
First Lien Secured Debt (2)
Second Lien Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of March 31, 2014
$
612,794

$
322,889

$
415,079

$
208,901

$
93,062

$
274,699

$
11,174

$
1,938,598

Net realized gains (losses)
652

(30
)
(2,119
)
(276
)
—

(5,819
)
9,713

2,121

Net change in unrealized gains (losses)
(4,056
)
(4,614
)
(9,580
)
13,113

(167
)
46,926

(809
)
40,813

Net amortization on investments
2,832

1,030

663

239

—

—

—

4,764

Purchases, including capitalized PIK (3)
550,982

259,703

109,549

168,265

45,703

57,097

—

1,191,299

Sales (3)
(209,832
)
(156,301
)
(102,038
)
(34,047
)
(1,169
)
(15,496
)
(13,709
)
(532,592
)
Transfers out of Level 3 (1)
—

—

—

—

—

—

—

—

Transfers into Level 3 (1)
77,502

106,805

22,546

—

—

—

—

206,853

Fair value as of December 31, 2014
$
1,030,874

$
529,482

$
434,100

$
356,195

$
137,429

$
357,407

$
6,369

$
2,851,856

Net change in unrealized gains (losses) on Level 3 investments still held as of December 31, 2014
$
(5,534
)
$
(5,164
)
$
(15,589
)
$
14,810

$
(167
)
$
53,662

$
(4,231
)
$
37,787

____________________
(1)
Transfers out of Level 3 are due to an increase in the availability of qualified observable inputs and transfers into Level 3 are due to a decrease in the availability of qualified observable inputs as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded revolver obligations and letters of credit measured at fair value of $(5,404) .
(3)
Includes reorganizations and restructuring of investments.

40

The following tables summarize the significant unobservable inputs the Company used to value the majority of its investments categorized within Level 3 as of December 31, 2015 and March 31, 2015 . In addition to the techniques and inputs noted in the tables below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below tables are not intended to be all-inclusive, but rather provide information on the significant unobservable inputs as they relate to the Company’s determination of fair values.
The unobservable inputs used in the fair value measurement of our Level 3 investments as of December 31, 2015 were as follows:
Quantitative Information about Level 3 Fair Value Measurements
Asset Category
Fair Value
Valuation Techniques/Methodologies
Unobservable Input
Range
Weighted Average
First Lien Secured Debt
$
640,241

Yield Analysis
Discount Rate
7.7%
30.0%
15.0%
365,084

Discounted Cash Flow
Discount Rate
2.3%
12.0%
12.0%
12,908

Recovery Analysis
N/A
N/A
N/A
N/A
61,123

Broker Quoted
Broker Quote
N/A
N/A
N/A
Second Lien Secured Debt
275,522

Yield Analysis
Discount Rate
9.6%
24.6%
13.7%
63,757

Recovery Analysis
N/A
N/A
N/A
N/A
117,776

Broker Quoted
Broker Quote
N/A
N/A
N/A
Unsecured Debt
240,205

Yield Analysis
Discount Rate
10.3%
35.0%
12.7%
Structured Products and Other
315,157

Discounted Cash Flow
Discount Rate
6.5%
17.0%
12.3%
Preferred Equity
4,207

Market Comparable Approach
Comparable Multiple
8.0x
12.4x
12.4x
34,233

Yield Analysis
Discount Rate
11.0%
11.0%
11.0%
11,250

Discounted Cash Flow
Discount Rate
40.6%
40.6%
40.6%
33,463

Recent Transaction
Recent Transaction
N/A
N/A
N/A
Common Equity/Interests
77,637

Market Comparable Approach
Comparable Multiple
6.0x
12.4x
8.7x
235,696

Discounted Cash Flow
Discount Rate
10.8%
38.4%
13.0%
3,826

Other
Illiquidity/Restrictive Discount
7.0%
7.0%
7.0%
Warrants
8,041

Recent Transaction
Recent Transaction
N/A
N/A
N/A
Total Level 3 Investments
$
2,500,126


41

The unobservable inputs used in the fair value measurement of our Level 3 investments as of March 31, 2015 were as follows:
Quantitative Information about Level 3 Fair Value Measurements
Asset Category
Fair Value
Valuation Techniques/Methodologies
Unobservable Input
Range
Weighted Average
First Lien Secured Debt
$
531,654

Yield Analysis
Discount Rate
7.9%
20.9%
13.0%
352,084

Discounted Cash Flow
Discount Rate
12.0%
12.0%
12.0%
14,377

Recent Transactions
Recent Transactions
N/A
N/A
N/A
117,915

Broker Quoted
Broker Quote
N/A
N/A
N/A
Second Lien Secured Debt
247,585

Yield Analysis
Discount Rate
9.7%
19.7%
14.5%
264,525

Broker Quoted
Broker Quote
N/A
N/A
N/A
Unsecured Debt
329,831

Yield Analysis
Discount Rate
9.7%
22.0%
11.4%
22,140

Broker Quoted
Broker Quote
N/A
N/A
N/A
Structured Products and Other
39,296

Yield Analysis
Discount Rate
8.4%
15.0%
8.8%
317,381

Discounted Cash Flow
Discount Rate
3.8%
15.0%
12.4%
17,691

Broker Quoted
Broker Quote
N/A
N/A
N/A
Preferred Equity
66,976

Market Comparable Approach
Comparable Multiple
2.2x
11.7x
7.3x
23,645

Yield Analysis
Discount Rate
10.8%
10.8%
10.8%
9,309

Discounted Cash Flow
Discount Rate
15.9%
15.9%
15.9%
65,171

Options Pricing Model
Expected Volatility
70.0%
70.0%
70.0%
Common Equity/Interests
121,169

Market Comparable Approach
Comparable Multiple
2.2x
10.8x
8.3x
203,469

Discounted Cash Flow
Discount Rate
11.4%
30.0%
13.0%
5,162

Other
Illiquidity/Restrictive Discount
7.0%
7.0%
7.0%
Warrants
1,399

Market Comparable Approach
Comparable Multiple
4.8x
11.4x
11.2x
222

Other
Illiquidity/Restrictive Discount
20.0%
20.0%
20.0%
3,950

Recent Transactions
Recent Transactions
N/A
N/A
N/A
Total Level 3 Investments
$
2,754,951

The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity securities are primarily earnings before interest, taxes, depreciation and amortization (“EBITDA”) comparable multiples and market discount rates. The Company typically uses EBITDA comparable multiples on its equity securities to determine the fair value of investments. The Company uses market discount rates for debt securities to determine if the effective yield on a debt security is commensurate with the market yields for that type of debt security. If a debt security’s effective yield is significantly less than the market yield for a similar debt security with a similar credit profile, then the resulting fair value of the debt security may be lower. Significant increases or decreases in either of these inputs in isolation would result in a significantly lower or higher fair value measurement. The significant unobservable inputs used in the fair value measurement of the structured products include the discount rate applied in the valuation models in addition to default and recovery rates applied to projected cash flows in the valuation models. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of an investment; conversely decreases in the discount rate can significantly increase the fair value of an investment. The discount rate is determined based on the market rates an investor would expect for a similar investment with similar risks.

42

Investment Transactions
During the three months ended December 31, 2015 and December 31, 2014 , purchases of investments on a trade date basis were $204,585 and $608,776 , respectively. For the nine months ended December 31, 2015 and December 31, 2014 , purchases of investments on a trade date basis were $918,169 and $1,839,380 , respectively.
During the three months ended December 31, 2015 and December 31, 2014 , sales and repayments of investments on a trade date basis were $261,594 and $699,203 , respectively. For the nine months ended December 31, 2015 and December 31, 2014 , sales and repayments of investments on a trade date basis were $1,074,057 and $1,775,150 , respectively.
PIK Income
PIK income earned for the three and nine months ended December 31, 2015 and December 31, 2014 is summarized below:
Three Months Ended December 31,
Nine Months Ended December 31,
2015
2014
2015
2014
PIK income for the period
$
10,238

$
8,619

$
31,607

$
24,889

Capitalized PIK income for the three and nine months ended December 31, 2015 and December 31, 2014 is summarized below:
Three Months Ended December 31,
Nine Months Ended December 31,
2015
2014
2015
2014
PIK balance at beginning of period
$
56,791

$
73,608

$
86,903

$
58,185

PIK income capitalized
12,358

7,097

34,090

24,155

Adjustments due to investment exits
(109
)
—

(3,505
)
—

PIK income received in cash
(726
)
(448
)
(49,174
)
(2,083
)
PIK balance at end of period
$
68,314

$
80,257

$
68,314

$
80,257

Investments on Non-Accrual Status
As of December 31, 2015 , 6.0% of total investments at amortized cost, or 2.5% of total investments at fair value, were on non-accrual status. As of March 31, 2015 , 1.3% of total investments at amortized cost, or 0.1% of total investments at fair value, were on non-accrual status.
Unconsolidated Significant Subsidiaries
The following unconsolidated subsidiaries are considered significant subsidiaries under SEC Regulation S-X Rule 10-01(b)(1) and Regulation S-X Rule 4-08(g) as of December 31, 2015 . Accordingly, summarized, comparative financial information is presented below for these unconsolidated significant subsidiaries.
Merx Aviation Finance, LLC
Merx Aviation Finance, LLC and its subsidiaries (“Merx Aviation”) are principally engaged in acquiring and leasing commercial aircraft to airlines. Its focus is on current generation aircraft, held either domestically or internationally. Merx Aviation may acquire fleets of aircraft primarily through securitized, non-recourse debt or individual aircraft. Merx Aviation may outsource its aircraft servicing requirements to third parties that have the global staff and expertise necessary to complete such tasks. The following table shows unaudited summarized financial information for Merx Aviation:
Nine Months Ended December 31,
2015
2014
Net revenue
$
89,535

$
59,086

Net operating income
56,050

37,219

Earnings before taxes
7,718

1,909

Net profit
5,545

1,906


43

MSEA Tankers LLC
MSEA Tankers LLC and its subsidiaries (“MSEA”) are engaged in acquiring and leasing tanker vessels to oil majors, commodity traders and shipping companies. Its focus is on tankers transporting refined products for its charterers through long-term charters. MSEA engages in a variety of income-generating structured equity transactions, ranging from bridge loans to sale-leaseback structures either on individual vessels or vessel packages sourced from bank balance sheets and other sources. MSEA may also outsource its technical management requirements through engaging in bareboat charters. The following table shows unaudited summarized financial information for MSEA:
Nine Months Ended
December 31, 2015*
Net revenue
$
9,869

Net operating income
5,915

Earnings before taxes
5,258

Net profit after non-controlling interest
5,170

____________________
*
MSEA commenced operations on December 16, 2014. Transactions from such date to December 31, 2014 are not significant.
Note 6. Debt and Foreign Currency Transactions and Translations
The Company’s outstanding debt obligations as of December 31, 2015 were as follows:
Date Issued/Amended
Total Aggregate Principal Amount Committed
Principal Amount Outstanding
Fair Value
Final Maturity Date
Senior Secured Facility
2015
$
1,310,000

$
495,161
*
$
499,641

(1)
4/24/2020
Senior Secured Notes (Series A)
2011
29,000

29,000

29,332

(1)
9/29/2016
Senior Secured Notes (Series B)
2011
16,000

16,000

16,732

(1)
9/29/2018
2042 Notes
2012
150,000

150,000

152,460

(2)
10/15/2042
2043 Notes
2013
150,000

150,000

150,360

(2)
7/15/2043
2025 Notes
2015
350,000

344,558

351,626

(1)
3/3/2025
Convertible Notes
2011
200,000

200,000

200,000

(2)
1/15/2016
Total Debt Obligations
$
2,205,000

$
1,384,719

$
1,400,151

____________________
*
Includes foreign currency debt obligations as outlined below.
(1)
The fair value of these debt obligations are categorized as Level 3 under ASC 820 as of December 31, 2015 . The valuation is based on a yield analysis and discount rate commensurate with the market yields for similar types of debt.
(2)
The fair value of these debt obligations are categorized as Level 1 under ASC 820 as of December 31, 2015 . The valuation is based on quoted prices of identical liabilities in active markets.

44

The Company’s outstanding debt obligations as of March 31, 2015 were as follows:
Date Issued/Amended
Total Aggregate Principal Amount Committed
Principal Amount Outstanding
Fair Value
Final Maturity Date
Senior Secured Facility
2013
$
1,270,000

$
384,648
*
$
384,253

(1)
8/31/2018
Senior Secured Notes
2010
225,000

225,000

227,363

(1)
10/4/2015
Senior Secured Notes (Series A)
2011
29,000

29,000

29,684

(1)
9/29/2016
Senior Secured Notes (Series B)
2011
16,000

16,000

16,952

(1)
9/29/2018
2042 Notes
2012
150,000

150,000

152,646

(2)
10/15/2042
2043 Notes
2013
150,000

150,000

153,438

(2)
7/15/2043
2025 Notes
2015
350,000

344,111

352,100

(1)
3/3/2025
Convertible Notes
2011
200,000

200,000

206,250

(2)
1/15/2016
Total Debt Obligations
$
2,390,000

$
1,498,759

$
1,522,686

____________________
*
Includes foreign currency debt obligations as outlined below.
(1)
The fair value of these debt obligations are categorized as Level 3 under ASC 820 as of March 31, 2015 . The valuation is based on a yield analysis and discount rate commensurate with the market yields for similar types of debt.
(2)
The fair value of these debt obligations are categorized as Level 1 under ASC 820 as of March 31, 2015 . The valuation is based on quoted prices of identical liabilities in active markets.
Senior Secured Facility
On April 24, 2015, the Company amended and restated its senior secured, multi-currency, revolving credit facility (the “Senior Secured Facility”). The facility increased the lenders’ commitments to $1,310,000 and extended the final maturity date through April 24, 2020, and allows the Company to seek additional commitments from new and existing lenders in the future, up to an aggregate facility size not to exceed $1,965,000. The Senior Secured Facility is secured by substantially all of the assets in Apollo Investment’s portfolio, including cash and cash equivalents. Commencing May 24, 2019, the Company is required to repay, in twelve consecutive monthly installments of equal size, the outstanding amount under the Senior Secured Facility as of April 24, 2019. In addition, the stated interest rate on the facility was changed from LIBOR plus 2.00% to a formula-based calculation, based on a minimum borrowing base, resulting in a stated interest rate of either LIBOR plus 1.75%, or LIBOR plus 2.00%. As of December 31, 2015 , the stated interest rate on the facility is LIBOR plus 2.00%. The Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the Senior Secured Facility and a letter of credit participation fee of 2.00% per annum plus a letter of credit fronting fee of 0.25% per annum on the letters of credit issued. The Senior Secured Facility contains affirmative and restrictive covenants, including: (a) periodic financial reporting requirements, (b) maintaining minimum shareholders’ equity of the greater of (i) 40% of the total assets of Apollo Investment and its consolidated subsidiaries as at the last day of any fiscal quarter and (ii) the sum of (A) $870,000 plus (B) 25% of the net proceeds from the sale of equity interests in Apollo Investment after the closing date of the Senior Secured Facility, (c) maintaining a ratio of total assets, less total liabilities (other than indebtedness) to total indebtedness, in each case of Apollo Investment and its consolidated subsidiaries, of not less than 2.0:1.0, (d) limitations on the incurrence of additional indebtedness, including a requirement to meet a certain minimum liquidity threshold before Apollo Investment can incur such additional debt, (e) limitations on liens, (f) limitations on investments (other than in the ordinary course of Apollo Investment’s business), (g) limitations on mergers and disposition of assets (other than in the normal course of Apollo Investment’s business activities), (h) limitations on the creation or existence of agreements that permit liens on properties of Apollo Investment’s consolidated subsidiaries and (i) limitations on the repurchase or redemption of certain unsecured debt and debt securities. In addition to the asset coverage ratio described in clause (c) of the preceding sentence, borrowings under the Senior Secured Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that applies different advance rates to different types of assets in Apollo Investment’s portfolio.
The Senior Secured Facility also provides for the issuance of letters of credit up to an aggregate amount of $150,000. As of December 31, 2015 and March 31, 2015 , the Company had $16,290 and $25,246 , respectively, in standby letters of credit issued through the Senior Secured Facility. The amount available for borrowing under the Senior Secured Facility is reduced by any standby letters of credit issued through the Senior Secured Facility. Under GAAP, these letters of credit are considered commitments because no funding has been made and as such are not considered a liability. These letters of credit are not senior securities because they are not in form of a typical financial guarantee and the portfolio companies are obligated to refund any drawn amounts. The available remaining capacity under the Senior Secured Facility was $798,549 and $860,106 as of December 31, 2015 and March 31, 2015 , respectively. Terms used in this disclosure have the meanings set forth in the Senior Secured Facility agreement.

45

Senior Secured Notes
On September 30, 2010, the Company entered into a note purchase agreement with certain institutional accredited investors providing for a private placement issuance of $225,000 in aggregate principal amount of five-year, senior secured notes with an annual fixed interest rate of 6.25% and a maturity date of October 4, 2015 (the “Senior Secured Notes”). On October 4, 2010, the Senior Secured Notes issued by Apollo Investment were sold to certain institutional accredited investors pursuant to an exemption from registration under the Securities Act of 1933, as amended. Interest on the Senior Secured Notes was due semi-annually on April 4 and October 4, commencing on April 4, 2011.
On October 4, 2015, the Senior Secured Notes, which had an outstanding principal amount of $225,000, matured and were repaid in full.
Senior Secured Notes — Series A and Series B
On September 29, 2011, the Company closed a private offering of $45,000 aggregate principal amount of senior secured notes (the “Series A and B Notes”) consisting of two series: 5.875% Senior Secured Notes, Series A, due September 29, 2016 in the aggregate principal amount of $29,000; and 6.250% Senior Secured Notes, Series B, due September 29, 2018 in the aggregate principal amount of $16,000. The Series A and B Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Interest on the Series A and B Notes is due semi-annually on March 29 and September 29, commencing on March 29, 2012.
Senior Unsecured Notes
2042 Notes
On October 9, 2012, the Company issued $150,000 in aggregate principal amount of senior unsecured notes for net proceeds of $145,275 (the “2042 Notes”). The 2042 Notes will mature on October 15, 2042. Interest on the 2042 Notes is paid quarterly on January 15, April 15, July 15 and October 15, at an annual rate of 6.625%, commencing on January 15, 2013. The Company may redeem the 2042 Notes in whole or in part at any time or from time to time on or after October 15, 2017. The 2042 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior, unsecured indebtedness. The 2042 Notes are listed on The New York Stock Exchange under the ticker symbol “AIB.”
2043 Notes
On June 17, 2013, the Company issued $135,000 in aggregate principal amount of senior unsecured notes and on June 24, 2013, an additional $15,000 in aggregate principal amount of such notes was issued pursuant to the underwriters’ over-allotment option exercise. In total, $150,000 of aggregate principal was issued for net proceeds of $145,275 (the “2043 Notes”). The 2043 Notes will mature on July 15, 2043. Interest on the 2043 Notes is paid quarterly on January 15, April 15, July 15 and October 15, at an annual rate of 6.875%, commencing on October 15, 2013. The Company may redeem the 2043 Notes in whole or in part at any time or from time to time on or after July 15, 2018. The 2043 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior, unsecured indebtedness. The 2043 Notes are listed on The New York Stock Exchange under the ticker symbol “AIY.”
2024 Note
On October 30, 2014, the Company entered into a note purchase agreement with an institutional accredited investor providing a private placement issuance of $150,000 in aggregate principal amount of a ten-year note with an annual fixed rate of 5.25% and a maturity of October 30, 2024 (the “2024 Note”). On October 30, 2014, the Company issued the 2024 Note for net proceeds of $148,875. Interest on the 2024 Note was due quarterly on January 15, April 15, July 15 and October 15, commencing on January 15, 2015. The 2024 Note was a general, unsecured obligation and ranked equal in right of payment with all of our existing unsecured indebtedness. On March 3, 2015, the Company repurchased and retired the 2024 Note. The transaction was accounted for as a debt modification in accordance with ASC 470-50, Modification and Extinguishment .
2025 Notes
On March 3, 2015, the Company issued $350,000 in the aggregate principal amount of senior unsecured notes for net proceeds of $343,650 (the “2025 Notes”). The 2025 Notes will mature on March 3, 2025. Interest on the 2025 Notes is due semi-annually on March 3 and September 3, at an annual rate of 5.25%, commencing on September 3, 2015. The 2025 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness.

46

Convertible Notes
On January 25, 2011, the Company closed a private offering of $200,000 aggregate principal amount of senior unsecured convertible notes (the “Convertible Notes”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Convertible Notes bore interest at an annual rate of 5.75%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2011. The Convertible Notes were convertible by the holders into shares of common stock, initially at a conversion rate of 72.7405 shares of the Company’s common stock per $1 principal amount of Convertible Notes (14,548,100 common shares) corresponding to an initial conversion price per share of approximately $13.75, which represented a premium of 17.5% to the $11.70 per share closing price of the Company’s common stock on the NASDAQ Global Select Market on January 19, 2011. The conversion rate was subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.28 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, were subject to a conversion price floor of $11.70 per share. As more fully reflected in Note 4, the issuance was considered as part of the if-converted method for calculation of diluted EPS.
On January 15, 2016, the Convertible Notes, which had an outstanding principal amount of $200,000, matured and were repaid in full.
The following table summarizes the average and maximum debt outstanding, and the annualized interest and debt issuance cost for the three and nine months ended December 31, 2015 and December 31, 2014 :
Three Months Ended December 31,
Nine Months Ended December 31,
2015
2014
2015
2014
Average debt outstanding
$
1,481,191

$
1,638,249

$
1,482,003

$
1,576,257

Maximum amount of debt outstanding
1,537,818

1,760,782

1,657,288

1,760,782

Weighted average annualized interest cost (1)
4.73
%
4.50
%
5.17
%
4.46
%
Annualized amortized debt issuance cost
0.44
%
0.40
%
0.51
%
0.42
%
Total annualized interest cost
5.17
%
4.90
%
5.68
%
4.88
%
____________________
(1)
Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Commitment fees for the three and nine months ended December 31, 2015 were $676 and $2,417 , respectively. Commitment fees for the three and nine months ended December 31, 2014 were $457 and $1,355 , respectively.
Foreign Currency Transactions and Translations
The Company had the following foreign-denominated debt outstanding on the Senior Secured Facility as of December 31, 2015 :
Original Principal Amount (Local)
Original Principal Amount (USD)
Principal Amount Outstanding
Unrealized Gain
Reset Date
Canadian Dollar
C$
7,000

$
5,051

$
5,039

$
12

1/25/2016
Canadian Dollar
C$
58,100

53,108

41,826

11,282

1/29/2016
Euro
€
6,000

6,528

6,518

10

1/25/2016
Euro
€
3,700

4,972

4,019

953

1/29/2016
British Pound
£
14,500

22,199

21,372

827

1/11/2016
British Pound
£
14,500

22,210

21,372

838

1/14/2016
British Pound
£
24,400

37,283

35,963

1,320

1/21/2016
British Pound
£
36,000

55,260

53,060

2,200

1/25/2016
British Pound
£
15,600

23,555

22,993

562

1/29/2016
$
230,166

$
212,162

$
18,004


47

The Company had the following foreign-denominated debt outstanding on the Senior Secured Facility as of March 31, 2015 :
Original Principal Amount (Local)
Original Principal Amount (USD)
Principal Amount Outstanding
Unrealized Gain (Loss)
Reset Date
Canadian Dollar
C$
65,100

$
60,245

$
51,402

$
8,843

4/30/2015
Euro
€
19,200

25,803

20,621

5,182

4/30/2015
British Pound
£
6,500

9,926

9,649

277

4/7/2015
British Pound
£
25,000

37,525

37,112

413

4/13/2015
British Pound
£
27,000

39,956

40,082

(126
)
4/20/2015
British Pound
£
7,600

12,124

11,282

842

4/30/2015
$
185,579

$
170,148

$
15,431

As of December 31, 2015 and March 31, 2015 , the Company was in compliance with all debt covenants.
Note 7. Shareholders’ Equity
There were no equity offerings of common stock during the nine months ended December 31, 2015 and fiscal year ended March 31, 2015 .
On August 6, 2015, the Company adopted a plan for the purpose of repurchasing up to $50 million of its common stock in accordance with applicable rules specified in the Securities Exchange Act of 1934 (the “Exchange Act”) (the “August Repurchase Plan”). Since adopting the August Repurchase Plan, the Company has repurchased the full amount authorized by the board of directors under such plan.

On December 14, 2015, the board of directors approved a new plan to acquire up to an additional $50 million of its common stock in accordance with applicable rules specified in the Exchange Act (the “Current Repurchase Plan,” and together with the August Repurchase Plan, the “Repurchase Plans”). The Current Repurchase Plan is designed to allow the Company to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under applicable insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in an agreement with the Company to repurchase shares on the Company’s behalf in accordance with the terms of the Current Repurchase Plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the Current Repurchase Plan. Pursuant to the Current Repurchase Plan, the Company may from time to time repurchase a portion of its shares of common stock and the Company is hereby notifying shareholders of its intention as required by applicable securities laws.

On September 15, 2015 and December 16, 2015, the Company allocated $5 million and $10 million, respectively, to be repurchased under the August Repurchase Plan and the Current Repurchase Plan, respectively, in accordance with SEC Rule 10b5-1 (the “10b5-1 Repurchase Plans”).
Under the Repurchase Plans and 10b5-1 Repurchase Plans (the “Plans”), the Company repurchased 8,572,729 shares at a weighted average price per share of $6.12 , inclusive of commissions. This represents a discount of approximately 21.58% of the average net asset value per share for the nine months ended December 31, 2015 . Since the inception of the Plans to December 31, 2015 , the total dollar amount of shares repurchased is $52,437 .
During the period from January 1, 2016 through February 8, 2016 , the Company repurchased 2,012,126 shares at a weighted average price per share of $4.97, inclusive of commissions, for a total cost of $10,000, leaving a maximum of $37,563 available for future purchases under the Current Repurchase Plan.
On September 12, 2014, the Company announced an at-the-market offering program (the “ATM Program”) through which we can sell up to 16 million shares of its common stock from time to time. As of December 31, 2015 , no shares had been sold through the Company’s ATM Program.

48

Note 8. Commitments and Contingencies
The Company has various commitments to fund revolving and delayed draw senior secured and subordinated loans to its portfolio companies, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. As of December 31, 2015 and March 31, 2015 , the Company had the following unfunded commitments to its portfolio companies:
December 31, 2015
March 31, 2015
Unfunded revolver obligations and bridge loan commitments (1)
$
61,947

$
206,294

Standby letters of credit issued and outstanding (2)
14,583

34,433

Unfunded delayed draw loan commitments (3)
4,245

102,092

Unfunded delayed draw loan commitments (performance thresholds not met) (4)
25,000

23,436

Total Unfunded Commitments
$
105,775

$
366,255

____________________
(1)
The unfunded revolver obligations may or may not be funded to the borrowing party in the future. The amounts relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers as of December 31, 2015 and March 31, 2015 , subject to the terms of each loan’s respective credit agreements which includes borrowing covenants that needs to be met prior to funding.
(2)
For all these letters of credit issued and outstanding, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. None of the letters of credit issued and outstanding are recorded as a liability on the Company’s Statement of Assets and Liabilities as such letters of credit are considered in the valuation of the investments in the portfolio company.
(3)
The Company’s commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions which can include covenants to maintain specified leverage levels and other related borrowing base covenants.
(4)
The borrowers are required to meet certain performance thresholds before the Company is obligated to fulfill the commitments and those performance thresholds were not met as of December 31, 2015 and March 31, 2015 .

49

Note 9. Financial Highlights
The following is a schedule of financial highlights for the nine months ended December 31, 2015 and the fiscal year ended March 31, 2015 :
Nine Months Ended
December 31, 2015
Year Ended
March 31, 2015
(Unaudited)
Per Share Data
Net asset value at beginning of period
$
8.18

$
8.67

Net investment income (1)
0.63

0.96

Net realized and change in unrealized losses (1)
(0.72
)
(0.64
)
Net increase (decrease) in net assets resulting from operations
(0.09
)
0.32

Distributions to shareholders from net investment income (2)
(0.60
)
(0.70
)
Distributions to shareholders from return of capital (2)
—

(0.10
)
Offering costs for the issuance of common stock (3)
—

—

Accretion to shareholders due to share repurchases
0.07

—

Net asset value at end of period*
$
7.56

$
8.18

Per share market value at end of period
$
5.22

$
7.68

Total return (4)
(25.01
)%
1.86
%
Shares outstanding at end of period
228,168,622

236,741,351

Weighted average shares outstanding
234,709,883

236,741,351

Ratio/Supplemental Data
Net assets at end of period (in millions)
$
1,724.2

$
1,937.6

Annualized ratio of operating expenses to average net assets (5)(6)
5.93
%
6.25
%
Annualized ratio of interest and other debt expenses to average net assets (6)
4.58
%
3.91
%
Annualized ratio of total expenses to average net assets (5)(6)
10.51
%
10.16
%
Annualized ratio of net investment income to average net assets (6)
10.71
%
11.27
%
Average debt outstanding (in millions)
$
1,482.0

$
1,586.5

Average debt per share
$
6.31

$
6.70

Annualized portfolio turnover rate (6)
37.81
%
62.14
%
____________________
*
Totals may not foot due to rounding.
(1)
Financial highlights are based on the weighted average number of shares outstanding for the period presented.
(2)
Dividends and distributions are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under GAAP. Per share amounts are based on actual rate per share.
(3)
Offering costs per share represent less than one cent per weighted average share for the fiscal year ended March 31, 2015.
(4)
Total return is based on the change in market price per share during the respective periods. Total return also takes into account dividends and distributions, if any, reinvested in accordance with the Company’s dividend reinvestment plan.
(5)
The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets are shown inclusive of all voluntary management and incentive fee waivers (Note 3). For the nine months ended December 31, 2015 , the annualized ratio of operating expenses to average net assets and the annualized ratio of total expenses to average net assets would be 6.97% and 11.55% , respectively, without the voluntary fee waivers. For the fiscal year ended March 31, 2015 , the ratio of operating expenses to average net assets and the ratio of total expenses to average net assets would be 7.03% and 10.95% , respectively, without the voluntary fee waivers.
(6)
Annualized for the nine months ended December 31, 2015 .

50

Information about our senior securities is shown in the following table as of each year ended March 31 since the Company commenced operations, unless otherwise noted. The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.
Class and Year
Total Amount Outstanding (1)
Asset Coverage Per Unit (2)
Involuntary Liquidating Preference Per Unit (3)
Average Market Value Per Unit (4)
Senior Secured Facility (5)
Fiscal 2016 (as of December 31, 2015)
$
495,161

$
803

$
—

N/A

Fiscal 2015
384,648

588

—

N/A

Fiscal 2014
602,261

1,095

—

N/A

Fiscal 2013
536,067

1,137

—

N/A

Fiscal 2012
539,337

1,427

—

N/A

Fiscal 2011
628,443

1,707

—

N/A

Fiscal 2010
1,060,616

2,671

—

N/A

Fiscal 2009
1,057,601

2,320

—

N/A

Fiscal 2008
1,639,122

2,158

—

N/A

Fiscal 2007
492,312

4,757

—

N/A

Fiscal 2006
323,852

4,798

—

N/A

Senior Secured Notes
Fiscal 2016 (as of December 31, 2015)
$
45,000

$
73

$
—

N/A

Fiscal 2015
270,000

413

—

N/A

Fiscal 2014
270,000

491

—

N/A

Fiscal 2013
270,000

572

—

N/A

Fiscal 2012
270,000

714

—

N/A

Fiscal 2011
225,000

611

—

N/A

Fiscal 2010
—

—

—

N/A

Fiscal 2009
—

—

—

N/A

Fiscal 2008
—

—

—

N/A

Fiscal 2007
—

—

—

N/A

Fiscal 2006
—

—

—

N/A

2042 Notes
Fiscal 2016 (as of December 31, 2015)
$
150,000

$
243

$
—

$
101.64

Fiscal 2015
150,000

230

—

99.59

Fiscal 2014
150,000

273

—

92.11

Fiscal 2013
150,000

318

—

97.43

Fiscal 2012
—

—

—

N/A

Fiscal 2011
—

—

—

N/A

Fiscal 2010
—

—

—

N/A

Fiscal 2009
—

—

—

N/A

Fiscal 2008
—

—

—

N/A

Fiscal 2007
—

—

—

N/A

Fiscal 2006
—

—

—

N/A


51

Class and Year
Total Amount Outstanding (1)
Asset Coverage Per Unit (2)
Involuntary Liquidating Preference Per Unit (3)
Average Market Value Per Unit (4)
2043 Notes
Fiscal 2016 (as of December 31, 2015)
$
150,000

$
243

$
—

$
100.24

Fiscal 2015
150,000

230

—

99.74

Fiscal 2014
150,000

273

—

89.88

Fiscal 2013
—

—

—

N/A

Fiscal 2012
—

—

—

N/A

Fiscal 2011
—

—

—

N/A

Fiscal 2010
—

—

—

N/A

Fiscal 2009
—

—

—

N/A

Fiscal 2008
—

—

—

N/A

Fiscal 2007
—

—

—

N/A

Fiscal 2006
—

—

—

N/A

2025 Notes
Fiscal 2016 (as of December 31, 2015)
$
344,558

$
559

$
—

N/A

Fiscal 2015
344,111

526

—

N/A

Fiscal 2014
—

—

—

N/A

Fiscal 2013
—

—

—

N/A

Fiscal 2012
—

—

—

N/A

Fiscal 2011
—

—

—

N/A

Fiscal 2010
—

—

—

N/A

Fiscal 2009
—

—

—

N/A

Fiscal 2008
—

—

—

N/A

Fiscal 2007
—

—

—

N/A

Fiscal 2006
—

—

—

N/A

Convertible Notes








Fiscal 2016 (as of December 31, 2015)
$
200,000

$
324

$
—

$
100.00

Fiscal 2015
200,000

306

—

104.43

Fiscal 2014
200,000

364

—

106.60

Fiscal 2013
200,000

424

—

102.84

Fiscal 2012
200,000

529

—

97.81

Fiscal 2011
200,000

544

—

N/A

(6)
Fiscal 2010
—

—

—

N/A

Fiscal 2009
—

—

—

N/A

Fiscal 2008
—

—

—

N/A

Fiscal 2007
—

—

—

N/A

Fiscal 2006
—

—

—

N/A


52

Class and Year
Total Amount Outstanding (1)
Asset Coverage Per Unit (2)
Involuntary Liquidating Preference Per Unit (3)
Average Market Value Per Unit (4)
Total Debt Securities
Fiscal 2016 (as of December 31, 2015)
$
1,384,719

$
2,245

$
—

N/A

Fiscal 2015
1,498,759

2,293

—

N/A

Fiscal 2014
1,372,261

2,496

—

N/A

Fiscal 2013
1,156,067

2,451

—

N/A

Fiscal 2012
1,009,337

2,670

—

N/A

Fiscal 2011
1,053,443

2,862

—

N/A

Fiscal 2010
1,060,616

2,671

—

N/A

Fiscal 2009
1,057,601

2,320

—

N/A

Fiscal 2008
1,639,122

2,158

—

N/A

Fiscal 2007
492,312

4,757

—

N/A

Fiscal 2006
323,852

4,798

—

N/A

____________________
(1)
Total amount of each class of senior securities outstanding at the end of the period presented.
(2)
The asset coverage ratio for the total senior securities representing indebtedness is calculated as our total assets, less all liabilities and indebtedness not represented by senior securities, divided by the total senior securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the Asset Coverage Per Unit. In order to determine the Asset Coverage Per Unit for each class of debt, the Asset Coverage Per Unit was allocated based on the amount of indebtedness outstanding at the end of the period for each class of debt.
(3)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4)
Not applicable, except for with respect to the 2042 Notes, the 2043 Notes, and the Convertible Notes, as other senior securities do not have sufficient trading for an average market value per unit to be determined. The average market value per unit for each of the 2042 Notes, the 2043 Notes, and the Convertible Notes is based on the closing daily prices of such notes and is expressed per $100 of indebtedness (including for the 2042 Notes and the 2043 Notes, which were issued in $25 increments).
(5)
Includes foreign currency debt obligations as outlined in Note 6.
(6)
Restrictive legends were removed in 2012.
Note 10. Subsequent Events
On January 15, 2016, the Convertible Notes, which had an outstanding principal amount of $200,000, matured and were repaid in full.
On February 4, 2016, the Board of Directors declared a dividend of $0.20 per share for the third quarter of fiscal year 2016, payable on April 6, 2016 to shareholders of record as of March 21, 2016.
During the period from January 1, 2016 through February 8, 2016 , the Company repurchased 2,012,126 shares at a weighted average price per share of $4.97, inclusive of commissions, for a total cost of $10,000.

53

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Apollo Investment Corporation:
We have reviewed the accompanying statement of assets and liabilities of Apollo Investment Corporation (the “Company”), including the schedule of investments, as of December 31, 2015 , the related statements of operations for the three and nine month periods ended December 31, 2015 and December 31, 2014 , the statement of changes in net assets for the nine month period ended December 31, 2015 , and the statements of cash flows for the nine month periods ended December 31, 2015 and December 31, 2014 . These interim financial statements are the responsibility of the Company’s management.
We conducted our review 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 (United States), 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.
We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of assets and liabilities, including the schedule of investments, as of March 31, 2015 , and the related statements of operations (not presented herein), of changes in net assets and of cash flows (not presented herein) for the year then ended, and in our report dated May 19, 2015, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying statement of assets and liabilities, including the schedule of investments, as of March 31, 2015 , and the related statement of changes in net assets for the year then ended, is fairly stated in all material respects in relation to the statements of assets and liabilities, including the schedule of investments, and of changes in net assets from which it has been derived.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 9, 2016

54

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this report.
Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including 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;
•
our contractual arrangements and relationships with third parties;
•
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 generally use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report.
We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
Apollo Investment Corporation (the “Company,” “Apollo Investment,” “AIC,” “we,” “us,” or “our”) was incorporated under the Maryland General Corporation Law in February 2004. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (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 equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Code. Pursuant to this election and assuming we qualify as a RIC, we generally do not have to pay corporate-level federal income taxes on any income we distribute to our shareholders. Apollo Investment commenced operations on April 8, 2004 upon completion of its initial public offering that raised $870 million in net proceeds from selling 62 million shares of its common stock at a price of $15.00 per share. Since then, and through December 31, 2015 , we have raised approximately $2.21 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $52.4 million .
Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”) is our investment adviser and an affiliate of Apollo Global Management, LLC and its consolidated subsidiaries (“AGM”). AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with ours. AIM and its affiliates may determine that an investment is appropriate both for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, AIM may determine that we should invest on a side-by-side basis with one or more other funds. We make all such investments subject to compliance with applicable regulations and interpretations, and our allocation procedures. In certain circumstances negotiated co-investments may be made only if we receive an order from the SEC permitting us to do so. There can be no assurance that any such order will be obtained.

55

In addition to furnishing us with office facilities, equipment, and clerical, bookkeeping and record keeping services, Apollo Investment Administration, LLC (the “Administrator” or “AIA”), an affiliate of AGM, also oversees our financial records as well as prepares our reports to shareholders and reports filed with the SEC. AIA also performs the calculation and publication of our net asset value, the payment of our expenses and oversees the performance of various third-party service providers and the preparation and filing of our tax returns. Furthermore, AIA provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, and the competitive environment for the types of investments we make. As a BDC, 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).
Revenue
We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of mezzanine or senior secured loans, generally have a stated term of five to ten years and bear interest at a fixed rate or a floating rate usually determined on the basis of a benchmark: LIBOR, Euro Interbank Offered Rate (EURIBOR), British pound sterling LIBOR (GBP LIBOR), or the prime rate. Interest on debt securities is generally payable quarterly or semiannually and while U.S. subordinated debt and corporate notes typically accrue interest at fixed rates, some of our investments may include zero coupon and/or step-up bonds that accrue income on a constant yield to call or maturity basis. In addition, some of our investments provide for PIK interest or dividends. Such amounts of accrued PIK interest or dividends are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.
Expenses
For all investment professionals of AIM and their staff, when and to the extent engaged in providing investment advisory and management services to us, the compensation and routine overhead expenses of that personnel which is allocable to those services are provided and paid for by AIM. We bear all other costs and expenses of our operations and transactions, including those relating to:
•
investment advisory and management fees;
•
expenses incurred by AIM payable to third parties, including agents, consultants or other advisors, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;
•
calculation of our net asset value (including the cost and expenses of any independent valuation firm);
•
direct costs and expenses of administration, including independent registered public accounting and legal costs;
•
costs of preparing and filing reports or other documents with the SEC;
•
interest payable on debt, if any, incurred to finance our investments;
•
offerings of our common stock and other securities;
•
registration and listing fees;
•
fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments;
•
transfer agent and custodial fees;
•
taxes;
•
independent directors’ fees and expenses;

56

•
marketing and distribution-related expenses;
•
the costs of any reports, proxy statements or other notices to shareholders, including printing and postage costs;
•
our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
•
organizational costs; and
•
all other expenses incurred by us or the Administrator in connection with administering our business, such as our allocable portion of overhead under the administration agreement, including rent and our allocable portion of the cost of our chief financial officer, chief compliance officer and their respective staffs.
We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors.
Portfolio and Investment Activity
Our portfolio and investment activity during the three and nine months ended December 31, 2015 and December 31, 2014 is as follows:
Three Months Ended December 31,
Nine Months Ended December 31,
(in millions)*
2015
2014
2015
2014
Investments made in portfolio companies (1)
$
204.6

$
608.8

$
918.2

$
1,839.4

Investments sold
(139.7
)
(444.3
)
(554.5
)
(1,070.6
)
Net activity before repaid investments
64.9

164.4

363.6

768.8

Investments repaid
(121.9
)
(254.9
)
(519.5
)
(704.5
)
Net investment activity
$
(57.0
)
$
(90.4
)
$
(155.9
)
$
64.2





Portfolio companies at beginning of period
98

113

105

111

Number of new portfolio companies
4

13

18

53

Number of exited portfolio companies
(7
)
(17
)
(28
)
(55
)
Portfolio companies at end of period
95

109

95

109





Number of investments in existing portfolio companies
19

13

48

55

____________________
*
Totals may not foot due to rounding.
(1)
Investments were primarily made through a combination of primary and secondary debt investments.

57

Our portfolio composition and weighted average yields at December 31, 2015 and March 31, 2015 are as follows:
December 31, 2015
March 31, 2015
Portfolio composition, at fair value:
Secured debt
67
%
60
%
Unsecured debt
9
%
14
%
Structured products and other (1)
11
%
11
%
Preferred equity
3
%
5
%
Common equity/interests and warrants
10
%
10
%
Weighted average yields, at amortized cost basis, exclusive of securities on non-accrual status (2):
Secured debt portfolio
11.4
%
11.2
%
Unsecured debt portfolio
11.2
%
10.9
%
Total debt portfolio
11.4
%
11.2
%
Income-bearing investment portfolio composition, at fair value:
Fixed rate amount
$
1.2
billion
$
1.3
billion
Floating rate amount
$
1.3
billion
$
1.4
billion
Fixed rate, as percentage of total
48
%
48
%
Floating rate, as percentage of total
52
%
52
%
Income-bearing investment portfolio composition, at amortized cost:
Fixed rate amount
$
1.3
billion
$
1.4
billion
Floating rate amount
$
1.3
billion
$
1.4
billion
Fixed rate, as percentage of total
49
%
50
%
Floating rate, as percentage of total
51
%
50
%
____________________
(1)
Structured products and other such as collateralized loan obligations (“CLOs”) and credit-linked notes (“CLNs”) are typically a form of securitization in which the cash flows of a portfolio of loans are pooled and passed on to different classes of debt and residual interest in order of seniority.
(2)
An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2015 , invested capital totaled $16.3 billion in 367 portfolio companies. Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, gains and losses. Changes in the economic environment, financial markets, credit worthiness of portfolio companies and any other parameters used in determining such estimates could cause actual results to differ materially. In addition to the discussion below, our critical accounting policies are further described in the Notes to the Financial Statements.

58

Fair Value Measurements
The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the values that would be received upon an actual disposition of such investments.
Commodity-related investments are susceptible to changes in value due to volatility in commodity prices. As such, our commodity-related investments may be impacted by volatility in the commodity markets subsequent to December 31, 2015. Our most recent NAV was calculated as of December 31, 2015 and our NAV when calculated thereafter may be different based on such change in prices.
As of December 31, 2015 , $2.50 billion or 81% of the Company’s investments were classified as Level 3. The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies. A fundamental difference exists between our investments and those of comparable publicly traded fixed income investments, namely high yield bonds, and this difference affects the valuation of our private investments relative to comparable publicly traded instruments.
Senior secured loans, or senior loans, are higher in the capital structure than high yield bonds, and are typically secured by assets of the borrowing company. This improves their recovery prospects in the event of default and affords senior loans a structural advantage over high yield bonds. Many of the Company’s investments are also privately negotiated and contain covenant protections that limit the issuer to take actions that could harm us as a creditor. High yield bonds typically do not contain such covenants.
Given the structural advantages of capital seniority and covenant protection, the valuation of our private debt portfolio is driven more by investment specific credit factors than movements in the broader debt capital markets. Each security is evaluated individually and as indicated above, we value our private investments based upon a multi-step valuation process, including valuation recommendations from independent valuation firms.

59

Investment Valuation Process
Under procedures established by our board of directors, we value investments, including certain secured debt, unsecured debt, and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within 15 days before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case, such investments shall be valued at fair value as determined in good faith by or under the direction of our board of directors, including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our board of directors. Such determination of fair values may involve subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our board of directors has approved 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 of our Investment Adviser which is responsible for the portfolio investment.
2.
Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser.
3.
Independent valuation firms are engaged by our board of directors to conduct independent appraisals by reviewing our Investment Adviser’s preliminary valuations and then making their own independent assessment.
4.
The audit committee of the board of directors reviews the preliminary valuation of our Investment Adviser and the valuation prepared by the independent valuation firms and responds, if warranted, to the valuation recommendation of the independent valuation firms to reflect any comments.
5.
The board of directors discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of our Investment Adviser, the applicable independent valuation firm, third party pricing services and the audit committee.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered in the valuation process of independent valuation firms. For the nine months ended December 31, 2015 , there was no change to the Company’s valuation techniques and related inputs considered in the valuation process.

60

Investment Income Recognition
The Company records interest and dividend income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Some of our loans and other investments, including certain preferred equity investments, may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate are accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company believes that PIK is expected to be realized.
Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon management’s judgment.
Loan origination fees, original issue discount (“OID”), and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable. Upon the prepayment of a loan, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. Other income generally includes amendment fees, bridge fees, and structuring fees which are recorded when earned.
The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults) of the underlying pools of assets. These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. A structured product investment typically has an underlying pool of assets. Payments on structured product investments are payable solely from the cash flows from such assets. As such any unforeseen event in these underlying pools of assets might impact the expected recovery and future accrual of income.
Expenses
Expenses include management fees, performance-based incentive fees, insurance expenses, administrative service fees, legal fees, directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis.
Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)
We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gains or losses.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Recent Accounting Pronouncements
See Note 2 within the Notes to the Financial Statements.

61

Results of Operations
Operating results for the three and nine months ended December 31, 2015 and December 31, 2014 were as follows:
Three Months Ended December 31,
Nine Months Ended December 31,
(in millions)*
2015
2014
2015
2014
Investment income
Interest income
$
75.3

$
98.1

$
240.8

$
298.9

Dividend income
18.3

7.3

46.4

21.2

Other income
0.7

4.6

7.2

11.4

Total investment income
$
94.3

$
110.0

$
294.4

$
331.5

Expenses
Management and performance-based incentive fees, net of amounts waived
$
22.6

$
28.2

$
70.1

$
84.9

Interest and other debt expenses, net of reimbursements
19.3

20.3

63.5

58.1

Administrative services expense, net of reimbursements
1.5

1.8

4.5

4.7

Other general and administrative expenses
2.8

3.0

7.7

7.9

Net expenses
$
46.2

$
53.4

$
145.8

$
155.6

Net investment income
$
48.1

$
56.7

$
148.6

$
175.9

Net realized and change in unrealized gains (losses)
Net realized gains (losses)
$
(9.3
)
$
(1.4
)
$
(120.4
)
$
(3.2
)
Net change in unrealized gains (losses)
(64.6
)
(74.7
)
(49.4
)
(85.6
)
Net realized and change in unrealized gains (losses)
(73.9
)
(76.1
)
(169.8
)
(88.8
)
Net increase (decrease) in net assets resulting from operations
$
(25.8
)
$
(19.5
)
$
(21.1
)
$
87.2

Net investment income on per average share basis
$
0.21

$
0.24

$
0.63

$
0.75

Earnings (Loss) per share — basic
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36

Earnings (Loss) per share — diluted
$
(0.11
)
$
(0.09
)
$
(0.09
)
$
0.36

____________________
*
Totals may not foot due to rounding.

62

Total Investment Income
For the three months ended December 31, 2015 as compared to the three months ended December 31, 2014
The decrease in total investment income for the three months ended December 31, 2015 compared to the three months ended December 31, 2014 was primarily driven by a decrease in interest income of $22.8 million due to a lower income-bearing investment portfolio, an increase in investments on non-accrual status, and a decrease in prepayment fees and income recognized from the acceleration of original issue discount on repaid investments which totaled $0.3 million and $9.3 million for the three months ended December 31, 2015 and December 31, 2014 , respectively. The decrease in total investment income was partially offset by an increase in dividend income of $10.9 million , primarily due to distributions received from the following portfolio companies: AMP Solar (UK) Limited; Dynamic Product Tankers, LLC; Golden Hill CLO I, LLC; Merx Aviation Finance, LLC; and MSEA Tankers LLC.
For the nine months ended December 31, 2015 as compared to the nine months ended December 31, 2014
The decrease in total investment income for the nine months ended December 31, 2015 compared to the nine months ended December 31, 2014 was primarily driven by a decrease in interest income of $58.1 million due to a lower income-bearing investment portfolio, an increase in investments on non-accrual status, and a decrease in prepayment fees and income recognized from the acceleration of original issue discount on repaid investments which totaled $12.8 million and $37.3 million for the nine months ended December 31, 2015 and December 31, 2014 , respectively. The decrease in total investment income was partially offset by an increase in dividend income of $25.2 million , primarily due to distributions received from the following portfolio companies: AMP Solar (UK) Limited; Dynamic Product Tankers, LLC; Golden Hill CLO I, LLC; Ivy Hill Middle Market Credit Fund IX, Ltd.; Merx Aviation Finance, LLC; and MSEA Tankers LLC.
Net Expenses
For the three months ended December 31, 2015 as compared to the three months ended December 31, 2014
The decrease in expenses for the three months ended December 31, 2015 compared to three months ended December 31, 2014 was primarily driven by a decrease of $5.6 million in management and performance-based incentive fees (net of amounts waived) due to lower average gross assets, a higher CION fee offset, and lower investment income. To a lesser extent, the decrease in expenses was driven by a decrease of $1.0 million in interest and other debt expenses, primarily due to the repayment of the Senior Secured Notes in October 2015 using amounts borrowed under the Senior Secured Facility, which has a lower interest rate.
For the nine months ended December 31, 2015 as compared to the nine months ended December 31, 2014
The decrease in expenses for the nine months ended December 31, 2015 compared to nine months ended December 31, 2014 was primarily driven by a decrease of $14.8 million in management and performance-based incentive fees (net of amounts waived) due to lower average gross assets, a higher CION fee offset, lower investment income, and reversal of prior period incentive fee due to lower than par realization on certain PIK investments. The decrease in management and performance-based incentive fees was partially offset by an increase of $5.4 million in interest and other debt expenses, primarily due to the issuance of the 2025 Notes in March 2015, which increased the total annualized cost of debt from 4.88% for the nine months ended December 31, 2014 to 5.68% for the nine months ended December 31, 2015 . The increase in interest expense related to the 2025 Notes was partially offset by decreased utilization of the Senior Secured Facility and the repayment of the Senior Secured Notes in October 2015, which decreased the average debt outstanding from $1.58 billion during the nine months ended December 31, 2014 to $1.48 billion during the nine months ended December 31, 2015 .

63

Net Realized Gains (Losses)
For the three months ended December 31, 2015 as compared to the three months ended December 31, 2014
During the three months ended December 31, 2015 , we recognized gross realized gains of $5.4 million and gross realized losses of $14.7 million , resulting in net realized losses of $9.3 million . Significant realized gains (losses) for the three months ended December 31, 2015 are summarized below:
(in millions)
Net Realized Gain (Loss)
Fidji Luxco (BC) S.C.A.
$
3.6

Explorer Coinvest, LLC
1.2

AMP Solar (UK) Limited
(1.6
)
American Energy - Woodford LLC/AEW Finance Corp
(2.2
)
CA Holding, Inc. (Collect America, Ltd.)
(3.7
)
Caza Petroleum Inc.
(4.8
)
During the three months ended December 31, 2014 , we recognized gross realized gains of $15.9 million and gross realized losses of $17.3 million , resulting in net realized losses of $1.4 million . Significant realized gains (losses) for the three months ended December 31, 2014 are summarized below:
(in millions)
Net Realized Gain (Loss)
First Data Corp.
$
5.6

RC Coinvestment, LLC
5.0

inVentiv Health, Inc.
(5.6
)
Walter Energy, Inc.
(7.8
)
For the nine months ended December 31, 2015 as compared to the nine months ended December 31, 2014
During the nine months ended December 31, 2015 , we recognized gross realized gains of $14.4 million and gross realized losses of $134.8 million , resulting in net realized losses of $120.4 million . Significant realized gains (losses) for the nine months ended December 31, 2015 are summarized below:
(in millions)
Net Realized Gain (Loss)
Venoco, Inc.
$
(7.1
)
BCA Osprey II Limited (British Car Auctions)
(7.4
)
PetroBakken Energy Ltd.
(9.0
)
Denver Parent Corp. (Venoco)
(9.1
)
Artsonig Pty Ltd
(21.7
)
Molycorp, Inc.
(22.1
)
PlayPower Holdings, Inc.
(39.7
)
During the nine months ended December 31, 2014 , we recognized gross realized gains of $37.8 million and gross realized losses of $41.0 million , resulting in net realized losses of $3.2 million . Significant realized gains (losses) for the nine months ended December 31, 2014 are summarized below:
(in millions)
Net Realized Gain (Loss)
Aventine Renewable Energy Holdings, Inc.
$
11.6

First Data Corp.
7.5

Walter Energy, Inc.
(8.6
)
inVentiv Health, Inc.
(9.4
)
Altegrity Holding Corp.
(13.8
)

64

Net Change in Unrealized Gains (Losses)
For the three months ended December 31, 2015 as compared to the three months ended December 31, 2014
During the three months ended December 31, 2015 , we recognized gross unrealized gains of $43.9 million and gross unrealized losses of $108.5 million , resulting in net unrealized losses of $64.6 million . Significant unrealized gains (losses) for the three months ended December 31, 2015 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
Renewable Funding Group, Inc.
$
8.4

Golden Bear Warehouse LLC
6.4

Venoco, Inc.
(5.8
)
Aveta, Inc.
(7.6
)
Magnetation, LLC
(9.8
)
Osage Exploration & Development, Inc.
(10.0
)
Spotted Hawk Development, LLC
(13.1
)
During the three months ended December 31, 2014 , we recognized gross unrealized gains of $51.1 million and gross unrealized losses of $125.8 million , resulting in net unrealized losses of $74.7 million . Significant unrealized gains (losses) for the three months ended December 31, 2014 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
Generation Brands Holdings, Inc.
$
10.9

Playpower Holdings, Inc.
7.0

inVentiv Health, Inc.
5.7

RC Coinvestment, LLC
(4.8
)
Gryphon Colleges Corp. (Delta Educational Systems, Inc.)
(5.8
)
First Data Corp.
(6.2
)
Molycorp, Inc.
(6.8
)
PetroBakken Energy Ltd.
(10.7
)
Magnetation, LLC
(12.4
)
Venoco, Inc.
(20.0
)
For the nine months ended December 31, 2015 as compared to the nine months ended December 31, 2014
During the nine months ended December 31, 2015 , we recognized gross unrealized gains of $156.0 million and gross unrealized losses of $205.4 million , resulting in net unrealized losses of $49.4 million . Significant unrealized gains (losses) for the nine months ended December 31, 2015 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
PlayPower Holdings, Inc.
$
21.8

Molycorp, Inc.
20.4

Renewable Funding Group, Inc.
17.7

Merx Aviation Finance, LLC
16.0

Spotted Hawk Development, LLC
(16.7
)
SquareTwo Financial Corp.
(17.8
)
Magnetation, LLC
(17.9
)
Miller Energy Resources, Inc.
(19.2
)
Osage Exploration & Development, Inc.
(19.4
)

65

During the nine months ended December 31, 2014 , we recognized gross unrealized gains of $128.5 million and gross unrealized losses of $214.1 million , resulting in net unrealized losses of $85.6 million . Significant unrealized gains (losses) for the nine months ended December 31, 2014 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
Generation Brands Holdings, Inc.
$
23.1

Playpower Holdings, Inc.
20.7

First Data Corp.
(11.2
)
PetroBakken Energy Ltd.
(12.4
)
Walter Energy, Inc.
(12.6
)
Magnetation, LLC
(15.3
)
LVI Services, Inc.
(17.9
)
Molycorp, Inc.
(21.7
)
Venoco, Inc.
(24.6
)
Liquidity and Capital Resources
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our senior secured, multi-currency Senior Secured Facility (as defined in Note 6 within the Notes to Financial Statements), our senior secured notes, our senior unsecured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and repayments of senior and subordinated loans and income earned from investments.
Cash Equivalents
We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. (See Note 2 within the Notes to Financial Statements.) At the end of each fiscal quarter, we consider taking proactive steps utilizing cash equivalents with the objective of enhancing our investment flexibility during the following quarter, pursuant to Section 55 of the 1940 Act. More specifically, we may purchase U.S. Treasury bills from time-to-time on the last business day of the quarter and typically close out that position on the following business day, settling the sale transaction on a net cash basis with the purchase, subsequent to quarter end. Apollo Investment may also utilize repurchase agreements or other balance sheet transactions, including drawing down on our Senior Secured Facility, as we deem appropriate. The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined. There were no cash equivalents held as of December 31, 2015 .
Debt
See Note 6 and Note 7 within the Notes to Financial Statements for information on the Company’s debt and public offerings.
The following table shows the contractual maturities of our debt obligations as of December 31, 2015 :
Payments due by Period
(in millions)*
Total
Less than 1 Year
1 to 3 Years
3 to 5 Years
More than 5 Years
Senior Secured Facility (1)
$
495.2

$
—

$
—

$
495.2

$
—

Senior Secured Notes (Series A)
29.0

29.0

—

—

—

Senior Secured Notes (Series B)
16.0

—

16.0

—

—

2042 Notes
150.0

—

—

—

150.0

2043 Notes
150.0

—

—

—

150.0

2025 Notes
344.6

—

—

—

344.6

Convertible Notes
200.0

200.0

—

—

—

Total Debt Obligations
$
1,384.7

$
229.0

$
16.0

$
495.2

$
644.6

____________________
*
Totals may not foot due to rounding.

66

(1)
As of December 31, 2015 , aggregate lender commitments under the Senior Secured Facility totaled $1.31 billion and $0.80 billion of unused capacity. As of December 31, 2015 , there were $16.3 million of letters of credit issued under the Senior Secured Facility that were not recorded as liabilities on the Company’s Statement of Assets and Liabilities.
On April 24, 2015, the Company amended and restated the Senior Secured Facility. The amendment increased the lenders’ commitments to $1.31 billion , extended the final maturity date to April 24, 2020, and allows the Company to seek additional commitments from new and existing lenders in the future, up to an aggregate facility size not to exceed $1.97 billion. In addition, the stated interest rate on the facility was changed from LIBOR plus 2.00% to a formula-based calculation, based on a minimum borrowing base, resulting in a stated interest rate of either LIBOR plus 1.75%, or LIBOR plus 2.00%. As of December 31, 2015 , the stated interest rate on the facility is LIBOR plus 2.00%. Commencing May 24, 2019, the Company is required to repay, in twelve consecutive monthly installments of equal size, the outstanding amount under the Senior Secured Facility as of April 24, 2019.
Shareholders’ Equity
On August 6, 2015, the Company adopted a plan for the purpose of repurchasing up to $50 million of its common stock in accordance with applicable rules specified in the Securities Exchange Act of 1934 (the “Exchange Act”) (the “August Repurchase Plan”). Since adopting the August Repurchase Plan, the Company has repurchased the full amount authorized by the board of directors under such plan.
On December 14, 2015, the board of directors approved a new plan to acquire up to an additional $50 million of its common stock in accordance with applicable rules specified in the Exchange Act (the “Current Repurchase Plan,” and together with the August Repurchase Plan, the “Repurchase Plans”). The Current Repurchase Plan is designed to allow the Company to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under applicable insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in an agreement with the Company to repurchase shares on the Company’s behalf in accordance with the terms of the Current Repurchase Plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the Current Repurchase Plan. Pursuant to the Current Repurchase Plan, the Company may from time to time repurchase a portion of its shares of common stock and the Company is hereby notifying shareholders of its intention as required by applicable securities laws.
On September 15, 2015 and December 16, 2015, the Company allocated $5 million and $10 million, respectively, to be repurchased under the August Repurchase Plan and the Current Repurchase Plan, respectively, in accordance with SEC Rule 10b5-1 (the “10b5-1 Repurchase Plans”).
Under the Repurchase Plans and 10b5-1 Repurchase Plans (the “Plans”), the Company repurchased 8,572,729 shares at a weighted average price per share of $6.12 , inclusive of commissions. This represents a discount of approximately 21.58% of the average net asset value per share for the nine months ended December 31, 2015 . Since the inception of the Plans to December 31, 2015 , the total dollar amount of shares repurchased is $52.4 million .
During the period from January 1, 2016 through February 8, 2016 , the Company repurchased 2,012,126 shares at a weighted average price per share of $4.97, inclusive of commissions, for a total cost of $10.0 million, leaving a maximum of $37.6 million available for future purchases under the Current Repurchase Plan.
Distributions
Distributions paid to shareholders for the three and nine months ended December 31, 2015 totaled $46.9 million ( $0.20 per share) and $141.5 million ( $0.60 per share), respectively. Distributions paid to shareholders for the three and nine months ended December 31, 2014 totaled $47.3 million ( $0.20 per share) and $142.0 million ( $0.60 per share), respectively. For income tax purposes, distributions made to shareholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to shareholders through December 31, 2015 may include return of capital, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ending March 31, 2016. Tax characteristics of all distributions will be reported to shareholders on Form 1099 after the end of the calendar year. Our quarterly distributions, if any, will be determined by our board of directors.
To maintain our RIC status, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

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We maintain an “opt out” dividend reinvestment plan for our common shareholders. As a result, if we declare a dividend, then shareholders’ cash dividends will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash dividends.
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, due to the asset coverage test applicable to us as a BDC, we may in the future be limited in our ability to make distributions. Also, our revolving credit facility may limit our ability to declare dividends if we default under certain provisions or fail to satisfy certain other conditions. If we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possible loss of the tax benefits available to us as a RIC. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual PIK, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may not be able to meet the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC.
With respect to the distributions to shareholders, income from origination, structuring, closing, commitment and other upfront fees associated with investments in portfolio companies is treated as taxable income and accordingly, distributed to shareholders.
PIK Income
For the three and nine months ended December 31, 2015 , PIK income totaled $10.2 million and $31.6 million , respectively, on total investment income of $94.3 million and $294.4 million , respectively. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to shareholders annually in the form of dividends, even though the Company has not yet collected the cash. See Note 5 within the Notes to the Financial Statements for more information on the Company’s PIK income.
Related Party Transactions
See Note 3 within the Notes to the Financial Statements for information on the Company’s related party transactions.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in interest rates. During the three and nine months ended December 31, 2015 , many of the loans in our portfolio had floating interest rates. These loans are usually based on floating LIBOR and typically have durations of one to twelve months after which they reset to current market interest rates. The Company also has a Senior Secured Facility that is based on floating LIBOR rates.
The following table shows the approximate annual impact on net investment income of base rate changes in interest rates (considering interest rate flows for variable rate instruments) to our loan portfolio and outstanding debt as of December 31, 2015 , assuming no changes in our investment and borrowing structure:
Basis Point Change
Net Investment Income
Net Investment Income Per Share
Up 400 basis points
$
20.8
million
$
0.091

Up 300 basis points
$
14.0
million
$
0.062

Up 200 basis points
$
7.2
million
$
0.032

Up 100 basis points
$
0.5
million
$
0.002

We may hedge against interest rate fluctuations from time-to-time by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act and applicable commodities laws. 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.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of December 31, 2015 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b) Changes in Internal Controls Over Financial Reporting
Management has not identified any change in the Company’s internal control over financing reporting that occurred during the third fiscal quarter of 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While we do not expect that the resolution of these matters if they arise would materially affect our business, financial condition or results of operations, resolution will be subject to various uncertainties and could result in the expenditure of significant financial and managerial resources.
On May 20, 2013, the Company was named as a defendant in a complaint by the bankruptcy trustee of DSI Renal Holdings and related companies (“DSI”). The complaint alleges, among other things, that the Company participated in a “fraudulent conveyance” involving a restructuring and subsequent sale of DSI in 2010 and 2011. The complaint seeks, jointly and severally from all defendants, (1) damages of approximately $425 million, of which the Company’s share would be approximately $41 million, and the return of 9,000 shares of common stock of DSI obtained by the Company in the restructuring and sale and (2) punitive damages. At this point in time, the Company is unable to assess whether it may have any liability in this action. The Company has not made any determination that this action is or may be material to the Company and intends to vigorously defend itself. The Company has filed a motion to dismiss this litigation.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2015, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities
On August 6, 2015, the Company adopted a plan for the purpose of repurchasing up to $50 million of its common stock in accordance with applicable rules specified in the Securities Exchange Act of 1934 (the “Exchange Act”) (the “August Repurchase Plan”). Since adopting the August Repurchase Plan, the Company has repurchased the full amount authorized by the board of directors under such plan.
On December 14, 2015, the board of directors approved a new plan to acquire up to an additional $50 million of its common stock in accordance with applicable rules specified in the Exchange Act (the “Current Repurchase Plan,” and together with the August Repurchase Plan, the “Repurchase Plans”). The Current Repurchase Plan is designed to allow the Company to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under applicable insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in an agreement with the Company to repurchase shares on the Company’s behalf in accordance with the terms of the Current Repurchase Plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the Current Repurchase Plan. Pursuant to the Current Repurchase Plan, the Company may from time to time repurchase a portion of its shares of common stock and the Company is hereby notifying shareholders of its intention as required by applicable securities laws.
On September 15, 2015 and December 16, 2015, the Company allocated $5 million and $10 million, respectively, to be repurchased under the August Repurchase Plan and the Current Repurchase Plan, respectively, in accordance with SEC Rule 10b5-1 (the “10b5-1 Repurchase Plans”).
Under the Repurchase Plans and 10b5-1 Repurchase Plans (the “Plans”), the Company repurchased 8,572,729 shares at a weighted average price per share of $6.12 , inclusive of commissions. This represents a discount of approximately 21.58% of the average net asset value per share for the nine months ended December 31, 2015 . Since the inception of the Plans to December 31, 2015 , the total dollar amount of shares repurchased is $52.4 million .

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The following table presents information with respect to the Company’s purchases of its common stock during the nine months ended December 31, 2015 :
Period*
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans
Maximum Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans
August 12, 2015 through August 31, 2015
1,530,000

$
6.57

1,530,000

$
40.0
million
September 1, 2015 through September 25, 2015
1,810,400

$
6.15

1,810,400

$
28.8
million
November 6, 2015 through November 30, 2015
3,350,000

$
6.03

3,350,000

$
8.6
million
December 1, 2015 through December 16, 2015
1,882,329

$
5.86

1,882,329

$
47.6
million
Total
8,572,729

$
6.12

8,572,729

* Represents actual transaction dates within each month that there were share repurchase transactions.
During the period from January 1, 2016 through February 8, 2016 , the Company repurchased 2,012,126 shares at a weighted average price per share of $4.97, inclusive of commissions, for a total cost of $10.0 million, leaving a maximum of $37.6 million available for future purchases under the Current Repurchase Plan.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
(a)    Exhibits
3.1
Articles of Amendment and Restatement, as amended (1)
3.2
Fourth Amended and Restated Bylaws (2)
10.1
Amended and Restated Senior Secured Revolving Credit Agreement, dated as of April 24, 2015, between Apollo Investment Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (3)
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 and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)*
_________________
*
Filed herewith.
(1)
Incorporated by reference from the Registrant’s post-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2, filed on August 14, 2006.
(2)
Incorporated by reference from the Registrant’s Form 10-K, filed on May 19, 2015.
(3)
Incorporated by reference from the Registrant’s Form 8-K, filed on April 30, 2015.

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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 February 9, 2016 .
APOLLO INVESTMENT CORPORATION
By:
/s/ JAMES C. ZELTER
James C. Zelter
Chief Executive Officer
By:
/s/ GREGORY W. HUNT
Gregory W. Hunt
Chief Financial Officer and Treasurer

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