UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2017~~2018 OR



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-35107

APOLLO GLOBAL MANAGEMENT, LLC

(Exact name of Registrant as specified in its charter)



Delaware		20-8880053
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9 West 57th Street, 43rd Floor

New York, New York 10019

(Address of principal executive offices) (Zip Code)

(212) 515-3200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 x 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~~“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	¨
		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
			¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of May ~~4, 2017~~3, 2018 there were ~~191,001,096~~201,550,654 Class A shares and 1 Class B share outstanding.



	TABLE OF CONTENTS
		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	8

	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Financial Condition (Unaudited) as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017	8

	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, ~~2017~~2018 and ~~2016~~2017	9

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, ~~2017~~2018 and ~~2016~~2017	10

	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, ~~2017~~2018 and ~~2016~~2017	11

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, ~~2017~~2018 and ~~2016~~2017	12

	Notes to Condensed Consolidated Financial Statements (Unaudited)	13

ITEM 1A.	UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION	6058

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6260

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	~~109~~106

ITEM 4.	CONTROLS AND PROCEDURES	~~111~~108

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	~~112~~109

ITEM 1A.	RISK FACTORS	~~112~~109

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	~~112~~109

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	~~113~~110

ITEM 4.	MINE SAFETY DISCLOSURES	~~113~~110

ITEM 5.	OTHER INFORMATION	~~113~~110

ITEM 6.	EXHIBITS	~~114~~111

SIGNATURES

Forward-Looking Statements

This quarterly report may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to, discussions related to Apollo’s expectations regarding the performance of its business, liquidity and capital resources and the other non-historical statements in the discussion and analysis. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this quarterly report, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions, including risks relating to our dependence on certain key personnel, our ability to raise new credit, private equity, ~~credit~~ or real ~~estate~~assets funds, market conditions generally, our ability to manage our growth, fund performance, changes in our regulatory environment and tax status, the variability of our revenues, net income and cash flow, our use of leverage to finance our businesses and investments by our funds and litigation risks, among others. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in the Company’s

Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on February ~~13, 2017~~12, 2018 (the ~~“2016~~“2017 Annual Report”); as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other filings. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Terms Used in This Report

In this quarterly report, references to “Apollo,” “we,” “us,” “our” and the “Company” refer collectively to Apollo Global Management, LLC, a Delaware limited liability company, and its subsidiaries, including the Apollo Operating Group and all of its subsidiaries, or as the context may otherwise require;

“AMH” refers to Apollo Management Holdings, L.P., a Delaware limited partnership, that is an indirect subsidiary of Apollo Global Management, LLC;

“Apollo funds”, “our funds” and references to the “funds” we manage, refer to the funds (including the parallel funds and alternative investment vehicles of such funds), partnerships, accounts, including strategic investment accounts or “SIAs,” alternative asset companies and other entities for which subsidiaries of the Apollo Operating Group provide investment management or advisory services;

“Apollo Operating Group” refers to (i) the limited partnerships through which our Managing Partners currently operate our businesses and (ii) one or more limited partnerships formed for the purpose of, among other activities, holding certain of our gains or losses on our principal investments in the funds, which we refer to as our “principal investments”;

“Assets Under Management”, or “AUM”, refers to the assets ~~we manage or advise for~~of the funds, partnerships and accounts to which we provide investment management, advisory, or ~~advisory~~certain other investment-related services, including, without limitation, capital that such funds, partnerships and accounts have the right to call from investors pursuant to capital commitments. Our AUM equals the sum of:


(i)	the fair value of the investments of the private equity funds, partnerships and accounts we manage or advise plus the capital that such funds, partnerships and accounts are entitled to call from investors pursuant to capital commitments;

(ii)

the net asset value, or “NAV,” of the credit funds, partnerships and accounts for which we provide investment management or advisory services, other than certain collateralized loan obligations (“CLOs”) and collateralized debt obligations (“CDOs”), which have a fee-generating basis other than the mark-to-market value of the underlying assets, plus used or available leverage and/or capital commitments;


(iii)	the gross asset value or net asset value of the real ~~estate~~assets funds, partnerships and accounts we manage, and the structured portfolio company investments of the funds, partnerships and accounts we manage or advise, which includes the leverage used by such structured portfolio company investments;


(iv)	the incremental value associated with the reinsurance investments of the portfolio company assets we manage or advise; and

(v)

the fair value of any other assets that we manage or advise for the funds, partnerships and accounts to which we provide investment management, advisory, or ~~advisory~~certain other investment-related services, plus unused credit facilities, including capital commitments to such funds, partnerships and accounts for investments that may require pre-qualification or other conditions before investment plus any other capital commitments to such funds, partnerships and accounts available for investment that are not otherwise included in the clauses above.

Our AUM measure includes Assets Under Management for which we charge either nonominal or ~~nominal~~zero fees. ~~In addition our~~Our AUM measure also includes ~~certain~~ assets for which we do not have investment ~~discretion.~~discretion, including certain assets for which we earn only investment-related service fees, rather than management or advisory fees. Our definition of AUM is not based on any definition of Assets Under Management contained in our operating agreement or in any of our Apollo fund management agreements. We consider multiple factors for determining what should be included in our definition of AUM. Such factors include but are not limited to (1) our ability to influence the investment decisions for existing and available assets; (2) our ability to generate income from the underlying assets in our funds; and (3) the AUM measures that we use internally or believe are used by other investment managers. Given the differences in the investment strategies and structures among other alternative investment managers, our calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may not be directly comparable to similar measures presented by other investment managers. Our calculation also differs from the manner in which our affiliates registered with the SEC report “Regulatory Assets Under Management” on Form ADV and Form PF in various ways;

“Fee-Generating AUM” consists of assets ~~we manage or advise for~~of the funds, partnerships and accounts to which we provide investment management, advisory, or ~~advisory~~certain other investment-related services and on which we earn management fees, monitoring fees or other investment-related fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds, partnerships and ~~accounts we manage or advise.~~accounts. Management fees are normally based on “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted cost of all unrealized portfolio investments,” “capital commitments,” “adjusted assets,” “stockholders’ equity,” “invested capital” or “capital contributions,” each as defined in the applicable management agreement. Monitoring fees, also referred to as advisory fees, with respect to the structured portfolio company investments of the funds, partnerships and accounts we manage or advise, are generally based on the total value of such structured portfolio company investments, which normally includes leverage, less any portion of such total value that is already considered in Fee-Generating AUM;

“Non-Fee-Generating AUM” refers to AUM that does not produce management fees or monitoring fees. This measure generally includes the following:


(i)	fair value above invested capital for those funds that earn management fees based on invested capital;


(ii)	net asset values related to general partner and co-investment interests;


(iii)	unused credit facilities;


(iv)	available commitments on those funds that generate management fees on invested capital;


(v)	structured portfolio company investments that do not generate monitoring fees; and


(vi)	the difference between gross asset and net asset value for those funds that earn management fees based on net asset value.

“~~Carry-Eligible~~Performance Fee-Eligible AUM” refers to the AUM that may eventually produce ~~carried interest income.~~performance fees. All funds for which we are entitled to receive a ~~carried interest income~~performance fee allocation or incentive fee are included in ~~Carry-Eligible~~Performance Fee-Eligible AUM, which consists of the following:

(i)

“~~Carry-Generating~~Performance Fee-Generating AUM”, which refers to invested capital of the funds, partnerships and accounts we manage, advise, or ~~advise,~~to which we provide certain other investment-related services, that is currently above its hurdle rate or preferred return, and profit of such funds, partnerships and accounts is being allocated to, or earned by, the general partner in accordance with the applicable limited partnership agreements or other governing agreements;


(ii)	“AUM Not Currently Generating ~~Carry”~~Performance Fees”, which refers to invested capital of the funds, partnerships and accounts we manage, advise, or ~~advise~~to which we provide certain other investment-related services, that is currently below its hurdle rate or preferred return; and

(iii)

“Uninvested ~~Carry-Eligible~~Performance Fee-Eligible AUM”, which refers to capital of the funds, partnerships and accounts we manage, advise, or ~~advise~~to which we provide certain other investment-related services, that is available for investment or reinvestment subject to the provisions of applicable limited partnership agreements or other governing agreements, which capital is not currently part of the NAV or fair value of investments that may eventually produce ~~carried interest income~~performance fees allocable to, or earned by, the general partner.

“AUM with Future Management Fee Potential” refers to the committed uninvested capital portion of total AUM not

currently earning management fees. The amount depends on the specific terms and conditions of each fund;

We use AUM as a performance measure of our funds’ investment activities, as well as to monitor fund size in relation to professional resource and infrastructure needs. Non-Fee-Generating AUM includes assets on which we could earn ~~carried interest income;~~performance fees;

“Advisory” refers to certain assets advised by Apollo Asset Management Europe PC LLP, a wholly-owned subsidiary of Apollo Asset Management Europe LLP (collectively, “AAME”). The AAME entities are subsidiaries of Apollo. Until AAME receives full authorization by the UKU.K. Financial Conduct Authority (“FCA”), references to AAME in this report mean AAME and Apollo Management International LLP, an existing FCA authorized and regulated subsidiary of Apollo in the United Kingdom;

“capital deployed” or “deployment” is the aggregate amount of capital that has been invested during a given period (which may, in certain cases, include leverage) by (i) our drawdown funds, (ii) SIAs that have a defined maturity date and (iii) funds and SIAs in our real estate debt strategy;

“~~carried interest”~~performance allocations”, ~~“carried interest income”~~“performance fees”, “performance revenues” and “incentive ~~income”~~fees” refer to interests granted to Apollo by an Apollo fund that entitle Apollo to receive allocations, distributions or fees which are based on the performance of such fund or its underlying investments;

“Contributing Partners” refer to those of our partners and their related parties (other than our Managing Partners) who indirectly beneficially own (through Holdings) Apollo Operating Group units;

“drawdown” refers to commitment-based funds and certain SIAs in which investors make a commitment to provide capital at the formation of such funds and SIAs and deliver capital when called as investment opportunities become available. It includes assets of Athene Holding Ltd. (“Athene Holding”) and its subsidiaries (collectively “Athene”) managed by Athene Asset Management ~~L.P.~~LLC (“Athene Asset Management” or “AAM”) that are invested in commitment-based funds;

“gross IRR” of a private equity fund represents the cumulative investment-related cash flows (i) for a given investment for the fund or funds which made such investment, and (ii) for a given fund, in the relevant fund itself (and not any one investor in the fund), in each case, on the basis of the actual timing of investment inflows and outflows (for unrealized investments assuming disposition on March 31, 2017 or other date specified) aggregated on a gross basis quarterly, and the return is annualized and compounded before management fees, carried interest and certain other fund expenses (including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to the fund’s investors. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor;

“gross IRR” of a credit fund represents the annualized return of a fund based on the actual timing of all cumulative fund cash flows before management fees, ~~carried interest income~~performance fees allocated to the general partner and certain other ~~fund~~ expenses. Calculations may include certain investors that do not pay fees. The terminal value is the net asset value as of the reporting date. Non-U.S. dollar denominated (“USD”) fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor;

“gross IRR” of a private equity fund represents the cumulative investment-related cash flows (i) for a given investment for the fund or funds which made such investment, and (ii) for a given fund, in the relevant fund itself (and not any one investor in the fund), in each case, on the basis of the actual timing of investment inflows and outflows (for unrealized investments assuming disposition on March 31, 2018 or other date specified) aggregated on a gross basis quarterly, and the return is annualized and compounded before management fees, performance fees and certain other expenses (including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to the fund’s investors. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor;

“gross IRR” of a real ~~estate~~assets fund represents the cumulative investment-related cash flows in the fund itself (and not any one investor in the fund), on the basis of the actual timing of cash inflows and outflows (for unrealized investments assuming disposition on March 31, ~~2017~~2018 or other date specified) starting on the date that each investment closes, and the return is annualized and compounded before management fees, ~~carried interest,~~performance fees, and certain other ~~fund~~ expenses (including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to the fund’s investors. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor;

“gross return” of a credit or real ~~estate~~assets fund is the monthly or quarterly time-weighted return that is equal to the percentage change in the value of a fund’s portfolio, adjusted for all contributions and withdrawals (cash flows) before the effects of management fees, incentive fees allocated to the general partner, or other fees and expenses. Returns of Athene sub-advised portfolios and CLOs represent the gross returns on invested assets, which exclude cash. Returns over multiple periods are calculated by geometrically linking each period’s return over time;

“Holdings” means AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership through which our Managing Partners and Contributing Partners indirectly beneficially own their interests in the Apollo Operating Group units;

“inflows” represents (i) at the individual segment level, subscriptions, commitments, and other increases in available capital, such as acquisitions or leverage, net of inter-segment transfers, and (ii) on an aggregate basis, the sum of inflows across the private equity, credit and real ~~estate~~assets segments;

“liquid/performing” includes CLOs and other performing credit vehicles, hedge fund style credit funds, structured credit funds and SIAs, as well as sub-advised managed accounts owned by or related to Athene. Certain commitment-based SIAs are included as the underlying assets are liquid;

“Managing Partners” refer to Messrs. Leon Black, Joshua Harris and Marc Rowan collectively and, when used in reference to holdings of interests in Apollo or Holdings, includes certain related parties of such individuals;

“net IRR” of a credit fund represents the annualized return of a fund after management fees, performance fees allocated to the general partner and certain other expenses, calculated on investors that pay such fees. The terminal value is the net asset value as of the reporting date. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor;

“net IRR” of a private equity fund means the gross IRR applicable to a fund, including returns for related parties which may not pay fees or ~~carried interest,~~performance fees, net of management fees, certain ~~fund~~ expenses (including interest incurred or earned by the fund itself) and realized ~~carried interest~~performance fees all offset to the extent of interest income, and measures returns at the fund level on amounts that, if distributed, would be paid to investors of the fund. To the extent that a fund exceeds all requirements detailed within the applicable fund agreement, the estimated unrealized value is adjusted such that a percentage of up to 20.0% of the unrealized gain is allocated to the general partner of such fund, thereby reducing the balance attributable to fund investors. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor;

“net IRR” of a credit fund represents the annualized return of a fund after management fees, carried interest income allocated to the general partner and certain other fund expenses, calculated on investors that pay such fees. The terminal value is the net asset value as of the reporting date. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor;

~~“net IRR” of a~~ real ~~estate~~assets fund represents the cumulative cash flows in the fund (and not any one investor in the fund), on the basis of the actual timing of cash inflows received from and outflows paid to investors of the fund (assuming the ending net asset value as of March 31, ~~2017~~2018 or other date specified is paid to investors), excluding certain non-fee and ~~non-carry~~non-performance fee bearing parties, and the return is annualized and compounded after management fees, ~~carried interest,~~performance fees, and certain other expenses (including interest incurred by the fund itself) and measures the returns to investors of the fund as a whole. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor;

“net return” of a credit or real ~~estate~~assets fund represents the gross return after management fees, incentive fees allocated to the general partner, or other fees and expenses. Returns of Athene sub-advised portfolios and CLOs represent the gross or net returns on invested assets, which exclude cash. Returns over multiple periods are calculated by geometrically linking each period’s return over time;

“our manager” means AGM Management, LLC, a Delaware limited liability company that is controlled by our Managing Partners;

“permanent capital vehicles” refers to (a) assets that are owned by or related to Athene (“ATH”) or Athora Holding Ltd. (“Athora”), (b) assets that are owned by or related to MidCap FinCo Designated Activity Company (“MidCap”) and managed by Apollo, (c) assets of publicly traded vehicles managed by Apollo such as Apollo Investment Corporation (“AINV”), Apollo Commercial Real Estate Finance, Inc. (“ARI”), Apollo Tactical Income Fund Inc. (“AIF”), and Apollo Senior Floating Rate Fund Inc. (“AFT”), in each case that do not have redemption provisions or a requirement to return capital to investors upon exiting the investments made with such capital, except as required by applicable law and (d) a non-traded business development company ~~sub-advised by Apollo.~~from which Apollo earns certain investment-related service fees. The investment management agreements of AINV, AIF and AFT have one year terms, are reviewed annually and remain in effect only if approved by the boards of directors of such companies or by the affirmative vote of the holders of a majority of the outstanding voting shares of such companies, including in either case, approval by a majority of the directors who are not “interested persons” as defined in the Investment Company Act of 1940. In addition, the investment

management agreements of AINV, AIF and AFT may be terminated in certain circumstances upon 60 days’ written notice. The investment management agreement of ARI has a one year term and is reviewed annually by ARI’s board of directors and may be terminated under certain circumstances by an affirmative vote of at least two-thirds of ARI’s independent directors. The investment management or advisory arrangements between MidCap and Apollo, ~~and~~as well as between Athene and Apollo, may also be terminated under certain circumstances. The agreement pursuant to which Apollo earns certain investment-related service fees from a non-traded business development company may be terminated under certain limited circumstances;

“private equity fund appreciation (depreciation)” refers to gain (loss) and income for the traditional private equity funds (as defined below), Apollo Natural Resources Partners, L.P. (“ANRP I”), Apollo Natural Resources Partners II, L.P. (“ANRP II”), Apollo Special Situations Fund, L.P. and AION Capital Partners Limited (“AION”) for the periods presented on a total return basis before giving effect to fees and expenses. The performance percentage is determined by dividing (a) the change in the fair value of

investments over the period presented, minus the change in invested capital over the period presented, plus the realized value for the period presented, by (b) the beginning unrealized value for the period presented plus the change in invested capital for the period presented. Returns over multiple periods are calculated by geometrically linking each period’s return over time;

“private equity investments” refer to (i) direct or indirect investments in existing and future private equity funds managed or sponsored by Apollo, (ii) direct or indirect co-investments with existing and future private equity funds managed or sponsored by Apollo, (iii) direct or indirect investments in securities which are not immediately capable of resale in a public market that Apollo identifies but does not pursue through its private equity funds, and (iv) investments of the type described in (i) through (iii) above made by Apollo funds;

“Realized Value” refers to all cash investment proceeds received by the relevant Apollo fund, including interest and dividends, but does not give effect to management fees, expenses, incentive compensation or ~~carried interest~~performance fees to be paid by such Apollo fund;

“Remaining Cost” represents the initial investment of the ~~general partner and limited partner investors~~fund in a ~~fund,~~portfolio investment, reduced for any return of capital distributed to date ~~excluding management fees, expenses, and any accrued preferred return;~~on such portfolio investment;

“Strategic Investor” refers to the California Public Employees’ Retirement System, or “CalPERS”;

“Total Invested Capital” refers to the aggregate cash invested by the relevant Apollo fund and includes capitalized costs relating to investment activities, if any, but does not give effect to cash pending investment or available for reserves;

“Total Value” represents the sum of the total Realized Value and Unrealized Value of investments;

“traditional private equity funds” refers to Apollo Investment Fund I, L.P. (“Fund I”), AIF II, L.P. (“Fund II”), a mirrored investment account established to mirror Fund I and Fund II for investments in debt securities (“MIA”), Apollo Investment Fund III, L.P. (together with its parallel funds, “Fund III”), Apollo Investment Fund IV, L.P. (together with its parallel fund, “Fund IV”), Apollo Investment Fund V, L.P. (together with its parallel funds and alternative investment vehicles, “Fund V”), Apollo Investment Fund VI, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VI”), Apollo Investment Fund VII, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VII”) ~~and~~, Apollo Investment Fund VIII, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VIII”) and Apollo Investment Fund IX, L.P. (together with its parallel funds and alternative investment vehicles, “Fund IX”);

“Unrealized Value” refers to the fair value consistent with valuations determined in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), for investments not yet realized and may include pay in kind, accrued interest and dividends receivable, if ~~any.~~any, and before the effect of certain taxes. In addition, amounts include committed and funded amounts for certain investments; and

“Vintage Year” refers to the year in which a fund’s final capital raise ~~occurred.~~

occurred, or, for certain funds, the year in which a fund’s investment period commences pursuant to its governing agreements.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

AS OF MARCH 31, ~~2017~~2018 AND DECEMBER 31, ~~2016~~2017

(dollars in thousands, except share data)


	As of March 31, 2017			As of December 31, 2016			As of March 31, 2018			As of December 31, 2017
Assets:
Cash and cash equivalents	$	1,084,218		$	806,329		$	988,284		$	751,252
Cash and cash equivalents held at consolidated funds	7,880			7,335			3			21
Restricted cash	4,946			4,680			3,902			3,875
Investments	1,575,687			1,494,744
U.S. Treasury securities, at fair value							225,510			364,649
Investments (includes performance allocations of $1,396,075 and $1,828,930 as of March 31, 2018 and December 31, 2017, respectively)							3,198,685			3,559,834
Assets of consolidated variable interest entities:
Cash and cash equivalents	60,086			41,318			74,798			92,912
Investments, at fair value	991,053			913,827			1,386,068			1,196,190
Other assets	55,268			46,666			39,006			39,484
Carried interest receivable	1,420,860			1,257,105
Incentive fees receivable							7,891			43,176
Due from related parties	249,881			254,853			328,902			262,588
Deferred tax assets	561,524			572,263
Deferred tax assets, net							380,565			337,638
Other assets	140,302			118,860			208,170			231,757
Goodwill	88,852			88,852			88,852			88,852
Intangible assets, net	21,006			22,721			17,861			18,842
Total Assets	$	6,261,563		$	5,629,553		$	6,948,497		$	6,991,070
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	72,170		$	57,465		$	81,548		$	68,873
Accrued compensation and benefits	54,257			52,754			60,489			62,474
Deferred revenue	171,267			174,893			145,282			128,146
Due to related parties	598,975			638,126			481,484			428,013
Profit sharing payable	634,668			550,148			644,883			752,276
Debt	1,353,572			1,352,447			1,361,711			1,362,402
Liabilities of consolidated variable interest entities:
Debt, at fair value	797,328			786,545			1,026,012			1,002,063
Other liabilities	127,680			68,034			100,135			115,658
Other liabilities	103,855			81,613			140,197			173,369
Total Liabilities	3,913,772			3,762,025			4,041,741			4,093,274
Commitments and Contingencies (see note 14)
Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Preferred shares (11,000,000 shares issued and outstanding as of March 31, 2017)	264,683			—
Class A shares, no par value, unlimited shares authorized, 187,644,092 and 185,460,294 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	—			—
Class B shares, no par value, unlimited shares authorized, 1 share issued and outstanding at March 31, 2017 and December 31, 2016	—			—
Series A Preferred shares, 11,000,000 and 11,000,000 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively							264,398			264,398
Series B Preferred shares, 12,000,000 and 0 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively							289,815			—
Class A shares, no par value, unlimited shares authorized, 201,550,654 and 195,267,669 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively							—			—
Class B shares, no par value, unlimited shares authorized, 1 share issued and outstanding at March 31, 2018 and December 31, 2017							—			—
Additional paid in capital	1,763,146			1,830,025			1,483,244			1,579,797
Accumulated deficit	(838,686		)	(986,186		)	(481,772		)	(379,460		)
Accumulated other comprehensive loss	(11,803		)	(8,723		)	(815		)	(1,809		)
Total Apollo Global Management, LLC shareholders’ equity	1,177,340			835,116			1,554,870			1,462,926
Non-Controlling Interests in consolidated entities	120,891			90,063			290,857			140,086
Non-Controlling Interests in Apollo Operating Group	1,049,560			942,349			1,061,029			1,294,784
Total Shareholders’ Equity	2,347,791			1,867,528			2,906,756			2,897,796
Total Liabilities and Shareholders’ Equity	$	6,261,563		$	5,629,553		$	6,948,497		$	6,991,070

See accompanying notes to condensed consolidated financial statements.

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2017~~2018 AND ~~2016~~2017

(dollars in thousands, except share data)


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Revenues:
Management fees from related parties	$	269,543		$	233,795
Advisory and transaction fees from related parties, net	15,067			7,999
Carried interest income (loss) from related parties	358,941			(120,968		)
Management fees							$	286,726		$	269,543
Advisory and transaction fees, net							13,551			15,067
Investment income (loss):
Performance allocations							(124,165		)	352,593
Principal investment income (loss)							(12,994		)	38,553
Total Investment Income (Loss)							(137,159		)	391,146
Incentive fees							3,785			6,348
Total Revenues	643,551			120,826			166,903			682,104
Expenses:
Compensation and benefits:
Salary, bonus and benefits	101,613			97,234			115,826			101,613
Equity-based compensation	23,107			14,002			35,525			23,107
Profit sharing expense	144,324			(37,605		)	(12,277		)	144,324
Total Compensation and Benefits	269,044			73,631			139,074			269,044
Interest expense	12,999			7,873			13,797			12,999
General, administrative and other	62,040			58,631			61,677			62,040
Placement fees	1,905			1,764			327			1,905
Total Expenses	345,988			141,899			214,875			345,988
Other Income (Loss):
Net gains (losses) from investment activities	34,517			(56,469		)	(67,133		)	34,517
Net gains from investment activities of consolidated variable interest entities	4,108			1,319			6,532			4,108
Income (loss) from equity method investments	38,553			(3,817		)
Interest income	803			585			3,559			803
Other income (loss), net	18,647			(253		)
Other income, net							4,246			18,647
Total Other Income (Loss)	96,628			(58,635		)	(52,796		)	58,075
Income (loss) before income tax (provision) benefit	394,191			(79,708		)
Income tax (provision) benefit	(39,161		)	5,147
Income (loss) before income tax provision							(100,768		)	394,191
Income tax provision							(8,580		)	(39,161		)
Net Income (Loss)	355,030			(74,561		)	(109,348		)	355,030
Net (income) loss attributable to Non-Controlling Interests	(209,834		)	41,733			51,086			(209,834		)
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)	(58,262		)	145,196
Net income attributable to Series A Preferred Shareholders							(4,383		)	—
Net Income (Loss) Attributable to Apollo Global Management, LLC Class A Shareholders							$	(62,645	)	$	145,196
Distributions Declared per Class A Share	$	0.45		$	0.28		$	0.66		$	0.45
Net Income (Loss) Per Class A Share:
Net Income (Loss) Available to Class A Share – Basic	$	0.75		$	(0.19	)	$	(0.34	)	$	0.75
Net Income (Loss) Available to Class A Share – Diluted	$	0.75		$	(0.19	)	$	(0.34	)	$	0.75
Weighted Average Number of Class A Shares Outstanding – Basic	186,537,367			182,665,330			198,432,603			186,537,367
Weighted Average Number of Class A Shares Outstanding – Diluted	186,537,367			182,665,330			198,432,603			186,537,367

See accompanying notes to condensed consolidated financial statements.

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2017~~2018 AND ~~2016~~2017

(dollars in thousands, except share data)


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Net Income (Loss)	$	355,030		$	(74,561	)	$	(109,348	)	$	355,030
Other Comprehensive Income (Loss), net of tax:
Allocation of currency translation adjustments (net of taxes of $0.1 million and $0.6 million for Apollo Global Management, LLC for the three months ended March 31, 2017 and 2016, respectively, and $0.0 million for Non-Controlling Interests in Apollo Operating Group for the three months ended March 31, 2017 and 2016)	(2,279		)	6,101
Currency translation adjustments, net of tax							5,020			(2,279		)
Net gain from change in fair value of cash flow hedge instruments	26			26			27			26
Net income (loss) on available-for-sale securities	48			(951		)	(41		)	48
Total Other Comprehensive Income (Loss), net of tax	(2,205		)	5,176			5,006			(2,205		)
Comprehensive Income (Loss)	352,825			(69,385		)	(104,342		)	352,825
Comprehensive (Income) Loss attributable to Non-Controlling Interests	(210,709		)	39,099			47,074			(210,709		)
Comprehensive Income (Loss) Attributable to Apollo Global Management, LLC	$	142,116		$	(30,286	)	$	(57,268	)	$	142,116

See accompanying notes to condensed consolidated financial statements.

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2017~~2018 AND ~~2016~~2017

(dollars in thousands, except share data)


	Apollo Global Management, LLC Shareholders																										Apollo Global Management, LLC Shareholders
	Class A Shares		Class B Shares	Preferred Shares		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Apollo Global Management, LLC Shareholders’ Equity			Non- Controlling Interests in Consolidated Entities			Non-Controlling Interests in Apollo Operating Group			Total Shareholders’ Equity			Class A Shares		Class B Shares	Series A Preferred Shares			Series B Preferred Shares		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Apollo Global Management, LLC Shareholders’ Equity			Non- Controlling Interests in Consolidated Entities			Non- Controlling Interests in Apollo Operating Group			Total Shareholders’ Equity
Balance at January 1, 2016	181,078,937		1	$	—	$	2,005,509		$	(1,348,384	)	$	(7,620	)	$	649,505		$	86,561		$	652,915		$	1,388,981
Dilution impact of issuance of Class A shares	—		—	—		190			—			—			190			—			—			190
Capital increase related to equity-based compensation	—		—	—		18,467			—			—			18,467			—			—			18,467
Capital contributions	—		—	—		—			—			—			—			33			—			33
Distributions	—		—	—		(53,555		)	—			—			(53,555		)	(2,249		)	(60,527		)	(116,331		)
Payments related to issuances of Class A shares for equity-based awards	3,276,701		—	—		—			(22,042		)	—			(22,042		)	—			—			(22,042		)
Repurchase of Class A Shares	(954,447	)	—	—		(12,919		)	—			—			(12,919		)	—			—			(12,919		)
Net income (loss)	—		—	—		—			(32,828		)	—			(32,828		)	2,035			(43,768		)	(74,561		)
Currency translation adjustments	—		—	—		—			—			3,481			3,481			2,620			—			6,101
Net gain from change in fair value of cash flow hedge instruments	—		—	—		—			—			12			12			—			14			26
Net loss on available-for-sale securities	—		—	—		—			—			(951		)	(951		)	—			—			(951		)
Balance at March 31, 2016	183,401,191		1	$	—	$	1,957,692		$	(1,403,254	)	$	(5,078	)	$	549,360		$	89,000		$	548,634		$	1,186,994
Balance at January 1, 2017	185,460,294		1	$	—	$	1,830,025		$	(986,186	)	$	(8,723	)	$	835,116		$	90,063		$	942,349		$	1,867,528		185,460,294		1	$	—		$	—	$	1,830,025		$	(986,186	)	$	(8,723	)	$	835,116		$	90,063		$	942,349		$	1,867,528
Dilution impact of issuance of Class A shares	—		—	—		(23		)	—			—			(23		)	—			—			(23		)	—		—	—			—		(23		)	—			—			(23		)	—			—			(23		)
Equity issued in connection with Preferred shares offering	—		—	264,683		—			—			—			264,683			—			—			264,683			—		—	264,683			—		—			—			—			264,683			—			—			264,683
Adoption of new accounting guidance	—		—	—		—			22,901			—			22,901			—			—			22,901			—		—	—			—		—			22,901			—			22,901			—			—			22,901
Capital increase related to equity-based compensation	—		—	—		17,066			—			—			17,066			—			—			17,066			—		—	—			—		17,066			—			—			17,066			—			—			17,066
Capital contributions	—		—	—		—			—			—			—			28,701			—			28,701			—		—	—			—		—			—			—			—			28,701			—			28,701
Distributions	—		—	—		(87,074		)	—			—			(87,074		)	(2,124		)	(96,956		)	(186,154		)	—		—	—			—		(87,074		)	—			—			(87,074		)	(2,124		)	(96,956		)	(186,154		)
Payments related to issuances of Class A shares for equity-based awards	1,683,798		—	—		—			(20,597		)	—			(20,597		)	—			—			(20,597		)	1,683,798		—	—			—		—			(20,597		)	—			(20,597		)	—			—			(20,597		)
Exchange of AOG Units for Class A shares	500,000		—	—		3,152			—			—			3,152			—			(2,291		)	861			500,000		—	—			—		3,152			—			—			3,152			—			(2,291		)	861
Net income	—		—	—		—			145,196			—			145,196			3,384			206,450			355,030			—		—	—			—		—			145,196			—			145,196			3,384			206,450			355,030
Currency translation adjustments	—		—	—		—			—			(3,140		)	(3,140		)	867			(6		)	(2,279		)
Currency translation adjustments, net of tax																											—		—	—			—		—			—			(3,140		)	(3,140		)	867			(6		)	(2,279		)
Net gain from change in fair value of cash flow hedge instruments	—		—	—		—			—			12			12			—			14			26			—		—	—			—		—			—			12			12			—			14			26
Net income on available-for-sale securities	—		—	—		—			—			48			48			—			—			48			—		—	—			—		—			—			48			48			—			—			48
Balance at March 31, 2017	187,644,092		1	$	264,683	$	1,763,146		$	(838,686	)	$	(11,803	)	$	1,177,340		$	120,891		$	1,049,560		$	2,347,791		187,644,092		1	$	264,683		$	—	$	1,763,146		$	(838,686	)	$	(11,803	)	$	1,177,340		$	120,891		$	1,049,560		$	2,347,791
Balance at January 1, 2018																											195,267,669		1	$	264,398		$	—	$	1,579,797		$	(379,460	)	$	(1,809	)	$	1,462,926		$	140,086		$	1,294,784		$	2,897,796
Adoption of new accounting guidance																											—		—	—			—		—			(8,149		)	—			(8,149		)	—			(11,210		)	(19,359		)
Dilution impact of issuance of Class A shares																											—		—	—			—		104			—			—			104			—			—			104
Equity issued in connection with Preferred shares offering																											—		—	—			289,815		—			—			—			289,815			—			—			289,815
Capital increase related to equity-based compensation																											—		—	—			—		28,312			—			—			28,312			—			—			28,312
Capital contributions																											—		—	—			—		—			—			—			—			143,928			—			143,928
Distributions																											—		—	(4,383		)	—		(138,407		)	—			—			(142,790		)	(2,111		)	(133,689		)	(278,590		)
Payments related to issuances of Class A shares for equity-based awards																											1,879,695		—	—			—		—			(31,518		)	—			(31,518		)	—			—			(31,518		)
Repurchase of Class A shares																											(777,310	)	—	—			—		(26,444		)	—			—			(26,444		)	—			—			(26,444		)
Exchange of AOG Units for Class A shares																											5,180,600		—	—			—		39,882			—			—			39,882			—			(32,828		)	7,054
Net income (loss)																											—		—	4,383			—		—			(62,645		)	—			(58,262		)	5,979			(57,065		)	(109,348		)
Currency translation adjustments, net of tax																											—		—	—			—		—			—			1,001			1,001			2,975			1,044			5,020
Net gain from change in fair value of cash flow hedge instruments																											—		—	—			—		—			—			13			13			—			14			27
Net loss on available-for-sale securities																											—		—	—			—		—			—			(20		)	(20		)	—			(21		)	(41		)
Balance at March 31, 2018																											201,550,654		1	$	264,398		$	289,815	$	1,483,244		$	(481,772	)	$	(815	)	$	1,554,870		$	290,857		$	1,061,029		$	2,906,756

See accompanying notes to condensed consolidated financial statements.

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2017~~2018 AND ~~2016~~2017

(dollars in thousands, except share data)


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Cash Flows from Operating Activities:
Net income (loss)	$	355,030		$	(74,561	)	$	(109,348	)	$	355,030
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity-based compensation	23,107			14,002			35,525			23,107
Depreciation and amortization	4,385			4,631			3,877			4,385
Unrealized (gains) losses from investment activities	(35,035		)	55,702			69,018			(35,035		)
(Income) loss from equity method investments	(38,553		)	3,817
Principal investment (income) loss							12,994			(38,553		)
Performance allocations							124,165			(352,593		)
Change in fair value of contingent obligations	(3,663		)	(4,113		)	466			(3,663		)
Deferred taxes, net	34,478			(4,296		)	6,958			34,478
Other non-cash amounts included in net income, net	621			6,686
Other non-cash amounts included in net income (loss), net							(7,540		)	621
Cash flows due to changes in operating assets and liabilities:
Carried interest receivable	(168,662		)	153,504
Incentive fees receivable							576			(2,733		)
Due from related parties	(6,654		)	(12,243		)	(63,841		)	(6,654		)
Accounts payable and accrued expenses	14,705			6,649			12,675			14,705
Accrued compensation and benefits	1,503			(6,750		)	(1,985		)	1,503
Deferred revenue	(2,784		)	(1,497		)	17,978			(2,784		)
Due to related parties	(39,151		)	(282		)	3,668			(7,048		)
Profit sharing payable	103,139			(32,650		)	(48,068		)	103,139
Other assets and other liabilities, net	(6,470		)	(2,011		)	(9,037		)	(6,470		)
Cash distributions of earnings from equity method investments	16,555			4,641
Satisfaction of contingent obligation	(14,956		)	—
Cash distributions of earnings from principal investments							22,299			16,555
Cash distributions of earnings from performance allocations							148,658			154,561
Satisfaction of contingent obligations							(2,564		)	(14,956		)
Apollo Fund and VIE related:
Net realized and unrealized gains from investing activities and debt	(1,241		)	(2,341		)	(6,668		)	(1,241		)
Change in cash held at consolidated variable interest entities	(14,746		)	23,569
Purchases of investments	(187,567		)	(118,974		)	(228,807		)	(187,567		)
Proceeds from sale of investments	120,882			117,664			72,229			120,882
Changes in other assets and other liabilities, net	49,911			(6,953		)	(11,701		)	53,933
Net Cash Provided by Operating Activities	$	204,834		$	124,194		$	41,527		$	223,602
Cash Flows from Investing Activities:
Purchases of fixed assets	$	(1,002	)	$	(2,309	)	$	(2,174	)	$	(1,002	)
Proceeds from sale of investments							28,315			—
Purchase of investments	—			(24,597		)	(57,903		)	—
Purchase of U.S. Treasury securities							(59,529		)	—
Proceeds from maturities of U.S. Treasury securities							200,000			—
Cash contributions to equity method investments	(43,529		)	(42,649		)	(36,455		)	(43,529		)
Cash distributions from equity method investments	19,758			10,447			24,916			19,758
Issuance of related party loans	(5,434		)	—			—			(5,434		)
Repayment of related party loans	17,700			—			—			17,700
Other investing activities	(375		)	2,109			45			(109		)
Net Cash Used in Investing Activities	$	(12,882	)	$	(56,999	)
Net Cash Provided by (Used in) Investing Activities							$	97,215		$	(12,616	)
Cash Flows from Financing Activities:
Issuance of Preferred shares (net of issuance costs)	$	264,683		$	—
Principal repayments of debt							$	(300,000	)	$	—
Issuance of Preferred shares, net of issuance costs							289,815			264,683
Distributions to Preferred Shareholders							(4,383		)	—
Issuance of debt	—			18,446			299,676			—
Purchase of Class A shares	(151		)	(12,919		)	(40,823		)	(151		)
Payments related to issuances of Class A shares for RSUs	(20,597		)	(22,042		)
Payments related to deliveries of Class A shares for RSUs							(31,518		)	(20,597		)
Distributions paid	(87,074		)	(53,555		)	(138,407		)	(87,074		)
Distributions paid to Non-Controlling Interests in Apollo Operating Group	(96,956		)	(60,527		)	(133,689		)	(96,956		)
Other financing activities	(1,939		)	(4,528		)	(3,352		)	(1,939		)
Apollo Fund and VIE related:
Distributions paid to Non-Controlling Interests in consolidated variable interest entities	(84		)	—
Contributions from Non-Controlling Interests in consolidated variable interest entities	28,600			11
Net Cash Provided by (Used in) Financing Activities	$	86,482		$	(135,114	)
Net Increase (Decrease) in Cash and Cash Equivalents	278,434			(67,919		)
Cash and Cash Equivalents, Beginning of Period	813,664			617,322
Cash and Cash Equivalents, End of Period	$	1,092,098		$	549,403
Principal repayment of debt							(1,073		)	—
Distributions paid to Non-Controlling Interests in consolidated entities							(671		)	(84		)
Contributions from Non-Controlling Interests in consolidated entities							144,610			28,600
Net Cash Provided by Financing Activities							$	80,185		$	86,482
Net Increase in Cash and Cash Equivalents, Cash and Cash Equivalents Held at Consolidated Funds, Restricted Cash and Cash Held at Consolidated Variable Interest Entities							218,927			297,468
Cash and Cash Equivalents, Cash Held at Consolidated Funds, Restricted Cash and Cash Held at Consolidated Variable Interest Entities, Beginning of Period							848,060			859,662
Cash and Cash Equivalents, Cash Held at Consolidated Funds, Restricted Cash and Cash Held at Consolidated Variable Interest Entities, End of Period							$	1,066,987		$	1,157,130
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	3,545		$	3,645		$	4,234		$	3,545
Interest paid by consolidated variable interest entities	1,776			6,168			4,457			1,776
Income taxes paid	2,733			1,327			3,750			2,733
Supplemental Disclosure of Non-Cash Investing Activities:
Non-cash distributions from equity method investments	$	(13,673	)	$	(1,114	)	$	(24,185	)	$	(13,673	)
Non-cash purchases of other investments, at fair value	13,304			—
Non-cash contributions of other investments, at fair value							194,003			13,304
Non-cash distributions of other investments, at fair value							(46,623		)	—
Supplemental Disclosure of Non-Cash Financing Activities:
Capital increases related to equity-based compensation	$	17,066		$	18,467		$	28,312		$	17,066
Other non-cash financing activities	(33		)	223			104			(33		)
Adjustments related to exchange of Apollo Operating Group units:
Deferred tax assets	$	861		$	—		$	47,009		$	861
Due to related parties							(39,955		)	—
Additional paid in capital	(861		)	—			(7,054		)	(861		)
Non-Controlling Interest in Apollo Operating Group	2,291			—			32,828			2,291

Reconciliation of Cash and Cash Equivalents, Cash and Cash Equivalents Held at Consolidated Funds, Restricted Cash and Cash Held at Consolidated Variable Interest Entities to the Condensed Consolidated Statements of Financial Condition:
Cash and cash equivalents							$	988,284		$	1,084,218
Cash and cash equivalents held at consolidated funds							3			7,880
Restricted cash							3,902			4,946
Cash held at consolidated variable interest entities							74,798			60,086
Total Cash and Cash Equivalents, Cash and Cash Equivalents Held at Consolidated Funds, Restricted Cash and Cash and Cash Equivalents Held at Consolidated Variable Interest Entities							$	1,066,987		$	1,157,130

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

1. ORGANIZATION

Apollo Global Management, LLC (“AGM”, together with its consolidated subsidiaries, the “Company” or “Apollo”) is a global alternative investment manager whose predecessor was founded in 1990. Its primary business is to raise, invest and manage credit, private equity ~~credit~~ and real ~~estate~~assets funds as well as strategic investment accounts, on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. For these investment management services, Apollo receives management fees generally related to the amount of assets managed, transaction and advisory fees, incentive fees and ~~carried interest income~~performance allocations related to the performance of the respective funds that it manages. Apollo has three primary business segments:

~~Private equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debt investments;~~

Credit—primarily invests in non-control corporate and structured debt instruments including performing, stressed and distressed investments across the capital structure;

Private equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debt investments; and

Real ~~estate~~assets—primarily invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities.

Organization of the Company

The Company was formed as a Delaware limited liability company on July 3, 2007 and completed a reorganization of its predecessor businesses on July 13, 2007 (the “2007 Reorganization”). The Company is managed and operated by its manager, AGM Management, LLC, which in turn is indirectly wholly-owned and controlled by Leon Black, Joshua Harris and Marc Rowan, ~~our~~its Managing Partners.

As of March 31, ~~2017~~,2018, the Company owned, through six intermediate holding companies, that include APO Corp., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, APO Asset Co., LLC, a Delaware limited liability company that is a disregarded entity for U.S. federal income tax purposes, APO (FC), LLC, an Anguilla limited liability company that is treated as a corporation for U.S. federal income tax purposes, APO (FC II), LLC, an Anguilla limited liability company that is treated as a corporation for U.S. federal income tax purposes, APO UK (FC), Limited, a United Kingdom incorporated company that is treated as a corporation for U.S. federal income tax purposes, and APO (FC III), LLC, a Cayman Islands limited liability company (collectively, the “Intermediate Holding Companies”), 46.6%49.9% of the economic interests of, and operated and controlled all of the businesses and affairs of, the Apollo Operating Group through its wholly-owned subsidiaries.

AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership (“Holdings”), is the entity through which the Managing Partners and certain of the Company’s other partners (the “Contributing Partners”) indirectly beneficially own interests in each of the partnerships that comprise the Apollo Operating Group (“AOG Units”). As of March 31, ~~2017,~~2018, Holdings owned the remaining ~~53.4%~~50.1% of the economic interests in the Apollo Operating Group. The Company consolidates the financial results of the Apollo Operating Group and its consolidated subsidiaries. Holdings’ ownership interest in the Apollo Operating Group is reflected as a Non-Controlling Interest in the accompanying condensed consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements and these notes are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting only of normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the ~~audited consolidated~~annual financial statements included in the ~~2016~~2017 Annual Report.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned or majority-owned subsidiaries, the consolidated entities which are considered to be variable interest entities (“VIEs”) and for which the Company is considered the primary beneficiary, and certain entities which are not considered VIEs but which the Company controls through a majority voting interest.

Intercompany accounts and transactions, if any, have been eliminated upon consolidation.

Certain reclassifications, when applicable, have been made to the prior ~~period’s~~periods’ condensed consolidated financial statements and notes to conform to the current period’s presentation and are disclosed accordingly.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Consolidation

The types of entities with which Apollo is involved generally include subsidiaries (e.g., general partners and management companies related to the funds the Company manages), entities that have all the attributes of an investment company (e.g., funds) and securitization vehicles (e.g., ~~collateralized loan obligations)~~CLOs). Each of these entities is assessed for consolidation on a case by case basis depending on the specific facts and circumstances surrounding that entity.

Pursuant to the consolidation guidance, the Company first evaluates whether it holds a variable interest in an entity. Fees that are customary and commensurate with the level of services provided, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. Apollo factors in all economic interests including proportionate interests through related parties, to determine if such interests are considered a variable interest. As Apollo’s interests in many of these entities are solely through market rate ~~performance~~ fees and/or insignificant indirect interests through related parties, Apollo is not considered to have a variable interest in many of these entities and no further consolidation analysis is performed. For entities where the Company has determined that it does hold a variable interest, the Company performs an assessment to determine whether each of those entities qualify as a ~~variable interest entity (“VIE”).~~VIE.

The determination as to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity and therefore certain of Apollo’s funds may qualify as VIEs under the variable interest model whereas others may qualify as voting interest entities (“VOEs”) under the voting interest model. The granting of substantive kick-out rights is a key consideration in determining whether a limited partnership or similar entity is a VIE and whether or not that entity should be consolidated.

Under the variable interest model, Apollo consolidates those entities where it is determined that the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it has a controlling financial interest in the VIE, which is defined as possessing both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. When Apollo alone is not considered to have a controlling financial interest in the VIE but Apollo and its related parties under common control in the aggregate have a controlling financial interest in the VIE, Apollo will be deemed the primary beneficiary if it is the party that is most closely associated with the VIE. When Apollo and its related parties not under common control in the aggregate have a controlling financial interest in the VIE, Apollo would be deemed to be the primary beneficiary if substantially all the activities of the entity are performed on behalf of Apollo.

Apollo determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, related parties of Apollo or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary.

Assets and liabilities of the consolidated VIEs are primarily shown in separate sections within the condensed consolidated statements of financial condition. Changes in the fair value of the consolidated VIEs’ assets and liabilities and related interest, dividend and other income and expenses are presented within net gains from investment activities of consolidated variable interest entities ~~and are~~in the condensed consolidated statements of operations. The portion attributable to Non-Controlling Interests is reported within net (income) loss attributable to Non-Controlling Interests in the condensed consolidated statements of operations. For additional disclosures regarding VIEs, see note 4.5.

Under the voting interest model, Apollo consolidates those entities it controls through a majority voting interest. Apollo does not consolidate those VOEs in which substantive kick-out rights have been granted to the unrelated investors to either dissolve the fund or remove the general partner.

Cash and Cash Equivalents

Apollo considers all highly liquid short-term investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include money market funds and U.S. Treasury securities with original maturities of three months or less when purchased. Interest income from cash and cash equivalents is recorded in interest income in the condensed consolidated statements of operations. The carrying values of the money market funds and U.S. Treasury securities was $680.4 million and $404.7 million as of March 31, 2018 and December 31, 2017, respectively, which approximate their fair values due to their short-term nature and are categorized as Level I within the fair value hierarchy. Substantially all of the Company’s cash on deposit is in interest bearing accounts with major financial institutions and exceed insured limits.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

U.S. Treasury securities, at fair value

U.S. Treasury securities, at fair value includes U.S. Treasury bills with original maturities greater than three months when purchased. These securities are recorded at fair value. Interest income on such securities is separately presented from the overall change in fair value and is recognized in interest income in the condensed consolidated statements of operations. Any remaining change in fair value of such securities, that is not recognized as interest income, is recognized in net gains (losses) from investment activities in the condensed consolidated statements of operations.

Fair Value of Financial Instruments

Apollo has elected the fair value option for the Company’s investment in Athene Holding, Athora Holding, the assets and liabilities of certain of its consolidated VIEs (including CLOs), the Company’s U.S. Treasury securities with original maturities greater than three months when purchased, and certain of the Company’s other investments. Such election is irrevocable and is applied to financial instruments on an individual basis at initial recognition.

The fair value of a financial instrument is 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 under current market conditions.

Except for the Company’s debt obligations, ~~(as described in note 9), Apollo’s~~ financial instruments are generally recorded at fair value or at amounts whose carrying values approximate fair value. ~~See “Investments, at Fair Value” below. While Apollo’s valuations of portfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the~~The actual realized

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

gains or losses will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were based. ~~Financial instruments’ carrying values generally approximate fair value because of the short-term nature of those instruments or variable interest rates related to the borrowings.~~

Fair Value Hierarchy

U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I - Quoted prices are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments included in Level I include listed equities and ~~listed derivatives.~~debt. The Company does not adjust the quoted price for these financial instruments, even in situations where the Company holds a large position and the sale of such position would likely deviate from the quoted price.

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments.

Level III - Pricing inputs are unobservable for the financial instrument and includes situations where there is little observable market activity for the financial instrument. The inputs into the determination of fair value may require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partner interests in corporate private equity and real ~~estate~~assets funds, opportunistic credit funds, distressed debt and non-investment grade residual interests in securitizations and CDOs and CLOs where the fair value is based on observable inputs as well as unobservable inputs.

When a security is valued based on broker quotes, the Company subjects those quotes to various criteria in making the determination as to whether a particular financial instrument would qualify for classification as Level II or Level III. These

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

criteria include, but are not limited to, the number and quality of the broker quotes, the standard deviations of the observed broker quotes, and the percentage deviation from independent pricing services.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs.

Transfers between levels of the fair value hierarchy are recognized as of the end of the reporting period.

~~Private~~ Equity Method Investments

The carrying amounts of equity method investments are recorded in investments in the condensed consolidated statements of financial condition. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of ~~liquid~~the Company’s equity method investments in ~~Apollo’s private equity funds, where~~such entities approximates fair value.

Financial Instruments held by Consolidated VIEs

The Company measures both the ~~primary~~financial assets and financial liabilities of the consolidated CLOs in its condensed consolidated financial statements using the fair value of the financial assets of the consolidated CLOs, which are more observable than the fair value of the financial liabilities of the consolidated CLOs. As a result, the financial assets of the consolidated CLOs are measured at fair value and the financial liabilities are measured in consolidation as: (i) the sum of the fair value of the financial assets and the carrying value of any non-financial assets that are incidental to the operations of the CLOs less (ii) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services) and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interest retained by the Company) using a reasonable and consistent methodology. Under the measurement alternative, net (income) loss attributable to Apollo Global Management, LLC reflects the Company’s own economic interests in the consolidated CLOs including (i) changes in the fair value of the beneficial interests retained by the Company and (ii) beneficial interests that represent compensation for collateral management services.

The consolidated VIEs hold investments that could be traded over-the-counter. Investments in securities that are traded on a securities exchange or comparable over-the-counter quotation systems are valued based on the last reported sale price at that date. If no sales of such investments are reported on such date, and in the case of over-the-counter securities or other investments for which the last sale date is not available, valuations are based on independent market ~~is an exchange (whether foreign~~quotations obtained from market participants, recognized pricing services or ~~domestic) is determined using period end market prices. Such~~other sources deemed relevant, and the prices are based on the average of the “bid” and “ask” prices, or at ascertainable prices at the close of business on such day. Market quotations are generally based on ~~the close price on the date~~valuation pricing models or market transactions of ~~determination.~~

~~Valuation approaches~~similar securities adjusted for security-specific factors such as relative capital structure priority and interest and yield risks, among other factors. When market quotations are not available, a model based approach is used to ~~estimate~~determine fair value.

Deferred Revenue

Apollo records deferred revenue, which is a type of contract liability, when consideration is received in advance of management services provided.

Apollo also earns management fees subject to the ~~fair value of investments in Apollo’s private equity funds that~~Management Fee Offset (described below). When advisory and transaction fees are ~~less liquid include~~earned by the ~~market approach and~~management company, the ~~income approach. The market approach provides an indication of fair value based on a comparison~~Management Fee Offset reduces the management fee obligation of the ~~subject company~~fund. When the Company receives cash for advisory and transaction fees, a certain percentage of such advisory and/or transaction fees, as applicable, is allocated as a credit to ~~comparable publicly traded companies and transactions~~reduce future management fees, otherwise payable by such fund. Such credit is recorded as deferred revenue in the ~~industry. The market approach~~condensed consolidated statements of financial condition. A portion of any excess advisory

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

and transaction fees may be required to be returned to the limited partners of certain funds upon such fund’s liquidation. As the management fees earned by the Company are presented on a gross basis, any Management Fee Offsets calculated are presented as a reduction to advisory and transaction fees in the condensed consolidated statements of operations.

Additionally, Apollo earns advisory fees pursuant to the terms of the advisory agreements with certain of the portfolio companies that are owned by the funds Apollo manages. When Apollo receives a payment from a portfolio company that exceeds the advisory fees earned at that point in time, the excess payment is ~~driven more~~recorded as deferred revenue in the condensed consolidated statements of financial condition. The advisory agreements with the portfolio companies vary in duration and the associated fees are received monthly, quarterly or annually. Deferred revenue is reversed and recognized as revenue over the period that the agreed upon services are performed. There was $117.6 million of revenue recognized during the three months ended March 31, 2018 that was previously deferred as of January 1, 2018.

Under the terms of the funds’ partnership agreements, Apollo is normally required to bear organizational expenses over a set dollar amount and placement fees or costs in connection with the offering and sale of interests in the funds it manages to investors. The placement fees are payable to placement agents, who are independent third parties that assist in identifying potential investors, securing commitments to invest from such potential investors, preparing or revising offering and marketing materials, developing strategies for attempting to secure investments by ~~current market conditions, including actual trading levels~~potential investors and/or providing feedback and insight regarding issues and concerns of ~~similar companies~~potential investors, when a limited partner either commits or funds a commitment to a fund. In certain instances the placement fees are paid over a period of time. Based on the management agreements with the funds, Apollo considers placement fees and organizational costs paid in determining if cash has been received in excess of the management fees earned. Placement fees and organizational costs are normally the obligation of Apollo but can be paid for by the funds. When these costs are paid by the fund, the resulting obligations are included within deferred revenue. The deferred revenue balance will also be reduced during future periods when management fees are earned but not paid.

Revenues

The Company’s revenues are reported in four separate categories that include (i) management fees; (ii) advisory and transaction fees, net; (iii) investment income (loss) which is comprised of two subcomponents: (1) performance allocations and (2) principal investment income (loss); and (iv) incentive fees.

On January 1, 2018, the Company adopted new revenue guidance issued by the FASB for recognizing revenue from contracts with customers. The new revenue guidance requires 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 (i.e., the transaction price). When determining the transaction price under the new revenue guidance, an entity may include variable consideration only to the extent ~~available, actual~~that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The new revenue guidance also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.

The Company has concluded that its management fees, advisory and transaction ~~data of similar companies. Judgment is required by management when assessing which companies~~fees, and incentive fees are ~~similar to~~within the ~~subject company being valued. Consideration may also be given to such factors as the Company’s historical and projected financial data, valuations given to comparable companies, the size and~~ scope of the ~~Company’s operations,~~new revenue guidance. For incentive fees, the ~~Company’s strengths, weaknesses, expectations relating~~new revenue guidance delays the timing of certain revenues compared to the ~~market’s receptivity~~prior accounting treatment. These amounts were previously recognized in carried interest income in the condensed consolidated statements of operations and are now recognized separately within its own line, incentive fees.

Effective January 1, 2018, the Company implemented a change in accounting principle for performance allocations to be accounted for under guidance applicable to equity method investments, and therefore not within the scope of the new revenue guidance. The accounting change does not change the timing or amount of revenue recognized related to performance allocation arrangements. These amounts were previously recognized within carried interest income in the condensed consolidated statements of operations and carried interest receivable within the condensed consolidated statements of financial condition. As a result of the change in accounting principle, the Company recognizes performance allocations within investment income along with the related principal investment income (loss) (as described further below) in the condensed consolidated statements of operations and within the investments line in the condensed consolidated statements of financial condition. The Company applied this change in accounting principle on a full retrospective basis.

The new revenue guidance was adopted on a modified retrospective basis. The adoption of the new revenue guidance did not have a material impact on the Company. In connection with the adoption of the new revenue guidance, the Company recorded a cumulative effect adjustment to total shareholders’ equity as of January 1, 2018 in the amount of $19.4 million net of

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

taxes. Prior periods have not been recast to reflect the new revenue guidance. Accordingly, prior periods reflect recognition under the previous guidance whereby incentive fees were recorded on an ~~offering~~assumed liquidation basis at each reporting date. Refer to disclosures below for additional information on each of the Company’s ~~securities, applicable restrictions~~revenue streams.

Management Fees

Management fees for funds are recognized over time during the periods in which the related services are performed in accordance with the contractual terms of the related agreement. Management fees are generally based on ~~transfer, industry~~(1) a percentage of the capital committed during the commitment period, and ~~market information and assumptions, general economic and market conditions and other factors deemed relevant. The income approach provides an indication of fair value~~thereafter based on the ~~present~~remaining invested capital of unrealized investments, or (2) net asset value, gross assets or as otherwise defined in the respective agreements. Included in management fees are certain expense reimbursements where the Company is considered the principal under the agreements and is required to record the expense and related reimbursement revenue on a gross basis.

Advisory and Transaction Fees, Net

Advisory fees, including monitoring fees and directors’ fees, are generally recognized over time as the underlying services are provided in accordance with the contractual terms of the related agreement. The Company receives such fees in exchange for ongoing management consulting, monitoring, and oversight of portfolio company operations. Transaction fees, including structuring fees and arranging fees are generally recognized at a point in time when the underlying services rendered are complete.

The amounts due from portfolio companies are recorded in due from related parties, which is discussed further in note 13. Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Advisory and transaction fees are presented net of the Management Fee Offset in the condensed consolidated statements of operations.

Underwriting fees, which are also included within advisory and transaction fees, net, include gains, losses and fees, arising from securities offerings in which one of the Company’s subsidiaries participates in the underwriter syndicate. Underwriting fees are recognized at a point in time when the underwriting is completed. Underwriting fees recognized but not received are recorded in other assets on the condensed consolidated statements of financial condition.

During the normal course of business, the Company incurs certain costs related to certain transactions that are not consummated (“broken deal costs”). These costs (e.g., research costs, due diligence costs, professional fees, legal fees and other related items) are determined to be broken deal costs upon management’s decision to no longer pursue the transaction. In accordance with the related fund agreement, in the event the deal is deemed broken, all of the costs are reimbursed by the funds and then included as a component of the calculation of the Management Fee Offset. If a deal is successfully completed, Apollo is reimbursed by the fund or fund’s portfolio company for all costs incurred and no offset is generated. As the Company acts as an agent for the funds it manages, any transaction costs incurred and paid by the Company on behalf of the respective funds relating to successful or broken deals are recorded net on the Company’s condensed consolidated statements of operations, and any receivable from the respective funds is recorded in due from related parties on the condensed consolidated statements of financial condition.

Investment Income (Loss)

Investment income (loss) is comprised of two subcomponents: (1) performance allocations and (2) principal investment income (loss).

Performance Allocations

Performance allocations are a type of performance revenue (i.e., income earned based on the extent to which an entity’s performance exceeds predetermined thresholds). Performance allocations are generally structured from a legal standpoint as an allocation of capital in which the asset manager’s capital account receives allocations of the returns of an entity when those returns exceed predetermined thresholds. The determination of which performance revenues are considered performance allocations is primarily based on the terms of an agreement with the entity.

As noted above, as a result of a change in accounting principle, the Company recognizes performance allocations within investment income (loss) along with the related principal investment income (loss) (as described further below) in the

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

condensed consolidated statements of operations and within the investments line in the condensed consolidated statements of financial condition.

Principal Investment Income (Loss)

Principal investment income (loss) includes the Company’s income or loss from equity method investments and certain other investments in entities in which the Company is generally eligible to receive performance allocations. Income from equity method investments includes the Company’s share of net income or loss generated from its investments, which are not consolidated, but in which the Company exerts significant influence. Prior to the change in accounting principle noted above, income from equity method investments was included within other income in the condensed consolidated statements of operations. All prior periods have been conformed to reflect this change in presentation.

Incentive Fees

Incentive fees are a type of performance revenue. Incentive fees differ from performance allocations in that incentive fees do not represent an allocation of capital but rather a contractual fee arrangement with the entity.

Incentive fees are considered a form of variable consideration under the new guidance as they are subject to clawback or reversal and therefore must be deferred until the fees are probable to not be significantly reversed. Accrued but unpaid incentive fees are reported within incentive fees receivable in the Company’s condensed consolidated statements of financial condition. As noted earlier, prior to the adoption of the new revenue guidance, incentive fees were recognized on an assumed liquidation basis. The Company’s incentive fees primarily relate to the credit segment and are generally received from the management of CLOs, managed accounts and AINV.

As it relates to AINV, incentive fees include a quarterly fee on the pre-incentive fee net investment income (“AINV Part I Fees”) of AINV. For purposes of the AINV Part I Fees, the net investment income of AINV includes interest income, dividend income and certain other income but excludes any realized and unrealized capital gains or losses. Such AINV Part I Fees are paid quarterly and are not subject to repayment. Therefore, the recognition of these fees are not impacted by the adoption of the new revenue guidance.

Compensation and Benefits

Equity-Based Compensation

Equity-based awards granted to employees as compensation are measured based on the grant date fair value of the award. Equity-based awards that do not require future service (i.e., vested awards) are expensed immediately. Equity-based employee awards that require future service are expensed over the relevant service period. In addition, the Company provides for the vesting of certain restricted stock units (“RSUs”) subject to continued employment and certain performance metrics being achieved. In accordance with U.S. GAAP, equity-based compensation expense for such awards is recognized over the requisite service period to the extent the performance metrics are met or deemed probable. Equity-based awards granted to non-employees for services provided to related parties are remeasured to fair value at the end of each reporting period and expensed over the relevant service period. The Company accounts for forfeitures of equity-based awards when they occur.

Profit Sharing

Profit sharing expense and profit sharing payable primarily consist of a portion of performance allocations and incentive fees (collectively, “performance revenues”) earned from certain funds that are allocated to employees, former employees and Contributing Partners. Profit sharing amounts are recognized as the related performance revenues are earned. Accordingly, profit sharing amounts can be reversed during periods when there is a decline in performance revenues that were previously recognized.

Profit sharing amounts are generally not paid until the related performance revenue is distributed to the general partner upon realization of the fund’s investments. Under certain profit sharing arrangements, a portion of the performance revenue distributed to the general partner is allocated by issuance of restricted shares, rather than cash to employees. Prior to distribution of the performance revenue to the general partner, the Company records the value of the restricted shares expected to be granted in other assets and other liabilities within the condensed consolidated statements of financial condition. Such shares are recorded as equity-based compensation expense over the relevant service period.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

amounts, which is a component of due from related parties on the condensed consolidated statements of financial condition, represents all amounts previously distributed to employees, former employees and Contributing Partners that would need to be returned to the general partner if the Apollo funds were to be liquidated based on the fair value of the underlying funds’ investments as of the reporting date. The actual general partner receivable, however, would not become realized until the end of a fund’s life.

Profit sharing payable also includes contingent consideration obligations that were recognized in connection with certain Apollo acquisitions. Changes in the fair value of the contingent consideration obligations are reflected in the Company’s condensed consolidated statements of operations as profit sharing expense.

The Company has a performance-based incentive arrangement for certain Apollo partners and employees designed to more closely align compensation on an annual basis with the overall realized performance of the Company. This arrangement enables certain partners and employees to earn discretionary compensation based on performance revenue earned by the Company in a given year, which amounts are reflected in profit sharing expense in the accompanying condensed consolidated financial statements.

401(k) Savings Plan

The Company sponsors a 401(k) savings plan (the “401(k) Plan”) whereby U.S.-based employees are entitled to participate in the 401(k) Plan based upon satisfying certain eligibility requirements. The Company matches 50% of eligible annual employee contributions up to 3% of the eligible employees’ annual compensation. Matching contributions vest after three years of service.

General, Administrative and Other

General, administrative and other primarily includes professional fees, occupancy, depreciation and amortization, travel, information technology and administration expenses.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Apollo’s most significant estimates include goodwill, intangible assets, income taxes, performance allocations, incentive fees, contingent consideration obligation related to an acquisition, non-cash compensation, and fair value of investments and debt. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

In February 2016, the FASB issued guidance that amends the accounting for leases. The amended guidance requires recognition of a lease asset and a lease liability by lessees for leases classified as operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from existing guidance. The amended guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. Early application is permitted for all entities.

The Company expects its total assets and total liabilities on its condensed consolidated statements of financial condition to increase upon adoption of this guidance as a result of recording a lease asset and lease liability related to our operating leases. The Company is continuing to evaluate the impact that this guidance will have on its condensed consolidated financial statements. The Company expects to adopt the new leasing guidance on January 1, 2019.

In November 2016, the FASB issued guidance to reduce diversity in practice in the classification and presentation of changes in restricted cash on the statements of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. Entities will also be required to reconcile such total to amounts on the Company’s condensed consolidated statements of financial condition and disclose the nature of the restrictions. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company adopted the standard beginning January 1, 2018 using a retrospective transition method to each period presented. Upon adoption of this standard restricted cash and cash and cash equivalents held at consolidated variable interest entities are included within the beginning of period and end of period balances in the Company’s condensed consolidated statements of cash flows. Refer to the Company’s condensed consolidated statements of cash flows for the impact of this standard.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

In January 2017, the FASB issued guidance that changes the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or ~~security~~businesses. The guidance is effective for interim and annual periods beginning after December 15, 2017. The adoption of this standard did not have an impact on the condensed consolidated financial statements of the Company.

In January 2017, the FASB issued guidance to simplify the test for goodwill impairment. The new guidance removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment (Step 2). Under the new guidance, a goodwill impairment is calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in the reporting unit. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be performed prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The guidance is not expected to ~~generate~~have an impact on the condensed consolidated financial statements of the Company.

3. INVESTMENTS

The following table represents Apollo’s investments:



	As of March 31, 2018		As of December 31, 2017
Investments, at fair value	$	986,016	$	866,998
Equity method investments	816,594		863,906
Performance allocations	1,396,075		1,828,930
Total Investments	$	3,198,685	$	3,559,834

Investments, at Fair Value

Investments, at fair value, consist of investments for which the fair value option has been elected and primarily include the Company’s investment in Athene Holding and investments in debt of unconsolidated CLOs. Changes in the ~~future.~~ fair value related to these investments are presented in net gains from investment activities except for certain investments which the Company is entitled to receive performance allocations. For those investments, changes in fair value are presented in principal investment income.

The ~~most widely used methodology~~Company’s investment in Athene Holding, for which the fair value option was elected, met the significance criteria as defined by the SEC for the three months ended March 31, 2018. As such, the following table presents summarized financial information of Athene Holding:



	For the Three Months Ended March 31,
	2018⁽¹⁾		2017
	(in millions)
Statements of Operations
Revenues	$	3,872	$	1,619
Expenses	3,374		1,213
Income before income tax provision	498		406
Income tax provision	34		22
Net income available to Athene common shareholders	$	464	$	384


(1)	The financial statement information for the three months ended March 31, 2018 is presented a quarter in arrears and is comprised of the financial information for the three months ended December 31, 2017, which represents the latest available financial information as of the date of this report.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Net Gains (Losses) from Investment Activities

The following table presents the realized and net change in unrealized gains (losses) reported in net gains (losses) from investment activities:



	For the Three Months Ended March 31,
	2018			2017
Realized gains on sales of investments, net	$	66		$	—
Net change in unrealized gains (losses) due to changes in fair value	(67,199		)	34,517
Net gains (losses) from investment activities	$	(67,133	)	$	34,517

Equity Method Investments

Apollo’s equity method investments include its investments in the credit, private equity and real assets funds it manages, which are not consolidated, but in which the Company exerts significant influence. Apollo’s share of net income ~~approach~~generated by these investments is recorded in principal investment income (loss) in the condensed consolidated statements of operations.

Equity method investments consisted of the following:



	Equity Held as of
	March 31, 2018		⁽⁴⁾	December 31, 2017		⁽⁴⁾
Credit⁽¹⁾⁽²⁾	$	325,892		$	325,267
Private Equity⁽¹⁾	462,228			509,707
Real Assets	28,474			28,932
Total equity method investments⁽³⁾	$	816,594		$	863,906

(1)

As of March 31, 2018, equity method investments include MidCap (Credit) and Fund VIII (Private Equity) of $80.2 million and $363.1 million, respectively, representing an ownership percentage of 4.2% and 2.2%, respectively. As of December 31, 2017, equity method investments include MidCap (Credit) and Fund VIII (Private Equity) of $79.6 million and $385.7 million, respectively, representing an ownership percentage of 4.2% and 2.2%, respectively.


(2)	The equity method investment in AINV was $55.4 million and $56.5 million as of March 31, 2018 and December 31, 2017, respectively. The value of the Company’s investment in AINV was $46.3 million and $50.2 million based on the quoted market price as of March 31, 2018 and December 31, 2017, respectively.


(3)	Certain funds invest across multiple segments. The presentation in the table above is based on the classification of the majority of such funds’ investments.


(4)	Some amounts included are a quarter in arrears.

Performance Allocations

Performance allocations from private equity, credit and real assets funds consisted of the following:



	As of March 31, 2018		As of December 31, 2017
Private Equity	$	966,551	$	1,404,777
Credit	404,395		395,340
Real Assets	25,129		28,813
Total performance allocations	$	1,396,075	$	1,828,930

The table below provides a roll forward of the performance allocations balance:



	Private Equity				Credit			Real Assets			Total
Performance allocations, January 1, 2018	$	1,404,777			$	395,340		$	28,813		$	1,828,930
Change in fair value of funds	(153,630		)		39,511			(198		)	(114,317		)
Fund distributions to the Company	(284,596		)	⁽¹⁾	(30,456		)	(3,486		)	(318,538		)
Performance allocations, March 31, 2018	$	966,551			$	404,395		$	25,129		$	1,396,075

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)


(1)	Includes realized performance allocations of $169.9 million from AP Alternative Assets, L.P. (“AAA”), settled in the form of Athene shares.

The change in fair value of funds excludes the reversal of previously realized performance allocations due to the general partner obligation to return previously distributed performance allocations, which is recorded in due to related parties in the consolidated statements of financial condition. See note 13 for further disclosure regarding the general partner obligation.

The timing of the payment of performance allocations due to the general partner or investment manager varies depending on the terms of the applicable fund agreements. Generally, performance allocations with respect to the private equity funds and certain credit and real assets funds is payable and is distributed to the fund’s general partner upon realization of an investment if the fund’s cumulative returns are in excess of the preferred return.

4. PROFIT SHARING PAYABLE

Profit sharing payable consisted of the following:



	As of March 31, 2018		As of December 31, 2017
Credit	$	262,138	$	265,791
Private Equity	372,065		475,556
Real Assets	10,680		10,929
Total profit sharing payable	$	644,883	$	752,276

The table below provides a roll forward of the profit sharing payable balance:



	Private Equity				Credit			Real Assets			Total
Profit sharing payable, January 1, 2018	$	475,556			$	265,791		$	10,929		$	752,276
Profit sharing expense	(32,036		)		22,697			496			(8,843		)
Payments/other⁽¹⁾	(71,455		)	⁽²⁾	(26,350		)	(745		)	(98,550		)
Profit sharing payable, March 31, 2018	$	372,065			$	262,138		$	10,680		$	644,883


(1)	Includes $10.6 million associated with the adoption of new revenue recognition accounting guidance, as discussed in note 2.


(2)	Includes $46.6 million associated with profit sharing expense related to AAA that were settled in the form of Athene shares.

Profit sharing expense includes (i) changes in amounts payable to employees and former employees entitled to a share of performance revenues in Apollo’s funds and (ii) changes to the fair value of the contingent consideration obligations recognized in connection with certain Apollo acquisitions. Profit sharing expense excludes the potential return of profit sharing distributions that would be due if certain funds were liquidated, which is recorded in due from related parties in the consolidated statements of financial condition. See note 13 for further disclosure regarding the potential return of profit sharing distributions.

As discussed in note 2, under certain profit sharing arrangements, a portion of the performance revenues distributed to the general partner is allocated by issuance of restricted shares, rather than cash to employees. Prior to distribution of the performance revenues to the general partner, the Company records the value of the restricted shares expected to be granted in other assets and other liabilities within the condensed consolidated statements of financial condition. See note 7 for further disclosure regarding deferred equity-based compensation.

5. VARIABLE INTEREST ENTITIES

As described in note 2, the Company consolidates entities that are VIEs for which the Company has been designated as the primary beneficiary. There is no recourse to the Company for the consolidated VIEs’ liabilities.

Consolidated Variable Interest Entities

Apollo has consolidated VIEs in accordance with the policy described in note 2. Through its role as investment manager of these VIEs, the Company determined that Apollo has the power to direct the activities that most significantly impact the economic performance of these VIEs. Additionally, Apollo determined that its interests, both directly and indirectly from these VIEs, represent

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

rights to returns that could potentially be significant to such VIEs. As a result, Apollo determined that it is the primary beneficiary and therefore should consolidate the VIEs.

Certain CLOs are consolidated by Apollo as the Company is considered to hold a controlling financial interest through direct and indirect interests in these CLOs exclusive of management and performance-based fees received. Through its role as collateral manager of these VIEs, the Company determined that Apollo has the power to direct the activities that most significantly impact the economic performance of these VIEs. These CLOs were formed for the sole purpose of issuing collateralized notes to investors. The assets of these VIEs are primarily comprised of senior secured loans and the liabilities are primarily comprised of debt.

The assets of consolidated CLOs are not available to creditors of the Company. In addition, the investors in these consolidated CLOs have no recourse against the assets of the Company. The Company measures both the financial assets and the financial liabilities of the CLOs using the fair value of the financial assets as further described in note 2. The Company has elected the fair value option for financial instruments held by its consolidated CLOs, which includes investments in loans and corporate bonds, as well as debt obligations and contingent obligations held by such consolidated CLOs. Other assets include amounts due from brokers and interest receivables. Other liabilities include payables for securities purchased, which represent open trades within the consolidated CLOs and primarily relate to corporate loans that are expected to settle within 60 days.

Net Gains from Investment Activities of Consolidated Variable Interest Entities

The following table presents net gains from investment activities of the consolidated VIEs:



	For the Three Months Ended March 31,
	2018			⁽¹⁾	2017			⁽¹⁾
Net gains from investment activities	$	5,322			$	1,990
Net gains (losses) from debt	1,350				(883		)
Interest and other income	9,579				7,822
Interest and other expenses	(9,719		)		(4,821		)
Net gains from investment activities of consolidated variable interest entities	$	6,532			$	4,108


(1)	Amounts reflect consolidation eliminations.

Senior Secured Notes, Subordinated Notes and Secured Borrowings

Included within debt are amounts due to third-party institutions by the consolidated VIEs. The following table summarizes the principal provisions of the debt of the consolidated VIEs:



	As of March 31, 2018						As of December 31, 2017
	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior Secured Notes⁽²⁾	$	827,058	1.67	%		11.9	$	806,603	1.68	%		12.2
Subordinated Notes⁽²⁾	102,856		N/A		⁽¹⁾	22.2	100,188		N/A		⁽¹⁾	22.4
Secured Borrowings⁽²⁾⁽³⁾	109,438		3.24	%		9.1	109,438		2.70	%		9.3
Total	$	1,039,352					$	1,016,229


(1)	The subordinated notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the VIEs.


(2)	The debt of the consolidated VIEs is collateralized by assets of the consolidated VIEs and assets of one vehicle may not be used to satisfy the liabilities of another vehicle. The fair value of the debt and collateralized assets of the Senior Secured Notes, Subordinated Notes and Secured Borrowings are presented below:

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)



	As of March 31, 2018		As of December 31, 2017
Debt at fair value	$	1,026,012	$	1,002,063
Collateralized assets	$	1,499,872	$	1,328,586


(3)	Secured borrowings consist of a consolidated VIE’s obligation through a repurchase agreement redeemable at maturity with a third party lender. The fair value of the secured borrowings as of March 31, 2018 and December 31, 2017 was $109.4 million.

The consolidated VIEs’ debt obligations contain various customary loan covenants. As of March 31, 2018, the Company was not aware of any instances of non-compliance with any of these covenants.

Variable Interest Entities Which are Not Consolidated

The Company holds variable interests in certain VIEs which are not consolidated, as it has been determined that Apollo is not the primary beneficiary.

The following table presents the carrying amounts of the assets and liabilities of the VIEs for which Apollo has concluded that it holds a significant variable interest, but that it is not the primary beneficiary. In addition, the table presents the maximum exposure to losses relating to these VIEs.



	As of March 31, 2018		As of December 31, 2017
Assets:
Cash	$	186,767	$	254,791
Investments	4,463,148		6,230,397
Receivables	41,649		36,601
Total Assets	$	4,691,564	$	6,521,789

Liabilities:
Debt and other payables	$	3,129,631	$	3,285,263
Total Liabilities	$	3,129,631	$	3,285,263

Apollo Exposure⁽¹⁾	$	223,814	$	252,605


(1)	Represents Apollo’s direct investment in those entities in which Apollo holds a significant variable interest and certain other investments. Additionally, cumulative performance allocations are subject to reversal in the event of future losses, as discussed in note 14.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

6. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level:



	As of March 31, 2018
	Level I		Level II		Level III		Total		Cost
Assets
U.S. Treasury securities, at fair value	$	225,510	$	—	$	—	$	225,510	$	223,342
Investments, at fair value:
Investment in Athene Holding	194,164		688,713		—		882,877		510,784
Other investments	—		45,847		30,758		76,605		71,933
Investment in Athora Holding	—		—		26,534		26,534		26,534
Total investments, at fair value	194,164		734,560		57,292		986,016		609,251
Investments of VIEs, at fair value	—		1,088,761		293,260		1,382,021
Investments of VIEs, valued using NAV	—		—		—		4,047
Total investments of VIEs, at fair value	—		1,088,761		293,260		1,386,068
Derivative assets⁽¹⁾	—		172		—		172
Total Assets	$	419,674	$	1,823,493	$	350,552	$	2,597,766

Liabilities
Liabilities of VIEs, at fair value	$	—	$	1,026,012	$	—	$	1,026,012
Contingent consideration obligations⁽²⁾	—		—		90,500		90,500
Derivative liabilities⁽¹⁾	—		1,812		—		1,812
Total Liabilities	$	—	$	1,027,824	$	90,500	$	1,118,324



	As of December 31, 2017
	Level I		Level II		Level III		Total		Cost
Assets
U.S. Treasury securities, at fair value	$	364,649	$	—	$	—	$	364,649	$	363,812
Investments, at fair value:
Investment in Athene Holding	—		802,985		—		802,985		387,526
Other investments	205		28,107		35,701		64,013		61,179
Total investments, at fair value	205		831,092		35,701		866,998		448,705
Investments of VIEs, at fair value	—		1,058,999		132,348		1,191,347
Investments of VIEs, valued using NAV	—		—		—		4,843
Total investments of VIEs, at fair value	—		1,058,999		132,348		1,196,190
Derivative assets⁽¹⁾	—		478		—		478
Total Assets	$	364,854	$	1,890,569	$	168,049	$	2,428,315

Liabilities
Liabilities of VIEs, at fair value	$	—	$	1,002,063	$	12,620	$	1,014,683
Contingent consideration obligations⁽²⁾	—		—		92,600		92,600
Derivative liabilities⁽¹⁾	—		1,537		—		1,537
Total Liabilities	$	—	$	1,003,600	$	105,220	$	1,108,820


(1)	Derivative assets and derivative liabilities are presented as a component of Other assets and Other liabilities, respectively, in the condensed consolidated statements of financial condition.


(2)	Profit sharing payable include contingent obligations classified as Level III.

There were no transfers of financial assets or liabilities between Level I and Level II for the three months ended March 31, 2018 and 2017.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following tables summarize the changes in financial assets measured at fair value for which Level III inputs have been used to determine fair value:



	For the Three Months Ended March 31, 2018
	Investment in Athora Holding		Other Investments			Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	—	$	35,701		$	132,348		$	168,049
Purchases	26,534		39,228			142,487			208,249
Sale of investments/distributions	—		(28,315		)	(11,661		)	(39,976		)
Net realized gains (losses)	—		413			(1,160		)	(747		)
Changes in net unrealized gains (losses)	—		(215		)	8,909			8,694
Cumulative translation adjustment	—		1,686			3,554			5,240
Transfer into Level III⁽¹⁾	—		—			18,783			18,783
Transfer out of Level III⁽¹⁾	—		(17,740		)	—			(17,740		)
Balance, End of Period	$	26,534	$	30,758		$	293,260		$	350,552
Change in net unrealized losses included in net gains (losses) from investment activities related to investments still held at reporting date	$	—	$	(217	)	$	—		$	(217	)
Change in net unrealized gains included in net gains from investment activities of consolidated VIEs related to investments still held at reporting date	—		—			6,950			6,950



	For the Three Months Ended March 31, 2017
	Other Investments			Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	45,721		$	92,474		$	138,195
Purchases	—			43,449			43,449
Sale of investments/distributions	—			(12,088		)	(12,088		)
Net realized gains (losses)	(14		)	48			34
Changes in net unrealized gains (losses)	(61		)	3,002			2,941
Cumulative translation adjustment	536			890			1,426
Transfer into Level III⁽¹⁾	60			9,569			9,629
Balance, End of Period	$	46,242		$	137,344		$	183,586
Change in net unrealized losses included in net gains (losses) from investment activities related to investments still held at reporting date	$	(75	)	$	—		$	(75	)
Change in net unrealized gains included in net gains from investment activities of consolidated VIEs related to investments still held at reporting date	—			2,873			2,873


(1)	Transfers between Level II and III were a result of subjecting the broker quotes on these financial assets to various criteria which include the number and quality of broker quotes, the standard deviation of obtained broker quotes and the percentage deviation from independent pricing services.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table summarizes the changes in fair value in financial liabilities measured at fair value for which Level III inputs have been used to determine fair value:



	For the Three Months Ended March 31,
	2018									2017
	Liabilities of Consolidated VIEs & Apollo Funds			Contingent Consideration Obligations			Total			Liabilities of Consolidated VIEs & Apollo Funds			Contingent Consideration Obligations			Total
Balance, Beginning of Period	$	12,620		$	92,600		$	105,220		$	11,055		$	106,282		$	117,337
Additions	—			—			—			97			—			97
Payments	(12,620		)	(2,564		)	(15,184		)	(59		)	(14,956		)	(15,015		)
Net realized gains	—			—			—			(9		)	—			(9		)
Changes in net unrealized gains (losses)⁽¹⁾	—			464			464			143			(3,663		)	(3,520		)
Balance, End of Period	$	—		$	90,500		$	90,500		$	11,227		$	87,663		$	98,890
Change in net unrealized gains (losses) included in net gains from investment activities of consolidated VIEs related to liabilities still held at reporting date	$	—		$	—		$	—		$	139		$	—		$	139


(1)	Changes in fair value of contingent consideration obligations are recorded in profit sharing expense in the condensed consolidated statements of operations.

The following tables summarize the quantitative inputs and assumptions used for financial assets and liabilities categorized as Level III under the fair value hierarchy:



	As of March 31, 2018
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Investment in Athora Holding	$	26,534	Cost⁽¹⁾	N/A	N/A	N/A
Other investments	4,941		Third Party Pricing	N/A	N/A	N/A
Other investments	25,817		Cost⁽¹⁾	N/A	N/A	N/A
Investments of consolidated VIEs:
Corporate loans/bonds/CLO notes	18,782		Third party pricing	N/A	N/A	N/A
Equity securities	274,478		Book value multiple	Book value multiple	0.75x	0.75x
Equity securities	274,478		Discounted cash flow	Discount rate	13.2%	13.2%
Total investments of consolidated VIEs	293,260
Total Financial Assets	$	350,552
Financial Liabilities
Contingent consideration obligation	$	90,500	Discounted cash flow	Discount rate	17.8%	17.8%
Total Financial Liabilities	$	90,500

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)



	As of December 31, 2017
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Other investments	$	20,641	Third party pricing	N/A	N/A	N/A
Other investments	15,060		Cost⁽¹⁾	N/A	N/A	N/A
Investments of consolidated VIEs:
Corporate loans/bonds/CLO notes	6,824		Third party pricing	N/A	N/A	N/A
Equity securities	125,524		Book value multiple	Book value multiple	0.71x	0.71x
Equity securities	125,524		Discounted cash flow	Discount rate	13.4%	13.4%
Total investments of consolidated VIEs	132,348
Total Financial Assets	$	168,049
Financial Liabilities
Liabilities of consolidated VIEs	$	12,620	Other	N/A	N/A	N/A
Contingent consideration obligation	92,600		Discounted cash flow	Discount rate	17.3%	17.3%
Total Financial Liabilities	$	105,220

(1) The valuation technique used is cost as it approximates the fair value of the investment.

Fair Value Measurement of Investment in Athene Holding

As of March 31, 2018 the fair value of Apollo’s Level I investment in Athene Holding was estimated using the closing market price of Athene Holding shares of $47.81. As of March 31, 2018 and December 31, 2017 the fair value of Apollo’s Level II investment in Athene Holding was estimated using the closing market price of Athene Holding shares of $47.81 and $51.71, respectively, less a discount due to a lack of marketability (“DLOM”) of 4.6% and 4.0%, respectively, as applicable. The DLOM was derived based on the average remaining lock up restrictions on the shares of Athene Holding held by Apollo (8.3 months and 11.3 months as of March 31, 2018 and December 31, 2017, respectively) and the estimated volatility in such shares of Athene Holding. Due to the limited trading history in Athene Holding shares, the historical share price volatility of a representative set of Athene Holding’s publicly traded insurance peers was calculated over a period equivalent to the remaining average lock up on the shares of Athene Holding held by Apollo and used as a proxy to estimate the projected volatility in Athene Holding’s shares.

Apollo uses the closing market price of shares of Athene Holding, adjusted for a DLOM in order to reflect the post initial public offering (“IPO”) sales restriction on such shares of Athene Holding, to value the opportunistic investment in Athene Holding. The DLOM is calculated based on the remaining length of such sales restrictions and the estimated market price volatility of the associated shares.

Discounted Cash Flow Model

When a discounted cash flow ~~method. Inherent~~model is used to determine fair value, the significant input used in the ~~discounted~~valuation model is the discount rate applied to present value the projected cash ~~flow method~~flows. Increases in the discount rate can significantly lower the fair value of an investment and the contingent consideration obligations; conversely decreases in the discount rate can significantly increase the fair value of an investment and the contingent consideration obligations.

Consolidated VIEs

Investments

As of March 31, 2018 and December 31, 2017, the significant unobservable inputs used in the fair value measurement of the equity securities include the discount rate applied and the book value multiples applied in the valuation models. These unobservable inputs in isolation can cause significant increases or decreases in fair value. The discount rate is determined based on the market rates an investor would expect for a similar investment with similar risks. When a comparable multiple model is used to determine fair value, the comparable multiples are ~~assumptions~~generally multiplied by the underlying companies’ earnings before interest, taxes, depreciation and amortization (“EBITDA”) to establish the total enterprise value of the company. The comparable multiple is determined based on the implied trading multiple of public industry peers.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Liabilities

As of March 31, 2018 and December 31, 2017, the debt obligations of the consolidated CLOs were measured on the basis of the fair value of the financial assets of the CLOs as the financial assets were determined to be more observable and, as a result, categorized as Level II in the fair value hierarchy.

Contingent Consideration Obligations

Valuation of Underlying Investments of Equity Method Investees

As discussed previously, the underlying entities that the Company manages and invests in are primarily investment companies which account for their investments at estimated fair value.

On a quarterly basis, Apollo utilizes valuation committees consisting of members from senior management, to review and approve the valuation results related to the investments of the funds it manages. For certain publicly traded vehicles managed by the Company, a review is performed by an independent board of directors. The Company also retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited procedures that management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management with validating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, including comparisons between expected ~~results,~~and observed outcomes, forecast evaluations and variance analyses. However, because of the ~~determination~~inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ~~terminal value~~ready market for the investments existed, and ~~a calculated discount rate.~~the differences could be material.

Credit Investments

The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models. Quoted market prices are valued based on the average of the “bid” and the “ask” quotes provided by multiple brokers wherever possible without any adjustments. Apollo will designate certain brokers to use to value specific securities. In order to determine the designated brokers, Apollo considers the following: (i) brokers with which Apollo has previously transacted, (ii) the underwriter of the security and (iii) active brokers indicating executable quotes. In addition, when valuing a security based on broker quotes wherever possible Apollo tests the standard deviation amongst the quotes received and the variance between the concluded fair value and the value provided by a pricing service. When broker quotes are not available Apollo considers the use of pricing service quotes or other sources to mark a position. When relying on a pricing service as a primary source, Apollo (i) analyzes how the price has moved over the measurement period, (ii) reviews the number of brokers included in the pricing service’s population and (iii) validates the valuation levels with Apollo’s pricing team and traders.

Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value utilizing a model based approach to determine fair value. Valuation approaches used to estimate the fair value of illiquid credit investments also may include the market approach and the income approach, as previously described above. The valuation approaches used consider, as applicable, market risks, credit risks, counterparty risks and foreign currency risks.

Private Equity Investments

The fair value of liquid investments in Apollo’s private equity funds, where the primary market is an exchange (whether foreign or domestic) is determined using period end market prices. Such prices are generally based on the close price on the date of determination.

Valuation approaches used to estimate the fair value of investments in Apollo’s private equity funds that are less liquid include the market approach and the income approach. The market approach provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies and transactions in the industry. The market approach is driven more by current market conditions, including actual trading levels of similar companies and, to the extent available, actual

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

transaction data of similar companies. Judgment is required by management when assessing which companies are similar to the subject company being valued. Consideration may also be given to such factors as the Company’s historical and projected financial data, valuations given to comparable companies, the size and scope of the Company’s operations, the Company’s strengths, weaknesses, expectations relating to the market’s receptivity to an offering of the Company’s securities, applicable restrictions on transfer, industry and market information and assumptions, general economic and market conditions and other factors deemed relevant. The income approach provides an indication of fair value based on the present value of cash flows that a business or security is expected to generate in the future. The most widely used methodology in the income approach is a discounted cash flow method. Inherent in the discounted cash flow method are assumptions of expected results, the determination of a terminal value and a calculated discount rate.

Real ~~Estate~~Assets Investments

The estimated fair value of commercial mortgage-backed securities (“CMBS”) in Apollo’s real ~~estate~~assets funds is determined by reference to market prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarily represent what the funds would receive in an actual trade for the applicable instrument. Additionally, the loans held-for-investment are stated at the principal amount outstanding, net of deferred loan fees and costs for certain investments. The loans in Apollo’s real ~~estate~~assets funds are evaluated for possible impairment on a quarterly basis. For Apollo’s real ~~estate~~assets funds, valuations of non-marketable underlying investments are determined using methods that include, but are not limited to (i) discounted cash flow estimates or comparable analysis prepared internally, (ii) third party appraisals or valuations by qualified real estate appraisers and (iii) contractual sales value of investments/properties subject to bona fide purchase contracts. Methods (i) and (ii) also incorporate consideration of the use of the income, cost, or sales comparison approaches of estimating property values.

Certain of the credit, private equity, ~~credit,~~ and real ~~estate~~assets funds may also enter into foreign currency exchange contracts, total return swap contracts, credit default swap contracts, and other derivative contracts, which may include options, caps, collars and floors. Foreign currency exchange contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. If securities are held at the end of ~~this~~the period, the changes in value are recorded in income as unrealized. Realized gains or losses are recognized when contracts are settled. Total return swap and credit default swap contracts are recorded at fair value as an asset or liability with changes in fair value recorded as unrealized appreciation or depreciation. Realized gains or losses are recognized at the termination of the contract based on the difference between the close-out price of the total return or credit default swap contract and the original contract price. Forward contracts are valued based on market rates obtained from counterparties or prices obtained from recognized financial data service providers.

~~Valuation Process~~

~~On a quarterly basis, Apollo utilizes valuation committees consisting~~7. OTHER ASSETS

Other assets consisted of ~~members from senior management, to review~~the following:



	As of March 31, 2018			As of December 31, 2017
Fixed assets	$	101,345		$	102,694
Less: Accumulated depreciation and amortization	(82,885		)	(83,510		)
Fixed assets, net	18,460			19,184
Prepaid expenses	174,137			189,542
Tax receivables	8,646			9,236
Other	6,927			13,795
Total Other Assets	$	208,170		$	231,757

Prepaid expenses includes $116.3 million and ~~approve the valuation results~~$135.0 million as of March 31, 2018 and December 31, 2017, respectively, of deferred equity-based compensation related to the investments of the funds it manages. For certain publicly traded vehicles, a review is performed by an independent board of directors. The Company also retains independent valuation firms to provide third-party

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

valuation consulting services to Apollo, which consist of certain limited procedures that management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management with validating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, including comparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

~~Financial Instruments held by Consolidated VIEs~~

~~The Company measures both the financial assets and financial liabilities of the consolidated CLOs in its condensed consolidated financial statements using the fair~~ value of the ~~financial assets of~~restricted shares that have been or are expected to be granted in connection with the consolidated CLOs, which are more observable than the fair value of the financial liabilities of the consolidated CLOs. As a result, the financial assets of the consolidated CLOs are measured at fair value and the financial liabilities are measured in consolidation as: (i) the sum of the fair value of the financial assets and the carrying value of any non-financial assets that are incidental to the operations of the CLOs less (ii) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services) and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interest retained by the Company) using a reasonable and consistent methodology. Under the measurement alternative, net income (loss) attributable to Apollo Global Management, LLC reflects the Company’s own economic interests in the consolidated CLOs including (i) changes in the fair value of the beneficial interests retained by the Company and (ii) beneficial interests that represent compensation for collateral management services.

The consolidated VIEs hold investments that could be traded over-the-counter. Investments in securities that are traded on a securities exchange or comparable over-the-counter quotation systems are valued based on the last reported sale price at that date. If no sales of such investments are reported on such date, and in the case of over-the-counter securities or other investments for which the last sale date is not available, valuations are based on independent market quotations obtained from market participants, recognized pricing services or other sources deemed relevant, and the prices are based on the average of the “bid” and “ask” prices, or at ascertainable prices at the close of business on such day. Market quotations are generally based on valuation pricing models or market transactions of similar securities adjusted for security-specific factors such as relative capital structure priority and interest and yield risks, among other factors. When market quotations are not available, a model based approach is used to determine fair value.

~~As previously noted, the Company measures the debt obligations of the consolidated CLOs on the basis of the fair value of the financial assets of the consolidated CLOs.~~

~~Investments, at Fair Value~~

~~Investments, at fair value represent investments of the consolidated funds, investments of the consolidated VIEs and certain financial instruments for which the fair value option has been elected.~~

The unrealized gains and losses resulting from changes in the fair value of the consolidated VIEs are reflected as net gains (losses) from investment activities of consolidated variable interest entities in the condensed consolidated statements of operations.

Net gains (losses) from investment activities in the condensed consolidated statements of operations include both realized gains and losses and the change in unrealized gains and losses in the Company’s~~investments, at fair value between the opening reporting date and the closing reporting date.~~

~~Fair Value Option~~

~~Apollo has elected the fair value option for the Company’s investment in Athene Holding, the assets and liabilities~~settlement of certain of its consolidated VIEs (including CLOs) and the Company’s investments in its unconsolidated CLOs. Such election is irrevocable and is applied to financial instruments on an individual basis at initial recognition. Apollo has applied the fair value optionprofit sharing arrangements. A corresponding amount for certain corporate loans, other investments and debt obligations held by the consolidated VIEs that otherwise would not have been carried at fair value. See notes 3, 4, and 5 for further disclosure on the investments in Athene Holding and financial instruments of the consolidated VIEs for which the fair value option has been elected.

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~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

~~Equity Method Investments~~

For investments in entities over which the Company exercises significant influence but which do not meet the requirements for consolidation and for which the Company has not elected the fair value option, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or loss of such entities. The Company’s share of the underlying net income or loss of such entities is recorded in income (loss) from equity method investments in the condensed consolidated statements of operations. The carrying amounts of equity method investments are recorded in investments in the condensed consolidated statements of financial condition. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value.

~~Revenues~~

Revenues are reported in three separate categories that include (i) advisory and transaction fees from related parties, net, which relate to the investments of the funds the Company manages and may include individual monitoring agreements the Company has with the portfolio companies and debt investment vehicles of the private equity funds and credit funds it manages; (ii) management fees from related parties, which are based on committed capital, invested capital, net asset value, gross assets or as otherwise defined in the respective agreements; and (iii) carried interest income (loss) from related parties, which is normally based on the performance of the funds the Company manages that are subject to preferred return.

~~Management Fees from Related Parties~~—Management fees for private equity, credit, and real estate funds are recognized in the period during which the related services are performed in accordance with the contractual terms of the related agreement, and are generally based upon (1) a percentage of the capital committed during the commitment period, and thereafter based on the remaining invested capital of unrealized investments, or (2) net asset value, gross assets or as otherwise defined in the respective agreements. Included in management fees are certain expense reimbursements where the Company is considered the principal under the agreements and is required to record the expense and related reimbursement revenue on a gross basis.

~~Advisory and Transaction Fees from Related Parties, Net~~—Advisory and transaction fees, including directors’ fees, are recognized when the underlying services rendered are substantially completed in accordance with the terms of the transaction and advisory agreements. Additionally, during the normal course of business, the Company incurs certain costs related to certain transactions that are not consummated (“broken deal costs”). These costs (e.g., research costs, due diligence costs, professional fees, legal fees and other related items) are determinedawards expected to be ~~broken deal costs upon management’s decision to no longer pursue the transaction. In accordance with the related fund agreement, in the event the deal~~granted of $96.0 million and $124.3 million, as of March 31, 2018 and December 31, 2017, respectively, is deemed broken, all of the costs are reimbursed by the funds and then included as a component of the calculation of the Management Fee Offset (described below). If a deal is successfully completed, Apollo is reimbursed by the fund or fund’s portfolio company for all costs incurred and no offset is generated. As the Company acts as an agent for the funds it manages, any transaction costs incurred and paid by the Company on behalf of the respective funds relating to successful or broken deals are recorded net on the Company’s condensed consolidated statements of operations, and any receivable from the respective funds is recorded in due from related parties on the condensed consolidated statements of financial condition.

Advisory and transaction fees from related parties, net, also includes underwriting fees. Underwriting fees include gains, losses and fees, net of syndicate expenses, arising from securities offerings in which one of the Company’s subsidiaries participates in the underwriter syndicate. Underwriting fees are recognized at the time the underwriting is completed and the income is reasonably assured and are included in ~~the condensed consolidated statements of operations. Underwriting fees recognized but not received are recorded in~~ other ~~assets~~liabilities on the condensed consolidated statements of financial condition.

AsDepreciation expense for the three months ended March 31, 2018 and 2017 was $2.1 million and $2.3 million, respectively, and is presented as a ~~result~~component of ~~providing advisory services to certain private equity~~general, administrative and credit portfolio companies, Apollo is generally entitled to receive fees for transactions related to the acquisition, in certain cases, and disposition of portfolio companies as well as ongoing monitoring of portfolio company operations and directors’ fees. The amounts due from portfolio companies are recorded in due from related parties, which is discussed further in note 13. Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Advisory and transaction fees from related parties are presented net of the Management Fee Offsetother expense in the condensed consolidated statements of operations.

~~Carried Interest Income (Loss) from Related Parties~~—Apollo is entitled to an incentive return that can normally amount to as much as 20% of the total returns on a fund’s capital, depending upon performance. Performance fees are assessed as a percentage of the investment performance of the funds. The carried interest income from related parties for any period is based

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

upon an assumed liquidation of the fund’s net assets on the reporting date, and distribution of the net proceeds in accordance with the fund’s income allocation provisions. Carried interest receivable is presented separately in the condensed consolidated statements of financial condition. The carried interest income from related parties may be subject to reversal to the extent that the carried interest income recorded exceeds the amount due to the general partner based on a fund’s cumulative investment returns. When applicable, the accrual for potential repayment of previously received carried interest income, which is a component of due to related parties, represents all amounts previously distributed to the general partner that would need to be repaid to the Apollo funds if these funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual general partner obligation, however, would not become payable or realized until the end of a fund’s life.

Carried interest income from related parties also includes a quarterly performance fee on the pre-incentive fee net investment income (“AINV Part I Fees”) of AINV. For purposes of the AINV Part I Fees, the net investment income of AINV includes interest income, dividend income and certain other income but excludes any realized and unrealized capital gains or losses. Such AINV Part I Fees are paid quarterly and are not subject to repayment.

~~Deferred Revenue~~—Apollo earns management fees subject to the Management Fee Offset (described above). When advisory and transaction fees are earned by the management company, the Management Fee Offset reduces the management fee obligation of the fund. When the Company receives cash for advisory and transaction fees, a certain percentage of such advisory and/or transaction fees, as applicable, is allocated as a credit to reduce future management fees, otherwise payable by such fund. Such credit is recorded as deferred revenue in the condensed consolidated statements of financial condition. A portion of any excess advisory and transaction fees may be required to be returned to the limited partners of certain funds upon such fund’s liquidation. As the management fees earned by the Company are presented on a gross basis, any Management Fee Offsets calculated are presented as a reduction to advisory and transaction fees from related parties in the condensed consolidated statements of operations.

Additionally, Apollo earns advisory fees pursuant to the terms of the advisory agreements with certain of the portfolio companies that are owned by the funds Apollo manages. When Apollo receives a payment from a portfolio company that exceeds the advisory fees earned at that point in time, the excess payment is recorded as deferred revenue in the condensed consolidated statements of financial condition. The advisory agreements with the portfolio companies vary in duration and the associated fees are received monthly, quarterly or annually. Deferred revenue is reversed and recognized as revenue over the period that the agreed upon services are performed.

Under the terms of the funds’ partnership agreements, Apollo is normally required to bear organizational expenses over a set dollar amount and placement fees or costs in connection with the offering and sale of interests in the funds it manages to investors. The placement fees are payable to placement agents, who are independent third parties that assist in identifying potential investors, securing commitments to invest from such potential investors, preparing or revising offering and marketing materials, developing strategies for attempting to secure investments by potential investors and/or providing feedback and insight regarding issues and concerns of potential investors, when a limited partner either commits or funds a commitment to a fund. In certain instances the placement fees are paid over a period of time. Based on the management agreements with the funds, Apollo considers placement fees and organizational costs paid in determining if cash has been received in excess of the management fees earned. Placement fees and organizational costs are normally the obligation of Apollo but can be paid for by the funds. When these costs are paid by the fund, the resulting obligations are included within deferred revenue. The deferred revenue balance will also be reduced during future periods when management fees are earned but not paid.

~~Compensation and Benefits~~

~~401(k) Savings Plan~~

The Company sponsors a 401(k) savings plan (the “401(k) Plan”) whereby U.S.-based employees are entitled to participate in the 401(k) Plan based upon satisfying certain eligibility requirements. Effective J~~anuary 1, 2017, the Company matches 50% of eligible annual employee contributions up to 3% of the eligible employees’ annual compensation. Matching contributions vest after three years of service.~~

~~Profit Sharing~~

Profit sharing expense and profit sharing payable primarily consist of a portion of carried interest earned from certain funds that is allocated to employees, former employees and Contributing Partners. Profit sharing amounts are recognized on an accrued basis as the related carried interest income is earned. Accordingly, profit sharing amounts can be reversed during periods when there is a decline in carried interest income that was previously recognized.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

Profit sharing amounts are generally not paid until the related carried interest is distributed to the general partner upon realization of the fund’s investments. Under certain profit sharing arrangements, a portion of the carried interest distributed to the general partner is settled by issuance of restricted shares, rather than cash to employees. Prior to distribution of the carried interest to the general partner, the Company records the value of the restricted shares expected to be granted in other assets and other liabilities within the condensed consolidated statements of financial condition. Upon distribution of the carried interest to the general partner, the general partner expects to purchase the Class A restricted shares on behalf of employees and simultaneously grant those shares to the employee. Such shares are recorded as equity-based compensation expense over the relevant service period.

Additionally, profit sharing amounts previously distributed may be subject to clawback from employees, former employees and Contributing Partners. When applicable, the accrual for potential clawback of previously distributed profit sharing amounts, which is a component of due from related parties on the condensed consolidated statements of financial condition, represents all amounts previously distributed to employees, former employees and Contributing Partners that would need to be returned to the general partner if the Apollo funds were to be liquidated based on the fair value of the underlying funds’ investments as of the reporting date. The actual general partner receivable, however, would not become realized until the end of a fund’s life.

The Company has a performance based incentive arrangement for certain Apollo partners and employees designed to more closely align compensation on an annual basis with the overall realized performance of the Company. This arrangement enables certain partners and employees to earn discretionary compensation based on carried interest realizations earned by the Company in a given year, which amounts are reflected in profit sharing expense in the accompanying condensed consolidated financial statements.

~~General, Administrative and Other~~

General, administrative and other primarily includes professional fees, occupancy, depreciation and amortization, travel, information technology, and administration expenses. For the three months ended March 31, 2016, the presentation of professional fees, occupancy, and depreciation and amortization was combined with general, administrative and other on the condensed consolidated statements of operations to conform to the current presentation.

~~Use of Estimates~~

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Apollo’s most significant estimates include goodwill, intangible assets, income taxes, carried interest income from related parties, contingent consideration obligations related to acquisitions, non-cash compensation, and fair value of investments and debt. Actual results could differ materially from those estimates.

~~Recent Accounting Pronouncements~~

In May 2014, the Financial Accounting Standards Board (“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 new guidance requires 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 (i.e., the transaction price). When determining the transaction price under the new guidance, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The new guidance also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The new guidance will apply to all entities. In August 2015, the FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. The amended guidance defers the effective date of the new guidance to interim reporting periods within annual reporting periods beginning after December 15, 2017.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

Upon adoption, the guidance currently applied by the Company in which it recognizes carried interest income on an assumed liquidation basis at each reporting date will no longer be permitted. The Company expects the recognition of carried interest income from incentive fees, which are a form of variable consideration, to be deferred until such fees are probable to not be significantly reversed. Incentive fees are carried interest income that is not a capital allocation to the general partner or investment manager.

Carried interest income that is a capital allocation to the general partner or investment manager, represents the remaining portion of carried interest income on the Company’s consolidated statements of operations. In connection with the adoption of the new revenue guidance, the Company will apply a new accounting policy for its carried interest income that is a capital allocation to the general partner or investment manager. The Company intends to account for such carried interest income as a financial instrument under the equity method of accounting. The pattern and amount of recognition under the new policy is not expected to differ materially from the Company’s existing recognition for such fees. Such carried interest income will be reported as a separate line item within revenue (i.e., separate from incentive fees). As capital allocation related carried interest income and the related general partner investment are considered to be a single unit of account under the Company’s new accounting policy, the equity method income associated with the general partner interests will be combined with the associated carried interest income and reported in a single line within revenue.

The Company is currently in the process of implementing the new revenue guidance and is continuing to evaluate the effect this guidance will have on other revenue streams, including advisory and transaction fees and management fees, as well as any principal versus agent considerations for reporting revenue gross versus net. The Company will adopt the new revenue recognition guidance effective January 1, 2018.

In February 2016, the FASB issued guidance that amends the accounting for leases. The amended guidance requires recognition of a lease asset and a lease liability by lessees for leases classified as operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from existing guidance and accounting applied by a lessor is largely unchanged from existing guidance. The amended guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. Early application is permitted for all entities.

In March 2016, the FASB issued amended guidance on stock compensation. The amendments are intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for excess tax benefits, forfeitures, and cash flows. The amended guidance requires that all excess tax benefits and deficiencies related to share-based payment transactions be recognized through the income tax provision (benefit) in the condensed consolidated statement of operations. Further, the amended guidance permits an entity to make an accounting policy election either to estimate the number of forfeitures expected to occur or to account for forfeitures when they occur. The amended guidance also requires excess tax benefits related to share-based payment transactions to be presented as operating activities and employee taxes paid to be presented as financing activities in the condensed consolidated statement of cash flows. The amended guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. The Company adopted the guidance for the three months ended March 31, 2017.

Amendments relating to the recognition of excess tax benefits in the condensed consolidated statements of operations and impacts to the condensed consolidated statements of cash flows have been applied prospectively, with the exception of a $22.9 million cumulative effect adjustment, as of January 1, 2017, to deferred tax assets with a corresponding decrease to accumulated deficit relating to previously unrecognized excess tax benefits.

For forfeitures, the Company made an accounting policy election to no longer estimate forfeitures in determining the number of equity-based awards that are expected to vest. Under the Company’s new policy, forfeitures are accounted for when they occur. Any adjustments have been reflected prospectively as of January 1, 2017.

In August 2016, the FASB issued guidance intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statements of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company early adopted the guidance for the three months ended March 31, 2017. Adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

In October 2016, the FASB issued guidance that amends the consolidation guidance issued in February 2015. Under the amended guidance a decision maker will need to consider only its proportionate indirect interest in a VIE that is held through a related party under common control. Under the originally issued guidance, a decision maker treats the interest of the related party under common control in the VIE as if the decision maker held the interest itself. The amended guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. The Company adopted the guidance for the three months ended March 31, 2017. Adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements.

In November 2016, the FASB issued guidance to reduce diversity in practice in the classification and presentation of changes in restricted cash on the statements of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. Entities will also be required to reconcile such total to amounts on the Company’s condensed consolidated statements of financial condition and disclose the nature of the restrictions. The guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company is in the process of evaluating the impact that this guidance will have on its condensed consolidated financial statements.

~~3. INVESTMENTS~~

~~The following table represents Apollo’s investments:~~

As of
March 31, 2017 As of
December 31, 2016
Investments, at fair value $ 760,680
$ 708,080
Equity method investments 815,007
786,664
Total Investments $ 1,575,687
$ 1,494,744

~~Investments, at Fair Value~~

Investments, at fair value, consist of investments for which the fair value option has been elected and include the Company’s investment in Athene Holding, investments held by the Company’s consolidated funds, investments in debt of unconsolidated CLOs, and other investments held by the Company. See note 5 for further discussion regarding investments, at fair value.

~~Net Gains from Investment Activities~~

~~The following table presents the realized and net change in unrealized gains on investments, at fair value for the three months ended March 31, 2017 and 2016:~~

For the Three Months Ended March 31,
2017 2016
Realized losses on sales of investments $ —
$ (288 )
Net change in unrealized gains (losses) due to changes in fair value⁽¹⁾
34,517
(56,181 )
Net gains (losses) from investment activities $ 34,517
$ (56,469 )


~~(1)~~	~~Primarily relates to the Company’s investment in Athene Holding. See note 5 for further information regarding the Company’s investment in Athene Holding.~~

~~Equity Method Investments~~

Apollo’s equity method investments include its investments in the private equity, credit and real estate funds it manages, which are not consolidated, but in which the Company exerts significant influence. Apollo’s share of net income generated by these investments is recorded within income from equity method investments in the condensed consolidated statements of operations.

~~Equity method investments, excluding those for which the fair value option was elected, as of~~ ~~March 31, 2017~~ ~~and December 31, 2016 consisted of the following:~~

~~- 22-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

Equity Held as of
March 31, 2017
⁽⁵⁾
December 31, 2016
⁽⁵⁾
Private Equity⁽¹⁾⁽²⁾
$ 455,626
$ 428,581

Credit⁽¹⁾⁽³⁾
328,255
327,012

Real Estate 31,126
31,071

Total equity method investments⁽⁴⁾
$ 815,007
$ 786,664

~~(1)~~

As of March 31, 2017, equity method investments include Fund VIII (Private Equity) and MidCap (Credit) of $289.2 million and $80.1 million, respectively, representing an ownership percentage of 2.2% and 4.3%, respectively. As of December 31, 2016, equity method investments include Fund VIII (Private Equity) and MidCap (Credit) of $260.9 million and $79.5 million, respectively, representing an ownership percentage of 2.2% and 4.3%, respectively.


~~(2)~~	The equity method investment in AP Alternative Assets, L.P. (“AAA”) was $58.2 million and $66.8 million as of March 31, 2017 and December 31, 2016, respectively. The value of the Company’s investment in AAA was $59.2 million and $64.9 million based on the quoted market price as of March 31, 2017 and December 31, 2016, respectively.


~~(3)~~	The equity method investment in AINV was $57.7 million and $58.6 million as of March 31, 2017 and December 31, 2016, respectively. The value of the Company’s investment in AINV was $58.3 million and $52.1 million based on the quoted market price as of March 31, 2017 and December 31, 2016, respectively.


~~(4)~~	~~Certain funds invest across multiple segments. The presentation in the table above is based on the classification of the majority of such funds’ investments.~~


~~(5)~~	~~Some amounts are included a quarter in arrears.~~

As of March 31, 2017 and for the three months ended March 31, 2017, no equity method investment held by Apollo met the significance criteria as defined by the SEC. Although the disclosure is not required by the significance criteria for the three months ended March 31, 2017, the Company chose to continue to include this information as it was disclosed in its 2016 Annual Report. The following table presents summarized financial information of Athene Holding for the three months ended March 31, 2017 and 2016.

For the Three Months Ended March 31,
2017
⁽¹⁾
2016
(in millions)
Statements of Operations
Revenues $ 1,062
$ 722
Expenses 676
634
Income before income tax provision 386
88
Income tax provision 18
1
Net income available to Athene common shareholders $ 368
$ 87


~~(1)~~	The financial statement information for the three months ended March 31, 2017 is presented a quarter in arrears and is comprised of the financial information for the three months ended December 31, 2016, ~~which represents the latest available financial information as of the date of this report.~~

~~4. VARIABLE INTEREST ENTITIES~~

~~Consolidated Variable Interest Entities~~

~~Apollo has consolidated VIEs in accordance with the policy described in note~~ 2. Through its role as investment manager of these VIEs, the Company determined that Apollo has the power to direct the activities that most significantly impact the economic performance of these VIEs. Additionally, Apollo determined that its interests, both directly and indirectly from these VIEs, represent rights to returns that could potentially be significant to such VIEs. As a result, Apollo determined that it is the primary beneficiary and therefore should consolidate the VIEs.

~~- 23-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

~~Consolidated CLOs~~

Certain CLOs are consolidated by Apollo as the Company is considered to hold a controlling financial interest through direct and indirect interests in these CLOs exclusive of management and performance based fees received. Through its role as collateral manager of these VIEs, the Company determined that Apollo has the power to direct the activities that most significantly impact the economic performance of these VIEs. These CLOs were formed for the sole purpose of issuing collateralized notes to investors. The assets of these VIEs are primarily comprised of senior secured loans and the liabilities are primarily comprised of debt.

The assets of these consolidated CLOs are not available to creditors of the Company. In addition, the investors in these consolidated CLOs have no recourse against the assets of the Company. The Company measures both the financial assets and the financial liabilities of the CLOs using the fair value of the financial assets as further described in note 2. The Company has elected the fair value option for financial instruments held by its consolidated CLOs, which includes investments in loans and corporate bonds, as well as debt obligations and contingent obligations held by such consolidated CLOs. Other assets include amounts due from brokers and interest receivables. Other liabilities include payables for securities purchased, which represent open trades within the consolidated VIEs and primarily relate to corporate loans that are expected to settle within the next 60 days. From time to time, Apollo makes investments in certain consolidated CLOs denominated in foreign currencies. As of March 31, 2017 and December 31, 2016, the Company held investments of $41.9 million and $41.3 million, respectively, in consolidated foreign currency denominated CLOs, which eliminates in consolidation.

~~Net Gains from Investment Activities of Consolidated Variable Interest Entities~~

~~The following table presents net gains from investment activities of the consolidated VIEs for the three months ended March 31, 2017 and 2016:~~

For the Three Months Ended March 31,
2017
⁽¹⁾
2016
⁽¹⁾
Net gains (losses) from investment activities $ 1,990
$ (4,122 )
Net gains (losses) from debt (883 ) 6,434

Interest and other income 7,822
10,553

Interest and other expenses (4,821 ) (11,546 )
Net gains from investment activities of consolidated variable interest entities $ 4,108
$ 1,319


~~(1)~~	~~Amounts reflect consolidation eliminations.~~

~~Senior Secured Notes and Subordinated Notes—Included within debt are amounts due to third-party institutions by the consolidated VIEs. The following table summarizes the principal provisions of the debt of the consolidated VIEs as of~~ ~~March 31, 2017~~ ~~and December 31, 2016:~~

As of March 31, 2017 As of December 31, 2016

Principal
Outstanding

Weighted
Average
Interest
Rate

Weighted
Average
Remaining
Maturity in
Years

Principal
Outstanding

Weighted
Average
Interest
Rate

Weighted
Average
Remaining
Maturity in
Years
Senior Secured Notes⁽²⁾⁽³⁾
$ 714,065
1.71 % 12.0 $ 704,976
1.83 % 12.3
Subordinated Notes⁽²⁾⁽³⁾
88,926
N/A
⁽¹⁾
18.9 87,794
N/A
⁽¹⁾
19.2
Total $ 802,991
$ 792,770


~~(1)~~	~~The subordinated notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the VIEs.~~


~~(2)~~	~~The fair value of Senior Secured Notes and Subordinated Notes as of March 31, 2017 and December 31, 2016 was $797.3 million and $786.5 million, respectively.~~

~~(3)~~

The debt at fair value of the consolidated VIEs is collateralized by assets of the consolidated VIEs and assets of one vehicle may not be used to satisfy the liabilities of another vehicle. As of March 31, 2017 and December 31, 2016, the fair value of the assets of the consolidated VIEs was $1,106.4 million and $1,001.8 million, respectively. This collateral consisted of cash and cash equivalents, investments, at fair value, and other assets.

~~- 24-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

~~The consolidated VIEs’ debt obligations contain various customary loan covenants. As of March 31, 2017, the Company was not aware of any instances of non-compliance with any of these covenants.~~

~~Variable Interest Entities Which are Not Consolidated~~

~~The Company holds variable interests in certain VIEs which are not consolidated, as it has been determined that Apollo is not the primary beneficiary.~~

The following tables present the carrying amounts of the assets and liabilities of the VIEs for which Apollo has concluded that it holds a significant variable interest, but that it is not the primary beneficiary as of March 31, 2017 and December 31, 2016. In addition, the tables present the maximum exposure to losses relating to these VIEs.

As of March 31, 2017
Total Assets Total Liabilities Apollo Exposure
Total $ 7,446,439
⁽¹⁾
$ 3,042,395
⁽²⁾
$ 271,273
⁽³⁾


~~(1)~~	~~Consists of $254.2 million in cash, $7,132.7 million in investments and $59.5 million in receivables.~~


~~(2)~~	~~Represents debt and other payables.~~

~~(3)~~

Represents Apollo’s direct investment in those entities in which Apollo holds a significant variable interest and certain other investments. Additionally, cumulative carried interest income is subject to reversal in the event of future losses. The maximum amount of future reversal of carried interest income from all of Apollo’s funds, including those entities in which Apollo holds a significant variable interest, was $3.1 billion as of March 31, 2017, as discussed in note 14.

As of December 31, 2016
Total Assets Total Liabilities Apollo Exposure
Total $ 7,523,335
⁽¹⁾
$ 2,818,459
⁽²⁾
$ 272,191
⁽³⁾


~~(1)~~	~~Consists of $231.9 million in cash, $7,253.9 million in investments and $37.5 million in receivables.~~


~~(2)~~	~~Represents debt and other payables.~~

~~(3)~~

Represents Apollo’s direct investment in those entities in which Apollo holds a significant variable interest. Additionally, cumulative carried interest income is subject to reversal in the event of future losses. The maximum amount of future reversal of carried interest income from all of Apollo’s funds, including those entities in which Apollo holds a significant variable interest, was $2.9 billion as of December 31, 2016.

~~- 25-~~31-

Table of Contents

APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

~~5. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS~~

The following tables summarize the valuation of the Company’s financial assets and liabilities for which the fair value option has been elected by the fair value hierarchy as of March 31, 2017 and December 31, 2016:

As of March 31, 2017

Level I⁽¹⁾

Level II⁽¹⁾
Level III Total
Cost of Investments,
at Fair Value
Assets
Investments, at fair value:
Investments of consolidated Apollo funds $ 4,535
$ 4,424
$ 643
$ 9,602
$ 9,665
Other investments —
—
45,599
45,599
47,690
Investment in Athene Holding⁽²⁾
—
705,479
—
705,479
387,526
Total investments, at fair value 4,535
709,903
46,242
760,680
⁽⁷⁾
$ 444,881
Investments of VIEs, at fair value⁽³⁾
—
848,274
137,344
985,618

Investments of VIEs, valued using NAV —
—
—
5,435

Total investments of VIEs, at fair value —
848,274
137,344
991,053

Derivative assets —
942
—
942

Total Assets $ 4,535
$ 1,559,119
$ 183,586
$ 1,752,675

Liabilities
Liabilities of consolidated Apollo funds $ 338
$ 5,273
$ 35
$ 5,646

Liabilities of VIEs, at fair value⁽³⁾⁽⁵⁾
—
797,328
11,192
808,520

Contingent consideration obligations⁽⁶⁾
—
—
87,663
87,663

Derivative liabilities⁽⁴⁾
—
761
—
761

Total Liabilities $ 338
$ 803,362
$ 98,890
$ 902,590

As of December 31, 2016

Level I⁽¹⁾

Level II⁽¹⁾
Level III Total Cost of Investments,
at Fair Value
Assets
Investments, at fair value:
Investments of consolidated Apollo funds $ 3,336
$ 1,475
$ 567
$ 5,378
$ 5,463
Other investments —
—
45,154
45,154
47,690
Investment in Athene Holding⁽²⁾
—
657,548
—
657,548
387,526
Total investments, at fair value 3,336
659,023
45,721
708,080
⁽⁷⁾
$ 440,679
Investments of VIEs, at fair value⁽³⁾
—
816,167
92,474
908,641

Investments of VIEs, valued using NAV —
—
—
5,186

Total investments of VIEs, at fair value —
816,167
92,474
913,827

Derivative assets —
1,360
—
1,360

Total Assets $ 3,336
$ 1,476,550
$ 138,195
$ 1,623,267

Liabilities
Liabilities of VIEs, at fair value⁽³⁾⁽⁵⁾
$ —
$ 786,545
$ 11,055
$ 797,600

Contingent consideration obligations⁽⁶⁾
—
—
106,282
106,282

Derivative liabilities⁽⁴⁾
—
1,167
—
1,167

Total Liabilities $ —
$ 787,712
$ 117,337
$ 905,049


~~(1)~~	~~All Level I and Level II assets and liabilities were valued using third party pricing, with the exception of the investment in Athene Holding.~~


~~(2)~~	~~See note 13 for further disclosure regarding the investment in Athene Holding.~~


~~(3)~~	~~See note 4 for further disclosure regarding VIEs.~~


~~(4)~~	~~Derivative liabilities are presented as a component of Other liabilities in the condensed consolidated statements of financial condition.~~

~~- 26-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~


~~(5)~~	As of March 31, 2017, liabilities of VIEs, at fair value included debt and other liabilities of $797.3 million and $11.2 million, respectively. As of December 31, 2016, liabilities of VIEs, at fair value included debt and other liabilities of $786.5 million and $11.1 million, respectively. Other liabilities include contingent obligations classified as Level III.


~~(6)~~	~~See note 14 for further disclosure regarding contingent consideration obligations.~~


~~(7)~~	See note 3 to our condensed consolidated financial statements for further detail regarding our investments at fair value and reconciliation to the condensed consolidated statements of financial condition.

~~There were no transfers of financial assets or liabilities between Level I and Level II for the three months ended March 31, 2017 and 2016.~~

The following tables summarize the changes in fair value in financial assets measured at fair value for which Level III inputs have been used to determine fair value for the three months ended March 31, 2017 and ~~2016~~:

For the Three Months Ended March 31, 2017
Investments of Consolidated Apollo Funds Other Investments Investments of Consolidated VIEs Total
Balance, Beginning of Period $ 567
$ 45,154
$ 92,474
$ 138,195
Purchases —
—
43,449
43,449
Sale of investments/Distributions —
—
(12,088 ) (12,088 )
Net realized gains (losses) (14 ) —
48
34
Changes in net unrealized gains (losses) 30
(91 ) 3,002
2,941
Cumulative translation adjustment —
536
890
1,426
Transfer into Level III⁽¹⁾
60
—
9,569
9,629
Balance, End of Period $ 643
$ 45,599
$ 137,344
$ 183,586
Change in net unrealized gains (losses) included in net gains from investment activities related to investments still held at reporting date $ 17
$ (92 ) $ —
$ (75 )
Change in net unrealized gains included in net gains from investment activities of consolidated VIEs related to investments still held at reporting date —
—
2,873
2,873


~~(1)~~	Transfers between Level II and III were a result of subjecting the broker quotes on these financial assets to various criteria which include the number and quality of broker quotes, the standard deviation of obtained broker quotes and the percentage deviation from independent pricing services.

For the Three Months Ended March 31, 2016
Investments of Consolidated Apollo Funds Other Investments Investment in Athene Holding Investments of Consolidated VIEs Total
Balance, Beginning of Period
$ 1,634
$ 434
$ 510,099
$ 100,941
$ 613,108
Purchases 496
24,597
—
3,174
28,267
Sale of investments/Distributions (643 ) —
—
(10,509 ) (11,152 )
Net realized gains (losses) (111 ) —
—
2,029
1,918
Changes in net unrealized gains (losses) 5
1,119
(56,479 ) (2,130 ) (57,485 )
Cumulative translation adjustment —
(357 ) —
3,551
3,194
Transfer into Level III⁽¹⁾
990
—
—
10,356
11,346
Transfer out of Level III⁽¹⁾
(1,222 ) —
—
(5,443 ) (6,665 )
Balance, End of Period $ 1,149
$ 25,793
$ 453,620
$ 101,969
$ 582,531
Change in net unrealized gains (losses) included in net gains from investment activities related to investments still held at reporting date $ (121 ) $ 1,119
$ (56,479 ) $ —
$ (55,481 )
Change in net unrealized losses included in net gains from investment activities of consolidated VIEs related to investments still held at reporting date —
—
—
(2,218 ) (2,218 )


~~(1)~~	Transfers between Level II and III were a result of subjecting the broker quotes on these financial assets to various criteria which include the number and quality of broker quotes, the standard deviation of obtained broker quotes and the percentage deviation from independent pricing services.

~~- 27-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

The following table summarizes the changes in fair value in financial liabilities measured at fair value for which Level III inputs have been used to determine fair value for the three months ended March 31, 2017 and 2016:

For the Three Months Ended March 31,
2017 2016
Liabilities of Consolidated Apollo Funds Liabilities of Consolidated VIEs Contingent Consideration Obligations Total Liabilities of Consolidated VIEs Contingent Consideration Obligations Total
Balance, Beginning of Period $ —
$ 11,055
$ 106,282
$ 117,337
$ 11,411
$ 79,579
$ 90,990
Additions 97
—
—
97
—
—
—
Payments/Extinguishment (59 ) —
(14,956 ) (15,015 ) —
(1,407 ) (1,407 )
Net realized gains (9 ) —
—
(9 ) —
—
—
Changes in net unrealized (gains) losses⁽¹⁾
6
137
(3,663 ) (3,520 ) (549 ) (4,113 ) (4,662 )
Balance, End of Period $ 35
$ 11,192
$ 87,663
$ 98,890
$ 10,862
$ 74,059
$ 84,921
Change in net unrealized gains included in net gains from investment activities of consolidated VIEs related to liabilities still held at reporting date $ 2
$ 137
$ —
$ 139
$ —
$ —
$ —


~~(1)~~	~~Changes in fair value of contingent consideration obligations are recorded in profit sharing expense in the condensed consolidated statements of operations.~~

The following tables summarize the quantitative inputs and assumptions used for financial assets and liabilities categorized as Level III under the fair value hierarchy as of March 31, 2017 and December 31, 2016:

As of March 31, 2017
Fair Value Valuation Techniques Unobservable Inputs Ranges Weighted Average
Financial Assets
Investments of consolidated Apollo funds $ 643

Third party pricing⁽¹⁾
N/A N/A N/A
Investments in other 45,599

Third party pricing⁽¹⁾
N/A N/A N/A
Investments of consolidated VIEs:
Bank debt term loans 19,437

Third party pricing⁽¹⁾
N/A N/A N/A
Corporate loans/bonds/CLO notes 15,456

Third party pricing⁽¹⁾
N/A N/A N/A
Equity securities Transaction N/A N/A N/A
102,451
Book value multiple Book value multiple 0.77x 0.77x
Discounted cash flow Discount rate 13.3% 13.3%
Total investments of consolidated VIEs 137,344

Total Financial Assets $ 183,586

Financial Liabilities
Liabilities of consolidated Apollo funds $ 35

Third party pricing⁽¹⁾
N/A N/A N/A
Liabilities of consolidated VIEs 11,192
Other N/A N/A N/A
Contingent consideration obligation 87,663
Discounted cash flow Discount rate 13.0% - 17.8% 17.7%
Total Financial Liabilities $ 98,890


~~(1)~~	~~These securities are valued primarily using unadjusted broker quotes.~~

~~- 28-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

As of December 31, 2016
Fair Value Valuation Techniques Unobservable Inputs Ranges Weighted Average
Financial Assets
Investments of consolidated Apollo funds $ 567

Third party pricing⁽¹⁾
N/A N/A N/A
Investments in other 45,154

Third party pricing⁽¹⁾
N/A N/A N/A
Investments of consolidated VIEs:
Bank debt term loans 4,701

Third party pricing⁽¹⁾
N/A N/A N/A
Corporate loans/bonds/CLO notes 15,496

Third party pricing⁽¹⁾
N/A N/A N/A
Equity securities 72,277
Transaction N/A N/A N/A
Total investments of consolidated VIEs 92,474

Total Financial Assets $ 138,195

Financial Liabilities
Liabilities of consolidated VIEs $ 11,055
Other N/A N/A N/A
Contingent consideration obligation 106,282
Discounted cash flow Discount rate 13.0% - 17.3% 17.2%
Total Financial Liabilities $ 117,337


~~(1)~~	~~These securities are valued primarily using unadjusted broker quotes.~~

~~Investment in Athene Holding~~

As of March 31, 2017 the fair value of Apollo’s investment in Athene Holding was estimated using the closing market price of Athene shares of $49.99 less a discount due to a lack of marketability (“DLOM”) of 8.6%, as applicable. The DLOM was derived based on the average remaining lock up restrictions on the shares of Athene Holding held by Apollo (20.3 months) and the estimated volatility in such shares of Athene Holding. Due to the limited trading history in Athene Holding shares, the historical share price volatility of a representative set of Athene Holding’s publicly traded insurance peers was calculated over a period equivalent to the remaining average lock up on the shares of Athene Holding held by Apollo and used as a proxy to estimate the projected volatility in Athene Holding’s shares. The fair value of Apollo’s investment in Athene Holding after the application of the DLOM was estimated at a weighted average price of $45.77 per share.

As of December 31, 2016 the fair value of Apollo’s investment in Athene Holding was estimated using the closing market price of Athene shares of $47.99 less a DLOM of 9.5%. The DLOM was derived based on the average remaining lock up restrictions on the shares of Athene Holding held by Apollo (23.3 months) and the estimated volatility in such shares of Athene Holding. Due to the limited trading history in Athene Holding shares, the historical share price volatility of a representative set of Athene Holding’s publicly traded insurance peers was calculated over a period equivalent to the remaining average lock up on the shares of Athene Holding held by Apollo and used as a proxy to estimate the projected volatility in Athene Holding’s shares. The fair value of Apollo’s investment in Athene Holding after the application of the DLOM was estimated at a price of $43.43 per share.

As of December 31, 2016, Apollo changed the valuation method used to value the opportunistic investment in Athene Holding from the U.S. GAAP book value multiple approach to the use of the closing market price of shares of Athene Holding, adjusted for a DLOM in order to reflect the post IPO sales restriction on such shares of Athene Holding. The DLOM is calculated based on the remaining length of such sales restrictions and the estimated market price volatility of the associated shares.

~~Investments of Consolidated Apollo Funds~~

The Company is the sole investor in the Apollo Senior Loan Fund, L.P. and Apollo Alternative Credit Long Short Fund L.P. and therefore consolidates the assets and liabilities of these funds. These funds invest in U.S. denominated senior secured loans, senior secured bonds and other income generating fixed-income investments. Amounts related to these consolidated funds are primarily presented in net gains from investment activities on the condensed consolidated statements of operations and in investments in the condensed consolidated statements of financial condition.

~~- 29-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

~~Other Investments~~

Other investments primarily consists of Apollo’s investments in debt of unconsolidated CLOs. The change in the fair value related to these investments is presented in net gains from investment activities on the condensed consolidated statements of operations.

~~Consolidated VIEs~~

~~Investments~~

As of March 31, 2017, the significant unobservable inputs used in the fair value measurement of the equity securities include the discount rate applied and the book value multiples applied in the valuation models. These unobservable inputs in isolation can cause significant increases or decreases in fair value. 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. When a comparable multiple model is used to determine fair value, the comparable multiples are generally multiplied by the underlying companies’ earnings before interest, taxes, depreciation and amortization (“EBITDA”) to establish the total enterprise value of the company. The comparable multiple is determined based on the implied trading multiple of public industry peers.

~~Liabilities~~

As of March 31, 2017 and December 31, 2016, the debt obligations of the consolidated CLOs were measured on the basis of the fair value of the financial assets of the CLOs as the financial assets were determined to be more observable and, as a result, categorized as Level II in the fair value hierarchy.

~~Contingent Consideration Obligations~~

The significant unobservable input used in the fair value measurement of the contingent consideration obligations is the discount rate applied in the valuation models. This input in isolation can cause significant increases or decreases in fair value. 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 the contingent consideration obligations; conversely, a decrease in the discount rate can significantly increase the fair value of the contingent consideration obligations. The discount rate was based on the hypothetical cost of equity in connection with the acquisition of Stone Tower Capital, LLC (together with its related management companies, “Stone Tower”). See note 14 for further discussion of the contingent consideration obligations.

~~6. CARRIED INTEREST RECEIVABLE~~

~~Carried interest receivable from private equity, credit and real estate funds consisted of the following:~~

As of March 31, 2017 As of December 31, 2016
Private Equity $ 993,458
$ 798,465
Credit 392,277
426,114
Real Estate 35,125
32,526
Total carried interest receivable $ 1,420,860
$ 1,257,105

~~The table below provides a roll-forward of the carried interest receivable balance for the three months ended March 31, 2017:~~

Private Equity Credit Real Estate Total
Carried interest receivable, January 1, 2017 $ 798,465
$ 426,114
$ 32,526
$ 1,257,105
Change in fair value of funds 286,974
37,331
2,668
326,973
Fund distributions to the Company (91,981 ) (71,168 ) (69 ) (163,218 )
Carried interest receivable, March 31, 2017 $ 993,458
$ 392,277
$ 35,125
$ 1,420,860

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~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

The change in fair value of funds excludes the reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income. The general partner obligation is recognized based upon a hypothetical liquidation of a fund’s net assets as of the reporting date. The actual determination and any required payment of any such general partner obligation would not take place until the final disposition of a fund’s investments based on the contractual termination of the fund or as otherwise set forth in the respective limited partnership agreement of the fund. See note 13 for further disclosure regarding the general partner obligation.

The timing of the payment of carried interest due to the general partner or investment manager varies depending on the terms of the applicable fund agreements. Generally, carried interest with respect to the private equity funds and certain credit and real estate funds is payable and is distributed to the fund’s general partner upon realization of an investment if the fund’s cumulative returns are in excess of the preferred return. For most credit funds, carried interest is payable based on realizations after the end of the relevant fund’s fiscal year or fiscal quarter, subject to certain return thresholds, or “high water marks,” having been achieved.

~~7. PROFIT SHARING PAYABLE~~

~~Profit sharing payable consisted of the following:~~

As of March 31, 2017 As of December 31, 2016
Private Equity $ 358,762
$ 268,170
Credit 260,797
268,855
Real Estate 15,109
13,123
Total profit sharing payable $ 634,668
$ 550,148

~~The table below provides a roll-forward of the profit sharing payable balance for the three months ended March 31, 2017:~~

Private Equity Credit Real Estate Total
Profit sharing payable, January 1, 2017 $ 268,170
$ 268,855
$ 13,123
$ 550,148
Profit sharing expense⁽¹⁾⁽²⁾
120,866
11,672
2,060
134,598
Payments/other (30,274 ) (19,730 ) (74 ) (50,078 )
Profit sharing payable, March 31, 2017 $ 358,762
$ 260,797
$ 15,109
$ 634,668


~~(1)~~	Includes (i) changes in amounts payable to employees and former employees entitled to a share of carried interest income in Apollo’s funds and (ii) changes to the fair value of the contingent consideration obligations recognized in connection with certain Apollo acquisitions. See notes 5 and 14 for further disclosure regarding the contingent consideration obligations.

~~(2)~~

The Company has recorded a receivable from the Contributing Partners, certain employees and former employees for the potential return of profit sharing distributions that would be due if certain funds were liquidated in the amount of $29.6 million and $39.3 million as of March 31, 2017 and December 31, 2016, respectively. Profit sharing expense excludes the potential return of these profit sharing distributions. See note 13 for further discussion regarding the potential return of profit sharing distributions.

8. INCOME TAXES

The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal, state and local income taxes. Certain consolidated entities are, or are treated as, corporations for U.S. and non-U.S. tax purposes and therefore subject to U.S. federal, state, and local corporate income tax. Certain other subsidiaries of the Company are subject to New York City Unicorporated Business Tax (“NYC UBT”) attributable to the Company’s operations apportioned to New York City. In addition, certain non-U.S. subsidiaries of the Company are subject to income taxes in their local jurisdictions.

The Company’s income tax ~~(provision) benefit~~provision totaled ~~$(39.2)~~$8.6 million and ~~$5.1~~$39.2 million for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively. The Company’s effective tax rate was approximately ~~9.9%~~(8.5)% and ~~6.5%~~9.9% for the three months ended March 31, 2018 and 2017, respectively.

The Tax Cuts and Jobs Act (the “TCJA”) was signed into law on December 22, 2017 and ~~2016, respectively.~~includes a broad range of tax reforms including a reduction in the corporate income tax rate to 21% from 35% effective January 1, 2018. In situations where the accounting for the income tax effects of the TJCA are incomplete by the time the company issues its financial statements (but the company can determine a reasonable estimate for those effects), the company can report provisional amounts that would be subject to adjustment during a measurement period until the accounting is complete. These amounts are subject to change as we obtain information necessary to complete the calculations. We will recognize any changes to the provisional amounts as we refine our estimates. We expect to complete our analysis of the provisional items during the second half of 2018. The effects of other provisions of the TCJA are not expected to have a material impact on our condensed consolidated financial statements.

Under U.S. GAAP, a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Based upon the Company’s review of its federal, state, local and foreign income tax returns and

~~- 31-~~

~~Table of Contents~~

~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

tax filing positions, the Company determined that no unrecognized tax benefits for uncertain tax positions were required to be recorded. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months.

The Company’s primary jurisdictions in which it operates are the United States, New York State, New York City, California and the United Kingdom. There are no unremitted earnings with respect to the United Kingdom and other foreign entities due to the flow-through nature of these entities.

In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax authorities. With a few exceptions, as of March 31, ~~2017,~~2018, the Company’s U.S. federal, state, local and foreign income tax returns for the years ~~2013~~2014 through ~~2016~~2017 are open under the general statute of limitations provisions and therefore subject to examination. Currently, the Internal Revenue Service is examining the tax return of certain subsidiaries for the 2011 ~~and 2012~~ tax ~~years.~~year. The State and City of New York isare examining certain subsidiaries’ tax returns for tax years 2011 to ~~2013.~~2016.

The Company has recorded a deferred tax asset for the future amortization of tax basis intangibles as a result of the 2007 Reorganization. The Company recorded additional deferred tax assets as a result of the step-up in tax basis of intangibles from subsequent exchanges of AOG Units for Class A shares. A related tax receivable agreement liability ~~was~~is recorded in due to related parties in the condensed consolidated statements of financial condition for the expected payments under the tax receivable agreement entered into by and among APO Corp., the Managing Partners, the Contributing Partners, and other parties thereto (as amended, the “tax receivable agreement”) (see note 13). The ~~increases~~benefit the Company obtains from the difference in the ~~deferred~~ tax asset ~~less~~recognized and the related liability ~~resulted~~results in ~~increases~~an increase to additional paid in ~~capital which were recorded in the condensed consolidated statements of changes in shareholders’ equity for the three months ended March 31, 2017 and 2016.~~capital. The amortization period for these tax basis intangibles is 15 years and the deferred tax assets will reverse over the same period.

Pursuant to an exchange agreement between Apollo, Holdings and the other parties thereto (as amended, the “Exchange Agreement”), the holders of the AOG Units (and certain permitted transferees thereof) may, upon notice and subject to the applicable vesting and minimum retained ownership requirements, transfer restrictions and other terms of the Exchange Agreement, exchange their AOG Units for the Company’s Class A shares on a one-for-one basis a limited number of times each year, subject to customary conversion rate adjustments for splits, distributions and reclassifications. Pursuant to the Exchange Agreement, a holder of AOG Units must simultaneously exchange one partnership unit in each of the Apollo Operating Group partnerships to effectuate an exchange for one Class A share. As a holder exchanges its AOG Units, the Company’s indirect interest in the Apollo Operating Group is correspondingly increased.

The table below presents the impact to the deferred tax asset, tax receivable agreement liability and additional paid in capital related to the exchange of AOG Units for Class A ~~shares during the three months ended March 31, 2017. There was no exchange of AOG Units for Class A shares during the three months ended March 31, 2016.~~shares.


Exchange of AOG Units for Class A shares	Increase in Deferred Tax Asset		Increase in Tax Receivable Agreement Liability		Increase to Additional Paid In Capital		Increase in Deferred Tax Asset		Increase in Tax Receivable Agreement Liability		Increase to Additional Paid In Capital
For the Three Months Ended March 31, 2018							$	47,009	$	39,955	$	7,054
For the Three Months Ended March 31, 2017	$	861	$	—	$	861	$	861	$	—	$	861

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

9. DEBT

Debt consisted of the following:


	As of March 31, 2017							As of December 31, 2016							As of March 31, 2018							As of December 31, 2017
	Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate		Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate		Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate		Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate
2013 AMH Credit Facilities - Term Facility⁽¹⁾	$	299,571	$	298,875	⁽⁵⁾	2.14	%	$	299,543	$	298,500	⁽⁵⁾	1.82	%	$	—	$	—		N/A		$	299,655	$	298,875	⁽³⁾	2.33	%
2024 Senior Notes⁽²⁾⁽¹⁾	495,370		503,963		⁽⁶⁾	4.00		495,208		498,336		⁽⁶⁾	4.00		496,023		502,911		⁽⁴⁾	4.00	%	495,860		511,096		⁽⁴⁾	4.00
2026 Senior Notes⁽³⁾⁽¹⁾	495,293		510,274		⁽⁶⁾	4.40		495,165		497,923		⁽⁶⁾	4.40		495,806		512,523		⁽⁴⁾	4.40		495,678		525,273		⁽⁴⁾	4.40
2014 AMI Term Facility I⁽⁴⁾	14,636		14,636		⁽⁵⁾	2.00		14,449		14,449		⁽⁵⁾	2.00
2014 AMI Term Facility II⁽⁴⁾	16,516		16,516		⁽⁵⁾	1.75		16,306		16,306		⁽⁵⁾	1.75
2016 AMI Term Facility I⁽⁴⁾	18,082		18,082		⁽⁵⁾	1.75		17,852		17,852		⁽⁵⁾	1.75
2016 AMI Term Facility II⁽⁴⁾	14,104		14,104		⁽⁵⁾	2.00		13,924		13,924		⁽⁵⁾	2.00
2048 Senior Notes⁽¹⁾															296,839		307,226		⁽⁴⁾	5.00		—		—			—
2014 AMI Term Facility I⁽²⁾															16,805		16,912		⁽³⁾	2.00		16,399		16,482		⁽³⁾	2.00
2014 AMI Term Facility II⁽²⁾															19,011		19,108		⁽³⁾	1.75		18,548		18,605		⁽³⁾	1.75
2016 AMI Term Facility I⁽²⁾															20,914		20,914		⁽³⁾	1.40		20,372		20,372		⁽³⁾	1.75
2016 AMI Term Facility II⁽²⁾															16,313		16,340		⁽³⁾	2.00		15,890		15,931		⁽³⁾	2.00
Total Debt	$	1,353,572	$	1,376,450				$	1,352,447	$	1,357,290				$	1,361,711	$	1,395,934				$	1,362,402	$	1,406,634


(1)	Includes amortization of note discount, as applicable. Outstanding balance is presented net of unamortized debt issuance ~~costs of $0.4 million and $0.5 million as of March 31, 2017 and December 31, 2016, respectively.~~costs:



	As of March 31, 2018		As of December 31, 2017
2013 AMH Credit Facilities - Term Facility	$	—	$	345
2024 Senior Notes	3,360		3,498
2026 Senior Notes	3,834		3,951
2048 Senior Notes	2,837		—


(2)	Includes impact of any amortization of note discount. Outstanding balance is presented net of unamortized debt issuance costs of $3.9 million and $4.1 million as of March 31, 2017 and December 31, 2016, respectively.


~~(3)~~	Includes impact of any amortization of note discount. Outstanding balance is presented net of unamortized debt issuance costs of $4.3 million and $4.4 million as of March 31, 2017 and December 31, 2016, respectively.


~~(4)~~	Apollo Management International LLP (“AMI”), a subsidiary of the Company, entered into ~~the following~~ five year credit agreements ~~and proceeds from the borrowings were used~~ to fund the Company’s investment in certain European CLOs it ~~manages:~~manages.



Facility	Date	Loan Amount
2014 AMI Term Facility I	July 3, 2014	€	~~13,736~~13,636
2014 AMI Term Facility II	December 9, 2014	€	~~15,500~~15,425
2016 AMI Term Facility I	January 18, 2016	€	16,970
2016 AMI Term Facility II	June 22, 2016	€	13,236

~~(5)~~(3)

Fair value is based on obtained broker ~~quotes and these~~quotes. These notes ~~would be~~are classified as a Level III liability within the fair value hierarchy based on the number and quality of broker quotes obtained, the standard deviations of the observed broker quotes and the percentage deviation from independent pricing services. For instances where broker quotes are not available, a discounted cash flow method is used to obtain a fair value.


~~(6)~~(4)	Fair value is based on obtained broker ~~quotes and these~~quotes. These notes ~~would be~~are classified as a Level II liability within the fair value hierarchy based on the number and quality of broker quotes obtained, the standard deviations of the observed broker quotes and the percentage deviation from independent pricing services.

2013 AMH Credit Facilities—On December 18, 2013, AMH and its subsidiaries and certain other subsidiaries of the Company (collectively, the “Borrowers”) entered into new credit facilities (the “2013 AMH Credit Facilities”) with JPMorgan Chase Bank, N.A. The 2013 AMH Credit Facilities provide for (i) a term loan facility to AMH (the “Term Facility”) that includes $750 million of the term loan from third-party lenders and $271.7 million of the term loan held by a subsidiary of the Company and (ii) a $500 million revolving credit facility (the “Revolver Facility”), in each case, with an original maturity date of January 18, 2019. On March 11, 2016, the maturity date of both the Term Facility and the Revolver Facility was extended by two years to January 18, 2021. The extension was determined to be a modification of the 2013 AMH Credit Facilities in accordance with U.S. GAAP.

~~Interest on the borrowings is based on an adjusted LIBOR rate or alternate base rate, in each case plus an applicable margin, and undrawn revolving commitments bear a commitment fee.~~ In connection with the issuance of the 2024 Senior Notes, the 2026 Senior Notes and the ~~2026~~2048 Senior Notes (as defined below), $250 million of the proceeds, $200 million of the proceeds, and ~~$200~~$300 million of the proceeds, respectively, were used to repay a portion of the Term Facility outstanding with third party lenders at par. The interest rate on the $300 million Term Facility as of March 31, 2017 was 2.28% and the commitment fee as of March 31, 2017 on the $500 million undrawn Revolver

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

repay the entire remaining amount of the Term Facility. The Revolver Facility ~~was 0.125%.~~is to remain available until its maturity, and any undrawn revolving commitments bear a commitment fee. The ~~$300 million carrying value of debt that is recorded~~commitment fee on the ~~condensed consolidated statements of financial condition at March 31, 2017 is the amount for which the Company is obligated to settle the 2013 AMH Credit Facilities.~~

As$500 million undrawn Revolver Facility as of March 31, 2017, the 2013 AMH Credit Facilities were guaranteed by AMH and its subsidiaries, Apollo Management, L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., AAA Holdings, L.P., Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, ST Holdings GP, LLC and ST Management Holdings, LLC. The 2013 AMH Credit Facilities contain affirmative and negative covenants which limit the ability of the Borrowers, the guarantors and certain of their subsidiaries to, among other things, incur indebtedness and create liens. Additionally, the 2013 AMH Credit Facilities contain financial covenants which require the Borrowers and their subsidiaries to maintain (1) at least $40 billion of Fee-Generating Assets Under Management and (2) a maximum total net leverage ratio of not more than 4.00 to 1.00 (subject to customary equity cure rights)2018 was 0.125%. The 2013 AMH Credit Facilities also contain customary events of default, including events of default arising from non-payment, material misrepresentations, breaches of covenants, cross default to material indebtedness, bankruptcy and changes in control of the Company.

Borrowings under the Revolver Facility may be used for working capital and general corporate purposes, including, without limitation, permitted acquisitions. In addition, the Borrowers may incur incremental facilities in respect of the Revolver Facility and the Term Facility in an aggregate amount not to exceed $500 million plus additional amounts so long as the Borrowers are in compliance with a net leverage ratio not to exceed 3.75 to 1.00. As of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, the Revolver Facility was undrawn.

2024 Senior Notes—On May 30, 2014, AMH issued $500 million in aggregate principal amount of its 4.000% Senior Notes due 2024 (the “2024 Senior Notes”), at an issue price of 99.722% of par. Interest on the 2024 Senior Notes is payable semi-annually in arrears on May 30 and November 30 of each year. The 2024 Senior Notes will mature on May 30, 2024. The discount ~~will be~~is amortized into interest expense on the condensed consolidated statements of operations over the term of the 2024 Senior Notes. The face amount of $500 million related to the 2024 Senior Notes is the amount for which the Company is obligated to settle the 2024 Senior Notes.

2026 Senior Notes—On May 27, 2016, AMH issued $500 million in aggregate principal amount of its 4.400% Senior Notes due 2026 (the “2026 Senior Notes”), at an issue price of 99.912% of par. Interest on the 2026 Senior Notes is payable semi-annually in arrears on May 27 and November 27 of each year. The 2026 Senior Notes will mature on May 27, 2026. The discount ~~will be~~is amortized into interest expense on the condensed consolidated statements of operations over the term of the 2026 Senior Notes. The face amount of $500 million related to the 2026 Senior Notes is the amount for which the Company is obligated to settle the 2026 Senior Notes.

2048 Senior Notes—On March 15, 2018, AMH issued $300 million in aggregate principal amount of its 5.000% Senior Notes due 2048 (the “2048 Senior Notes”), at an issue price of 99.892% of par. Interest on the 2048 Senior Notes is payable semi-annually in arrears on March 15 and September 15 of each year. The 2048 Senior Notes will mature on March 15, 2048. The discount is amortized into interest expense on the condensed consolidated statements of operations over the term of the 2048 Senior Notes. The face amount of $300 million related to the 2048 Senior Notes is the amount for which the Company is obligated to settle the 2048 Senior Notes.

As of March 31, ~~2017,~~2018, the indentures governing the 2024 Senior Notes, the 2026 Senior Notes and the 2024 Senior Notes were guaranteed by Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, AMH Holdings (Cayman), L.P. and any other entity that is required to become a guarantor of the notes under the terms of the indentures governing the 2026 Senior Notes and the 20242048 Senior Notes (the “Indentures”)~~. The Indentures~~ include covenants that restrict the ability of AMH and, as applicable, the guarantors of the notes under the Indentures to incur indebtedness secured by liens on voting stock or profit participating equity interests of their respective subsidiaries or merge, consolidate or sell, transfer or lease assets. The Indentures also provide for customary events of default.

The following table presents the interest expense incurred related to the Company’s debt:



	For the Three Months Ended March 31,
	2018		2017
Interest Expense:⁽¹⁾
2013 AMH Term Facility	$	1,964	$	1,912
2024 Senior Notes	5,163		5,163
2026 Senior Notes	5,628		5,628
2048 Senior Notes	667		—
AMI Term Facilities	375		296
Total Interest Expense	$	13,797	$	12,999


(1)	Debt issuance costs incurred in connection with the Term Facility, the 2024 Senior Notes, the 2026 Senior Notes and the 2048 Senior Notes are amortized into interest expense over the term of the debt arrangement.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

~~The following table presents the interest expense incurred related to the Company’s debt for the three months ended March 31, 2017 and 2016:~~

For the Three Months Ended March 31,
2017 2016
Interest Expense:⁽¹⁾

2013 AMH Term Facility $ 1,912
$ 2,463
2024 Senior Notes 5,163
5,163
2026 Senior Notes 5,628
—
AMI Term Facilities 296
247
Total Interest Expense $ 12,999
$ 7,873


~~(1)~~	~~Debt issuance costs incurred in connection with the Term Facility, the 2024 Senior Notes and the 2026 Senior Notes are amortized into interest expense over the term of the debt arrangement.~~

10. NET INCOME (LOSS) PER CLASS A SHARE

U.S. GAAP requires use of the two-class method of computing earnings per share for all periods presented for each class of common stock and participating security as if all earnings for the period had been distributed. Under the two-class method, during periods of net income, the net income is first reduced for distributions declared on all classes of securities to arrive at undistributed earnings. During periods of undistributed losses, the undistributed loss is allocated to a participating security only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity.

The remaining undistributed earnings are allocated to Class A shares and participating securities to the extent that each security shares in earnings as if all of the earnings for the period had been distributed. Earnings or losses allocated to each class of security are then divided by the applicable number of shares to arrive at basic earnings per share. For the diluted earnings, the denominator includes all outstanding Class A shares and includes the number of additional Class A shares that would have been outstanding if the dilutive Class A shares had been issued. The numerator is adjusted for any changes in income or loss that would result if the dilutive Class A shares were issued.

The table below presents basic and diluted net income (loss) per Class A share using the two-class ~~method for the three months ended March 31, 2017 and 2016:~~method:


	Basic and Diluted								Basic and Diluted
	For the Three Months Ended March 31,								For the Three Months Ended March 31,
	2017				2016				2018				2017
Numerator:
Net income (loss) attributable to Apollo Global Management, LLC	$	145,196			$	(32,828	)
Net Income (Loss) Attributable to Apollo Global Management, LLC Class A Shareholders									$	(62,645	)		$	145,196
Distributions declared on Class A shares(1)	(84,215		)	⁽¹⁾	(51,432		)	⁽¹⁾	(133,023		)		(84,215		)
Distributions on participating securities⁽³⁾⁽²⁾	(2,859		)		(2,123		)		(5,384		)		(2,859		)
Earnings allocable to participating securities	(2,264		)		—			⁽²⁾	—			⁽³⁾	(2,264		)
Undistributed income (loss) attributable to Class A shareholders: Basic and Diluted	$	55,858			$	(86,383	)		$	(201,052	)		$	55,858
Denominator:
Weighted average number of Class A shares outstanding: Basic and Diluted	186,537,367				182,665,330				198,432,603				186,537,367
Net Income per Class A Share: Basic and Diluted⁽⁴⁾
Net Income (Loss) per Class A Share: Basic and Diluted⁽⁴⁾
Distributed Income	$	0.45			$	0.28			$	0.66			$	0.45
Undistributed Income (Loss)	0.30				(0.47		)		(1.00		)		0.30
Net Income (Loss) per Class A Share: Basic and Diluted	$	0.75			$	(0.19	)		$	(0.34	)		$	0.75


(1)	See note 12 for information regarding the quarterly distributions declared and paid during ~~2017~~2018 and ~~2016.~~2017.


(2)	Participating securities consist of vested and unvested RSUs that have rights to distributions and unvested restricted shares.


(3)	No allocation of undistributed losses was made to the participating securities as the holders do not have a contractual obligation to share in the losses of the Company with Class A shareholders.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~


~~(3)~~	~~Participating securities consist of vested and unvested RSUs that have rights to distributions and unvested restricted shares.~~


(4)	For the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, all of the classes of securities were determined to be anti-dilutive.

The Company has granted RSUs that provide the right to receive, subject to vesting, Class A shares ~~of Apollo Global Management, LLC,~~ pursuant to the Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Equity Plan”). Certain RSU grants to employees provide the right to receive distribution equivalents on vested RSUs on an equal basis any time a distribution is declared. The Company refers to these RSU grants as “Plan Grants.” For certain Plan Grants, distribution equivalents are paid in January of the calendar year next following the calendar year in which a distribution on Class A shares was declared. In addition, certain RSU grants to employees provide that both vested and unvested RSUs participate in distribution equivalents on an equal basis with the Class A shareholders any time a distribution is declared. The Company refers to these as “Bonus Grants.”

Any distribution equivalent paid to an employee will not be returned to the Company upon forfeiture of the award by the employee. Vested and unvested RSUs that are entitled to non-forfeitable distribution equivalents qualify as participating securities and are included in the Company’s basic and diluted earnings per share computations using the two-class method. The holder of an RSU participating security would have a contractual obligation to share in the losses of the entity if the holder is obligated to fund the losses of the issuing entity or if the contractual principal or mandatory redemption amount of the participating security is reduced as a result of losses incurred by the issuing entity. ~~Because the~~The RSU participating securities do not have a mandatory redemption amount and the holders of the participating securities are not obligated to fund losses, therefore, neither the vested RSUs nor the unvested RSUs are subject to any contractual obligation to share in losses of the Company.

Holders of AOG Units are subject to the transfer restrictions set forth in the agreements with the respective holders and may, a limited number of times each year, upon notice (subject to the terms of the Exchange Agreement), exchange their AOG Units for Class A shares on a one-for-one basis. An AOG Unit holder must exchange one unit in each of the Apollo Operating Group partnerships to effectuate an exchange for one Class A share.

Apollo Global Management, LLC has one Class B share outstanding, which is held by BRH Holdings GP, Ltd. (“BRH”). The voting power of the Class B share is reduced on a one vote per one AOG Unit basis in the event of an exchange of AOG Units for Class A shares, as discussed above. The Class B share has no net income (loss) per share as it does not participate in Apollo’s earnings (losses) or distributions. The Class B share has no distribution or liquidation rights. The Class B share has voting rights on a pari passu basis with the Class A shares. The Class B share represented ~~55.8%~~52.4% and ~~61.0%~~55.8% of the total voting power of the Company’s shares entitled to vote as of March 31, 2018 and 2017, ~~and 2016,~~ respectively.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table summarizes the anti-dilutive ~~securities for the three months ended March 31, 2017 and 2016, respectively.~~securities.


	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2017	2016	2018	2017
Weighted average vested RSUs	1,233,685	3,142,789	1,176,450	1,233,685
Weighted average unvested RSUs	6,252,139	6,211,882	7,817,506	6,252,139
Weighted average unexercised options	222,920	222,920	204,167	222,920
Weighted average AOG Units outstanding	215,286,909	216,169,856	204,576,722	215,286,909
Weighted average unvested restricted shares	74,362	99,135	668,672	74,362

11. EQUITY-BASED COMPENSATION

RSUs

The Company grants RSUs under the 2007 ~~Omnibus~~ Equity ~~Incentive~~ Plan. ~~These grants are accounted for as a grant of equity awards in accordance with U.S. GAAP.~~ The fair value of all grants is based on the grant date fair value, which considers

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

the public share price of the Company’s Class A shares subject to certain discounts, as applicable. The following table summarizes the weighted average discounts for Plan Grants ~~for the three months ended March 31, 2017.~~and Bonus Grants. There were ~~no Plan Grants awarded during the three months ended March 31, 2016 and~~ no Bonus Grants awarded during the three months ended March 31, ~~2017 and 2016.~~2017.



	~~For the Three Months Ended March 31, 2017~~
~~Plan Grants:~~
~~Discount for the lack of distributions until vested~~⁽¹⁾	~~11.0~~	%
~~Marketability discount for transfer restrictions~~⁽²⁾	~~2.0~~	%



	For the Three Months Ended March 31,
	2018		2017
Plan Grants:
Discount for the lack of distributions until vested⁽¹⁾	10.5	%	11.0	%
Marketability discount for transfer restrictions⁽²⁾	3.4	%	2.0	%
Bonus Grants:
Marketability discount for transfer restrictions⁽²⁾	2.3	%	N/A


(1)	Based on the present value of a growing annuity calculation.


(2)	Based on the Finnerty Model calculation.

The estimated total grant date fair value for Plan Grants and Bonus Grants is charged to compensation expense on a straight-line basis over the vesting period, which for Plan Grants is generally up to six years, with the first installment vesting one year after grant and quarterly vesting thereafter, and for Bonus Grants is generally annual vesting over three years. ~~The fair value of grants made during~~

During the three months ended March 31, ~~2017 was $8.4 million.~~

~~In addition,~~2018, the Company ~~provides for~~granted 3.3 million RSUs to certain executives with a grant date fair value of $108.9 million, which will vest on the ~~vesting~~first five anniversaries of ~~RSUs when~~January 1, 2018 subject to continued employment on such date and achievement of certain performance ~~metrics have been achieved.~~conditions associated with realized performance revenues pursuant to the terms of the associated RSU award agreement. In accordance with U.S. GAAP, equity-based compensation expense for such awards is recognized ~~only when certain~~over the requisite service period to the extent the performance metrics are met or deemed probable. Accordingly, for the three months ended March 31, ~~2017, no~~2018, equity-based compensation expense of $12.4 million was recognized relating to these RSUs.

The fair value of all RSU grants made during the three months ended March 31, 2018 and 2017 was $160.8 million and $8.4 million, respectively.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table presents the forfeiture rate and equity-based compensation expense ~~recognized for the three months ended March 31, 2017 and 2016:~~recognized:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Actual forfeiture rate	4.1		%	0.9		%	5.9		%	4.1		%
Equity-based compensation	$	17,031		$	18,067		$	30,747		$	17,031

The following table summarizes RSU ~~activity for the three months ended March 31, 2017:~~activity:


	Unvested			Weighted Average Grant Date Fair Value		Vested		Total Number of RSUs Outstanding			Unvested			Weighted Average Grant Date Fair Value		Vested		Total Number of RSUs Outstanding
Balance at January 1, 2017	9,391,566			$	15.80	2,752,455		12,144,021		⁽¹⁾
Balance at January 1, 2018											6,262,288			$	15.58	2,802,277		9,064,565		⁽¹⁾
Granted	500,000			16.87		—		500,000			4,826,811			33.31		—		4,826,811
Forfeited	(403,738	)		16.17		—		(403,738	)		(561,692	)		17.21		—		(561,692	)
Issued	—			18.75		(2,614,093	)	(2,614,093	)		—			18.44		(2,905,390	)	(2,905,390	)
Vested	(287,374	)		17.23		287,374		—			(356,813	)		18.02		356,813		—
Balance at March 31, 2017	9,200,454		(2)	$	15.80	425,736		9,626,190		⁽¹⁾
Balance at March 31, 2018											10,170,594		(2)	$	23.82	253,700		10,424,294		⁽¹⁾


(1)	Amount excludes RSUs which have vested and have been issued in the form of Class A shares.


(2)	RSUs were expected to vest over the weighted average period of ~~2.4~~3.0 years.

Restricted Share Awards—Athene Holding

The Company has granted Athene Holding restricted share awards to certain employees of the Company. Separately, Athene Holding has also granted restricted share awards to certain employees of the Company. Both awards are collectively referred to as the “AHL Awards”. Certain of the AHL Awards function similarly to options as they are exchangeable for Class A shares of Athene Holding upon payment of a conversion price and the satisfaction of certain other conditions. The awards granted are either subject to time-based vesting conditions that generally vest over three to five years or vest upon achieving certain metrics, such as attainment of certain rates of return and realized cash received by certain investors in Athene Holding upon sale of their shares.

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~~APOLLO GLOBAL MANAGEMENT, LLC~~

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

The Company records the AHL Awards in other assets and other liabilities in the condensed consolidated statements of financial condition. The fair value of the asset is amortized through equity-based compensation over the vesting period. The fair value of the liability is remeasured each period with any changes in fair value recorded in compensation expense in the condensed consolidated statements of operations. For AHL Awards granted by Athene Holding, compensation expense related to amortization of the asset is offset, with certain exceptions, by related management fees earned by the Company from Athene.

The grant date fair value of the AHL Awards is based on the share price of Athene Holding, less discounts for transfer restrictions. The AHL Awards that function similarly to options were valued using a multiple-scenario model, which considers the price volatility of the underlying share price of Athene Holding, time to expiration and the risk-free rate, while the other awards were valued using the share price of Athene Holding less any discounts for transfer restrictions.

The following table summarizes the management fees, equity-based compensation expense and actual forfeiture rates for the AHL ~~Awards for the three months ended March 31, 2017 and 2016:~~Awards:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Management fees	$	2,064		$	(7,131	)	$	(878	)	$	2,064
Equity-based compensation	2,904			(7,034		)	(920		)	2,904
Actual forfeiture rate	—		%	0.4		%	—		%	—		%

Equity-Based Compensation Allocation

Equity-based compensation is allocated based on ownership interests. Therefore, the amortization of equity-based compensation is allocated to shareholders’ equity attributable to ~~Apollo Global Management, LLC~~AGM and the Non-Controlling Interests, which results in a difference in the amounts charged to equity-based compensation expense and the amounts credited to shareholders’ equity attributable to Apollo Global Management, LLC in the Company’s condensed consolidated financial statements.

~~Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the three months ended March 31, 2017 and 2016:~~

For the Three Months Ended March 31, 2017

Total
Amount

Non-
Controlling
Interest % in
Apollo
Operating
Group

Allocated to Non-Controlling Interest in Apollo Operating Group⁽¹⁾

Allocated to
Apollo
Global
Management,
LLC
RSUs, share options and restricted share awards $ 17,697
— % $ —
$ 17,697
AHL Awards 2,904
53.4
1,551
1,353
Other equity-based compensation awards 2,506
53.4
1,333
1,173
Total equity-based compensation $ 23,107
2,884
20,223
Less other equity-based compensation awards⁽²⁾
�� (2,884 ) (3,157 )
Capital increase related to equity-based compensation $ —
$ 17,066

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

difference in the amounts charged to equity-based compensation expense and the amounts credited to shareholders’ equity attributable to AGM in the Company’s condensed consolidated financial statements.

Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC:


	For the Three Months Ended March 31, 2016											For the Three Months Ended March 31, 2018
	Total Amount			Non- Controlling Interest % in Apollo Operating Group		Allocated to Non-Controlling Interest in Apollo Operating Group⁽¹⁾			Allocated to Apollo Global Management, LLC			Total Amount			Non-Controlling Interest % in Apollo Operating Group		Allocated to Non-Controlling Interest in Apollo Operating Group⁽¹⁾			Allocated to Apollo Global Management, LLC
RSUs, share options and restricted share awards	$	18,992		—	%	$	—		$	18,992		$	32,759		—	%	$	—		$	32,759
AHL Awards	(7,034		)	54.1		(3,805		)	(3,229		)	(920		)	50.1		(461		)	(459		)
Other equity-based compensation awards	2,044			54.1		1,106			938			3,686			50.1		1,848			1,838
Total equity-based compensation	$	14,002				(2,699		)	16,701			$	35,525				1,387			34,138
Less other equity-based compensation awards⁽²⁾						2,699			1,766								(1,387		)	(5,826		)
Capital increase related to equity-based compensation						$	—		$	18,467							$	—		$	28,312



	For the Three Months Ended March 31, 2017
	Total Amount		Non-Controlling Interest % in Apollo Operating Group		Allocated to Non-Controlling Interest in Apollo Operating Group⁽¹⁾			Allocated to Apollo Global Management, LLC
RSUs, share options and restricted share awards	$	17,697	—	%	$	—		$	17,697
AHL Awards	2,904		53.4		1,551			1,353
Other equity-based compensation awards	2,506		53.4		1,333			1,173
Total equity-based compensation	$	23,107			2,884			20,223
Less other equity-based compensation awards⁽²⁾					(2,884		)	(3,157		)
Capital increase related to equity-based compensation					$	—		$	17,066


(1)	Calculated based on average ownership percentage for the period considering Class A share issuances during the period.


(2)	Includes equity-based compensation reimbursable by certain funds.

12. EQUITY

Class A Shares

Class A shares represent limited liability company interests in the Company. Holders of Class A shares are entitled to participate in distributions from the Company on a pro rata basis. Class A shareholders do not elect the Company’s manager or the manager’s executive committee and have ~~only~~ limited voting rights.

~~Issuance of Class A Shares~~

During the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, the Company issued Class A shares in settlement of vested RSUs. The Company has generally allowed holders of vested RSUs and exercised share options to settle their tax liabilities by reducing the number of Class A shares issued to them, which the Company refers to as “net share settlement.” Additionally, the Company has generally allowed holders of share options to settle their exercise price by reducing the number of Class A shares issued to them at the time of exercise by an amount sufficient to cover the exercise price. The net share settlement results in a liability for the Company and a corresponding accumulated deficit adjustment. ~~This adjustment for the three months ended March 31, 2017 and 2016 was $20.6 million and $22.0 million, respectively.~~

~~The table below summarizes the issuances of Class A shares in settlement of vested RSUs and share options for the three months ended March 31, 2017 and 2016:~~

For the Three Months Ended March 31,
2017 2016
Class A shares issued 1,683,798
3,276,701
Gross value of shares⁽¹⁾
$ 57,876
$ 66,259


~~(1)~~	~~Based on the closing price of a Class A share at the time of issuance.~~

~~Share Repurchase Plan~~

In February 2016, Apollo ~~adopted~~announced its adoption of a ~~plan~~program to repurchase up to $250 million in the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through net share settlement of equity-based awards granted under the 2007 Equity Plan. ~~There were no~~The Company intends to continue the net share ~~repurchases made as part~~settlement program in excess of the ~~share~~$100 million pursuant to the repurchase ~~program during the three months ended March 31, 2017. During the three months ended March 31, 2016, the Company repurchased and canceled 1.0 million Class A shares for $12.9 million.~~

~~The table below summarizes the reduction of Class A shares to be issued to employees~~plan adopted in ~~connection with net share settlements under the 2007 Equity Plan for the three months ended March 31, 2017 and 2016:~~February 2016.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The table below summarizes the issuance of Class A shares for equity-based awards:

For the Three Months Ended March 31,
2017 2016
Class A shares issued 930,295
1,646,320
Gross value of shares⁽¹⁾
$ 20,597
$ 22,042



	For the Three Months Ended March 31,
	2018		2017
Class A shares issued in settlement of vested RSUs and share options exercised⁽¹⁾	2,911,640		2,614,093
Reduction of Class A shares issued⁽²⁾	(940,168	)	(930,295	)
Class A shares purchased related to restricted share issuances and forfeitures⁽³⁾	(91,777	)	—
Issuance of Class A shares for equity-based awards	1,879,695		1,683,798


(1)	~~Based~~The gross value of shares issued was $97.8 million and $57.9 million for the three months ended March 31, 2018 and 2017, respectively, based on the closing price of a Class A share at the time of issuance.


(2)	Cash paid for tax liabilities associated with net share settlement was $31.5 million and $20.6 million for the three months ended March 31, 2018 and 2017, respectively.

(3)

During the fiscal quarter ended March 31, 2018, we issued 341,214 restricted shares under the 2007 Equity Plan and repurchased 422,690 Class A shares in open-market transactions not pursuant to a publicly-announced repurchase plan or program. The number of Class A shares repurchased was equal to the number of Class A restricted shares issued under the 2007 Equity Plan during the quarter and during the prior quarter. In addition, there were 10,301 restricted shares forfeited during the quarter.

Additionally, during the three months ended March 31, 2018, 777,310 Class A shares were repurchased as part of the publicly announced share repurchase program adopted in February 2016. Cash paid for open market share repurchases and cancellations was $26.4 million for the three months ended March 31, 2018.

Preferred Share Issuance

On March 7, 2017, Apollo issued 11,000,000 6.375% Series A Preferred shares (the ~~“Preferred~~“Series A Preferred shares”) for gross proceeds of $275.0 million, or ~~$264.7~~$264.4 million net of issuance costs and on March 19, 2018, Apollo issued 12,000,000 6.375% Series B Preferred shares (the “Series B Preferred shares” and collectively with the Series A Preferred shares, “Preferred shares”) for gross proceeds of $300.0 million or $289.8 million net of issuance costs. When, as and if declared by the manager of Apollo, distributions on the Preferred shares will be payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, ~~2017,~~2018 for Series B Preferred shares, at a rate per annum equal to 6.375%. Distributions on the Preferred shares are discretionary and non-cumulative.

Subject to certain exceptions, unless distributions have been declared and paid or declared and set apart for payment on the Preferred shares for a quarterly distribution period, during the remainder of that distribution period Apollo may not declare or pay or set apart payment for distributions on any Class A shares ~~and~~or any other equity securities that the Company may issue in the future ranking as to the payment of distributions, junior to the Preferred shares (“Junior Shares”) and Apollo may not repurchase any Junior Shares. These restrictions are not applicable during the initial distribution period, which is the period from March ~~7, 2017, the original issue date,~~19, 2018 to but excluding June 15, ~~2017.~~2018 for Series B Preferred shares.

The Series A and Series B Preferred shares may be redeemed at Apollo’s option, in whole or in part, at any time on or after March 15, 2022 and March 15, 2023, respectively, at a price of $25.00 per Preferred share, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the Preferred shares will have no right to require the redemption of the Preferred shares and there is no maturity date.

If a certain change of control event or a certain tax redemption event occurs prior to March 15, 2022 and March 15, 2023 for Series A and Series B Preferred shares, respectively, the Preferred shares may be redeemed at Apollo’s option, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such change of control event or such tax redemption event, as applicable, at a price of $25.25 per Preferred share, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. If a certain rating agency event occurs prior to March 15, 2023, the Series B Preferred shares may be redeemed at Apollo’s option, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such rating agency event, at a price of $25.50 per Series B Preferred share, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. If (i) a change of control event occurs (whether before, on or after March 15, ~~2022)~~2022 and March 15, 2023 for Series A and Series B Preferred shares, respectively) and (ii) Apollo does not give notice prior to the 31st day following the change of control event to redeem all the outstanding Preferred shares, the distribution rate per annum on the Preferred shares will increase by 5.00%, beginning on the 31st day following such change of control event.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The Preferred shares are not convertible into Class A shares and have no voting rights, except in limited circumstances as provided in the Company’s limited liability company agreement. In connection with the issuance of the Preferred shares, certain Apollo Operating Group entities issued for the benefit of Apollo a series of preferred units with economic terms that mirror those of the Preferred shares.

On May 3, 2018, Apollo declared a cash distribution of $0.398438 and $0.380729 per Series A and Series B Preferred shares, respectively. The distributions on the Series A Preferred shares were $4.4 million for the three months ended March 31, 2018.

Distributions

In addition to other distributions such as payments pursuant to the tax receivable agreement, the table below presents information regarding the quarterly distributions which were made at the sole discretion of the manager of the Company ~~during 2017 and 2016~~ (in millions, except per share data):



Distribution Declaration Date	Distribution per Class A Share		Distribution Payment Date	Distribution to Class A Shareholders		Distribution to Non-Controlling Interest Holders in the Apollo Operating Group			Total Distributions from Apollo Operating Group		Distribution Equivalents on Participating Securities
February 3, 2017	$	0.45	February 28, 2017	$	84.2	$	97.0		$	181.2	$	2.9
April 13, 2017	—		April 13, 2017	—		20.5		⁽¹⁾	20.5		—
April 28, 2017	0.49		May 31, 2017	94.5		102.9			197.4		3.3
August 2, 2017	0.52		August 31, 2017	100.6		108.8			209.4		3.2
November 1, 2017	0.39		November 30, 2017	75.6		81.6			157.2		2.4
For the year ended December 31, 2017	$	1.85		$	354.9	$	410.8		$	765.7	$	11.8
February 1, 2018	$	0.66	February 28, 2018	$	133.0	$	133.7		$	266.7	$	5.4
For the three months ended March 31, 2018	$	0.66		$	133.0	$	133.7		$	266.7	$	5.4


(1)	On April 13, 2017, the Company made a $0.10 per AOG Unit pro rata distribution to the Non-Controlling Interest holders in the Apollo Operating Group in connection with a payment made under the tax receivable agreement. See note 13 for more information regarding the tax receivable agreement.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Distribution
Declaration Date

Distribution
per
Class A
Share

Distribution
Payment Date

Distribution
to
Class A
Shareholders

Distribution to
Non-Controlling
Interest Holders
in the Apollo
Operating
Group

Total
Distributions
from
Apollo
Operating
Group

Distribution
Equivalents
on
Participating
Securities
February 3, 2016 0.28
February 29, 2016 51.4
60.5
111.9
2.1
May 6, 2016 0.25
May 31, 2016 46.0
54.0
100.0
1.8
August 3, 2016 0.37
August 31, 2016 68.4
79.9
148.3
2.4
October 28, 2016 0.35
November 30, 2016 64.9
75.4
140.3
2.1
For the year ended December 31, 2016 $ 1.25
$ 230.7
$ 269.8
$ 500.5
$ 8.4
February 3, 2017 $ 0.45
February 28, 2017 $ 84.2
$ 97.0
$ 181.2
$ 2.9
For the three months ended March 31, 2017 $ 0.45
$ 84.2
$ 97.0
$ 181.2
$ 2.9

Non-Controlling Interests ~~in Consolidated Entities~~

The table below presents equity interests in Apollo’s consolidated, but not wholly-owned, subsidiaries and funds. Net income and comprehensive income attributable to Non-Controlling Interests consisted of the following:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Net income attributable to Non-Controlling Interests in consolidated entities:
Interest in management companies and a co-investment vehicle⁽¹⁾	$	(867	)	$	(2,082	)	$	1,395		$	867
Other consolidated entities	(2,517		)	47			4,584			2,517
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)	$	5,979		$	3,384
Net (income) loss attributable to Non-Controlling Interests in the Apollo Operating Group	(206,450		)	43,768
Net (Income) Loss attributable to Non-Controlling Interests	$	(209,834	)	$	41,733

Net income (loss) attributable to Non-Controlling Interests in the Apollo Operating Group:
Net income (loss)							$	(109,348	)	$	355,030
Net income attributable to Non-Controlling Interests in consolidated entities							(5,979		)	(3,384		)
Net income (loss) after Non-Controlling Interests in consolidated entities							(115,327		)	351,646
Adjustments:
Income tax provision⁽²⁾							8,580			39,161
NYC UBT and foreign tax benefit⁽³⁾							(1,556		)	(5,395		)
Net loss in non-Apollo Operating Group entities							86			2
Net income attributable to Series A Preferred Shareholders							(4,383		)	—
Total adjustments							2,727			33,768
Net income (loss) after adjustments							(112,600		)	385,414
Weighted average ownership percentage of Apollo Operating Group							50.7		%	53.6		%
Net income (loss) attributable to Non-Controlling Interests in Apollo Operating Group							$	(57,065	)	$	206,450

Net Income (Loss) attributable to Non-Controlling Interests							$	(51,086	)	$	209,834
Other comprehensive income attributable to Non-Controlling Interests	(875		)	(2,634		)	4,012			875
Comprehensive (Income) Loss Attributable to Non-Controlling Interests	$	(210,709	)	$	39,099
Comprehensive Income (Loss) Attributable to Non-Controlling Interests							$	(47,074	)	$	210,709


(1)	Reflects the remaining interest held by certain individuals who receive an allocation of income from certain of the credit funds managed by Apollo.


(2)	Reflects all taxes recorded in our condensed consolidated statements of operations. Of this amount, U.S. federal, state, and local corporate income taxes attributable to APO Corp. are added back to income of the Apollo Operating Group before calculating Non-Controlling Interests as the income allocable to the Apollo Operating Group is not subject to such taxes.


(3)	Reflects New York City Unincorporated Business Tax (“NYC UBT”) and foreign taxes that are attributable to the Apollo Operating Group and its subsidiaries related to its operations in the U.S. as partnerships and in non-U.S. jurisdictions as corporations. As such, these amounts are considered in the income attributable to the Apollo Operating Group.

13. RELATED PARTY TRANSACTIONS AND INTERESTS IN CONSOLIDATED ENTITIES

Management fees, transaction and advisory fees and reimbursable expenses from the funds the Company manages and their portfolio companies are included in due from related parties in the condensed consolidated statements of financial condition. The Company also typically facilitates the ~~initial~~ payment of certain operating costs incurred by the funds that it manages as well as their related parties. These costs are normally reimbursed by such funds and are included in due from related parties. Due from related parties and due to related parties are comprised of the following:

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

~~Due from related parties and due to related parties are comprised of the following:~~


	As of March 31, 2017		As of December 31, 2016		As of March 31, 2018		As of December 31, 2017
Due from Related Parties:
Due from credit funds					$	163,095	$	128,198
Due from private equity funds	$	19,796	$	19,089	21,482		18,120
Due from portfolio companies	37,720		34,339		54,530		37,366
Due from credit funds	121,984		112,516
Due from Contributing Partners, employees and former employees	49,179		72,305		63,251		58,799
Due from real estate funds	21,202		16,604
Due from real assets funds					26,544		20,105
Total Due from Related Parties	$	249,881	$	254,853	$	328,902	$	262,588
Due to Related Parties:
Due to Managing Partners and Contributing Partners	$	506,542	$	506,542	$	373,333	$	333,379
Due to credit funds					61,105		63,491
Due to private equity funds	24,530		56,880		46,753		30,848
Due to credit funds	67,615		66,859
Due to real estate funds	281		281
Due to real assets funds					285		283
Distributions payable to employees	7		7,564		8		12
Total Due to Related Parties	$	598,975	$	638,126	$	481,484	$	428,013

Tax Receivable Agreement and Other

Subject to certain restrictions, each of the Managing Partners and Contributing Partners has the right to exchange their vested AOG Units for the Company’s Class A shares. Certain Apollo Operating Group entities have made an election under Section 754 of the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), which will result in an adjustment to the tax basis of the assets owned by the Apollo Operating Group at the time of the exchange. These exchanges will result in increases in tax deductions that will reduce the amount of tax that APO Corp. will otherwise be required to pay in the future.

The tax receivable agreement provides for the payment to the Managing Partners and Contributing Partners of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes that APO Corp. would realize as a result of the increases in tax basis of assets that resulted from the 2007 Reorganization and exchanges of AOG Units for Class A shares. APO Corp. retains the benefit from the remaining 15% of actual cash tax savings. If the Company does not make the required annual payment on a timely basis as outlined in the tax receivable agreement, interest is accrued on the balance until the payment date. These payments are expected to occur approximately over the next 15 years.

Due from Contributing Partners, Employees and Former Employees

As of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, due from Contributing Partners, Employees and Former Employees includes various amounts due to the Company including employee loans and return of profit sharing distributions. As of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, the balance included interest-bearing employee loans receivable of $15.4 million and ~~$26.1~~$15.3 million, respectively. The outstanding principal amount of the loans as well as all accrued and unpaid interest is required to be repaid at the earlier of the eighth anniversary of the date of the relevant loan or at the date of the relevant employee’s resignation from the Company.

The Company recorded a receivable from the Contributing Partners and certain employees and former employees for the potential return of profit sharing distributions that would be due if certain funds were liquidated as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 of ~~$29.6~~$39.9 million and ~~$39.3~~$36.4 million, respectively.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Indemnity

~~Carried interest income~~Performance revenues from certain funds ~~that the Company manages~~ can be distributed to the Company on a current basis, but is subject to repayment by the ~~subsidiary~~subsidiaries of the Apollo Operating Group that ~~acts~~act as general ~~partner~~partners of the ~~fund~~funds in the event that certain specified return thresholds are not ultimately achieved. The Managing Partners, Contributing Partners and certain other investment professionals have personally guaranteed, subject to certain limitations, the ~~obligation~~obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to a particular Managing Partner’s or Contributing Partner’s distributions. Pursuant to an existing shareholders agreement, the Company has agreed to indemnify each of the Company’s Managing Partners and certain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor of certain funds that the Company manages (including costs and expenses related to investigating the basis for or objecting to any claims made in respect of the guarantees) for all interests that the Company’s Managing Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.

Accordingly, in the event that the Company’s Managing Partners, Contributing Partners and certain investment professionals are required to pay amounts in connection with a general partner obligation for the return of previously made distributions with respect to Fund IV, Fund V and Fund VI, the Company will be obligated to reimburse the Company’s Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to pay even though the Company did not receive the certain distribution to which that general partner obligation related. The Company recorded an indemnification liability of ~~$7.3~~$10.1 million and ~~$5.9~~$10.5 million ~~respectively,~~ as of March 31, ~~2017~~2018 and December 31, ~~2016.~~2017, respectively.

Due to Credit and Private Equity Funds

Based upon ~~a hypothetical~~an assumed liquidation of certain of the credit and private equity funds the Company manages ~~as of March 31, 2017 and December 31, 2016,~~ the Company has recorded a general partner obligation to return previously distributed ~~carried interest income,~~performance allocations, which represents amounts due to these funds. ~~There was a~~The general partner obligation ~~to return previously distributed carried interest income~~is recognized based upon an assumed liquidation of ~~$23.9 million and $56.0 million accrued~~a fund’s net assets as of ~~March 31, 2017 and December 31, 2016, respectively.~~the reporting date. The actual determination and any required payment of aany such general partner obligation would not take place until the final disposition of ~~the~~a fund’s investments based on the contractual termination of the fund or as otherwise set forth in the respective limited partnership agreement or other governing document of the fund.

~~Due to Credit Funds~~

Based upon a hypothetical liquidation of certain of the credit funds the Company manages, as of March 31, 2017 and December 31, 2016, the Company has recorded a general partner obligation to return previously distributed carried interest income, which represents amounts due to these funds. As such, thereThere was a general partner obligation to return previously distributed ~~carried interest income~~performance allocations related to certain private equity funds of ~~$60.4~~$41.5 million and ~~$60.6~~$30.1 million accrued as of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. ~~The actual determination and any required payment of~~There was a general partner obligation ~~would not take place until the final disposition~~to return previously distributed performance allocations related to certain credit funds of ~~the fund’s investments based on contractual termination~~$55.8 million and $56.1 million accrued as of ~~the fund or as otherwise set forth in the respective limited partnership agreement or other governing document of the fund.~~March 31, 2018 and December 31, 2017, respectively.

Athene

Athene Holding was founded in 2009 to capitalize on favorable market conditions in the dislocated life insurance sector. Athene Holding, through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products and services offered by Athene include fixed and fixed indexed annuity ~~products;~~products, reinsurance services offered to third-party annuity providers; and institutional products, such as funding agreements. Athene Holding became an effective registrant under the Exchange Act on December 9, 2016. Athene Holding is currently ~~trades~~listed on the New York Stock Exchange (NYSE) under the symbol “ATH”.

The Company ~~through its consolidated subsidiary, Athene Asset Management,~~ provides asset management and advisory services to Athene, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions, asset diligence hedging and other asset management ~~services, and receives a gross~~services.

The Company, through its consolidated subsidiary Athene Asset Management, or AAM, earns management ~~fee~~fees of 0.40% per ~~annum~~year on all assets ~~under management~~that it manages in accounts owned by Athene in the U.S. and Bermuda or ~~related~~in accounts supporting reinsurance ceded to U.S. and Bermuda subsidiaries of Athene ~~(the~~Holding by third-party insurers (collectively, the “Athene North American Accounts”) ~~with~~up to $65.846 billion (the level of assets in the Athene North American Accounts as of December 31, 2016) and 0.30% per year on all assets in excess of $65.846 billion, respectively, subject to certain ~~limited~~discounts and exceptions. ~~Another subsidiary of the Company, AAME, provides investment advisory services to Athene and receives a gross fee of 0.10% per annum on the assets with respect to which it advises.~~

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(dollars in thousands, except share data, except where noted)

Athora

The Company, through its consolidated subsidiary, AAME, provides investment advisory services to Athora, a strategic platform established to acquire or reinsure blocks of insurance business in the German and broader European life insurance market (collectively, the “Athora European Accounts”).

Athene and Athora Sub-Advised

The Company, through AAM, provides sub-advisory services with respect to a portion of the assets in the Athene North American Accounts. In addition, ~~from~~Apollo, through AAME, provides sub-advisory services with respect to a portion of the assets in the Athora European Accounts.

From time to time, Athene also invests in funds and investment vehicles that Apollo manages. The Company refers to such assets which are invested directly as “Athene Assets Directly Invested.”

The Company broadly refers to “Athene Sub-Advised” assets ~~under management~~ as those assets in the Athene North American Accounts which the Company explicitly sub-advises as well as Athene Assets Directly Invested. The Company broadly refers to “Athora Sub-Advised” assets as those assets in the Athora European Accounts which the Company explicitly sub-advises as well as those assets in the ~~Athene~~Athora European Accounts which are invested directly in funds and investment vehicles Apollo ~~manages (“Athene Assets Directly Invested”).~~manages.

With ~~respect to assets in~~limited exceptions, the ~~Athene Accounts which~~sub-advisory fee arrangements between the Company, explicitly sub-advises, the Company earns up to 0.40% per annum on assets up to $10 billion and 0.35% per annum on all such assets in excess of $10 billion, with certain limited exceptions. These fees are in addition to the gross management fee of 0.40% per annum paid to Athene, ~~Asset Management on the portion of such assets that it manages~~Athora and the ~~gross~~ fee of 0.10% per annum paid to AAME on the portion of such assets that it advises. A majority of the assets in the Athene Accounts which the Company explicitly sub-advises are in accounts that invest in high-grade credit asset classes, such as CLO debt, commercial mortgage backed securities and insurance-linked securities.

~~With~~arrangements with respect to Athene Assets Directly Invested ~~Apollo receives management fees and carried interest, if applicable, directly from~~are presented in the relevant funds under the investment management agreements and other governing documents of such funds. Fees paid to the Company related to such fund investments vary from 0% per annum to 1.75% per annum with respect to management fees and 0% to 20% with respect to carried interest. These fees are in addition to the gross management fee of 0.40% per annum paid to Athene Asset Management on the portion of such assets that it manages and the gross fee of 0.10% per annum paid to AAME on the portion of such assets it advises.following table:

~~The Company refers to the portion of the Athene Asset Management assets under management that is not Athene Sub-Advised as “Athene Non-Sub-Advised”.~~



	As of March 31, 2018
Athene North American Accounts sub-advised by AAM⁽¹⁾:
Assets up to $10.0 billion	0.40	%
Assets between $10.0 billion to $12.4 billion	0.35	%
Assets between $12.4 billion to $16.0 billion	0.40	%
Assets in excess of $16.0 billion	0.35	%

Athora European Accounts sub-advised by AAME	0.35	%

Athene Assets Directly Invested⁽²⁾	0% to 1.75%


(1)	The sub-advisory fees with respect to the assets in the Athene North American Accounts are in addition to the management fee earned by the Company described above.


(2)	With respect to Athene Assets Directly Invested, Apollo earns performance revenues of 0% to 20% in addition to the fees presented above. The fees set forth above with respect to the Athene Assets Directly Invested, and the performance revenues that Apollo earns on such assets, are in addition to the fees described above, with certain limited exceptions.

AAA Investments

Apollo, as general partner of AAA Investments, is generally entitled to ~~a carried interest that allocates~~performance allocations equal to it 20% of the realized returns (net of related expenses, including borrowing costs) on the investments of AAA Investments, except that Apollo is not entitled to receive any ~~carried interest~~performance allocations with respect to the shares of Athene Holding that were acquired (and not in satisfaction of prior commitments to buy such shares) by AAA Investments in the contribution of certain assets by AAA to Athene in October 2012. ~~Apollo may elect to receive payment of carried interest receivable~~

The following table presents the performance allocations earned from AAA Investments in cash or in common shares of Athene Holding (valued at the then fair market value); and if Apollo elects to receive payment of such carried interest in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such carried interest in cash. For the three months ended March 31, 2017 and 2016, the Company recorded carried interest income, taking into account the related profit sharing expense, of $14.1 million and $(19.1) million, respectively, from AAA Investments, which is recorded in the condensed consolidated statements of operations. As of March 31, 2017 and December 31, 2016, the Company had a $249.3 million and $229.8 million carried interest receivable, respectively, from AAA Investments. As of March 31, 2017 and December 31, 2016, the Company had a related profit sharing payable of $71.5 million and $80.6 million, respectively, recorded in profit sharing payable in the condensed consolidated statements of financial condition. In connection with the March 28, 2017 follow-on offering of common shares of Athene Holding that closed on April 3, 2017, the carried interest receivable balance from AAA Investments, L.P. declined to $204.2 million, or $145.6 million net of profit sharing, reflecting receipt of the carried interest amount that was presented within realized carried interest income for the three months ended March 31, 2017.Investments:

For the three months ended March 31, 2017 and 2016, Apollo earned revenues in the aggregate totaling $152.2 million and $(27.4) million, respectively, consisting of management fees, sub-advisory, monitoring fees and carried interest income from Athene after considering the related profit sharing expense and changes in the market value of the Athene Holding shares owned directly by Apollo, which is recorded in the condensed consolidated statements of operations. These amounts exclude the deferred revenue recognized as management fees associated with the vesting of AHL Awards granted to employees of Apollo as further described in note 11.

The Company had an approximate 8.9% economic ownership interest in Athene Holding as of March 31, 2017, which comprises Apollo’s direct 8.1% economic ownership interest in Athene Holding plus an additional 0.8% economic ownership interest, which is calculated as the sum of the Company’s approximate 2.2% economic ownership interest in AAA and the Company’s approximate 0.06% economic ownership interest in AAA Investments, multiplied by AAA Investments’ approximate 32.3% economic ownership interest in Athene, calculated without giving effect to restricted common shares issued under Athene’s management equity plan as of March 31, 2017.



	For the Three Months Ended March 31,
	2018			2017
Performance allocations from AAA Investments, net⁽¹⁾	$	(4,841	)	$	14,135

The Company had an approximate 8.9% economic ownership interest in Athene Holding as of December 31, 2016, which comprises Apollo’s direct ownership of 8.0% of the economic ownership interest in Athene Holding plus an additional 0.9% economic ownership interest, which is calculated as the sum of the Company’s approximate 2.2% economic ownership interest


(1)	Net of related profit sharing expense.

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FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table presents the revenues earned in aggregate from Athene, Athora and AAA Investments:



	For the Three Months Ended March 31,
	2018		2017
Revenues earned in aggregate from Athene, Athora and AAA Investments, net⁽¹⁾	$	38,143	$	152,238

(1)

Consisting of management fees, sub-advisory fees, performance revenues from Athene, Athora and AAA Investments, as applicable (net of related profit sharing expense) and changes in the market value of the Athene Holding shares owned directly by Apollo. These amounts exclude the deferred revenue recognized as management fees associated with the vesting of AHL Awards granted to employees of Apollo as further described in note 11.

During the three months ended March 31, 2018, the Company received performance allocations of $169.9 million and settled $46.6 million of profit sharing expense in the ~~Company’s approximate 0.06% economic ownership interest in~~form of Athene shares. The following table presents performance allocations and profit sharing payable from AAA ~~Investments, multiplied by AAA Investments’ approximate 39.4%~~Investments:



	As of March 31, 2018		As of December 31, 2017
Performance allocations	$	2,048	$	178,600
Profit sharing payable	562		49,038

The Company’s economic ownership interest in Athene ~~calculated without giving effect to restricted common shares issued under Athene’s management equity plan as~~Holding is comprised of ~~December 31, 2016.~~the following:



	As of March 31, 2018		⁽¹⁾	As of December 31, 2017		⁽¹⁾
Indirect interest in Athene Holding:
Interest in AAA	2.2	%		2.2	%
Plus: Interest in AAA Investments	0.1	%		0.1	%
Total Interest in AAA and AAA Investments	2.3	%		2.3	%
Multiplied by: AAA Investments’ interest in Athene Holding	0.3	%		14.0	%
Indirect interest in Athene Holding	—	%		0.3	%

Plus: Direct interest in Athene Holding	10.1	%		8.5	%
Total interest in Athene Holding	10.1	%		8.8	%


(1)	Ownership interest percentages are based on approximate share count as of the reporting date.

AAA Investments Credit Agreement

On April 30, 2015, Apollo entered into a revolving credit agreement with AAA Investments (“AAA Investments Credit Agreement”). Under the terms of the AAA Investments Credit Agreement, the Company shall make available to AAA Investments one or more advances at the discretion of AAA Investments in the aggregate amount not to exceed a balance of $10.0 million at an applicable rate of LIBOR plus 1.5%. The Company receives an annual commitment fee of 0.125% on the unused portion of the loan. As of March 31, ~~2017~~2018 and December 31, ~~2016, $4.0~~2017, $4.9 million and $4.5 million, respectively, had been advanced by the Company and remained outstanding on the AAA Investments Credit Agreement. AAA Investments shall pay the aggregate borrowings plus accrued interest at the earlier of (a) the third anniversary of the closing date, or (b) the date that is fifteen months following the initial public offering of shares of Athene Holding Ltd. (the “Maturity Date”). On January 30, 2018 the Company and AAA agreed to extend the maturity date of the AAA Investments Credit Agreement to April 30, 2019.

Regulated Entities

Apollo Global Securities, LLC (“AGS”) is a registered broker dealer with the SEC and is a member of the Financial Industry Regulatory Authority, subject to the minimum net capital requirements of the SEC. AGS was in compliance with these requirements at March 31, ~~2017.~~2018. From time to time, this entity is involved in transactions with related parties of Apollo, including portfolio companies of the funds Apollo manages, whereby AGS earns underwriting and transaction fees for its services.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

Other Transactions

The Company recognized $3.8 million of other income in the condensed consolidated statement of operations from the assignment of a CLO collateral management agreement to a related party during the three months ended March 31, 2018.

14. COMMITMENTS AND CONTINGENCIES

Investment Commitments—As a limited partner, general partner and manager of the Apollo funds, Apollo had unfunded capital commitments as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017 of ~~$588.5~~$1.6 billion and $1.7 billion, respectively, of which $823 million related to Fund IX as of March 31, 2018 and ~~$607.9 million, respectively.~~December 31, 2017.

Debt Covenants—Apollo’s debt obligations contain various customary loan covenants. As of March 31, ~~2017,~~2018, the Company was not aware of any instances of non-compliance with the financial covenants contained in the documents governing the Company’s debt obligations.

Guarantees—Apollo entered into an agreement to guarantee 20% of a consolidated VIE’s outstanding secured borrowings of $109.4 million with a third party lending institution. The amount guaranteed by Apollo as of March 31, 2018 was $21.9 million.

On December 21, 2017, an investor group led by Apollo and certain other investors entered into an agreement (the “Venerable Transaction”) to acquire Voya Financial, Inc.’s (“Voya”) Closed Block Variable Annuity business (the “CBVA Business”). The investment will be made through an investment company into a newly formed standalone entity (“Venerable Holdings, Inc.” or “Venerable”) which will hold the underlying CBVA Business. The proposed transaction, which is expected to close during 2018, is subject to regulatory approvals and other customary closing conditions. Each of the investors will acquire minority positions in Venerable.

In connection with the Venerable Transaction, the Company provided a limited guarantee, applicable only in the event the deal is terminated under certain circumstances. Maximum exposure under this guarantee is $30.9 million. As of March 31, 2018, there is no liability recorded on the condensed consolidated statements of financial condition as the Company has deemed payment on this guarantee as not probable.

Litigation and Contingencies—Apollo is, from time to time, party to various legal actions arising in the ordinary course of business including claims and lawsuits, reviews, investigations or proceedings by governmental and ~~self regulatory~~self-regulatory agencies regarding its business.

Various state attorneys general and federal and state agencies have initiated industry-wide investigations into the use of placement agents in connection with the solicitation of investments, particularly with respect to investments by public pension funds. Certain affiliates of Apollo have received subpoenas and other requests for information from various government regulatory agencies and investors in Apollo’s funds, seeking information regarding the use of placement agents. ~~California Public Employees’ Retirement System (“CalPERS”)~~CalPERS announced on October 14, 2009, that it had initiated a special review of placement agents and related issues. The report of the CalPERS’ Special Review was issued on March 14, 2011. That report does not allege any wrongdoing on the part of Apollo or its affiliates. Apollo is continuing to cooperate with all such investigations and other reviews. In addition, on May 6, 2010, the California Attorney General filed a civil complaint against Alfred Villalobos and his company, Arvco Capital Research, LLC (“Arvco”) (a placement agent that Apollo has used) and Federico Buenrostro Jr., the former CEO of CalPERS, alleging conduct in violation of certain California laws in connection with CalPERS’s purchase of securities in various funds managed by Apollo and another asset manager. Apollo is not a party to the civil lawsuit and the lawsuit does not allege any misconduct on the part of Apollo. Likewise, on April 23, 2012, the SEC filed a lawsuit alleging securities fraud on the part of Arvco, as well as Messrs. Buenrostro and Villalobos, in connection with their activities concerning certain CalPERS investments in funds managed by Apollo. This lawsuit also does not allege wrongdoing on the part of Apollo, and alleges that Apollo was defrauded by Arvco, Villalobos, and Buenrostro. On March 14, 2013, the United States Department of Justice unsealed an indictment against Messrs. Villalobos and Buenrostro alleging, among other crimes, fraud in connection with those same activities; again, Apollo is not accused of any wrongdoing and in fact is alleged to have been defrauded by the defendants. The criminal action was set for trial in a San Francisco federal court in July 2014, but was put on hold after Mr. Buenrostro pleaded guilty on July 11, 2014. As part of Mr. Buenrostro’s plea agreement, he admitted to taking cash and other bribes from Mr. Villalobos in exchange for several improprieties, including attempting to influence CalPERS’ investing decisions and improperly preparing disclosure letters to satisfy Apollo’s requirements. There is no suggestion that Apollo was aware that Mr. Buenrostro had signed the letters with a corrupt motive. The government has indicated that they will file new charges against Mr. Villalobos incorporating Mr. Buenrostro’s admissions. On August 7, 2014, the government filed a superseding indictment against Mr. Villalobos asserting additional charges. Trial had been scheduled for February 23, 2015, but Mr. Villalobos passed away on January 13, 2015. Additionally, on April 15,

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

a superseding indictment against Mr. Villalobos asserting additional charges. Trial had been scheduled for February 23, 2015, but Mr. Villalobos passed away on January 13, 2015. Additionally, on April 15, 2013, Mr. Villalobos, Arvco and related entities (the “Arvco Debtors”) brought a civil action in the United States Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”) against Apollo. The action is related to the ongoing bankruptcy proceedings of the Arvco Debtors. This action alleges that Arvco served as a placement agent for Apollo in connection with several funds associated with Apollo, and seeks to recover purported fees the Arvco Debtors claim Apollo has not paid them for a portion of Arvco’s placement agent services. In addition, the Arvco Debtors allege that Apollo has interfered with the Arvco Debtors’ commercial relationships with third parties, purportedly causing the Arvco Debtors to lose business and to incur fees and expenses in the defense of various investigations and litigations. The Arvco Debtors also seek compensation from Apollo for these alleged lost profits and fees and expenses. The Arvco Debtors’ complaint asserts various theories of recovery under the Bankruptcy Code and common law. Apollo denies the merit of all of the Arvco Debtors’ claims and will vigorously contest them. The Bankruptcy Court had stayed this action pending the result in the criminal case against Mr. Villalobos but lifted the stay on May 1, 2015; in light of Mr. Villalobos’s death, the criminal case was dismissed. On August 25, 2016, Christina Lovato, in her capacity as the Chapter 7 Trustee for the Arvco Debtors, filed an amended complaint. On March 20, 2017, the court granted Apollo’s motion to dismiss the equitable claims asserted in the amended complaint, leaving just two breach of contract claims remaining. On October 20, 2017, Apollo moved for summary judgment as to the trustee’s remaining claims and a counterclaim by Apollo that seeks indemnification for attorneys’ fees and expenses. No estimate of possible loss, if any, can be made at this time.

On June 18, 2014, BOKF N.A. (the “First Lien Trustee”), the successor indenture trustee under the indenture governing the First Lien Notes issued by Momentive Performance Materials, Inc. (“Momentive”), commenced a lawsuit in the Supreme Court for the State of New York, New York County against AGM and members of an ad hoc group of Second Lien Noteholders (including, but not limited to, Euro VI (BC) S.a.r.l.). The First Lien Trustee amended its complaint on July 2, 2014 (the “First Lien Intercreditor Action”). In the First Lien Intercreditor Action, the First Lien Trustee seeks, among other things, a declaration that the defendants violated an intercreditor agreement entered into between holders of the First Lien Notes and holders of the second lien notes. On July 16, 2014, the successor indenture trustee under the indenture governing the 1.5 Lien Notes (the “1.5 Lien Trustee,” and, together with the First Lien Trustee, the “Indenture Trustees”) filed an action in the Supreme Court of the State of New York, New York County that is substantially similar to the First Lien Intercreditor Action (the “1.5 Lien Intercreditor Action,” and, together with the First Lien Intercreditor Action, the “Intercreditor Actions”). AGM subsequently removed the Intercreditor Actions to federal district court, and the Intercreditor Actions were automatically referred to the Bankruptcy Court adjudicating the Momentive chapter 11 bankruptcy cases. The Indenture Trustees then filed motions with the Bankruptcy Court to remand the Intercreditor Actions back to the state court (the “Remand Motions”). On September 9, 2014, the Bankruptcy Court denied the Remand Motions. On August 15, 2014, the defendants in the Intercreditor Actions (including AGM) filed a motion to dismiss the 1.5 Lien Intercreditor Action and a motion for judgment on the pleadings in the First Lien Intercreditor Action (the “Dismissal Motions”). On September 30, 2014, the Bankruptcy Court granted the Dismissal Motions. In its order granting the Dismissal Motions, the Bankruptcy Court gave the Indenture Trustees until mid-November 2014 to move to amend some, but not all, of the claims alleged in their respective complaints. On November 14, 2014, the Indenture Trustees moved to amend their respective complaints pursuant to the Bankruptcy Court’s order (the “Motions to Amend”). On January 9, 2015, the defendants filed their oppositions to the Motions to Amend. On January 16, 2015, the Bankruptcy Court denied the Motions to Amend (the “Dismissal Order”), but gave the Indenture Trustees until March 2, 2015 to seek to amend their respective complaints. On March 2, 2015, the First Lien Trustee filed a motion seeking to amend its complaint. On April 10, 2015, the defendants, including AGM and Euro VI (BC) S.a.r.l., filed an opposition to the First Lien Trustee’s motion to amend. Instead of moving again to amend its complaint, the 1.5 Lien Trustee chose to appeal the Dismissal Order (the “1.5 Lien Appeal”). On March 30, 2015, the 1.5 Lien Trustee filed its Statement of Issues and Designation of Record on Appeal. On March 31, 2015, because the legal issues presented in the 1.5 Lien Appeal are substantially similar to those presented in the First Lien Intercreditor Action, the parties in the 1.5 Lien Appeal submitted a joint stipulation and proposed order to the District Court staying the briefing schedule on the 1.5 Lien Appeal pending the outcome of the First Lien Trustee’s most recent motion to amend. On April 13, 2015, the Defendants filed their Counter-Designation of the Record on Appeal in the 1.5 Lien Appeal. On May 8, 2015, the Bankruptcy Court denied the motion to amend filed on March 2, 2015 by the First Lien Trustee. On May 27, 2015, the First Lien Trustee filed a notice of appeal from the orders of the Bankruptcy Court dismissing the First Lien Intercreditor Action and denying the First Lien Trustee’s motions to amend (the “First Lien Appeal”). On June 2, 2015, the First Lien Trustee filed its Statement of Issues and Designation of Record on Appeal. On June 24, 2015, the defendants filed their Counter-Designation of the Record on Appeal in the First Lien Appeal. On July 31, 2015, the 1.5 Lien Trustee sent a letter to the federal district court hearing the 1.5 Lien Appeal asking the court to consolidate the 1.5 Lien Appeal with the First Lien Appeal which had been assigned to a different judge (the “Consolidation Request”). On April 8, 2016, the court granted the Consolidation Request. On May 20, 2016, the Indenture Trustees filed their opening appellate brief. The Appellees filed their response brief on July 14, 2016, and the Indenture Trustees filed their reply brief on August 5, 2016. ~~The~~On October 2, 2017, the court ~~has not yet set~~stayed the Intercreditor Actions pending a ~~date for oral argument. Apollo is unable at this time to assess a potential risk~~decision by the U.S. Court of ~~loss. In addition, Apollo does not believe that AGM is a proper defendant in these actions.~~

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~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars in thousands, except share data, except where noted)~~

There are several pending actions concerning transactions related to Caesars Entertainment Corporation (“Caesars Entertainment”), Caesars Entertainment Operating Company, Inc. (“CEOC”) and certain of their respective subsidiaries.

In re: Caesars Entertainment Operating Company, Inc. bankruptcy proceedings, No. 15-01145 (N.D. Ill. Bankr.) (the “Illinois Bankruptcy Action”). On January 17, 2017, an order was entered in the Illinois Bankruptcy Action confirming a plan of reorganization for CEOC and its debtor subsidiaries (the “Plan”) which, inter alia, grants broad releases to Apollo and others. The Plan is likely to become effective in the third quarter of 2017 after the conditions to its effectiveness have been satisfied. On the effective date of the Plan (the “Plan Effective Date”), the Apollo Released Parties (as defined below) will be released from the claims in the WSFS Action, the UMB Action, the Trilogy Action, the Danner Action, the BOKF Action, the UMB SDNY Action, the Wilmington Trust Action and the CEOC Action (each as defined below).

~~Background: On January 12, 2015, three holders of CEOC second lien notes filed an involuntary bankruptcy petition against CEOC in the United States Bankruptcy Court~~Appeals for the District of Delaware (the “Delaware Bankruptcy Action”). On January 15, 2015, CEOC and certain of its affiliates (collectively the “Debtors”) filed the Illinois Bankruptcy Action under Chapter 11 in the Northern District of Illinois. On February 2, 2015, the court in the Delaware Bankruptcy Action ordered that all bankruptcy proceedings relating to the Debtors should take place in the Illinois Bankruptcy Action. The Illinois Bankruptcy Court held an evidentiary hearing to determine whether the Debtors’ petition date was January 12, 2015 or January 15, 2015; this motion has not yet been ruled on by the Illinois Bankruptcy Court, and pursuant to the Plan this motion will be dismissed as moot. Certain of the Debtors’ creditors indicated in filings with the Illinois Bankruptcy Court that an investigation into certain acts and transactions that predated the Debtors’ bankruptcy filing could lead to claims against a number of parties, including AGM and certain of its affiliates. No such claims were brought by the Debtors’ prepetition creditors against Apollo in the Illinois Bankruptcy Action. On May 13, 2016, the Official Committee of Second Priority Noteholders (the “Second Lien Noteholders Committee”) filed a motion seeking an Order granting it standing to commence, prosecute and settle claims on behalf of the Debtors’ estates (the “Standing Motion”). The proposed complaint filed with the Standing Motion names Apollo and many others as defendants (see also “H” below). On or about September 27, 2016, Caesars Entertainment and the Debtors announced that they had received confirmations from representatives of the Debtors’ major creditor groups of those groups’ support for a term sheet that describes the key economic terms of a proposed consensual chapter 11 plan for the Debtors. On October 4, 2016, the Debtors filed the Third Amended Joint Plan of Reorganization which subsequently was amended and became the Plan. As part of the Plan, and in connection with the merger between Caesars Entertainment and Caesars Acquisition Company (“CAC”), funds managed by Apollo will not retain any of their equity interests in the merged Caesars Entertainment on account of their pre-merger Caesars Entertainment shares. Such equity interests would, instead, be for the benefit of CEOC’s creditors. Funds managed by Apollo will, however, retain their equity interests in the merged Caesars Entertainment on account of their CAC shares. The voting deadline on the Plan was November 21, 2016, and approximately 90% in dollar amount of the Debtors’ creditors voted in favor of the Plan. On October 17, 2016, the Bankruptcy Court granted the Debtors’ requested injunction of the WSFS, Trilogy, Danner, UMB, Wilmington Trust and BOKF Actions (defined below “B”, “C”, “D”, “F” and “G”) (the “105 Injunction”) through the first omnibus hearing after Plan confirmation, and by order dated January 26, 2017 the 105 Injunction was extended to, inter alia, the Plan Effective Date. At the confirmation hearing, no creditor presented any objection to the Plan. As noted above, the Plan was confirmed by the Illinois Bankruptcy Court and will become effective after the conditions to its effectiveness have been satisfied. The Plan provides several parties, including, AGM and certain of its affiliates (collectively referred to as the "Apollo Released Parties") with a release of claims that the Debtors and the Debtors’ creditors have or may have against any or all of the Apollo Released Parties, including those described below in the WSFS Action, the Trilogy Action, the Danner Action, the UMB Action, the BOKF Action, the Wilmington Trust Action and the CEOC Action.Circuit

Wilmington Savings Fund Society, FSB v. Caesars Entertainment Corp. et al., No. 10004-CVG (Del. Ch.) (the “WSFS Action”). On August 4, 2014, Wilmington Savings Fund Society, FSB (“WSFS”), as trustee for certain CEOC second-lien notes, sued Caesars Entertainment, CEOC, other Caesars Entertainment-affiliated entities, and certain of Caesars Entertainment’s directors, including Marc Rowan, Eric Press, David Sambur (each an Apollo Partner) and Jeffrey Benjamin (a consultant to Apollo), in Delaware’s Court of Chancery (the “Delaware Court”). WSFS (i) asserts claims (against some or all of the defendants) for fraudulent conveyance, breach of fiduciary duty, breach of contract, corporate waste, and aiding and abetting related to certain transactions among CEOC and certain of its subsidiaries and Caesars Entertainment and certain of its affiliates, and (ii) requests (among other things) that the Delaware Court unwind the challenged transactions and award damages. WSFS served a subpoena for documents on Apollo on September 11, 2014, but Apollo’s

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~~response was stayed during~~in an appeal concerning the ~~pendency of motions to dismiss under a September 23, 2014 stipulated order.~~Momentive chapter 11 bankruptcy cases. On ~~March 18, 2015,~~October 20, 2017, the Delaware Court denied Defendants’ motion to dismiss. Apollo served responses and objections to WSFS’ subpoena on March 25, 2015. Caesars Entertainment answered the complaint on April 1, 2015. During the pendency of CEOC’s bankruptcy proceedings, the WSFS Action has been automatically stayed with respect to CEOC. WSFS additionally advised the Illinois Bankruptcy Court that, during CEOC’s bankruptcy proceedings, WSFS would only pursue claimsSecond Circuit issued its ruling in the ~~WSFS Action relating to whether Caesars Entertainment remains liable~~appeal concerning the Momentive chapter 11 bankruptcy cases. As a result, the court has lifted the stay on ~~a guarantee of certain of CEOC’s second priority notes. On July 17, 2015, WSFS served supplemental subpoenas to several entities affiliated with AGM, and AGM and these entities~~the Intercreditor Actions, but no further proceedings have substantially completed their production of non-privileged documents responsive to those subpoenas. On March 11, 2016, WSFS filed a motion for partial summary judgment (the “Summary Judgment Motion”) on its breach of contract claim against Caesars Entertainment. On April 25, 2016, Caesars Entertainment filed a joint Cross-Motion for Partial Summary Judgment and answering brief in opposition to WSFS’ Summary Judgment Motion (the “Cross-Motion”). WSFS filed its joint reply and opposition to Caesars Entertainment’s Cross-Motion on May 25, 2016, and Caesars Entertainment filed a reply to WSFS’ opposition on June 9, 2016. On June 15, 2016, the Illinois Bankruptcy Court issued a temporary restraining order and preliminary injunction pursuant to Section 105(a) of the Bankruptcy Code enjoining the plaintiffsbeen held in the WSFS Action from prosecuting actions against Caesars Entertainment until August 29, 2016. On October 17, 2016, the Illinois Bankruptcy Court granted the 105 Injunction staying the WSFS Action initially through the first omnibus hearing after Plan confirmation, and now through, inter alia, the Plan Effective Date. Pursuant to the Plan, theIntercreditor Actions. Apollo ~~Released Parties will be released from all claims relating to the WSFS Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.~~

Trilogy Portfolio Company, L.L.C., et al. v. Caesars Entertainment Corp., et al., No. 14-cv-7091 (S.D.N.Y.) (the “Trilogy Action”). On September 3, 2014, institutional investors allegedly holding approximately $137 million in CEOC unsecured senior notes sued CEOC and Caesars Entertainment in federal court in New York (the “New York Court”) for breach of contract and the implied covenant of good faith, Trust Indenture Act (“TIA”) violations, and a declaratory judgment challenging the August 2014 private financing transaction in which a portion of outstanding senior unsecured notes were purchased by Caesars Entertainment, and a majority of the noteholders agreed to amend the indenture to terminate Caesars Entertainment’s guarantee of the notes and modify certain restrictions on CEOC’s ability to sell assets. Caesars Entertainment and CEOC filed a motion to dismiss on November 12, 2014. On January 15, 2015, the New York Court granted the motion with respect to a TIA claim by Trilogy but otherwise denied the motion. On January 30, 2015, plaintiffs filed an amended complaint seeking relief against Caesars Entertainment only, and Caesars Entertainment answered on February 12, 2015. On October 2, 2014, a related putative class action complaint was filed on behalf of the holders of these notes captioned Danner v. Caesars Entertainment Corp., et al., No. 14-cv-7973 (S.D.N.Y.) (the “Danner Action”), against Caesars Entertainment alleging claims similar to those in the Trilogy Action. On February 19, 2015, plaintiffs filed an amended complaint, and Caesars Entertainment answered the amended complaint on February 25, 2015. In March 2015, each of Trilogy and Danner served subpoenas for documents on Apollo. Apollo produced responsive, non-privileged documents in response to those subpoenas. In July 2015, Trilogy and Danner served subpoenas for depositions on Apollo and those depositions were completed on September 22, 2015. On October 23, 2015, Trilogy and Danner filed motions for partial summary judgment, related to TIA and breach of contract claims. On December 29, 2015, the New York Court denied the motions for partial summary judgment. On March 23, 2016, the judge presiding over the Trilogy and Danner Actions announced that she was retiring from the bench effective April 28, 2016. A new judge was assigned to preside over the Trilogy and Danner Actions (in addition to the BOKF, UMB SDNY and Wilmington Trust Actions, defined below). On April 6, 2016, the parties agreed to a renewed summary judgment schedule for the Trilogy, Danner, BOKF, UMB SDNY (as defined below) and Wilmington Trust Actions. The moving parties submitted their briefs to the New York Court on May 10, 2016. Opposition briefs were filed on May 31, 2016. Reply briefs were filed on June 14, 2016. On June 15, 2016, the Illinois Bankruptcy Court issued a temporary restraining order and preliminary injunction pursuant to Section 105(a) of the Bankruptcy Code, enjoining the plaintiffs in the Trilogy and Danner Actions from prosecuting actions against Caesars Entertainment until August 29, 2016. On October 17, 2016, the Illinois Bankruptcy Court granted the 105 Injunction, staying the Trilogy and Danner Actions initially through the first omnibus hearing after Plan confirmation and now by order dated January 26, 2017 through, inter alia, the Plan Effective Date. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the Trilogy and Danner Actions. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.


D.	UMB Bank v. Caesars Entertainment Corporation, et al., No. 10393 (Del. Ch.) (the “UMB Action”). On November 25, 2014, UMB Bank, as trustee for certain CEOC notes, sued Caesars Entertainment, CEOC, other Caesars Entertainment-affiliated entities and certain of Caesars Entertainment’s directors, including Marc Rowan, Eric Press, David Sambur

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(each an Apollo Partner) and Jeffrey Benjamin (an Apollo consultant), in the Delaware Court. The UMB Action alleges claims for actual and constructive fraudulent conveyance and transfer, insider preferences, illegal dividends, breach of contract, intentional interference with contractual relations, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, usurpation of corporate opportunities, and unjust enrichment. The UMB Action seeks appointment of a receiver for CEOC, a constructive trust and other relief. The UMB Action has been assigned to the same judge overseeing the WSFS Action. The UMB Action has effectively been stayed since April 7, 2016, and on October 17, 2016, the Illinois Bankruptcy Court granted the 105 Injunction staying the UMB Action initially through the first omnibus hearing after Plan confirmation and now by order dated January 26, 2017 through, inter alia, the Plan Effective Date. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the UMB Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.

Koskie v. Caesars Acquisition Company, et al., No. A-14-711712-C (Clark Cnty Nev. Dist. Ct.) (the “Koskie Action”). On December 30, 2014, Nicholas Koskie brought a shareholder class action on behalf of shareholders of Caesars Acquisition Company (“CAC”) against CAC, Caesars Entertainment, and members of CAC’s Board of Directors, including Marc Rowan and David Sambur (each an Apollo partner). The lawsuit challenges CAC’s and Caesars Entertainment’s plan to merge, alleging that the proposed transaction will not give CAC shareholders fair value. Koskie asserts claims for breach of fiduciary duty relating to the director defendants’ interrelationships with the entities involved the proposed transaction. The case has been dismissed for failure to prosecute, and the time granted to the plaintiff to refile has passed without there being any refiling.

BOKF, N.A. v. Caesars Entertainment Corporation, No. 15-156 (S.D.N.Y) (the “BOKF Action”). On March 3, 2015, BOKF, N.A., as trustee for certain CEOC notes, sued Caesars Entertainment in the New York Court. The lawsuit alleges claims for breach of contract, intentional interference with contractual relations and a declaratory judgment, and seeks to enforce Caesars Entertainment’s guarantee of certain CEOC notes. The BOKF Action has been assigned to the same judge in the New York Court as the Trilogy and Danner Actions. On March 25, 2015, Caesars Entertainment filed an answer to the complaint. On May 19, 2015, BOKF sent the New York Court a letter requesting permission to file a partial summary judgment motion on Counts II and V of its complaint, related to the validity and enforceability of Caesars Entertainment’s guarantee of certain notes issued by CEOC and alleged violations of the Trust Indenture Act, 15 U.S.C. §§ 76aaa, et seq. The Trilogy and Danner plaintiffs did not join BOKF’s request to file for partial summary judgment. On May 28, 2015, the New York Court granted BOKF permission to move for partial summary judgment. On June 15, 2015, another related complaint captioned UMB Bank, N.A. v. Caesars Entertainment Corp., et al., No. 15-cv-4634 (S.D.N.Y.) (the “UMB SDNY Action”) was filed by UMB Bank, N.A., solely in its capacity as Indenture Trustee of certain first lien notes (“UMB”), against Caesars Entertainment alleging claims similar to those alleged in the BOKF, Trilogy and Danner Actions. On June 16, 2015, UMB sent a letter to the New York Court requesting permission to file a partial summary judgment motion on the same schedule with BOKF. On June 26, 2015, BOKF and UMB filed partial summary judgment motions (the “Partial Summary Judgment Motions”). On July 24, 2015, Caesars Entertainment filed its opposition to the Partial Summary Judgment Motions, and on August 7, 2015, BOKF and UMB filed reply briefs in further support of the Partial Summary Judgment Motions. On August 27, 2015, the New York Court denied the Partial Summary Judgment Motions and certified its opinion for an interlocutory appeal to the United States Court of Appeals for the Second Circuit. On December 22, 2015, the Second Circuit declined to hear the interlocutory appeal. Separately, on November 20, 2015, BOKF and UMB filed a second set of motions for partial summary judgment, on the issue of the disputed contract interpretation related to indenture release provisions. On January 5, 2016 the New York Court denied these motions. At a hearing on February 22, 2016, the New York Court bifurcated the trial in the BOKF and UMB SDNY Actions and scheduled the trial on the breach of contract and TIA claims to begin on March 14, 2016. The New York Court ordered a separate trial on the claims for breach of the covenant of good faith and fair dealing and tortious interference with contract to begin at a later date to be determined. On February 26, 2016, the Illinois Bankruptcy Court granted the stay request as to the BOKF Action until May 9, 2016, resulting in a stay of the trial on the breach of contract and TIA claims in the BOKF and UMB SDNY Actions. On February 24, 2016, Caesars Entertainment filed a motion for partial summary judgment to dispose of the claims for (1) breach of the implied covenant of good faith and fair dealing brought by BOKF and UMB, and (2) intentional interference with contractual relations brought by BOKF. The moving parties submitted their briefs on May 10, 2016. Opposition briefs were filed on May 31, 2016. Reply briefs were filed on June 14, 2016. On June 15, 2016, the Illinois Bankruptcy Court issued a temporary restraining order and preliminary injunction pursuant to Section 105(a) of the Bankruptcy Code, enjoining the plaintiffs in the BOKF Action from prosecuting actions against Caesars Entertainment until August 29, 2016. On October 17, 2016, after several motions and appeals relating to extending the stay past August 29, 2016, the Illinois Bankruptcy Court granted the 105 Injunction staying the BOKF

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Action initially through the first omnibus hearing after Plan confirmation and now by order dated January 26, 2017 through, inter alia, the Plan Effective Date. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the BOKF Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.

Wilmington Trust, National Association v. Caesars Entertainment Corporation, No. 15-cv-08280 (S.D.N.Y.) (the “Wilmington Trust Action”). On October 20, 2015, Wilmington Trust, N.A., solely in its capacity as Indenture Trustee for the 10.75% Notes due 2016 (“Wilmington Trust”), sued Caesars Entertainment in the New York Court alleging claims similar to those alleged in the BOKF, UMB, Trilogy, and Danner Actions. The parties cross-moved for partial summary judgment on the same schedule as the Trilogy Action. Caesars Entertainment argued that its actions did not violate the TIA and that its guarantee of the 10.75% Notes was automatically released under a certain clause contained in the indenture governing the 10.75% Notes. Wilmington Trust argued that Caesars Entertainment’s actions constituted an improper out-of-court reorganization under the TIA and that Caesars Entertainment’s guarantee was not released because the necessary conditions precedent did not occur. Although the temporary restraining order and preliminary injunction issued by the Illinois Bankruptcy Court did not apply to the Wilmington Trust Action, on July 6, 2016, Wilmington Trust and Caesars Entertainment filed a stipulation staying the Wilmington Trust Action until August 29, 2016. The New York Court scheduled oral argument for August 30, 2016. A motion was made by CEOC and the other Debtors to the Illinois Bankruptcy Court to extend the stay beyond August 29, 2016, which motion was denied. On October 17, 2016, the Illinois Bankruptcy Court granted the 105 Injunction staying the Wilmington Trust Action initially through the first omnibus hearing after Plan confirmation and now by order dated January 26, 2017 through, inter alia, the Plan Effective Date. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the Wilmington Trust Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.

CEOC v. Caesars Entertainment et al., Illinois Bankruptcy Court (the “CEOC Action”). On or about August 9, 2016, CEOC and certain of the other Debtors commenced a “placeholder” lawsuit against Caesars Entertainment, AGM, Caesars Entertainment directors (including Messrs. Rowan, Sambur, Press and Benjamin) and certain of its officers, and many others to, inter alia, prevent the statute of limitations from running respecting any claim owned by a Debtor’s estate. This lawsuit basically asserts the claims identified in the Examiner’s Report and has been stayed by an order of the Bankruptcy Court. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the CEOC Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.

Apollo believes that the claims in the WSFS Action, the UMB Action, the Trilogy Action, the Danner Action, the Koskie Action, the BOKF Action, the UMB SDNY Action, the Wilmington Trust Action and the CEOC Action are without merit. For this reason, and because the confirmed Plan has not become effective yet, no reasonable estimate of possible loss, if any, can be madeis unable at this ~~time.~~

~~The Bankruptcy Court administering the CEOC bankruptcy proceedings appointed an examiner (the “Examiner”)~~time to ~~report on certain transactions engaged~~assess a potential risk of loss. In addition, Apollo does not believe that AGM is a proper defendant in by CEOC and certain of its subsidiaries. The Examiner issued his report on March 16, 2016. The Examiner’s report states that potential claims may exist against “Apollo” and persons affiliated with it relating to certain transactions that occurred in the years preceding CEOC’s bankruptcy filing, principally relating to Bankruptcy Code fraudulent conveyance claims as well as aiding and abetting claims. Apollo and persons affiliated with it deny any wrongdoing and deny any liability in connection with such transactions, and if any new claim is asserted against any of them, such claim will be vigorously contested.these actions.

Following the January 16, 2014 announcement that CEC Entertainment, Inc. (“CEC”) had entered into a merger agreement with certain entities affiliated with Apollo (the “Merger Agreement”), four putative shareholder class actions were filed in the District Court of Shawnee County, Kansas on behalf of purported stockholders of CEC against, among others, CEC, its directors and Apollo and certain of its affiliates, which include Queso Holdings Inc., Q Merger Sub Inc., Apollo Management VIII, L.P., and AP VIII Queso Holdings, L.P. The first purported class action, which is captioned Hilary Coyne v. Richard M. Frank et al., Case No. 14C57, was filed on January 21, 2014 (the “Coyne Action”). The second purported class action, which was captioned John Solak v. CEC Entertainment, Inc. et al., Civil Action No. 14C55, was filed on January 22, 2014 (the “Solak Action”). The Solak Action was dismissed for lack of prosecution on October 14, 2014. The third purported class action, which is captioned Irene Dixon v. CEC Entertainment, Inc. et al., Case No. 14C81, was filed on January 24, 2014 and additionally names as defendants Apollo Management VIII, L.P. and AP VIII Queso Holdings, L.P. (the “Dixon Action”). The fourth purported class action, which is captioned Louisiana Municipal Public Employees’ Retirement System v. Frank, et al., Case No. 14C97, was filed on January 31, 2014 (the “LMPERS Action”) (together with the Coyne and Dixon Actions, the “Shareholder Actions”). A fifth purported class action, which was captioned McCullough v. Frank, et al., Case No. CC-14-00622-B, was filed in the County Court of Dallas

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County, Texas on February 7, 2014. This action was dismissed for want of prosecution on May 21, 2014. Each of the Shareholder Actions alleges, among other things, that CEC’s directors breached their fiduciary duties to CEC’s stockholders in connection with their consideration and approval of the Merger Agreement, including by agreeing to an inadequate price, agreeing to impermissible deal protection devices, and filing materially deficient disclosures regarding the transaction. Each of the Shareholder Actions further alleges that Apollo and certain of its affiliates aided and abetted those alleged breaches. As filed, the Shareholder Actions seek, among other things, rescission of the various transactions associated with the merger, damages and attorneys’ and experts’ fees and costs. On February 7, 2014 and February 11, 2014, the plaintiffs in the Shareholder Actions pursued a consolidated action for damages after the transaction closed. Thereafter, the Shareholder Actions were consolidated under the caption In re CEC Entertainment, Inc. Stockholder Litigation, Case No. 14C57, and the parties engaged in limited discovery. On July 21, 2015, a consolidated class action complaint was brought by Twin City Pipe Trades Pension Trust in the Shareholder Actions that did not name as defendants Apollo, Queso Holdings Inc., Q Merger Sub Inc., Apollo Management VIII, L.P., or AP VIII Queso Holdings, L.P., continued to assert claims against CEC and its former directors, and added The Goldman Sachs Group Inc. (“Goldman Sachs”) as a defendant. The consolidated complaint alleges, among other things, that CEC’s former directors breached their fiduciary duties to CEC’s stockholders by conducting a deficient sales process, agreeing to impermissible deal protection devices, and filing materially deficient disclosures regarding the transaction. It further alleges that two members of the board who also served as the senior managers of CEC had material conflicts of interest and that Goldman Sachs aided and abetted the board’s breaches as a result of various conflicts of interest facing the bank. The consolidated complaint seeks, among other things, to recover damages, attorneys’ fees and costs. On October 22, 2015, the parties to the consolidated action moved to dismiss the complaint. On March 1, 2017, the special master appointed by the Kansas court to oversee pre-trial proceedings recommended that the Kansas court grant defendants’ motions to dismiss the complaint. On March 30, 2017, plaintiff moved for leave to amend the consolidated complaint. The proposed amended consolidated complaint does not name as defendants CEC or its former directors, and purports to substitute Goldman, Sachs & Co. in place of the Goldman Sachs Group Inc. on the claim for aiding and abetting breach of fiduciary duty. On June 1, 2017, the Court granted the parties’ joint motion to dismiss all claims against CEC and the former directors, and dismissed the former CEC directors from the action. Although Apollo cannot predict the ultimate outcome of the consolidated action, and therefore no reasonable estimate of possible loss, if any, can be made at this time, Apollo believes that such action ~~is without merit.~~

On June 12, 2015, a putative class action was commenced in the United States District Court for the Northern District of California (“California Court”) by Rachel Silva (“Silva”) and Don Hudson (“Hudson”), on behalf of themselves and all others similarly situated, against Aviva plc; Athene Annuity and Life Company f/k/a Aviva Life and Annuity Company (“Aviva”); Athene USA Corporation f/k/a Aviva USA Corporation; Athene Holding; Athene Life Re Ltd.; Athene Asset Management; and AGM. The original complaint in this action alleged violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1962(c) and (d). The plaintiffs alleged that commencing in 2007 and continuing thereafter, Aviva and its then management engaged in a scheme to, among other things, falsely represent the financial strength of and hide the true financial condition of Aviva by, among other things, allegedly ceding risky liabilities to Aviva’s undercapitalized subsidiaries and affiliates, misvaluing assets, and failing to make required disclosures to purchasers of policies, and that after Athene Holding purchased all of the outstanding stock of Aviva’s parent effective October 2, 2013 the scheme was “unwound and rewound” so as to continue, and that as a result thereof some of the purchasers of annuity products issued by Aviva were charged an excessive price and were damaged as a result thereof. All defendants (except Aviva plc) (a) moved to transfer this action to the United States District Court for the Southern District of Iowa (“Iowa Court”) and (b) moved to dismiss this action. Aviva plc separately moved to dismiss the action for lack of jurisdiction over it. The California Court granted the motion to transfer to the Iowa Court and denied without prejudice the motions to dismiss. Plaintiff Hudson moved for leave to amend the complaint, which motion was granted by the Iowa Court. The amended complaint removed Silva as a named plaintiff and removed Aviva plc as a defendant, but otherwise substantively makes the same or similar allegations. The Defendants have moved to dismiss the amended complaint, and that motion has been fully briefed. On November 14, 2016, the Court stayed its decision on the motion to dismiss until the Eighth Circuit Court of Appeals renders its decision in a different case that has some of the same jurisdictional issues and stayed additional discovery until the Court decides the motion to dismiss. On April 13, 2017, the Eighth Circuit affirmed the lower court’s decision to dismiss the other case. The Court has not yet decided the motion to dismiss in this case. If the action is not dismissed, Athene Asset Management and AGM (and the other defendants) will deny the material allegations of the amended complaint and will vigorously defend themselves against these claims. Although neither Athene Asset Management nor AGM can predict the ultimate outcome of this action, each believes that it is without merit, and because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

After the announcement of the execution of the Agreement and Plan of Merger among Apollo Commercial Real Estate Finance, Inc., Apollo Residential Mortgage, Inc. and Arrow Merger Sub, Inc. (“Merger Sub”), two putative class action lawsuits challenging the proposed merger, captioned Aivasian v. Apollo Residential Mortgage, Inc., et al., No. 24-C-16-001532, and Wiener v. Apollo Residential Mortgage, Inc., et al., No. 24-C-16-001837, were filed in the Circuit Court for Baltimore City. A putative class and derivative lawsuit was later filed in the same Court, captioned Crago v. Apollo Residential Mortgage, Inc., et al., No.

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24-C-16-002610. Following a hearing on May 6, 2016, the Court entered orders among other things, consolidating the three actions under the caption In Re Apollo Residential Mortgage, Inc. Shareholder Litigation, Case No.: 24-C-16-002610. The plaintiffs have designated the Crago complaint as the operative complaint. The operative complaint includes both direct and derivative claims, names as defendants AGM, AMTG, the board of directors of AMTG (the “AMTG Board”), ARI, Merger Sub and Athene Holding and alleges, among other things, that the members of the AMTG Board breached their fiduciary duties to AMTG’s stockholders and that the other defendants aided and abetted such fiduciary breaches. The operative complaint further alleges, among other things, that the proposed merger involves inadequate consideration, was the result of an inadequate and conflicted sales process, and includes unreasonable deal protection devices that purportedly preclude competing offers. It also alleges that the transactions with Athene Holding are unfair and that the registration statement on Form S-4 filed with the SEC on April 6, 2016 contains materially misleading disclosures and omits certain material information. The operative complaint seeks, among other things, certification of the proposed class, declaratory relief, preliminary and permanent injunctive relief, including enjoining or rescinding the merger, unspecified damages, and an award of other unspecified attorneys’ and other fees and costs. On May 6, 2016, counsel for the plaintiffs filed with the Court a stipulation seeking the appointment of interim co-lead counsel, which stipulation was approved by the Court on June 9, 2016. Defendants’ motions to dismiss have been fully briefed, and oral argument was held on December 8, 2016. Apollo believes that the claims asserted in the complaints are without merit. For this reason, and because the claims are in their early stages, no reasonable estimate of possible loss, if any, can be made at this time.

Following the March 14, 2016 announcement that The Fresh Market, Inc. (“TFM”) had entered into a merger agreement with certain entities affiliated with Apollo (the “TFM Merger Agreement”), two Petitions for Appraisal of Stock were filed in the Chancery Court for the State of Delaware. The first, captioned Hudson Bay Master Fund, Ltd. and Brigade Leveraged Capital Structures Fund, Ltd. v. The Fresh Market, Inc., was filed May 23, 2016 on behalf of holders of 1,660,000 shares of common stock of TFM and names only TFM as the respondent. The second captioned Verition Multi-Strategy Master Ltd. and Verition Partners Master Fund Ltd. v. The Fresh Market, Inc. was filed August 22, 2016 on behalf of holders of 1,198,318 shares of common stock of TFM and names only TFM as the respondent. Both actions seek a determination of the fair value of the shares of the common stock of TFM under Section 262 of the Delaware Corporate Code. The two actions have since been consolidated and will proceed together under the caption, In re Appraisal of The Fresh Market, Inc., Case No. 12372-VCG (the “Appraisal Action”). The Court in the Appraisal Action has scheduled a trial on the merits to take place in November 2017. In addition, a purported shareholder class action, captioned Elizabeth Morrison v. Ray Berry, et. al., Case No. 12808-VCG, was filed October 6, 2016 in the Chancery Court for the State of Delaware and names as defendants TFM’s former officers and directors (the “Morrison Action”). The Morrison Action alleges, among other things, that the TFM officers and directors breached their fiduciary duties to the TFM shareholders in connection with their consideration and approval of the TFM Merger Agreement, including by engaging in a sale process that improperly favored AGM and/or Apollo Management VIII, L.P., by agreeing to an inadequate price and by filing materially deficient disclosures regarding the transaction. The Court has not yet set a schedule for resolving this Action on the merits. Subsequently, a purported shareholder class action, captioned Bruce S. Sherman and Bruce & Cynthia Sherman Charitable Foundation, Inc. v. The Fresh Market, Inc., et. al., Case No. 1:17-cv-00179, was filed March 3, 2017 in federal district court in the Middle District of North Carolina (the “Sherman Action”). The Sherman Action names as defendants, in addition to TFM, the former members of its Board of Directors, as well as AGM and certain of its affiliates. The Sherman Action alleges, among other things, that the defendants violated federal securities laws based on purported material misstatements and omissions contained in public filings related to the TFM Merger Agreement. The plaintiffs seek, among other things, rescission of the various transactions associated with the merger and/or rescissory or other damages, and attorneys’ and experts’ fees and costs. The Court has not yet set a schedule for resolving this action on the merits. Because each of the pending actions is in the early stages, no reasonable estimate of possible loss, if any, can be made. Apollo believes that each of these actions is without merit.

On March 4, 2016, the Public Employees Retirement System of Mississippi filed a putative securities class action against Sprouts Farmers Market, Inc. (“SFM”), several SFM directors (including Andrew Jhawar, an Apollo partner), AP Sprouts Holdings, LLC and AP Sprouts Holdings (Overseas), L.P. (the “AP Entities”), which are controlled by entities managed by Apollo affiliates, and two underwriters of a March 2015 secondary offering of SFM common stock. The AP Entities sold SFM common stock in the March 2015 secondary offering. The complaint, filed in Arizona Superior Court and captioned Public Employees Retirement System of Mississippi v. Sprouts Farmers Market, Inc. (CV2016-050480), alleges that SFM filed a materially misleading registration statement for the secondary offering that incorporated alleged misrepresentations in SFM’s 2014 annual report regarding SFM’s business prospects, and failed to disclose alleged accelerating produce deflation. ~~The two~~Plaintiffs alleged causes of action against the AP Entities ~~are~~ for ~~alleged~~ violations of Sections 11 and 15 of the Securities Act of ~~1933. Plaintiff seeks, among other things,~~1933, seeking compensatory damages for alleged losses sustained from a decline in SFM’s stock price. Defendants ~~removed~~moved to dismiss the ~~case to United States District Court for~~action, and the ~~District of Arizona, but on March 27, 2017,~~court dismissed the Court granted Plaintiff's motion to remand the case to state court. Defendants filed a notice of appeal on April 21, 2017. Meanwhile, the state court ordered the following briefing schedule for motions to dismiss: (1) Defendants’ motions are due by May 25, 2017; (2) Plaintiff’s opposition is due by June 26,Section 11

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~~2017; and (3) Defendants’ replies are due by July 14, 2017.~~claim against the AP Entities but not the Section 15 claim. Discovery is ongoing. Because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

Between February 25 and March 23, 2016, plaintiffs filed five putative class actions in the Superior Court of Maricopa County, Arizona, on behalf of purported stockholders of Apollo Education Group, Inc. (“AEG”) asserting claims for breaches of fiduciary duties and aiding and abetting the alleged breaches in connection with a proposed acquisition of AEG. The defendants include, among others, AEG, members of AEG’s board of directors, AGM, Fund VIII, and certain subdisiaries of funds managed by Apollo. On April 12, 2016, the Court consolidated all the actions under the following caption: In re Apollo Education Group, Inc. Shareholder Litigation, Lead Case No. CV2016-001905 (Ariz. Super. Ct.). Shortly thereafter, the parties informed the Court that they had entered into a memorandum of understanding for a settlement that would, among other things, (i) provide for the dismissal with prejudice on the merits and release of any and all claims by the proposed class against the Defendants; and (ii) recognize that the pendency of the suit was, in part, a factor in the decision by the purchasers of AEG to increase the price offered to acquire all of the outstanding shares of AEG’s common stock from $9.50 per share to $10.00 per share. On April 10, 2017, the parties filed settlement papers for the Court’s review following the consummation of the merger agreement on February 1, 2017, the completion by plaintiffs of three confirmatory discovery depositions on February 27, 2017, and the execution of a stipulation of settlement by the parties on April 10, 2017. The settlement papers include, among other things, (i) the stipulation of settlement, (ii) a proposed class notice, (iii) a memorandum of law in support of preliminary approval, and (iv) a proposed order that, among other things, provisionally certifies the settlement class, sets a date for the settlement hearing, grants preliminary approval, and institutes a stay of all proceedings in the action other than settlement-related proceedings pending a ruling on a motion for final approval.

On June 20, 2016 Banca Carige S.p.A. (“Carige”) commenced a lawsuit in the Court of Genoa (Italy) (No. 8965/2016), against its former Chairman, its former Chief Executive Officer, AGM and certain entities (the “Apollo Entities”) organized and owned by investment funds managed by affiliates of AGM. The complaint alleges that AGM and the Apollo Entities (i) aided and abetted breaches of fiduciary duty to Carige allegedly committed by Carige’s former Chairman and former CEO in connection with the sale to the Apollo Entities of Carige subsidiaries engaged in the insurance business; and (ii) took wrongful actions aimed at weakening Banca Carige’s financial condition supposedly to facilitate an eventual acquisition of Carige. The causes of action are based in tort under Italian law. Carige purportedly seeks damages of €450 million in connection with the sale of the insurance businesses and €800 million for other losses. ~~The first hearing has been scheduled for~~Hearings were held on May 17, 2017, on June 14, 2017, on November 7, 2017 and on January 18, 2018. After the Court’s decision dated December 6, 2017, that the case can be decided without further evidence, the parties filed their final two briefs on March 19, 2018 and April 9, ~~2017.~~2018, respectively. Based on the allegations made inby the ~~complaint,~~plaintiff during the proceedings, Apollo believes that there is no merit to Carige’s claims. Additionally, asalthough the case isappears to be in its ~~early~~final stages, no reasonable estimate of possible loss, if any, can be ~~made at this time.~~made.

On December 12, 2016, the CORE Litigation Trust (the “Trust”), which was created under the Chapter 11 reorganization plan for CORE Media and other affiliated entities, including CORE Entertainment, Inc. (“CORE”), approved by the Southern District of New York Bankruptcy Court on September 22, 2016, commenced an action in California Superior Court for Los Angeles County, captioned Core Litigation Trust v. Apollo Global Management, LLC, et al., Case No. BC 643732, which was removed to the United States District Court for the Central District of California on February 3, 2017. On ~~February 21,~~April 5, 2017, the ~~Trust moved to remand the action to California state court, and Defendants moved~~C.D. Cal. District Court granted Defendants’ motion to transfer the case to the Southern District of New York (“SDNY”)~~. On April 5, 2017, the Court granted Defendants’ motion to transfer the case to the SDNY~~ and denied the Trust’s motion to remand the action to California state court, without prejudice to the Trust refiling its remand motion in the SDNY. On April 20, 2017, the SDNY District Court referred the case to the SDNY Bankruptcy Court. On ~~April 27,~~July 17, 2017, the SDNY Bankruptcy Court granted the Trust’s motion for mandatory abstention and remanded the case to Los Angeles County Superior Court. On October 3, 2017, the Los Angeles County Superior Court granted defendants’ motion to stay all proceedings in the California state court action on forum non conveniens grounds in favor of litigating the case in New York state court. On November 9, 2017, the Trust filed a ~~motion~~complaint in the Supreme Court of the State of New York for ~~mandatory abstention, permissive abstention, and remand~~New York County, commencing an action captioned Core Litigation Trust v. Apollo Global Management, LLC, et al., Index No. 656856/2017. On January 16, 2018, defendants filed motions to ~~California state court. Defendants’~~dismiss the complaint. The Trust’s opposition to ~~that motion~~the motions to dismiss is due ~~May 16, 2017, the Trust’s reply is~~February 14, 2018, and defendants’ replies are due May 26, 2017, and a hearing on the motion has been noticed for June 13, 2017. The Trust’s complaint asserts claims for inducing the breach of and tortiously interfering with $360 million in loans under the 2011 loan agreements entered into between CORE and certain First and Second Lien Lenders (the “Lenders”), who assigned their loan-agreement claims to the Trust as part of CORE’s Chapter 11 plan of reorganization.March 8, 2018. The complaint names as defendants: (i) AGM, (ii) Apollo Global Securities, LLC, (iii) other AGM subsidiaries, (iv) the funds managed by Apollo that were the beneficial owners of CORE Media (the “CORE Funds”), (v) certain affiliated-entities through which the CORE Funds owned their beneficial interest in CORE Media, (vi) Twenty-First Century Fox, Inc. (“Fox”) and certain Fox affiliates, ~~and~~ (vii) Endemol USA Holding, Inc. (“Endemol”) and certain Endemol-affiliated ~~entities.~~entities, and (viii) the joint venture through which the CORE Funds and Fox beneficially owned CORE Media and Endemol Shine. The Trust’s complaint asserts against all defendants claims for inducing the breach of and tortiously interfering with $360 million in loans under the 2011 loan agreements entered into between CORE and certain First and Second Lien Lenders (the “Lenders”), who assigned their loan-agreement claims to the Trust as part of CORE’s Chapter 11 plan of reorganization. The Trust alleges that defendants’ participation in certain transactions related to CORE, including the December 12, 2014 formation of the joint venture through which the CORE Funds and Fox beneficially owned CORE Media and Endemol Shine, induced CORE to breach the loan agreements and tortiously interfered with CORE’s performance of its obligations under the loan agreements. The Trust also asserts alter-ego and de-facto-merger claims seeking to hold certain defendants liable for the guarantee provided by CORE Entertainment Holdings, Inc. (CORE’s parent holding company) of CORE's repayment obligations under the loans’ repayment. The Trust seeks $240 million in compensatory, unspecified ~~compensatory~~punitive damages, pre-judgment interests, and costs and expenses. On January 16, 2018, defendants filed motions to dismiss the complaint. The Trust opposed the motions to dismiss on February 16, 2018. Defendants filed their replies on March 12, 2018. The court has scheduled oral argument on defendants’ motions for May 17, 2018. Apollo believes these claims are without merit. Because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

On August 3, 2017, a putative class action was commenced in the United States District Court for the Middle District of Florida against AGM, Gareth Turner (an Apollo Partner) and Mark Beith (a former Apollo Principal) by Michael McEvoy on behalf of a class of current and former employees of subsidiaries of CEVA Group, LLC (“CEVA Group”) who purchased restricted Class A shares in CEVA Investment Limited (“CIL”), the former parent company of CEVA Group. The complaint alleges that the defendants breached fiduciary duties to and defrauded the plaintiffs by inducing them to purchase shares in CIL and subsequently participating in a debt restructuring of CEVA Group in which shareholders of CIL did not receive a recovery. The complaint purports to seek damages in excess of €14 million. On October 18, 2017, the bankruptcy trustee for CIL filed a motion in the

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Bankruptcy Court for the Southern District of New York to prevent Mr. McEvoy and his counsel from continuing to prosecute the Florida action on the basis that the relevant claims belong to the CIL bankruptcy estate. On October 18, 2017, the bankruptcy trustee for CIL filed a motion in the Bankruptcy Court for the Southern District of New York to prevent Mr. McEvoy and his counsel from continuing to prosecute the Florida action on the basis that the relevant claims belong to the CIL bankruptcy estate. On November 21, 2017, the Florida court granted the parties’ joint motion to stay the case pending resolution of the CIL bankruptcy trustee’s motion to enforce the automatic stay, staying the case until further Order. On February 9, 2018, the bankruptcy court granted the CIL trustee’s motion to enforce the automatic stay and enjoined further prosecution of the McEvoy Action (the “February 9 Order”). On February 23, 2018, defendants Beith and Turner filed a motion to correct certain statements in the February 9 Order. Also on February 23, 2018, Mr. McEvoy filed a motion for leave to appeal the February 9 Order. On April 3, 2018, the District Court for the Southern District of New York held that Mr. McEvoy’s appeal of the February 9 Order was stayed pending the resolution of the motion to correct certain statements in that order. On April 12, 2018, the bankruptcy court granted the motion to correct, and entered an order to that effect on April 24, 2018. Based on the allegations in the complaint, Apollo believes that there is no merit to the claims. Additionally, as the case is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

Between July 25 and August 15, 2017, plaintiffs filed three purported stockholder class actions in the Nevada state and federal court against ClubCorp Holdings Inc. (“ClubCorp”), the directors of ClubCorp, and AGM, in connection with the proposed acquisition of ClubCorp. The cases in the District Court for Clark County, Nevada were originally captioned Meng v. ClubCorp Holdings, Inc., et al., No. A-17-758912-B (“Meng”); Baum v. Affeldt, et al., No. A-17-759227-C (“Baum”); and Solak v. Affeldt, et al., No. A-17-759987-B (“Solak”). On August 16, 2017, the Meng and Baum actions were consolidated with two other similar actions that did not name AGM as a defendant. The consolidated action is captioned In re ClubCorp Holdings Shareholder Litigation, Case No. A-17-758912-B (“In re ClubCorp”). On September 21, 2017, the Solak action was consolidated into In re ClubCorp. On October 12, 2017, plaintiffs in In re ClubCorp filed a consolidated amended complaint. The complaint purports to assert claims against the directors of ClubCorp for allegedly breaching their fiduciary duties of loyalty, due care, good faith, and candor owed to the plaintiff and the public stockholders of ClubCorp. The complaint includes allegations that the directors, among other things, agreed to a transaction at an unreasonably low price, failed to take the necessary steps to maximize stockholder value, gave preferential severance benefits to certain executives, agreed to preclusive deal protection provisions, and included materially incomplete and misleading information in the proxy statement recommending that stockholders vote in favor of the acquisition. The complaint also purports to assert a claim against AGM for aiding and abetting the directors’ purported breach of fiduciary duty. On November 15, 2017, another plaintiff with separate counsel filed a motion to intervene, attaching a proposed complaint in intervention containing similar allegations but asserting claims only against ClubCorp and its directors, not AGM. On December 19, 2017, a hearing was held in which the motion to intervene was denied. On January 26, 2018, plaintiffs filed a second consolidated amended complaint. On February 23, 2018, AGM, ClubCorp, and the ClubCorp directors filed motions to dismiss the second consolidated amended complaint. On March 23, 2018, plaintiffs filed a brief in opposition to the motions to dismiss. On April 20, 2018, defendants filed reply briefs in further support of their motions to dismiss. Because this action is in the early stages, no reasonable estimate of possible loss, if any, can be made.

On December 21, 2017, Harbinger Capital Partners II, LP, Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Harbinger Capital Partners Special Situations GP, LLC, Harbinger Capital Partners Offshore Manager, L.L.C., Global Opportunities Breakaway Ltd. (in voluntary liquidation), and Credit Distressed Blue Line Master Fund, Ltd. (collectively, “Harbinger”) commenced an action in New York Supreme Court captioned Harbinger Capital Partners II LP et al. v. Apollo Global Management LLC, et al. (No. 657515/2017). The complaint names as defendants (i) AGM, (ii) the funds managed by Apollo that invested in SkyTerra Communications, Inc. (“SkyTerra”) equity before selling their interests to Harbinger under an April 2008 agreement that closed in 2010, and (iii) six former SkyTerra directors, five of whom are current or former Apollo employees. The complaint alleges that during the period of Harbinger’s various equity and debt investments in SkyTerra, from 2004 to 2010, Defendants concealed from Harbinger material defects in SkyTerra technology that was to be used to create a new mobile wi-fi network. The complaint alleges that Harbinger would not have made investments in SkyTerra totaling approximately $1.9 billion had it known of the defects, and that the public disclosure of these defects ultimately led to SkyTerra filing for bankruptcy in 2012 (after it had been renamed LightSquared). The complaint asserts claims against (i) all defendants for fraud, civil conspiracy, and negligent misrepresentation, (ii) AGM and the Apollo-managed funds only for breach of fiduciary duty, breach of contract, and unjust enrichment, and (iii) the SkyTerra director defendants only for aiding and abetting breach of fiduciary duty. The complaint seeks $1.9 billion in damages, as well as punitive ~~damages.~~damages, interest, costs, and fees. On February 14, 2018, the parties filed a stipulation in the state court to stay the state court action until December 31, 2018. The Court entered the stay on February 21, 2018. On February 14, 2018, Defendants moved the United States Bankruptcy Court for the Southern District of New York to reopen the LightSquared bankruptcy proceeding for the limited purpose of enforcing

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Harbinger’s assignment and release in that bankruptcy of the claims that it asserts in the New York state court action. On February 23, 2018, Apollo filed a Notice of Adjournment on behalf of all parties that adjourned without date the hearing on the motion to reopen, to be rescheduled to a new date and time following the expiration of the state-court stay. Apollo believes these claims are without merit. Because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

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~~Table~~On February 9, 2018, plaintiffs Joseph M. Dropp, Mary E. Dropp, Robert Levine, Susan Levine, and Kaarina Pakka filed a complaint in the United States District Court for the District of ~~Contents~~

~~APOLLO GLOBAL MANAGEMENT,~~Nevada against Apollo Management VIII, L.P. (“Management VIII”), Apollo Global Management, LLC

~~NOTES TO CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(dollars~~ (“AGM”) and Diamond Resorts International, Inc. (“Diamond”) and several of its affiliates and executives. Plaintiffs, who allege that they bought vacation interest points from Diamond, allege that the points are securities and that defendants violated federal securities laws by selling the points without registering them as securities. Plaintiffs also assert a “control person” claim against Management VIII and AGM. Plaintiffs assert their claims on their own behalf and on behalf of a purported class of Diamond customers who bought vacation interest points over the last three years. They seek injunctive relief prohibiting defendants from continuing to market and sell unregistered securities, the right to rescind their purchases, and unspecified compensatory damages. On April 11, 2018, Defendants filed motions to sever Ms. Pakka's claims from the claims of the other plaintiffs and to transfer those claims to the United States District Court for the District of Hawaii. In regard to the other plaintiffs, Defendants filed motions to compel those plaintiffs to arbitrate their claims; to strike their class action claim and to pursue their arbitration claim individually, rather than jointly; and to dismiss the complaint or, in ~~thousands, except share data, except where noted)~~

the alternative, stay it pending arbitration. Because this action is in the early stages, no reasonable estimate of possible loss, if any, can be made at this time.

~~In December 2016,~~Four substantially similar shareholder class action lawsuits related to the ~~Company received~~January 19, 2018 initial public offering (“IPO”) of ADT Inc. (“ADT”) common stock were filed in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida in March and April 2018. The actions are entitled Goldstrand Investments Inc. v. ADT Inc., Krebsbach v. ADT Inc., Katz v. ADT Inc., and Sweet v. ADT Inc. Plaintiffs in each case allege the purchase of ADT common stock in or traceable to the IPO or “pursuant to” ADT’s registration statement, assert claims for alleged violations of the Securities Act of 1933 (the “1933 Act”), and seek to represent a ~~subpoena from~~class of similarly situated shareholders. Each of the ~~SEC principally concerning~~complaints names ADT and various ADT officers, directors and IPO underwriters, including Apollo Global Securities, LLC, as defendants. Plaintiffs allege that the ~~Company's disclosure~~defendants violated the 1933 Act because the registration statement and prospectus used to effectuate the IPO purportedly were false and misleading in that they allegedly misled investors with respect to material litigation involving ADT, ADT’s efforts to protect its intellectual property, competitive pressures ADT faced, ADT’s customer acquisition costs, and false-alarm pressures. Because these actions are in the early stages, no reasonable estimate of IRR calculations for certain private equity funds, costs associated with a European service provider, and certain personnel changes. These topics generally track matters with which the Company is familiar and has previously examined. The Company is fully cooperating with the SEC inpossible loss, if any, can be made at this ~~matter.~~

time.

Commitments and Contingencies—Apollo leases office space and certain office equipment under various lease and sublease arrangements, which expire on various dates through 2025. As these leases expire, it can be expected that in the normal course of business, they will be renewed or replaced. Certain lease agreements contain renewal options, rent escalation provisions based on certain costs incurred by the landlord or other inducements provided by the landlord. Rent expense is accrued to recognize lease escalation provisions and inducements provided by the landlord, if any, on a straight-line basis over the lease term and renewal periods where applicable. Apollo has entered into various operating lease service agreements in respect of certain assets.

As of March 31, ~~2017,~~2018, the approximate aggregate minimum future payments required for operating leases were as follows:

Remaining 2017 2018 2019 2020 2021 Thereafter Total
Aggregate minimum future payments $ 26,283
$ 31,075
$ 30,255
$ 13,523
$ 4,622
$ 6,876
$ 112,634



	Remaining 2018		2019		2020		2021		2022		Thereafter		Total
Aggregate minimum future payments	$	29,084	$	36,590	$	18,013	$	7,136	$	4,923	$	9,978	$	105,724

Expenses related to non-cancellable contractual obligations for premises, equipment, auto and other assets were ~~$9.7~~$9.8 million and ~~$10.1~~$9.7 million for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively, and are included in general, administrative and other on the condensed consolidated statements of operations.

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Other long-term obligations relate to payments with respect to certain consulting agreements entered into by Apollo Investment Consulting LLC, a subsidiary of Apollo, as well as long-term service contracts. A significant portion of these costs are reimbursable by funds or portfolio companies. As of March 31, ~~2017,~~2018, fixed and determinable payments due in connection with these obligations were as follows:

Remaining 2017 2018 2019 2020 2021 Thereafter Total
Other long-term obligations $ 19,290
$ 5,948
$ 2,935
$ 1,365
$ 1,365
$ 1,365
$ 32,268



	Remaining 2018		2019		2020		2021		2022		Thereafter		Total
Other long-term obligations	$	17,401	$	4,786	$	1,982	$	1,982	$	1,622	$	1,365	$	29,138

Contingent Obligations—~~Carried interest income~~Performance allocations with respect to ~~private equity~~certain funds ~~and certain credit and real estate funds is~~are subject to reversal in the event of future losses to the extent of the cumulative ~~carried interest~~revenues recognized in income to date. If all of the existing investments became worthless, the amount of cumulative revenues that have been recognized by Apollo through March 31, ~~2017~~2018 and that would be reversed approximates ~~$3.1~~$3.5 billion. Management views the possibility of all of the investments becoming worthless as remote. ~~Carried interest income is~~Performance allocations are affected by changes in the fair values of the underlying investments in the funds that Apollo manages. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, bond yields and industry trading multiples. Movements in these items can affect valuations quarter to quarter even if the underlying business fundamentals remain stable.

Additionally, at the end of the life of certain funds that the Company manages, there could be a payment due to a fund by the Company if the Company, as general partner, has received more ~~carried interest income~~performance allocations than was ultimately earned. The general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of each fund or as otherwise set forth in the respective limited partnership agreement of the fund. See note 13 to our condensed consolidated financial statements for further details regarding the general partner obligation.

Certain funds may not generate ~~carried interest income~~performance allocations as a result of unrealized and realized losses that are recognized in the current and prior reporting period. In certain cases, ~~carried interest income~~performance allocations will not be generated until additional unrealized and realized gains occur. Any appreciation would first cover the deductions for invested capital, unreturned organizational expenses, operating expenses, management fees and priority returns based on the terms of the respective fund agreements.

One of the Company’s subsidiaries, AGS, provides underwriting commitments in connection with securities offerings to the portfolio companies of the funds Apollo manages. As of March 31, ~~2017,~~2018, there were no underwriting commitments outstanding related to such offerings.

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As of March 31, ~~2017,~~2018, one of the Company’s subsidiaries had unfunded contingent commitments of ~~$0.9~~$4.9 million, to facilitate fundings at closing by lead arrangers for syndicated term loans issued by portfolio companies of ~~a fund~~funds managed by Apollo. The commitments expired on April ~~30, 2017.~~16, 2018, May 5, 2018 and May 7, 2018, respectively, and were not funded.

Contingent Consideration—In connection with the acquisition of Stone Tower in April 2012, the Company agreed to pay the former owners of Stone Tower a specified percentage of any future ~~carried interest income~~performance revenues earned from certain of the Stone Tower funds, CLOs, and strategic investment accounts. This contingent consideration liability was determined based on the present value of estimated future ~~carried interest~~performance revenue payments, and is recorded in profit sharing payable in the condensed consolidated statements of financial condition. The fair value of the remaining contingent obligation was ~~$87.7~~$90.5 million and ~~$106.3~~$92.6 million as of March 31, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

The contingent consideration obligations will be remeasured to fair value at each reporting period until the obligations are ~~satisfied.~~satisfied and are characterized as Level III liabilities. The changes in the fair value of the contingent consideration obligations is reflected in profit sharing expense in the condensed consolidated statements of operations.

~~The contingent consideration obligations are measured at fair value and are characterized as Level III liabilities.~~ See note 56 for further information regarding fair value measurements.

15. SEGMENT REPORTING

Apollo conducts its business primarily in the United States and substantially all of its revenues are generated domestically. Apollo’s business is conducted through three reportable segments: credit, private equity ~~credit~~ and real ~~estate.~~assets. Segment information is utilized by our Managing Partners, who operate collectively as our chief operating decision maker, to assess performance and to allocate resources. These segments were established based on the nature of investment activities in each underlying fund, including the specific type of investment made and the level of control over the investment.

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The performance is measured by the Company’s chief operating decision maker on an unconsolidated basis because management makes operating decisions and assesses the performance of each of Apollo’s business segments based on financial and operating metrics and data that exclude the effects of consolidation of any of the affiliated funds.

Economic Income (Loss)

Economic Income (Loss), or “EI”, is a key performance measure used by management in evaluating the performance of Apollo’s credit, private equity ~~credit~~ and real ~~estate~~assets segments. Management believes the components of EI, such as the amount of management fees, advisory and transaction fees and ~~carried interest income,~~performance fees, are indicative of the Company’s performance. Management uses EI in making key operating decisions such as the following:

Decisions related to the allocation of resources such as staffing decisions including hiring and locations for deployment of the new hires;

Decisions related to capital deployment such as providing capital to facilitate growth for the business and/or to facilitate expansion into new businesses; and

Decisions ~~relating~~related to expenses, such as determining annual discretionary bonuses and equity-based compensation awards to its employees. With respect to compensation, management seeks to align the interests of certain professionals and selected other individuals with those of the investors in such funds and those of the Company’s shareholders by providing such individuals a profit sharing interest in the ~~carried interest income~~performance fees earned in relation to the funds. To achieve that objective, a certain amount of compensation is based on the Company’s performance and growth for the year.

EI is a measure of profitability and has certain limitations in that it does not take into account certain items included under U.S. GAAP. EI represents segment income (loss) before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges ~~include~~includes equity-based compensation charges, the amortization of intangible assets, contingent consideration and certain other charges associated with acquisitions. In addition, ~~segment data~~EI excludes non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, compensation and administrative related expense reimbursements, as well as the assets, liabilities and operating results of the funds and VIEs that are included in the condensed consolidated financial statements. We believe the exclusion of the non-cash charges related to the 2007 Reorganization for equity-based compensation provides investors with a meaningful indication of our performance because these charges relate to the equity portion of our capital structure and not our core operating performance. EI also excludes impacts of the remeasurement of the tax receivable agreement recorded in other income, which arises from changes in the associated deferred tax balance, including the impacts related to the TCJA.

Management believes that excluding the remeasurement of the tax receivable agreement from EI is meaningful as it increases comparability between periods. Remeasurement of the tax receivable agreement is an estimate, and may change due to changes in interpretations and assumptions based on additional guidance that may be issued pertaining to the TCJA.

- ~~55-~~53-

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following tables present financial data for Apollo’s reportable ~~segments as of and for the three months ended March 31, 2017 and for the three months ended March 31, 2016. Prior period financial data has been updated to conform to the current presentation.~~segments.


	As of and for the Three Months Ended March 31, 2017												As of and for the Three Months Ended March 31, 2018
	Private Equity Segment			Credit Segment			Real Estate Segment			Total Reportable Segments			Credit Segment			Private Equity Segment			Real Assets Segment			Total Reportable Segments
Revenues:
Management fees from related parties	$	77,398		$	158,342		$	16,313		$	252,053
Advisory and transaction fees from related parties, net	11,772			2,556			739			15,067
Carried interest income from related parties:
Management fees													$	183,070		$	71,160		$	17,973		$	272,203
Advisory and transaction fees, net													2,348			10,598			48			12,994
Performance fees⁽¹⁾:
Unrealized⁽¹⁾⁽²⁾	163,619			6,322			2,604			172,545			27,711			(445,468		)	(2,665		)	(420,422		)
Realized	155,461			30,936			64			186,461			15,057			279,275			3,126			297,458
Total carried interest income from related parties	319,080			37,258			2,668			359,006
Total Revenues⁽²⁾	408,250			198,156			19,720			626,126
Total performance fees													42,768			(166,193		)	461			(122,964		)
Principal investment income (loss)													5,409			(17,531		)	(482		)	(12,604		)
Total Revenues⁽³⁾													233,595			(101,966		)	18,000			149,629
Expenses:
Compensation and benefits:
Salary, bonus and benefits	31,469			54,882			8,370			94,721			61,074			35,021			10,436			106,531
Equity-based compensation	7,095			9,102			548			16,745			9,727			6,772			859			17,358
Profit sharing expense:
Unrealized	55,016			2,215			2,034			59,265			15,713			(137,633		)	(1,091		)	(123,011		)
Realized	75,252			13,445			26			88,723			6,602			102,082			1,586			110,270
Realized: Equity-based	—			287			—			287
Equity-based⁽⁴⁾													1,791			12,601			249			14,641
Total profit sharing expense	130,268			15,947			2,060			148,275			24,106			(22,950		)	744			1,900
Total compensation and benefits	168,832			79,931			10,978			259,741			94,907			18,843			12,039			125,789
Non-compensation expenses:
General, administrative and other	17,360			32,090			4,482			53,932			33,135			15,098			6,142			54,375
Placement fees	134			1,770			—			1,904			276			51			—			327
Total non-compensation expenses	17,494			33,860			4,482			55,836			33,411			15,149			6,142			54,702
Total Expenses⁽²⁾	186,326			113,791			15,460			315,577
Other Income (Loss):
Income from equity method investments	31,728			6,483			1,003			39,214
Net gains from investment activities	3,396			31,094			—			34,490
Total Expenses⁽³⁾													128,318			33,992			18,181			180,491
Other Loss:
Net gains (losses) from investment activities													(55,267		)	(11,877		)	7			(67,137		)
Net interest loss	(4,242		)	(6,522		)	(1,224		)	(11,988		)	(4,971		)	(3,927		)	(1,043		)	(9,941		)
Other income, net	17,790			811			63			18,664			3,946			251			63			4,260
Total Other Income (Loss)⁽²⁾	48,672			31,866			(158		)	80,380
Total Other Loss⁽³⁾													(56,292		)	(15,553		)	(973		)	(72,818		)
Non-Controlling Interests	—			(934		)	—			(934		)	(1,215		)	—			—			(1,215		)
Economic Income⁽²⁾	$	270,596		$	115,297		$	4,102		$	389,995
Economic Income (Loss)⁽³⁾													$	47,770		$	(151,511	)	$	(1,154	)	$	(104,895	)
Total Assets⁽²⁾⁽³⁾	$	2,472,357		$	2,533,034		$	209,650		$	5,215,041		$	2,685,763		$	2,625,479		$	227,199		$	5,538,441


(1)	Performance fees includes performance allocations and incentive fees.

(2)

Included in unrealized ~~carried interest income from related parties~~performance fees for the three months ended March 31, ~~2017~~2018 was a reversal of previously realized ~~carried interest income~~performance fees due to the general partner obligation to return previously distributed ~~carried interest income. See note 13 for further details regarding the general partner obligation.~~performance fees.


~~(2)~~(3)	Refer below for a reconciliation of total revenues, total expenses, other income and total assets for Apollo’s total reportable segments to total consolidated revenues, total consolidated expenses, total consolidated other income (loss) and total assets.


(4)	Relates to amortization of restricted share awards granted under certain profit sharing arrangements.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)


	For the Three Months Ended March 31, 2016												For the Three Months Ended March 31, 2017
	Private Equity Segment			Credit Segment			Real Estate Segment			Total Reportable Segments			Credit Segment			Private Equity Segment			Real Assets Segment			Total Reportable Segments
Revenues:
Management fees from related parties	$	74,918		$	142,511		$	13,504		$	230,933
Advisory and transaction fees from related parties, net	2,713			4,410			876			7,999
Carried interest income (loss) from related parties:
Management fees													$	158,342		$	77,398		$	16,313		$	252,053
Advisory and transaction fees, net													2,556			11,772			739			15,067
Performance fees⁽¹⁾:
Unrealized⁽¹⁾⁽²⁾	(146,335		)	(21,179		)	(3,377		)	(170,891		)	6,322			163,619			2,604			172,545
Realized	—			45,152			4,771			49,923			30,936			155,461			64			186,461
Total carried interest income (loss) from related parties	(146,335		)	23,973			1,394			(120,968		)
Total Revenues⁽²⁾	(68,704		)	170,894			15,774			117,964
Total performance fees													37,258			319,080			2,668			359,006
Principal investment income													6,483			31,728			1,003			39,214
Total Revenues⁽³⁾													204,639			439,978			20,723			665,340
Expenses:
Compensation and benefits:
Salary, bonus and benefits	32,074			51,612			8,684			92,370			54,882			31,469			8,370			94,721
Equity-based compensation	7,385			8,560			775			16,720			9,102			7,095			548			16,745
Profit sharing expense:
Unrealized	(57,374		)	(9,137		)	(1,171		)	(67,682		)	2,215			55,016			2,034			59,265
Realized	—			30,561			3,628			34,189			13,445			75,252			26			88,723
Equity-based													287			—			—			287
Total profit sharing expense	(57,374		)	21,424			2,457			(33,493		)	15,947			130,268			2,060			148,275
Total compensation and benefits	(17,915		)	81,596			11,916			75,597			79,931			168,832			10,978			259,741
Non-compensation expenses:
General, administrative and other	15,731			30,486			6,144			52,361			32,090			17,360			4,482			53,932
Placement fees	994			707			—			1,701			1,770			134			—			1,904
Total non-compensation expenses	16,725			31,193			6,144			54,062			33,860			17,494			4,482			55,836
Total Expenses⁽²⁾	(1,190		)	112,789			18,060			129,659
Other Loss:
Income (loss) from equity method investments	(5,483		)	848			776			(3,859		)
Net losses from investment activities	(4,106		)	(52,393		)	—			(56,499		)
Total Expenses⁽³⁾													113,791			186,326			15,460			315,577
Other Income (Loss):
Net gains from investment activities													31,094			3,396			—			34,490
Net interest loss	(2,428		)	(3,655		)	(808		)	(6,891		)	(6,522		)	(4,242		)	(1,224		)	(11,988		)
Other loss, net	(124		)	(408		)	(29		)	(561		)
Total Other Loss⁽²⁾	(12,141		)	(55,608		)	(61		)	(67,810		)
Other income, net													811			17,790			63			18,664
Total Other Income (Loss)⁽³⁾													25,383			16,944			(1,161		)	41,166
Non-Controlling Interests	—			(2,385		)	—			(2,385		)	(934		)	—			—			(934		)
Economic Income (Loss)⁽²⁾	$	(79,655	)	$	112		$	(2,347	)	$	(81,890	)
Economic Income⁽³⁾													$	115,297		$	270,596		$	4,102		$	389,995


(1)	Performance fees includes performance allocations and incentive fees.

(2)

Included in unrealized ~~carried interest income (losses) from related parties~~performance fees for the three months ended March 31, ~~2016~~2017 was a reversal of previously realized ~~carried interest income~~performance fees due to the general partner obligation to return previously distributed ~~carried interest income. See note 13 for further detail regarding the general partner obligation.~~performance fees.


~~(2)~~(3)	Refer below for a reconciliation of total revenues, total expenses and other income for Apollo’s total reportable segments to total consolidated revenues, total consolidated expenses and total consolidated other income (loss).

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Table of Contents

APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table reconciles total consolidated revenues to total revenues for Apollo’s reportable ~~segments for the three months ended March 31, 2017 and 2016:~~segments:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Total Consolidated Revenues	$	643,551		$	120,826		$	166,903		$	682,104
Equity awards granted by unconsolidated related parties and reimbursable expenses⁽¹⁾	(18,223		)	(4,966		)
Equity awards granted by unconsolidated related parties, reimbursable expenses and other⁽¹⁾							(18,913		)	(18,223		)
Adjustments related to consolidated funds and VIEs⁽¹⁾	798			652			1,639			1,459
Other⁽¹⁾	—			1,452
Total Reportable Segments Revenues	$	626,126		$	117,964		$	149,629		$	665,340


(1)	Represents advisory fees, management fees and ~~carried interest income~~performance fees earned from consolidated VIEs which are eliminated in consolidation. Includes non-cash revenues related to equity awards granted by unconsolidated related parties to employees of the Company and certain compensation and administrative related expense reimbursements.

The following table reconciles total consolidated expenses to total expenses for Apollo’s reportable ~~segments for the three months ended March 31, 2017 and 2016:~~segments:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Total Consolidated Expenses	$	345,988		$	141,899		$	214,875		$	345,988
Equity awards granted by unconsolidated related parties and reimbursable expenses⁽¹⁾	(18,223		)	(5,083		)
Equity awards granted by unconsolidated related parties, reimbursable expenses and other⁽¹⁾							(18,735		)	(18,223		)
Transaction-related compensation charges⁽¹⁾	2,683			2,373			(892		)	2,683
Reclassification of interest expenses	(12,999		)	(7,873		)	(13,797		)	(12,999		)
Amortization of transaction-related intangibles⁽¹⁾	(1,872		)	(2,050		)	(960		)	(1,872		)
Other⁽¹⁾	—			393
Total Reportable Segments Expenses	$	315,577		$	129,659		$	180,491		$	315,577

(1)

Represents the addition of expenses of consolidated funds and VIEs, transaction-related charges, non-cash expenses related to equity awards granted by unconsolidated related parties to employees of the Company and certain compensation and administrative expenses. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets, contingent consideration and certain other charges associated with acquisitions.

The following table reconciles total consolidated other income (loss) to total other income (loss) for Apollo’s reportable ~~segments for the three months ended March 31, 2017 and 2016:~~segments:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Total Consolidated Other Income (Loss)	$	96,628		$	(58,635	)	$	(52,796	)	$	58,075
Reclassification of interest expense	(12,999		)	(7,873		)	(13,797		)	(12,999		)
Adjustments related to consolidated funds and VIEs⁽¹⁾	(3,316		)	(638		)	(6,225		)	(3,910		)
Other	67			(664		)
Total Reportable Segments Other Income (Loss)	$	80,380		$	(67,810	)	$	(72,818	)	$	41,166


(1)	Represents the addition of other income of consolidated funds and VIEs.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(dollars in thousands, except share data, except where noted)

The following table presents the reconciliation of income before income tax provision reported in the condensed consolidated statements of operations to Economic ~~Income for the three months ended March 31, 2017 and 2016:~~Income:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Income (Loss) before income tax (provision) benefit	$	394,191		$	(79,708	)
Income (loss) before income tax provision							$	(100,768	)	$	394,191
Adjustments:
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)
Transaction-related charges, net⁽¹⁾	(812		)	(147		)
Transaction-related charges⁽¹⁾							1,852			(812		)
Net income attributable to Non-Controlling Interests in consolidated entities and appropriated partners’ capital							(5,979		)	(3,384		)
Total consolidation adjustments and other	(4,196		)	(2,182		)	(4,127		)	(4,196		)
Economic Income (Loss)	$	389,995		$	(81,890	)	$	(104,895	)	$	389,995


(1)	Transaction-related charges include equity-based compensation charges, the amortization of intangible assets, contingent consideration and certain other charges associated with acquisitions. ~~Equity-based compensation adjustment includes non-cash revenues and expenses related to equity awards granted by unconsolidated related parties to employees of the Company.~~

The following table presents the reconciliation of Apollo’s total reportable segment assets to total ~~assets as of March 31, 2017 and December 31, 2016:~~assets:


	As of March 31, 2017		As of December 31, 2016		As of March 31, 2018		As of December 31, 2017
Total reportable segment assets	$	5,215,041	$	4,694,643	$	5,538,441	$	5,740,943
Adjustments⁽¹⁾	1,046,522		934,910		1,410,056		1,250,127
Total assets	$	6,261,563	$	5,629,553	$	6,948,497	$	6,991,070


(1)	Represents the addition of assets of consolidated funds and VIEs and consolidation elimination adjustments.

16. SUBSEQUENT EVENTS

On ~~April 28, 2017,~~May 3, 2018, the Company declared a cash distribution of ~~$0.49~~$0.38 per Class A share, which will be paid on May 31, ~~2017~~2018 to holders of record on May ~~19, 2017.~~18, 2018.

On ~~April 28, 2017,~~May 3, 2018, the Company declared a cash distribution of ~~$0.433854~~$0.398438 and $0.380729 per Series A and Series B Preferred share, respectively, which will be paid on June 15, ~~2017~~2018 to holders of record on June 1, ~~2017.~~2018.

ITEM 1A. UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS

OF FINANCIAL CONDITION

APOLLO GLOBAL MANAGEMENT, LLC

CONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(dollars in thousands, except share data)


	As of March 31, 2017												As of March 31, 2018
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs			Eliminations			Consolidated			Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs		Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	1,084,218		$	—		$	—		$	1,084,218		$	988,284		$	—	$	—		$	988,284
Cash and cash equivalents held at consolidated funds	—			7,880			—			7,880			—			3		—			3
Restricted cash	4,946			—			—			4,946			3,902			—		—			3,902
U.S. Treasury securities, at fair value													225,510			—		—			225,510
Investments	1,641,030			9,602			(74,945		)	1,575,687			3,284,383			634		(86,332		)	3,198,685
Assets of consolidated variable interest entities:
Cash and cash equivalents	—			60,086			—			60,086			—			74,798		—			74,798
Investments, at fair value	—			991,339			(286		)	991,053			—			1,386,400		(332		)	1,386,068
Other assets	—			55,268			—			55,268			—			39,006		—			39,006
Carried interest receivable	1,422,707			—			(1,847		)	1,420,860
Incentive fees receivable													7,891			—		—			7,891
Due from related parties	250,648			—			(767		)	249,881			332,690			—		(3,788		)	328,902
Deferred tax assets	561,524			—			—			561,524			380,565			—		—			380,565
Other assets	140,110			345			(153		)	140,302			208,503			—		(333		)	208,170
Goodwill	88,852			—			—			88,852			88,852			—		—			88,852
Intangible assets, net	21,006			—			—			21,006			17,861			—		—			17,861
Total Assets	$	5,215,041		$	1,124,520		$	(77,998	)	$	6,261,563		$	5,538,441		$	1,500,841	$	(90,785	)	$	6,948,497
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	72,170		$	—		$	—		$	72,170		$	81,548		$	—	$	—		$	81,548
Accrued compensation and benefits	54,257			—			—			54,257			60,489			—		—			60,489
Deferred revenue	171,267			—			—			171,267			145,282			—		—			145,282
Due to related parties	598,975			—			—			598,975			481,484			—		—			481,484
Profit sharing payable	634,668			—			—			634,668			644,883			—		—			644,883
Debt	1,353,572			—			—			1,353,572			1,361,711			—		—			1,361,711
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			839,231			(41,903		)	797,328			—			1,074,338		(48,326		)	1,026,012
Other liabilities	—			127,833			(153		)	127,680			—			100,468		(333		)	100,135
Due to related parties	—			2,615			(2,615		)	—			—			988		(988		)	—
Other liabilities	97,668			6,187			—			103,855			140,197			—		—			140,197
Total Liabilities	2,982,577			975,866			(44,671		)	3,913,772			2,915,594			1,175,794		(49,647		)	4,041,741

Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Preferred shares	264,683			—			—			264,683
Series A Preferred shares													264,398			—		—			264,398
Series B Preferred shares													289,815			—		—			289,815
Additional paid in capital	1,763,146			—			—			1,763,146			1,483,244			—		—			1,483,244
Accumulated deficit	(838,686		)	14,884			(14,884		)	(838,686		)	(481,773		)	9,315		(9,314		)	(481,772		)
Accumulated other comprehensive loss	(11,970		)	(2,849		)	3,016			(11,803		)	(887		)	235		(163		)	(815		)
Total Apollo Global Management, LLC shareholders’ equity	1,177,173			12,035			(11,868		)	1,177,340			1,554,797			9,550		(9,477		)	1,554,870
Non-Controlling Interests in consolidated entities	5,731			136,619			(21,459		)	120,891			7,021			315,497		(31,661		)	290,857
Non-Controlling Interests in Apollo Operating Group	1,049,560			—			—			1,049,560			1,061,029			—		—			1,061,029
Total Shareholders’ Equity	2,232,464			148,654			(33,327		)	2,347,791			2,622,847			325,047		(41,138		)	2,906,756
Total Liabilities and Shareholders’ Equity	$	5,215,041		$	1,124,520		$	(77,998	)	$	6,261,563		$	5,538,441		$	1,500,841	$	(90,785	)	$	6,948,497

APOLLO GLOBAL MANAGEMENT, LLC

CONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(dollars in thousands, except share data)


	As of December 31, 2016												As of December 31, 2017
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs			Eliminations			Consolidated			Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs			Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	806,329		$	—		$	—		$	806,329		$	751,252		$	—		$	—		$	751,252
Cash and cash equivalents held at consolidated funds	—			7,335			—			7,335			—			21			—			21
Restricted cash	4,680			—			—			4,680			3,875			—			—			3,875
U.S. Treasury securities, at fair value													364,649			—			—			364,649
Investments	1,567,388			5,378			(78,022		)	1,494,744			3,637,042			854			(78,062		)	3,559,834
Assets of consolidated variable interest entities:
Cash and cash equivalents	—			41,318			—			41,318			—			92,912			—			92,912
Investments, at fair value	—			914,110			(283		)	913,827			—			1,196,512			(322		)	1,196,190
Other assets	—			46,666			—			46,666			—			39,484			—			39,484
Carried interest receivable	1,258,887			—			(1,782		)	1,257,105
Incentive fees receivable													43,176			—			—			43,176
Due from related parties	255,342			—			(489		)	254,853			263,572			—			(984		)	262,588
Deferred tax assets	572,263			—			—			572,263			337,638			—			—			337,638
Other assets	118,181			768			(89		)	118,860			232,045			5			(293		)	231,757
Goodwill	88,852			—			—			88,852			88,852			—			—			88,852
Intangible assets, net	22,721			—			—			22,721			18,842			—			—			18,842
Total Assets	$	4,694,643		$	1,015,575		$	(80,665	)	$	5,629,553		$	5,740,943		$	1,329,788		$	(79,661	)	$	6,991,070
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	57,465		$	—		$	—		$	57,465		$	68,873		$	—		$	—		$	68,873
Accrued compensation and benefits	52,754			—			—			52,754			62,474			—			—			62,474
Deferred revenue	174,893			—			—			174,893			128,146			—			—			128,146
Due to related parties	638,126			—			—			638,126			428,013			—			—			428,013
Profit sharing payable	550,148			—			—			550,148			752,276			—			—			752,276
Debt	1,352,447			—			—			1,352,447			1,362,402			—			—			1,362,402
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			827,854			(41,309		)	786,545			—			1,049,235			(47,172		)	1,002,063
Other liabilities	—			68,123			(89		)	68,034			—			115,951			(293		)	115,658
Due to related parties	—			2,271			(2,271		)	—			—			2,719			(2,719		)	—
Other liabilities	81,568			45			—			81,613			173,369			—			—			173,369
Total Liabilities	2,907,401			898,293			(43,669		)	3,762,025			2,975,553			1,167,905			(50,184		)	4,093,274

Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Series A Preferred shares													264,398			—			—			264,398
Additional paid in capital	1,830,025			—			—			1,830,025			1,579,797			—			—			1,579,797
Accumulated deficit	(986,187		)	16,131			(16,130		)	(986,186		)	(379,461		)	9,037			(9,036		)	(379,460		)
Accumulated other comprehensive loss	(5,750		)	(3,029		)	56			(8,723		)	(1,878		)	(381		)	450			(1,809		)
Total Apollo Global Management, LLC shareholders’ equity	838,088			13,102			(16,074		)	835,116			1,462,856			8,656			(8,586		)	1,462,926
Non-Controlling Interests in consolidated entities	6,805			104,180			(20,922		)	90,063			7,750			153,227			(20,891		)	140,086
Non-Controlling Interests in Apollo Operating Group	942,349			—			—			942,349			1,294,784			—			—			1,294,784
Total Shareholders’ Equity	1,787,242			117,282			(36,996		)	1,867,528			2,765,390			161,883			(29,477		)	2,897,796
Total Liabilities and Shareholders’ Equity	$	4,694,643		$	1,015,575		$	(80,665	)	$	5,629,553		$	5,740,943		$	1,329,788		$	(79,661	)	$	6,991,070


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with Apollo Global Management, LLC’s condensed consolidated financial statements and the related notes included within this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those included in the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, ~~2016~~2017 filed with the SEC on February ~~13, 2017~~12, 2018 (the ~~“2016~~“2017 Annual Report”). The highlights listed below have had significant effects on many items within our condensed consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.

General

Our Businesses

Founded in 1990, Apollo is a leading global alternative investment manager. We are a contrarian, value-oriented investment manager in credit, private equity ~~credit~~ and real ~~estate~~assets with significant distressed expertise and a flexible mandate in the majority of our funds which enables our funds to invest opportunistically across a company’s capital structure. We raise, invest and manage funds on behalf of some of the world’s most prominent pension, endowment and sovereign wealth funds as well as other institutional and individual investors. Apollo is led by our Managing Partners, Leon Black, Joshua Harris and Marc Rowan, who have worked together for more than 3032 years and lead a team of ~~989~~1,030 employees, including ~~371~~372 investment professionals, as of March 31, ~~2017.~~2018.

Apollo conducts its business primarily in the United States and substantially all of its revenues are generated domestically. These businesses are conducted through the following three reportable segments:


(i)	~~Private equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debt instruments;~~


~~(ii)~~	Credit—primarily invests in non-control corporate and structured debt instruments including performing, stressed and distressed instruments across the capital structure;


(ii)	Private equity—primarily invests in control equity and related debt instruments, convertible securities and distressed debt instruments; and


(iii)	Real ~~estate~~assets—primarily invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities.

These business segments are differentiated based on the varying investment strategies. The performance is measured by management on an unconsolidated basis because management makes operating decisions and assesses the performance of each of Apollo’s business segments based on financial and operating metrics and data that exclude the effects of consolidation of any of the managed funds.

Our financial results vary since ~~carried interest,~~performance fees, which generally constitutes a large portion of the income we receive from the funds that we manage, as well as the transaction and advisory fees that we receive, can vary significantly from quarter to quarter and year to year. As a result, we emphasize long-term financial growth and profitability to manage our business.

In addition, the growth in our Fee-Generating AUM during the last year has primarily been in our credit segment. The average management fee rate for these new credit products is at market rates for such products and in certain cases is below our historical rates. Also, due to the complexity of these new product offerings, the Company has incurred and will continue to incur additional costs associated with managing these products. To date, these additional costs have been offset by realized economies of scale and ongoing cost management.

As of March 31, ~~2017,~~2018, we had total AUM of ~~$197.5~~$247.4 billion across all of our businesses. More than 90% of our total AUM was in funds with a contractual life at inception of seven years or more, and ~~45%~~43% of such AUM was in ~~permanent~~Permanent Capital Vehicles. For our credit segment, total gross and net returns, excluding Athene and Athora assets that are managed by Apollo but not directly invested in Apollo funds and investment vehicles or sub-advised by Apollo, were 1.3% and 1.1%, respectively, for the three months ended March 31, 2018.

As of December 31, 2017, Fund IX held its final closing, raising a total of $23.5 billion in third-party capital ~~vehicles.~~and approximately $1.2 billion of additional capital from Apollo and affiliated investors for total commitments of $24.7 billion. On December 31, 2013, Fund VIII held a final closing raising a total of $17.5 billion in third-party capital and approximately $880

million of additional capital from Apollo and affiliated investors, and as of March 31, ~~2017,~~2018, Fund VIII had ~~$7.4~~$5.2 billion of uncalled commitments remaining. Additionally, Fund VII held a final closing in December 2008, raising a total of $14.7 billion, and as of March 31, ~~2017,~~2018, Fund VII had ~~$2.3~~$2.1 billion of uncalled commitments remaining. We have consistently produced attractive long-term investment returns in our traditional private equity funds, generating a 39% gross IRR and a 25% net IRR on a compound annual basis from inception through March 31, ~~2017.~~2018. Apollo’s private equity fund appreciation was 8%(2.7)% for the three months ended March 31, ~~2017.~~

For our credit segment, total gross and net returns, excluding assets managed by Athene Asset Management that are not directly invested in Apollo funds and investment vehicles or sub-advised by Apollo, were 1.9% and 1.6%, respectively, for the three months ended March 31, 2017.2018.

For our real ~~estate~~assets segment, total combined gross and net returns for AGRE U.S. Real Estate Fund, L.P. (“U.S. RE Fund I”) and Apollo U.S. RE Fund II, L.P. (“U.S. RE Fund II”) including co-investment capital were ~~3.8%~~1.9% and ~~3.2%~~1.6%, respectively, for the three months ended March 31, ~~2017.~~2018.

For further detail related to fund performance metrics across all of our businesses, see “—The Historical Investment Performance of Our Funds.”

Holding Company Structure

The diagram below depicts our current organizational structure:

Note: The organizational structure chart above depicts a simplified version of the Apollo structure. It does not include all legal entities in the structure. Ownership percentages are as of May ~~4, 2017.~~3, 2018.

(1)

The Strategic Investor holds ~~9.16%~~8.7% of the Class A shares outstanding and ~~4.34%~~4.3% of the economic interests in the Apollo Operating Group. The Class A shares held by investors other than the Strategic Investor represent ~~45.00%~~47.6% of the total voting power of our shares entitled to vote and ~~43.05%~~45.6% of the economic interests in the Apollo Operating Group. Class A shares held by the Strategic Investor do not have voting rights. However, such Class A shares will become entitled to vote upon transfers by the Strategic Investor in accordance with the agreements entered into in connection with the investments made by the Strategic Investor.

(2)

Our Managing Partners own BRH Holdings GP, Ltd., which in turn holds our only outstanding Class B share. The Class B share represents ~~55.00%~~52.4% of the total voting power of our shares entitled to vote but no economic interest in Apollo Global Management, LLC. Our Managing Partners’ economic interests are instead represented by their indirect beneficial ownership, through Holdings, of ~~47.30%~~45.4% of the limited partner interests in the Apollo Operating Group.


(3)	Through BRH Holdings, L.P., our Managing Partners indirectly beneficially own through estate planning vehicles, limited partner interests in Holdings.

(4)

Holdings owns ~~52.61%~~50.1% of the limited partner interests in each Apollo Operating Group entity. The AOG Units held by Holdings are exchangeable for Class A shares. Our Managing Partners, through their interests in BRH and Holdings, beneficially own ~~47.30%~~45.4% of the AOG Units. Our Contributing Partners, through their ownership interests in Holdings, beneficially own ~~5.31%~~4.7% of the AOG Units.


(5)	BRH Holdings GP, Ltd. is the sole member of AGM Management, LLC, our manager. The management of Apollo Global Management, LLC is vested in our manager as provided in our operating agreement.


(6)	Represents ~~47.39%~~49.9% of the limited partner interests in each Apollo Operating Group entity, held through the intermediate holding companies. Apollo Global Management, LLC, also indirectly owns 100% of the general partner interests in each Apollo Operating Group entity.

Each of the Apollo Operating Group partnerships holds interests in different businesses or entities organized in different jurisdictions.

Our structure is designed to accomplish a number of objectives, the most important of which are as follows:

We are a holding company that is qualified as a partnership for U.S. federal income tax purposes. Our intermediate holding companies enable us to maintain our partnership status and to meet the qualifying income exception.

We have historically used multiple management companies to segregate operations for business, financial and other reasons. Going forward, we may increase or decrease the number of our management companies or partnerships within the Apollo Operating Group based on our views regarding the appropriate balance between (a) administrative convenience and (b) continued business, financial, tax and other optimization.

Business Environment

As a global investment manager, we are affected by numerous factors, including the condition of financial markets and the economy. Price fluctuations within equity, credit, commodity, foreign exchange markets, as well as interest rates, which may be volatile and mixed across geographies, can significantly impact the valuation of our funds' ~~investments~~portfolio companies and related income we may recognize.

In the U.S., the S&P 500 Index ~~rose~~decreased by ~~5.5%~~1.2% in the first quarter of ~~2017,~~2018, following an increase of ~~3.3%~~6.1% in the fourth quarter of ~~2016.~~2017. Outside the U.S., global equity markets ~~rose~~declined during the first quarter of ~~2017.~~2018. The MSCI All Country World ex USA Index ~~rose 7.1%~~decreased 1.7% following an increase of 4.6% in the fourth quarter of ~~2016.~~2017.

Conditions in the credit markets also have a significant impact on our business. Credit markets ~~rose~~were mixed in the first quarter of ~~2017,~~2018, with the ~~BofAML~~Bof AML HY Master II Index ~~increasing 2.7% and~~decreasing 0.9% while the S&P/LSTA Leveraged Loan Index ~~increasing 1.2%~~increased 1.5%. Benchmark interest rates ~~decreased slightly in~~finished the ~~first~~ quarter ~~following consecutive quarters~~higher from where they were at the end of ~~increasing,~~2017, as ~~investors weigh potential monetary policy actions by~~ the Federal ~~Reserve. The~~Reserve increased the target federal funds rate 25 basis points to 1.50%-1.75% in March, the sixth rate hike since December 2015. Accordingly, the U.S. 10-year Treasury yield ~~fell slightly~~rose to finish the quarter at ~~2.4%~~2.7%.

Foreign exchange rates can materially impact the valuations of our ~~funds’~~ investments that are denominated in currencies other than the U.S. dollar. Relative to the U.S. dollar, the Euro appreciated ~~1.3%~~2.7% in the first quarter of ~~2017,~~2018, after ~~depreciating 6.4%~~appreciating 1.6% in the fourth quarter of ~~2016,~~2017, while the British pound appreciated ~~1.7%~~3.7% in the first quarter of ~~2017,~~2018, after ~~depreciating~~appreciating by ~~4.9%~~0.9% in the fourth quarter of ~~2016.~~2017. Commodities were generally mixed in the first quarter of ~~2017.~~2018, with crude oil, gold and wheat appreciating, while natural gas, copper and sugar depreciated. The price of crude oil ~~declined 5.8%~~increased 7.5% during the first quarter, ~~of 2017, compared~~continuing to ~~a significant increase of 11.4% during~~rise for the ~~fourth quarter of 2016.~~third consecutive quarter.

In terms of economic conditions in the U.S., the Bureau of Economic Analysis reported real GDP increased at an annual rate of ~~0.7%~~2.3% in the first quarter of ~~2017, compared to a 2.1% increase~~2018, lower than the 2.9% growth experienced in the fourth quarter of ~~2016.~~2017. As of April ~~2017, the~~2018, The International Monetary Fund estimated that the U.S. economy will expand by ~~2.3%~~2.9% in ~~2017~~2018 and ~~by 2.5%~~2.7% in ~~2018.~~2019. Additionally, the U.S. unemployment rate stood at ~~4.5%~~4.1% as of March 31, ~~2017, marking~~2018, the lowest level ~~in approximately 10 years.~~since 2000.

Regardless of the market or economic environment at any given time, Apollo relies on its contrarian, value-oriented approach to consistently invest capital on behalf of its fund investors by focusing on opportunities that management believes are often overlooked by other investors. As such, Apollo’s global integrated investment platform deployed ~~$3.4~~$3.0 billion and ~~$17.2~~$14.4 billion of capital through the funds it manages during the first quarter and the twelve months ended March 31, ~~2017,~~2018, respectively. We believe Apollo’s expertise in credit and its focus on nine core industry sectors, combined with more than 2528 years of investment experience, has allowed Apollo to respond quickly to changing environments. Apollo’s core industry sectors include chemicals, manufacturing and industrial, natural resources, consumer and retail, consumer services, business services, financial services, leisure, and media/telecom/technology. Apollo believes that these attributes have contributed to the success of its private equity funds investing in buyouts and credit opportunities during both expansionary and recessionary economic periods.

In general, institutional investors continue to allocate capital towards alternative investment managers for more attractive risk-adjusted returns in a low interest rate environment, and we believe the business environment remains generally

accommodative to raise larger successor funds, launch new products, and pursue attractive strategic growth opportunities. As such, Apollo had ~~$5.3~~$4.9 billion and ~~$35.5~~$56.1 billion of capital inflows during the first quarter and the twelve months ended March 31, ~~2017,~~2018, respectively. While Apollo continues to attract capital inflows, it also continues to generate realizations for fund investors. Apollo returned ~~$1.7~~$4.1 billion and ~~$6.0~~$13.1 billion of capital and realized gains to the investors in the funds it manages during the first quarter and the twelve months ended March 31, ~~2017,~~2018, respectively.

Managing Business Performance

We believe that the presentation of Economic Income, or ~~EI,~~“EI”, supplements a reader’s understanding of the economic operating performance of each of our segments.

Economic Income (Loss)

EI has certain limitations in that it does not take into account certain items included under U.S. GAAP. EI represents segment income before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges ~~include~~includes equity-based compensation charges, the amortization of intangible assets, contingent consideration and certain other charges associated with acquisitions. In addition, ~~segment data~~EI excludes non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, compensation and administrative related expense reimbursements, ~~from unconsolidated related parties,~~ as well as the assets, liabilities and operating results of the funds and ~~VIEs~~variable interest entities (“VIEs”) that are included in the condensed consolidated financial statements. We believe the exclusion of the non-cash charges related to the 2007 Reorganization for equity-based compensation provides investors with a meaningful indication of our performance because these charges relate to the equity portion of our capital structure and not our core operating performance. EI also excludes impacts of the remeasurement of the tax receivable agreement which arises from changes in the associated deferred tax balance, including the impacts related to the Tax Cuts and Jobs Act (the “TCJA”).

Economic Net Income (“ENI”) represents EI adjusted to reflect income tax provision on EI that has been calculated assuming that all income is allocated to Apollo Global Management, LLC, which would occur following an exchange of all AOG Units for Class A shares of Apollo Global Management, LLC. ENI excludes the impacts of the remeasurement of deferred tax assets and liabilities which arises from changes in estimated future tax rates, including impacts related to the TCJA. The economic assumptions and methodologies that impact the implied income tax provision are similar to those methodologies and certain assumptions used in calculating the income tax provision for Apollo’s condensed consolidated statements of operations under U.S. GAAP. ENI is net of preferred distributions, if any, to Series A and Series B Preferred shareholders.

We believe that EI is helpful for an understanding of our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed below in “—Overview of Results of Operations” that have been prepared in accordance with U.S. GAAP. See note 15 to the condensed consolidated financial statements for more details regarding management’s consideration of EI.

EI may not be comparable to similarly titled measures used by other companies and is not a measure of performance calculated in accordance with U.S. GAAP. We use EI as a measure of operating performance, not as a measure of liquidity. EI should not be considered in isolation or as a substitute for net income or other income data prepared in accordance with U.S. GAAP. The use of EI without consideration of related U.S. GAAP measures is not adequate due to the adjustments described above. Management compensates for these limitations by using EI as a supplemental measure to U.S. GAAP results, to provide a more complete understanding of our performance as management measures it. A reconciliation of EI to its most directly comparable U.S. GAAP measure of income before income tax provision can be found in the notes to our condensed consolidated financial statements.

Management believes that excluding the remeasurement of the tax receivable agreement and deferred taxes from EI and ENI, respectively, is meaningful as it increases comparability between periods. Remeasurement of the tax receivable agreement and deferred taxes are estimates, and may change due to changes in interpretations and assumptions based on additional guidance that may be issued pertaining to the TCJA.

Fee Related Earnings

Fee Related Earnings (“FRE”) is derived from our segment reported results and refers to a component of EI that is used as a supplemental performance measure to assess whether revenues that we believe are generally more stable and predictable in nature, primarily consisting of management fees, are sufficient to cover associated operating expenses and generate profits. FRE

is the sum across all segments of (i) management fees, (ii) advisory and transaction fees, (iii) ~~carried interest income~~performance fees earned from a publicly traded business development company we manage and (iv) other income, net, ~~excluding gains (losses) arising from the reversal of a portion of the tax receivable agreement liability,~~ less (y) salary, bonus and benefits, excluding equity-based compensation and (z) other associated operating expenses.

Distributable Earnings

Distributable Earnings (“DE”), as well as DE After Taxes and Related Payables are derived from our segment reported results, and are supplemental non-U.S. GAAP measures to assess performance and the amount of earnings available for distribution to Class A shareholders, holders of RSUs that participate in distributions and holders of AOG Units. DE represents the amount of net realized earnings without the effects of the consolidation of any of the related funds. DE, which is a component of EI, is the sum across all segments of (i) total management fees and advisory and transaction fees, ~~excluding monitoring fees received from Athene based on its capital and surplus (as defined in Apollo’s transaction advisory services agreement with Athene),~~ (ii) other income (loss), ~~excluding the gains (losses) arising from the reversal of a portion of the tax receivable agreement liability~~ (iii) realized ~~carried interest income,~~performance fees, excluding realizations received in the form of shares and (iv) realized investment income, less (x) compensation expense, excluding the expense related to equity-based awards, (y) realized profit sharing expense, and (z) non-compensation expenses, excluding depreciation and amortization expense. DE After Taxes and Related Payables represents DE less estimated current corporate, local and non-U.S. taxes as well as the payable under Apollo’s tax receivable agreement. DE After Taxes and Related Payables is net of preferred distributions, if any, to Series A and Series B Preferred shareholders. A reconciliation of DE and EI to their most directly comparable U.S. GAAP measure of income before income tax provision can be found in “—Summary of Non-U.S. GAAP Measures”.

Fee Related EBITDA

Fee related EBITDA is a non-U.S. GAAP measure derived from our segment reported results and is used to assess the performance of our operations as well as our ability to service current and future borrowings. Fee related EBITDA represents FRE plus amounts for depreciation and amortization. “Fee related EBITDA +100% of net realized ~~carried interest”~~performance fees” represents fee-related EBITDA plus realized ~~carried interest~~performance fees less realized profit sharing.

We use FRE, DE and Fee related EBITDA as measures of operating performance, not as measures of liquidity. These measures should not be considered in isolation or as a substitute for net income or other income data prepared in accordance with U.S. GAAP. The use of these measures without consideration of their related U.S. GAAP measures is not adequate due to the adjustments described above.

Operating Metrics

We monitor certain operating metrics that are common to the alternative investment management industry. These operating metrics include Assets Under Management, capital deployed and uncalled commitments.

Assets Under Management

The tables below present Fee-Generating and Non-Fee-Generating AUM by ~~segment as of~~ ~~March 31, 2017~~ ~~and 2016 and December 31, 2016:~~segment:


	As of March 31, 2017								As of March 31, 2018
	Private Equity		Credit		Real Estate		Total		Credit		Private Equity		Real Assets		Total
	(in millions)								(in millions)
Fee-Generating	$	30,774	$	114,914	$	8,466	$	154,154	$	129,484	$	43,758	$	9,225	$	182,467
Non-Fee-Generating	13,799		26,018		3,495		43,312		35,781		25,191		3,977		64,949
Total Assets Under Management	$	44,573	$	140,932	$	11,961	$	197,466	$	165,265	$	68,949	$	13,202	$	247,416


	As of March 31, 2016								As of March 31, 2017
	Private Equity		Credit		Real Estate		Total		Credit		Private Equity		Real Assets		Total
	(in millions)								(in millions)
Fee-Generating	$	29,325	$	104,904	$	6,844	$	141,073	$	114,914	$	30,774	$	8,466	$	154,154
Non-Fee-Generating	8,377		18,950		4,113		31,440		26,018		13,799		3,495		43,312
Total Assets Under Management	$	37,702	$	123,854	$	10,957	$	172,513	$	140,932	$	44,573	$	11,961	$	197,466


	As of December 31, 2016								As of December 31, 2017
	Private Equity		Credit		Real Estate		Total		Credit		Private Equity		Real Assets		Total
	(in millions)								(in millions)
Fee-Generating	$	30,722	$	111,781	$	8,295	$	150,798	$	130,150	$	29,792	$	9,023	$	168,965
Non-Fee-Generating	12,906		24,826		3,158		40,890		33,963		42,640		3,360		79,963
Total Assets Under Management	$	43,628	$	136,607	$	11,453	$	191,688	$	164,113	$	72,432	$	12,383	$	248,928

The table below presents AUM with Future Management Fee Potential, which is a component of Non-Fee-Generating AUM, for each of Apollo’s three ~~segments as of March 31, 2017 and 2016 and December 31, 2016.~~segments.


	As of March 31, 2017		As of March 31, 2016		As of December 31, 2016		As of March 31, 2018		As of March 31, 2017		As of December 31, 2017
	(in millions)						(in millions)
Credit							$	10,241	$	6,622	$	10,057
Private Equity	$	1,895	$	2,052	$	1,977	6,662		1,895		$	25,912
Credit	6,622		6,098		6,533
Real Estate	759		975		639
Real Assets							803		759		464
Total AUM with Future Management Fee Potential	$	9,276	$	9,125	$	9,149	$	17,706	$	9,276	$	36,433

The following tables present the components of ~~Carry-Eligible~~Performance Fee-Eligible AUM for each of Apollo’s three ~~segments as of March 31, 2017 and 2016 and December 31, 2016:~~segments:

As of March 31, 2017
Private Equity Credit Real Estate Total
(in millions)
Carry-Generating AUM $ 23,964
$ 27,752
$ 837
$ 52,553
AUM Not Currently Generating Carry 264
12,936
355
13,555
Uninvested Carry-Eligible AUM 11,906
10,737
1,090
23,733
Total Carry-Eligible AUM $ 36,134
$ 51,425
$ 2,282
$ 89,841



	As of March 31, 2018
	Credit⁽¹⁾		Private Equity		Real Assets		Total
	(in millions)
Performance Fee-Generating AUM	$	31,237	$	24,707	$	645	$	56,589
AUM Not Currently Generating Performance Fees	13,097		1,552		505		15,154
Uninvested Performance Fee-Eligible AUM	12,910		32,461		1,271		46,642
Total Performance Fee-Eligible AUM	$	57,244	$	58,720	$	2,421	$	118,385

As of March 31, 2016
Private Equity Credit Real Estate Total
(in millions)
Carry-Generating AUM $ 9,008
$ 22,985
$ 510
$ 32,503
AUM Not Currently Generating Carry 7,276
16,038
756
24,070
Uninvested Carry-Eligible AUM 16,467
9,193
1,007
26,667
Total Carry-Eligible AUM $ 32,751
$ 48,216
$ 2,273
$ 83,240



	As of March 31, 2017
	Credit		Private Equity		Real Assets		Total
	(in millions)
Performance Fee-Generating AUM	$	27,752	$	23,964	$	837	$	52,553
AUM Not Currently Generating Performance Fees	12,936		264		355		13,555
Uninvested Performance Fee-Eligible AUM	10,737		11,906		1,090		23,733
Total Performance Fee-Eligible AUM	$	51,425	$	36,134	$	2,282	$	89,841

As of December 31, 2016
Private Equity Credit Real Estate Total
(in millions)
Carry-Generating AUM $ 21,521
$ 33,306
$ 776
$ 55,603
AUM Not Currently Generating Carry 487
7,219
365
8,071
Uninvested Carry-Eligible AUM 13,136
11,119
976
25,231
Total Carry-Eligible AUM $ 35,144
$ 51,644
$ 2,117
$ 88,905



	As of December 31, 2017
	Credit		Private Equity		Real Assets		Total
	(in millions)
Performance Fee-Generating AUM	$	25,814	$	26,775	$	694	$	53,283
AUM Not Currently Generating Performance Fees	17,901		494		437		18,832
Uninvested Performance Fee-Eligible AUM	11,607		33,412		923		45,942
Total Performance Fee-Eligible AUM	$	55,322	$	60,681	$	2,054	$	118,057

(1)

As of March 31, 2018, $7.7 billion of the performance-fee generating AUM is currently above its hurdle rate or preferred return, but in accordance with the adoption of the revenue recognition standard effective January 1, 2018, recognition of performance fees associated with such performance-fee generating AUM has been deferred to future periods when the fees are probable to not be significantly reversed.

The following table presents AUM Not Currently Generating ~~Carry~~Performance Fees for funds that have commenced investing capital for more than 24 months as of March 31, ~~2017~~2018 and the corresponding appreciation required to reach the preferred return or high watermark in order to generate ~~carried interest:~~performance fees:


Category / Fund	Invested AUM Not Currently Generating Carry		Investment Period Active > 24 Months		Appreciation Required to Achieve Carry⁽¹⁾	Invested AUM Not Currently Generating Performance Fees		Investment Period Active > 24 Months		Appreciation Required to Achieve Performance Fees⁽¹⁾
	(in millions)					(in millions)
Private Equity:
Total Private Equity	$	264	$	264	40%
Credit:
Drawdown	4,106		3,980		29%	$	3,637	$	3,162	40%
Liquid/Performing	8,189		6,824		< 250bps	8,259		3,357		< 250bps
			17		250-500bps			69		250-500bps
			534		> 500bps			363		> 500bps
Permanent Capital Vehicles ex Athene Non-Sub-Advised	641		641		< 250bps
MidCap, AINV, AFT, AIF						1,201		831		< 250bps
Total Credit	12,936		11,996		11%	13,097		7,782		18%
Real Estate:
Total Real Estate	355		250		> 250bps
Private Equity:
ANRP I						688		688		2%
Other PE						864		864		11%
Total Private Equity						1,552		1,552		7%
Real Assets:
Total Real Assets						505		280		> 250bps
Total	$	13,555	$	12,510		$	15,154	$	9,614


(1)	All investors in a given fund are considered in aggregate when calculating the appreciation required to achieve ~~carry~~performance fees presented above. Appreciation required to achieve ~~carry~~performance fees may vary by individual investor.

The components of Fee-Generating AUM by segment ~~as of March 31, 2017 and 2016 and December 31, 2016~~ are presented below:


	As of March 31, 2017									As of March 31, 2018
	Private Equity			Credit		Real Estate		Total		Credit		Private Equity			Real Assets		Total
	(in millions)									(in millions)
Fee-Generating AUM based on capital commitments	$	21,782		$	5,693	$	724	$	28,199	$	8,257	$	27,805		$	784	$	36,846
Fee-Generating AUM based on invested capital	8,060			6,680		4,565		19,305		5,646		15,211			4,725		25,582
Fee-Generating AUM based on gross/adjusted assets	932			89,904		3,113		93,949		97,691		742			3,652		102,085
Fee-Generating AUM based on NAV	—			12,637		64		12,701		17,890		—			64		17,954
Total Fee-Generating AUM	$	30,774	⁽¹⁾	$	114,914	$	8,466	$	154,154	$	129,484	$	43,758	⁽¹⁾	$	9,225	$	182,467


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at March 31, 2018 was 87 months.



	As of March 31, 2017
	Credit		Private Equity			Real Assets		Total
	(in millions)
Fee-Generating AUM based on capital commitments	$	5,693	$	21,782		$	724	$	28,199
Fee-Generating AUM based on invested capital	6,680		8,060			4,565		19,305
Fee-Generating AUM based on gross/adjusted assets	89,904		932			3,113		93,949
Fee-Generating AUM based on NAV	12,637		—			64		12,701
Total Fee-Generating AUM	$	114,914	$	30,774	⁽¹⁾	$	8,466	$	154,154


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at March 31, 2017 was 63 months.

As of March 31, 2016

Private
Equity
Credit
Real
Estate
Total
(in millions)
Fee-Generating AUM based on capital commitments $ 20,319
$ 6,042
$ 376
$ 26,737
Fee-Generating AUM based on invested capital 8,209
4,279
3,799
16,287
Fee-Generating AUM based on gross/adjusted assets 378
86,161
2,580
89,119
Fee-Generating AUM based on NAV 419
8,422
89
8,930
Total Fee-Generating AUM $ 29,325
⁽¹⁾
$ 104,904
$ 6,844
$ 141,073


~~(1)~~	~~The weighted average remaining life of the private equity funds excluding permanent capital vehicles at March 31, 2016 was 70 months.~~


	As of December 31, 2016									As of December 31, 2017
	Private Equity			Credit		Real Estate		Total		Credit		Private Equity			Real Assets		Total
	(in millions)									(in millions)
Fee-Generating AUM based on capital commitments	$	21,782		$	8,072	$	724	$	30,578	$	8,771	$	21,803		$	784	$	31,358
Fee-Generating AUM based on invested capital	8,058			4,212		4,374		16,644		6,186		7,197			4,535		17,918
Fee-Generating AUM based on gross/adjusted assets	882			88,196		3,131		92,209		97,514		792			3,658		101,964
Fee-Generating AUM based on NAV	—			11,301		66		11,367		17,679		—			46		17,725
Total Fee-Generating AUM	$	30,722	⁽¹⁾	$	111,781	$	8,295	$	150,798	$	130,150	$	29,792	⁽¹⁾	$	9,023	$	168,965


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, ~~2016~~2017 was 6657 months.

The following table presents total AUM and Fee-Generating AUM amounts for our credit segment by category type:



	Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2018		2017		2017		2018		2017		2017
	(in millions)
Liquid/Performing	$	45,282	$	37,203	$	43,306	$	36,503	$	32,919	$	36,863
Drawdown	28,147		23,810		28,468		15,749		13,794		16,778
MidCap, AINV, AFT, AIF	13,610		12,328		13,428		12,749		11,462		12,623
Athene Non-Sub-Advised⁽¹⁾	60,365		52,346		59,670		60,365		52,346		59,670
Athora Non-Sub-Advised⁽¹⁾	6,798		4,393		6,719		4,118		4,393		4,216
Advisory	11,063		10,852		12,522		—		—		—
Total	$	165,265	$	140,932	$	164,113	$	129,484	$	114,914	$	130,150

(1)

The Company refers to the portion of the AUM related to Athora that is not sub-advised by Apollo or invested in funds and or investment vehicles managed by Apollo as “Athora Non-Sub-Advised” AUM. Athene Non-Sub-Advised AUM and Athora Non-Sub-Advised AUM reflects total combined AUM of $86.6 billion less $19.5 billion of assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo included within other asset categories. Athora Non-Sub-Advised AUM includes $4.1 billion of AUM for which AAME provides investment advisory services.

Investment Management and Sub-Advisory Agreements - AAM

Apollo, through its consolidated subsidiary, AAM, provides asset management services to Athene with respect to assets in the Athene North American Accounts, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions, asset diligence, hedging and other asset management services and receives management fees for providing these services. In addition, the Company, through AAM, provides sub-advisory services with respect to a portion of the assets in the Athene North American Accounts. See note 13 to the condensed consolidated financial statements for more details regarding the fee rates of the investment management, sub-advisory and other fee arrangements with respect to the assets in the Athene North American Accounts.

Investment Advisory and Sub-Advisory Agreements - AAME

Apollo, through AAME, provides investment advisory services with respect to certain assets in the Athora European Accounts and sub-advises certain assets in the Athora European Accounts. See note 13 to the condensed consolidated financial statements for more details regarding the fee rates of the investment advisory, sub-advisory and other fee arrangements with respect to the assets in the Athora European Accounts.

The following table presents the Athene and Athora assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo:



	Total AUM
	As of March 31,				As of December 31,
	2018		2017		2017
	(in millions)
Credit
Liquid/Performing	$	12,139	$	10,100	$	10,986
Drawdown	1,246		1,083		1,327
Total Credit	13,385		11,183		12,313
Private Equity	912		1,136		1,121
Real Assets
Real Estate Debt	4,677		3,628		4,509
Real Estate Equity	492		423		488
Total Real Assets	5,169		4,051		4,997
Total	$	19,466	$	16,370	$	18,431

Athene and Athora Non-Sub-Advised AUM

The Company refers to the portion of the AUM in the Athene North American Accounts that is not Athene Sub-Advised AUM as “Athene Non-Sub-Advised” AUM. The Company refers to the portion of the Athora AUM that is not Athora Sub-Advised AUM as “Athora Non-Sub-Advised” AUM.

The following table presents the AUM for Athene and Athora:



	As of March 31, 2018
	Sub-Advised AUM⁽¹⁾		Non-Sub-Advised AUM		Total AUM
	(in millions)
Athene	$	18,017	$	60,364	$	78,381
Athora	1,449		6,799		8,248
Total	$	19,466	$	67,163	$	86,629


(1)	Of the total $19.5 billion Athene Sub-Advised AUM and Athora Sub-Advised AUM as of March 31, 2018, $2.8 billion was Athene Assets Directly Invested.

The following table presents total AUM and Fee-Generating AUM amounts for our private equity segment:

Total AUM Fee-Generating AUM
As of
March 31, As of December 31, As of
March 31, As of December 31,
2017 2016 2016 2017 2016 2016
(in millions)
Traditional Private Equity Funds $ 31,004
$ 30,647
$ 30,490
$ 24,457
$ 24,826
$ 24,457
Natural Resources 5,505
3,120
5,223
4,181
2,654
4,181
Other⁽¹⁾
8,064
3,935
7,915
2,136
1,845
2,084
Total $ 44,573
$ 37,702
$ 43,628
$ 30,774
$ 29,325
$ 30,722



	Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2018		2017		2017		2018		2017		2017
	(in millions)
Traditional Private Equity Funds	$	55,048	$	31,004	$	57,250	$	37,579	$	24,457	$	23,580
Natural Resources	4,449		5,505		4,709		4,058		4,181		4,058
Other⁽¹⁾	9,452		8,064		10,473		2,121		2,136		2,154
Total	$	68,949	$	44,573	$	72,432	$	43,758	$	30,774	$	29,792


(1)	Includes co-investments contributed to Athene by AAA through its investment in AAA Investments as discussed in note 13 of the condensed consolidated financial statements.

~~The following table presents total AUM and Fee-Generating AUM amounts for our credit segment by category type:~~

Total AUM Fee-Generating AUM
As of
March 31, As of December 31, As of
March 31, As of December 31,
2017 2016 2016 2017 2016 2016
(in millions)
Liquid/Performing $ 37,203
$ 36,789
$ 35,684
$ 32,919
$ 30,903
$ 31,562
Drawdown 23,810
20,088
23,852
13,794
11,743
13,645
Permanent capital vehicles ex Athene Non-Sub-Advised⁽¹⁾
12,328
14,993
12,330
11,462
10,274
11,460
Athene Non-Sub-Advised⁽¹⁾
56,739
51,984
55,114
56,739
51,984
55,114
Advisory 10,852
—
9,627
—
—
—
Total $ 140,932
$ 123,854
$ 136,607
$ 114,914
$ 104,904
$ 111,781


~~(1)~~	Athene Non-Sub-Advised reflects total Athene-related AUM of $73.1 billion less $16.4 billion of assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo. Athene Non-Sub-Advised includes $4.4 billion of Athene AUM for which AAME provides investment advisory services.

~~The following table presents the Athene assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo:~~

Total AUM
As of
March 31,
As of
December 31,
2017 2016 2016
(in millions)
Private Equity $ 1,136
$ 1,025
$ 1,099
Credit
Liquid/Performing 10,100
8,290
9,407
Drawdown 1,083
883
1,075
Total Credit 11,183
9,173
10,482
Real Estate
Debt 3,628
3,375
3,698
Equity 423
332
439
Total Real Estate 4,051
3,707
4,137
Total $ 16,370
$ 13,905
$ 15,718

The following table presents total AUM and Fee-Generating AUM amounts for our real ~~estate~~assets segment:


	Total AUM						Fee-Generating AUM						Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,		As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2017		2016		2016		2017		2016		2016		2018		2017		2017		2018		2017		2017
	(in millions)												(in millions)
Debt	$	8,861	$	7,768	$	8,604	$	6,666	$	5,335	$	6,577	$	10,405	$	8,861	$	9,965	$	7,660	$	6,666	$	7,451
Equity	3,100		3,189		2,849		1,800		1,509		1,718		2,797		3,100		2,418		1,565		1,800		1,572
Total	$	11,961	$	10,957	$	11,453	$	8,466	$	6,844	$	8,295	$	13,202	$	11,961	$	12,383	$	9,225	$	8,466	$	9,023

The following tables summarize changes in total AUM for each of Apollo’s three ~~segments for the three months ended March 31, 2017 and 2016:~~segments:


	For the Three Months Ended March 31,																								For the Three Months Ended March 31,
	2017												2016												2018												2017
	Private Equity			Credit			Real Estate			Total			Private Equity			Credit			Real Estate			Total			Credit			Private Equity			Real Assets			Total			Credit			Private Equity			Real Assets			Total
	(in millions)																								(in millions)
Change in Total AUM⁽¹⁾:
Beginning of Period	$	43,628		$	136,607		$	11,453		$	191,688		$	37,502		$	121,361		$	11,260		$	170,123		$	164,113		$	72,432		$	12,383		$	248,928		$	136,607		$	43,628		$	11,453		$	191,688
Inflows	297			4,385			631			5,313			482			3,663			432			4,577			3,295			461			1,118			4,874			4,385			297			631			5,313
Outflows⁽²⁾	(71		)	(698		)	—			(769		)	(306		)	(1,374		)	—			(1,680		)	(1,569		)	(180		)	—			(1,749		)	(698		)	(71		)	—			(769		)
Net Flows	226			3,687			631			4,544			176			2,289			432			2,897			1,726			281			1,118			3,125			3,687			226			631			4,544
Realizations	(1,050		)	(365		)	(265		)	(1,680		)	(21		)	(320		)	(798		)	(1,139		)	(2,144		)	(1,513		)	(412		)	(4,069		)	(365		)	(1,050		)	(265		)	(1,680		)
Market Activity⁽⁴⁾⁽³⁾	1,769			1,003			142			2,914			45			524			63			632			1,570			(2,251		)	113			(568		)	1,003			1,769			142			2,914
End of Period	$	44,573		$	140,932		$	11,961		$	197,466		$	37,702		$	123,854		$	10,957		$	172,513		$	165,265		$	68,949		$	13,202		$	247,416		$	140,932		$	44,573		$	11,961		$	197,466

(1)

At the individual segment level, inflows include new subscriptions, commitments, capital raised, other increases in available capital, purchases, acquisitions and portfolio company appreciation. Outflows represent redemptions, other decreases in available capital and portfolio company depreciation. Realizations represent fund distributions of realized proceeds. Market activity represents gains (losses), the impact of foreign exchange rate fluctuations and other income.


(2)	Outflows for Total AUM include redemptions of ~~$297.9~~$184.2 million and ~~$347.3~~$297.9 million during the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively.

(3)

Includes foreign exchange impacts of ~~$38.2~~$862.0 million, $44.3 million and $23.9 million for credit, private equity and real assets, respectively, during the three months ended March 31, 2018, and foreign exchange impacts of $288.8 million, $38.2 million and $25.5 million for credit, private equity ~~credit~~ and real ~~estate,~~assets, respectively, during the three months ended March 31, 2017.


~~(4)~~	~~Includes foreign exchange impacts of $59.8 million, $425.5 million and $9.6 million for private equity, credit and real estate, respectively, during the three months ended March 31, 2016.~~

Assets Under Management

Total AUM was ~~$197.5~~$247.4 billion at March 31, ~~2017, an increase~~2018, a decrease of ~~$5.8~~$1.5 billion, or ~~3.0%~~0.6%, compared to ~~$191.7~~$248.9 billion at December 31, ~~2016.~~2017. The net ~~increase~~decrease was primarily due to:

Realizations of $4.1 billion primarily related to:

~~Net flows~~$2.1 billion related to funds we manage in the credit segment primarily consisting of ~~$4.5~~distributions of $0.4 billion, $0.3 billion, $0.9 billion and $0.5 billion from Apollo Credit Opportunity Fund III, L.P. (“COF III”), Financial Credit Investment III, L.P. (“FCI III”), liquid/performing funds and other drawdown funds, respectively;

$1.5 billion related to funds we manage in the private equity segment primarily consisting of distributions of $0.7 billion and $0.5 billion from Fund VIII and Fund VI, respectively; and

$0.4 billion related to funds we manage in the real assets segment primarily consisting of distributions of $0.4 billion from our real estate debt funds.

Market activity of $0.6 billion primarily related to:

a ~~$3.7~~$2.3 billion decrease related to funds we manage in the private equity segment as a result of depreciation in Fund VIII and co-investment vehicles;

offset by $1.6 billion of appreciation throughout the funds we manage in the credit segment as a result of favorable market conditions.

Offsetting these decreases were:

Net flows of $3.1 billion primarily related to:

a $1.7 billion increase related to funds we manage in the credit segment primarily consisting of a net increase in AUM relating to Athene of $1.7 billion, subscriptions of $1.3 billion primarily related to liquid/performing funds and drawdown funds of $1.0 billion and $0.3 billion, respectively, offset by a decrease in AUM relating to Advisory assets of ~~$1.9~~$1.3 billion ~~and $1.1 billion, respectively, and subscriptions of $1.1 billion, offset~~driven by ~~redemptions of $0.3 billion, a net change in leverage of $0.2 billion~~portfolio company activity; and ~~net segment transfers of $0.2 billion;~~

a ~~$0.6~~$1.1 billion increase related to funds we manage in the real ~~estate~~assets segment primarily consisting of subscriptions of ~~$0.2~~$0.4 billion ~~primarily~~ related to ~~AGRE Debt Fund I, L.P. ("AGRE Debt Fund I")~~the real estate equity funds and aARI, an increase in net ~~change in~~ leverage of ~~$0.2 billion;~~$0.3 billion and

~~a $0.2 billion increase related to funds we manage in the private equity~~ net segment ~~consisting of subscriptions attributable to co-investments for Fund VIII transactions~~transfers of $0.2 billion.

~~Market activity of $2.9 billion primarily related to $1.8 billion and $1.0 billion of appreciation in the funds we manage in the private equity and credit segments, respectively.~~

~~Offsetting these increases were:~~

~~Realizations of $1.7 billion primarily related to:~~

$1.1 billion related to funds we manage in the private equity segment primarily consisting of distributions of $0.7 billion and $0.3 billion from our traditional private equity funds and co-investment vehicles, respectively;

$0.4 billion related to funds we manage in the credit segment primarily consisting of distributions of $0.1 billion, $0.1 billion and $0.1 billion from drawdown funds, liquid/performing funds and permanent capital vehicles, respectively; and

~~$0.3 billion related to funds we manage in the real estate segment primarily consisting of distributions of $0.3 billion from our real estate debt funds.~~

The following tables summarize changes in Fee-Generating AUM for each of Apollo’s three ~~segments for the three months ended March 31, 2017 and 2016:~~segments:


	For the Three Months Ended March 31,																							For the Three Months Ended March 31,
	2017											2016												2018												2017
	Private Equity		Credit			Real Estate			Total			Private Equity			Credit			Real Estate			Total			Credit			Private Equity			Real Assets			Total			Credit			Private Equity		Real Assets			Total
	(in millions)																							(in millions)
Change in Fee-Generating AUM⁽¹⁾:	Change in Fee-Generating AUM⁽¹⁾:																							Change in Fee-Generating AUM⁽¹⁾:
Beginning of Period	$	30,722	$	111,781		$	8,295		$	150,798		$	29,258		$	101,522		$	7,317		$	138,097		$	130,150		$	29,792		$	9,023		$	168,965		$	111,781		$	30,722	$	8,295		$	150,798
Inflows	31		3,602			347			3,980			281			3,891			117			4,289			3,027			23,518			239			26,784			3,602			31		347			3,980
Outflows⁽²⁾	—		(984		)	—			(984		)	(214		)	(608		)	(46		)	(868		)	(3,100		)	(9,560		)	—			(12,660		)	(984		)	—		—			(984		)
Net Flows	31		2,618			347			2,996			67			3,283			71			3,421			(73		)	13,958			239			14,124			2,618			31		347			2,996
Realizations	—		(236		)	(245		)	(481		)	—			(179		)	(547		)	(726		)	(1,256		)	—			(94		)	(1,350		)	(236		)	—		(245		)	(481		)
Market Activity⁽³⁾	21		751			69			841			—			278			3			281			663			8			57			728			751			21		69			841
End of Period	$	30,774	$	114,914		$	8,466		$	154,154		$	29,325		$	104,904		$	6,844		$	141,073		$	129,484		$	43,758		$	9,225		$	182,467		$	114,914		$	30,774	$	8,466		$	154,154

(1)


(2)	Outflows for Fee-Generating AUM include redemptions of ~~$277.3~~$172.1 million and ~~$290.0~~$277.3 million during the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively.

(3)

Includes foreign exchange impacts of $430.7 million and $22.8 million for credit and real assets, respectively, during the three months ended March 31, 2018, and foreign exchange impacts of $140.7 million and $2.8 million for credit and real ~~estate,~~assets, respectively, during the three months ended March 31, ~~2017, and foreign exchange impacts of $386.6 million and $15.5 million for credit and real estate, respectively, during the three months ended March 31, 2016.~~2017.

Total Fee-Generating AUM was ~~$154.2~~$182.5 billion at March 31, ~~2017,~~2018, an increase of ~~$3.4~~$13.5 billion or ~~2.3%~~8.0%, compared to ~~$150.8~~$169.0 billion at December 31, ~~2016.~~2017. The net increase was primarily due to:

Net flows of ~~$3.0~~$14.1 billion primarily related to:

a ~~$2.6~~$14.0 billion increase related to funds we manage in the ~~credit~~private equity segment primarily consisting of ~~a net~~an increase ~~in AUM~~of $23.5 billion relating to ~~Athene of $1.9 billion, subscriptions of $1.0 billion, and an increase in fee-generating capital deployment of $0.4 billion,~~Fund IX commencing its investment period, offset by a ~~net change~~fee basis adjustment of $6.7 billion in ~~leverage of $0.3 billion, redemptions of $0.3 billion and net segment transfers of $0.1 billion; and~~

~~a $0.3 billion increase~~Fund VIII related to ~~funds we manage in the real estate segment primarily consisting~~Fund IX’s commencement and a decrease of ~~subscriptions of $0.3~~$2.8 billion ~~and net segment transfers of $0.1 billion.~~

relating to Fund VI’s management fee termination;

Market activity of ~~$0.8~~$0.7 billion primarily related to appreciation in the funds we manage in the credit ~~segment.~~segment as a result of favorable market conditions.

Offsetting these increases were:

Realizations of ~~$0.5~~$1.4 billion primarily related to:

$~~0.2 billion related to funds we manage in the real estate segment primarily driven by distributions of $0.2 billion from our real estate debt funds; and~~

~~$0.2~~1.3 billion related to funds we manage in the credit segment primarily driven by ~~certain of~~distributions from our liquid/performing ~~funds.~~

funds and Apollo European Principal Finance Fund II, L.P. (“EPF II”) of $0.8 billion and $0.4 billion, respectively.

Capital Deployed and Uncalled Commitments

Capital deployed is the aggregate amount of capital that has been invested during a given period by our drawdown funds, SIAs that have a defined maturity date and funds and SIAs in our real estate debt strategy. Uncalled commitments, by

contrast, represents unfunded capital commitments that certain of Apollo’s funds and SIAs have received from fund investors to fund future or current fund investments and expenses.

Capital deployed and uncalled commitments are indicative of the pace and magnitude of fund capital that is deployed or will be deployed, and which therefore could result in future revenues that include management fees, transaction fees and incentive income to the extent they are fee-generating. Capital deployed and uncalled commitments can also give rise to future costs that are related to the hiring of additional resources to manage and account for the additional capital that is deployed or will be deployed. Management uses capital deployed and uncalled commitments as key operating metrics since we believe the results measure our fund’s investment activities.

Capital Deployed

The following table summarizes by segment the capital deployed for funds and SIAs with a defined maturity date and certain funds and SIAs in Apollo’s real estate debt ~~strategy during the specified reporting periods:~~strategy:


	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2017		2016		2018		2017
	(in millions)				(in millions)
Credit					$	909	$	992
Private Equity	$	1,564	$	501	1,294		1,564
Credit	992		1,337
Real Estate⁽¹⁾	867		334
Real Assets⁽¹⁾					835		867
Total capital deployed	$	3,423	$	2,172	$	3,038	$	3,423


(1)	Included in capital deployed is ~~$735~~$822.8 million, and ~~$302~~$735.0 million for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively, related to funds in Apollo’s real estate debt strategy.

Uncalled Commitments

The following table summarizes the uncalled commitments by ~~segment during the specified reporting periods:~~

segment:


	As of March 31, 2017		As of December 31, 2016		As of March 31, 2018		As of December 31, 2017
	(in millions)				(in millions)
Credit					$	15,730	$	15,225
Private Equity	$	14,759	$	16,079	35,879		36,810
Credit	12,083		11,816
Real Estate	1,314		1,414
Real Assets					1,356		1,074
Total uncalled commitments⁽¹⁾	$	28,156	$	29,309	$	52,965	$	53,109

(1)

As of March 31, ~~2017~~2018 and December 31, ~~2016, $24.2~~2017, $46.5 billion and ~~$25.9~~$47.6 billion, respectively, represented the amount of capital available for investment or reinvestment subject to the provisions of the applicable limited partnership agreements or other governing agreements of the funds, partnerships and accounts we manage. These amounts exclude uncalled commitments which can only be called for fund fees and expenses.

The Historical Investment Performance of Our Funds

Below we present information relating to the historical performance of our funds, including certain legacy Apollo funds that do not have a meaningful amount of unrealized investments, and in respect of which the general partner interest has not been contributed to us.

When considering the data presented below, you should note that the historical results of our funds are not indicative of the future results that you should expect from such funds, from any future funds we may raise or from your investment in our Class A shares.

An investment in our Class A shares is not an investment in any of the Apollo funds, and the assets and revenues of our funds are not directly available to us. The historical and potential future returns of the funds we manage are not directly linked to returns on our Class A shares. Therefore, you should not conclude that continued positive performance of the funds we manage

will necessarily result in positive returns on an investment in our Class A shares. However, poor performance of the funds that we manage would cause a decline in our revenue from such funds, and would therefore have a negative effect on our performance and in all likelihood the value of our Class A shares.

Moreover, the historical returns of our funds should not be considered indicative of the future results you should expect from such funds or from any future funds we may raise. There can be no assurance that any Apollo fund will continue to achieve the same results in the future.

Finally, our private equity IRRs have historically varied greatly from fund to fund. For example, Fund IV generated a 12% gross IRR and a 9% net IRR since its inception through March 31, ~~2017,~~2018, while Fund V generated a 61% gross IRR and a 44% net IRR since its inception through March 31, ~~2017.~~2018. Accordingly, the IRR going forward for any current or future fund may vary considerably from the historical IRR generated by any particular fund, or for our private equity funds as a whole. Future returns will also be affected by the applicable risks, including risks of the industries and businesses in which a particular fund invests. See “Item 1A. Risk Factors—Risks Related to Our Businesses—The historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our Class A shares and our Preferred shares” in the ~~2016~~2017 Annual Report.

Investment Record

The following table summarizes the investment record by segment of Apollo’s significant drawdown funds and SIAs that have a defined maturity date in which investors make a commitment to provide capital at the formation of such funds and deliver capital when called as investment opportunities become available. The funds included in the investment record table below have greater than $500 million of AUM and/or form part of a flagship series of funds. The SIAs included in the investment record table below have greater than $200 million of AUM and did not predominantly invest in other Apollo funds or SIAs.

All amounts are as of March 31, ~~2017~~2018, unless otherwise noted:


																As of March 31, 2017
($ in millions)	Vintage Year	Total AUM		Committed Capital		Total Invested Capital⁽¹⁾		Realized Value⁽¹⁾		Remaining Cost⁽¹⁾		Unrealized Value⁽¹⁾		Total Value⁽¹⁾		Gross IRR⁽¹⁾			Net IRR⁽¹⁾			Vintage Year⁽¹⁾	Total AUM		Committed Capital		Total Invested Capital⁽¹⁾		Realized Value⁽¹⁾		Remaining Cost⁽¹⁾		Unrealized Value⁽¹⁾		Total Value⁽¹⁾		Gross IRR⁽¹⁾			Net IRR⁽¹⁾
Private Equity:
Fund IX																						2018	$	24,729	$	24,729	$	—	$	—	$	—	$	—	$	—	—	%		—	%
Fund VIII	2013	$	20,598	$	18,377	$	10,854	$	1,684	$	9,668	$	12,583	$	14,267	27	%		16	%		2013	21,554		18,377		13,599		4,162		11,328		16,159		20,321		26			18
Fund VII	2008	6,559		14,677		16,097		29,423		3,686		4,177		33,600		35			26			2008	5,731		14,677		16,198		30,328		3,341		3,396		33,724		34			26
Fund VI	2006	3,515		10,136		12,457		18,100		3,407		2,895		20,995		12			9			2006	2,724		10,136		12,457		19,118		2,389		2,108		21,226		12			9
Fund V	2001	315		3,742		5,192		12,697		138		58		12,755		61			44			2001	296		3,742		5,192		12,711		124		40		12,751		61			44
Fund I, II, III, IV and MIA⁽³⁾	Various	17		7,320		8,753		17,400		—		2		17,402		39			26
Fund I, II, III, IV & MIA⁽³⁾																						Various	14		7,320		8,753		17,400		—		—		17,400		39			26
Traditional Private Equity Funds⁽⁴⁾		$	31,004	$	54,252	$	53,353	$	79,304	$	16,899	$	19,715	$	99,019	39	%		25	%			$	55,048	$	78,981	$	56,199	$	83,719	$	17,182	$	21,703	$	105,422	39	%		25	%
ANRP II	2016	3,809		3,454		810		144		734		1,180		1,324		NM		⁽²⁾	NM		⁽²⁾	2016	3,414		3,454		1,638		656		1,343		1,554		2,210		46			25
ANRP I	2012	1,696		1,323		1,035		241		868		1,361		1,602		18			12			2012	1,035		1,323		1,112		765		705		781		1,546		12			8
AION	2013	687		826		328		137		216		194		331		5	%		(7	)%		2013	713		826		407		251		225		308		559		18			8
Total Private Equity⁽⁹⁾		$	37,196	$	59,855	$	55,526	$	79,826	$	18,717	$	22,450	$	102,276								$	60,210	$	84,584	$	59,356	$	85,391	$	19,455	$	24,346	$	109,737
Credit:
Credit Opportunity Funds
COF III	2014	$	3,131	$	3,426	$	4,375	$	2,174	$	2,559	$	2,129	$	4,303	(2	)%		(3	)%		2014	$	2,646	$	3,426	$	5,016	$	3,555	$	1,739	$	1,608	$	5,163	1	%		—	%
COF I and II	2008	442		3,068		3,787		7,396		127		159		7,555		23			20
COF II																						2008	55		1,583		2,176		3,136		39		44		3,180		14			11
COF I																						2008	324		1,485		1,611		4,336		38		54		4,390		30			27
European Principal Finance Funds
EPF III⁽⁵⁾																						2017	4,542		4,652		511		—		511		512		512		NM		⁽²⁾	NM		⁽²⁾
EPF II⁽⁵⁾	2012	4,139		3,391		3,547		1,471		2,077		3,265		4,736		18			11			2012	3,063		3,536		3,726		3,169		1,529		2,223		5,392		19			11
EPF I⁽⁵⁾	2007	262		1,380		1,813		3,013		—		40		3,053		23			17			2007	271		1,593		2,093		3,505		—		14		3,519		23			17
Structured Credit Funds
FCI III																						2017	2,728		1,906		1,608		366		1,367		1,666		2,032		NM		⁽²⁾	NM		⁽²⁾
FCI II	2013	2,345		1,555		2,022		749		1,596		1,795		2,544		15			11			2013	2,476		1,555		2,299		1,065		1,759		1,823		2,888		12			8
FCI I	2012	1,030		559		1,265		881		809		824		1,705		15			12			2012	975		559		1,410		1,087		852		815		1,902		14			11
SCRF III⁽¹²⁾	2015	1,033		1,238		1,716		1,125		697		708		1,833		17			14
SCRF I and II¹²⁾	Various	2		222		707		885		—		—		885		27			21
SCRF IV⁽¹²⁾																						2017	1,416		1,709		823		74		598		741		815		NM		⁽²⁾	NM		⁽²⁾
SCRF III																						2015	—		1,238		2,110		2,428		—		—		2,428		18			14
SCRF II																						2012	—		104		467		528		—		—		528		15			12
SCRF I																						2008	—		118		240		357		—		—		357		33			26
Other Drawdown Funds & SIAs⁽⁶⁾	Various	6,537		8,803		7,741		7,644		2,144		1,979		9,623		9			6			Various	6,868		9,572		9,672		9,502		2,374		2,341		11,843		9			7
Total Credit⁽¹⁰⁾		$	18,921	$	23,642	$	26,973	$	25,338	$	10,009	$	10,899	$	36,237								$	25,364	$	33,036	$	33,762	$	33,108	$	10,806	$	11,841	$	44,949
Real Estate:
Real Assets:
U.S. RE Fund II⁽⁷⁾	2016	$	826	$	771	$	408	$	75	$	384	$	441	$	516	19	%		17	%		2016	$	921	$	862	$	560	$	222	$	448	$	537	$	759	20	%		17	%
U.S. RE Fund I⁽⁷⁾	2012	517		649		631		584		277		344		928		17			13			2012	446		658		640		659		244		285		944		15			12
AGRE Debt Fund I⁽¹³⁾	2011	1,163		2,148		2,058		1,148		1,135		1,065		2,213		8			6			2011	866		2,091		2,089		1,457		879		853		2,310		9			7
CPI Funds⁽⁸⁾	Various	602		4,794		2,485		2,553		282		84		2,637		15			12			Various	410		5,106		2,620		2,681		259		68		2,749		14			11
Total Real Estate⁽¹¹⁾		$	3,108	$	8,362	$	5,582	$	4,360	$	2,078	$	1,934	$	6,294
Asia RE Fund⁽⁷⁾																						2017	615		588		244		40		216		250		290		NM		⁽²⁾	NM		⁽²⁾
Total Real Assets⁽¹¹⁾																							$	3,258	$	9,305	$	6,153	$	5,059	$	2,046	$	1,993	$	7,052


(1)	Refer to the definitions of Vintage Year, Total Invested Capital, Realized Value, Remaining Cost, Unrealized Value, Total Value, Gross IRR and Net IRR described elsewhere in this report.


(2)	Returns have not been presented as the fund commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.

(3)

The general partners and managers of Funds I, II and MIA, as well as the general partner of Fund III, were excluded assets in connection with the 2007 Reorganization. As a result, Apollo did not receive the economics associated with these entities. The investment performance of these funds, combined with Fund IV, is presented to illustrate fund performance associated with Apollo’s Managing Partners and other investment professionals.


(4)	Total IRR is calculated based on total cash flows for all funds presented.


(5)	Funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to ~~$1.07~~$1.23 as of March 31, ~~2017.~~2018.

(6)

Amounts presented have been aggregated for (i) drawdown funds with AUM greater than $500 million that do not form part of a flagship series of funds and (ii) SIAs with AUM greater than $200 million that do not predominantly invest in other Apollo funds or SIAs. Certain SIAs’ historical figures are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to ~~$1.07~~$1.23 as of March 31, ~~2017.~~2018. Additionally, certain SIAs totaling $1.8 billion of AUM have been excluded from Total Invested Capital, Realized Value, Remaining Cost, Unrealized Value and Total Value. These SIAs have an open ended life and a significant turnover in their portfolio assets due to the ability to recycle capital. These SIAs had $9.5 billion of Total Invested Capital through March 31, 2017.

SIAs totaling $1.7 billion of AUM have been excluded from Total Invested Capital, Realized Value, Remaining Cost, Unrealized Value and Total Value. These SIAs have an open ended life and a significant turnover in their portfolio assets due to the ability to recycle capital. These SIAs had $10.4 billion of Total Invested Capital through March 31, 2018.

(7)

U.S. RE Fund I, ~~and~~ U.S. RE Fund II and Asia RE Fund had ~~$153~~$162 million, $390 million and ~~$298~~$245 million of co-investment commitments raised as of March 31, ~~2017,~~2018, respectively, which are included in the figures in the table. A co-invest entity within U.S. RE Fund I is denominated in GBP and translated into U.S. dollars at an exchange rate of £1.00 to ~~$1.26~~$1.40 as of March 31, ~~2017.~~2018.

(8)

As part of the acquisition of Citi Property Investors (“CPI”), Apollo acquired general partner interests in fully invested funds. CPI Funds refers to CPI Capital Partners North America, CPI Capital Partners Asia Pacific, CPI Capital Partners Europe and other CPI funds or individual investments of which Apollo is not the general partner or manager and only receives fees pursuant to either a sub-advisory agreement or an investment management and administrative agreement. For CPI Capital Partners North America, CPI Capital Partners Asia Pacific and CPI Capital Partners Europe, the gross and net IRRs are presented in the investment record table since acquisition on November 12, 2010. The aggregate net IRR for these funds from their inception to March 31, ~~2017~~2018 was ~~(1)~~(2)%. This net IRR was primarily achieved during a period in which Apollo did not make the initial investment decisions and Apollo only became the general partner or manager of these funds upon completing the acquisition on November 12, 2010.


(9)	~~Certain private~~Private equity co-investment vehicles, and funds with AUM less than $500 million have been excluded. These co-investment vehicles and funds had ~~$7.4~~$8.7 billion of aggregate AUM as of March 31, ~~2017.~~2018.


(10)	Certain credit funds and SIAs with AUM less than $500 million and $200 million, respectively, have been excluded. These funds and SIAs had ~~$4.9~~$2.8 billion of aggregate AUM as of March 31, ~~2017.~~2018.


(11)	Certain accounts owned by or related to Athene, certain co-investment vehicles and certain funds with AUM less than $500 million have been excluded. These accounts, co-investment vehicles and funds had ~~$4.8~~$5.1 billion of aggregate AUM as of March 31, ~~2017.~~2018.


(12)	Remaining cost for certain of our credit funds may include physical cash called, invested or reserved for certain levered investments.

(13)

The investor in this U.S. Dollar denominated fund has chosen to make contributions and receive distributions in the local currency of each underlying investment. As a result, Apollo has not entered into foreign currency hedges for this fund and the returns presented include the impact of foreign currency gains or losses. The investor’s gross and net IRR, before the impact of foreign currency gains or losses, from the fund’s inception to March 31, ~~2017~~2018 was 10% and 9%, respectively.

Private Equity

The following table summarizes the investment record for distressed investments made in our traditional private equity fund portfolios, since the Company’s inception. All amounts are as of March 31, ~~2017:~~2018:


	Total Invested Capital		Total Value		Gross IRR		Total Invested Capital		Total Value		Gross IRR
	(in millions)						(in millions)
Distressed for Control	$	7,795	$	18,548	29	%	$	7,885	$	19,043	29	%
Non-Control Distressed	5,490		8,481		71		5,416		8,418		71
Total	13,285		27,029		49		13,301		27,461		49
Corporate Carve-outs, Opportunistic Buyouts and Other Credit⁽¹⁾	40,068		71,990		22		42,898		77,961		22
Total	$	53,353	$	99,019	39	%	$	56,199	$	105,422	39	%


(1)	Other Credit is defined as investments in debt securities of issuers other than portfolio companies that are not considered to be distressed.

The following tables provide additional detail on the composition of the Fund VIII, Fund VII and Fund VI private equity portfolios based on investment strategy. Amounts for Fund I, II, III, IV and V are included in the table above but not presented below as their remaining value is less than $100 million or the fund has been liquidated. All amounts are as of March 31, ~~2017:~~2018:

Fund VIII⁽¹⁾


	Total Invested Capital		Total Value		Total Invested Capital		Total Value
	(in millions)				(in millions)
Corporate Carve-outs	$	2,318	$	3,394	$	2,391	$	4,181
Opportunistic Buyouts	8,037		10,188		10,694		15,324
Distressed	499		685		514		816
Total	$	10,854	$	14,267	$	13,599	$	20,321

Fund VII⁽¹⁾


	Total Invested Capital		Total Value		Total Invested Capital		Total Value
	(in millions)				(in millions)
Corporate Carve-outs	$	2,176	$	4,578	$	2,277	$	4,348
Opportunistic Buyouts	4,338		10,628		4,338		10,675
Distressed/Other Credit⁽²⁾	9,583		18,394		9,583		18,701
Total	$	16,097	$	33,600	$	16,198	$	33,724

Fund VI


	Total Invested Capital		Total Value		Total Invested Capital		Total Value
	(in millions)				(in millions)
Corporate Carve-outs	$	3,397	$	5,783	$	3,397	$	5,844
Opportunistic Buyouts	6,374		10,246		6,374		10,411
Distressed/Other Credit⁽²⁾	2,686		4,966		2,686		4,971
Total	$	12,457	$	20,995	$	12,457	$	21,226


(1)	Committed capital less unfunded capital commitments for Fund VIII and Fund VII was ~~$11.0~~$13.2 billion and ~~$14.0~~$14.1 billion, respectively, which represents capital commitments from limited partners to invest in such funds less capital that is available for investment or reinvestment subject to the provisions of the applicable limited partnership agreement or other governing agreements.


(2)	The distressed investment strategy includes distressed for control, non-control distressed and other credit.

During the recovery and expansionary periods of 1994 through 2000 and late 2003 through the first half of 2007, our private equity funds invested or committed to invest approximately $13.7 billion primarily in traditional and corporate partner buyouts. During the recessionary periods of 1990 through 1993, 2001 through late 2003 and the recessionary and post recessionary periods (beginning the second half of 2007 through March 31, ~~2017)~~2018), our private equity funds have invested ~~$43.5~~$47.5 billion, of which ~~$18.7~~$18.9 billion was in distressed buyouts and debt investments when the debt securities of quality companies traded at deep discounts to par value. Our average entry multiple for Fund VIII, VII and VI was ~~5.5x,~~5.7x, 6.1x and 7.7x, respectively, as of March 31, ~~2017.~~2018. Our average entry multiple for a private equity fund is the average of the total enterprise value over an applicable adjusted earnings before interest, taxes, depreciation and amortization which may incorporate certain adjustments based on the investment team’s estimate and we believe captures the true economics of our funds’ investments in portfolio companies. The average entry multiple of actively investing funds may include committed investments not yet closed.

Credit

The following table presents the AUM and gross and net returns information for Apollo’s credit segment by category type:


											As of March 31, 2018								Gross Returns⁽¹⁾	Net Returns⁽¹⁾
	As of March 31, 2017								Gross Returns	Net Returns	AUM		Fee-Generating AUM		Performance Fee-Eligible AUM		Performance Fee-Generating AUM⁽²⁾		For the Three Months Ended March 31, 2018	For the Three Months Ended March 31, 2018
Category	AUM		Fee-Generating AUM		Carry-Eligible AUM		Carry-Generating AUM		For the Three Months Ended March 31, 2017⁽¹⁾		(in millions)
	(in millions)
Liquid/Performing	$	37,203	$	32,919	$	20,393	$	11,157	1.9%	1.8%	$	45,282	$	36,503	$	22,302	$	12,936	0.8%	0.7%
Drawdown⁽²⁾⁽³⁾	23,810		13,794		21,040		7,887		1.6	1.2	28,147		15,749		21,908		8,780		2.4	1.8
Permanent capital vehicles ex Athene Non-Sub-Advised⁽³⁾⁽⁴⁾	12,328		11,462		9,992		8,708		2.7	1.8	13,610		12,749		10,970		9,521		3.2	2.2
Athene Non-Sub-Advised⁽³⁾⁽⁴⁾	56,739		56,739		—		—		N/A	N/A	60,365		60,365		—		—		N/A	N/A
Athora Non-Sub-Advised⁽⁴⁾											6,798		4,118		2,064		—		N/A	N/A
Advisory	10,852		—		—		—		N/A	N/A	11,063		—		—		—		N/A	N/A
Total Credit	$	140,932	$	114,914	$	51,425	$	27,752	1.9%	1.6%	$	165,265	$	129,484	$	57,244	$	31,237	1.3%	1.1%


(1)	The gross and net returns for the three months ended March 31, ~~2017~~2018 for total credit excludes assets managed by AAM that are not directly invested in Apollo funds and investment vehicles or sub-advised by Apollo.

(2)

As of March 31, ~~2017,~~2018, $7.7 billion of the performance-fee generating AUM is currently above its hurdle rate or preferred return, but in accordance with the adoption of the revenue recognition standard effective January 1, 2018, recognition of performance fees associated with such performance-fee generating AUM has been deferred to future periods when the fees are probable to not be significantly reversed.


(3)	As of March 31, 2018, significant drawdown funds and SIAs had inception-to-date gross and net IRRs of ~~16.1%~~16.0% and ~~12.3%~~12.1%, respectively. Significant drawdown funds and SIAs include funds and SIAs with AUM greater than $200 million that do not predominantly invest in other Apollo funds or SIAs.

~~(3)~~(4)

Athene Non-Sub-Advised and Athora Non-Sub-Advised reflects total ~~Athene-related~~combined AUM of ~~$73.1~~$86.6 billion less ~~$16.4~~$19.5 billion of assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by ~~Apollo. Athene~~Apollo included within other asset categories. Athora Non-Sub-Advised includes ~~$4.4~~$4.1 billion of ~~Athene~~ AUM for which AAME provides investment advisory services.

Liquid/Performing

The following table summarizes the investment record for funds in the liquid/performing category within Apollo’s credit segment. The significant funds included in the investment record table below have greater than $200 million of AUM and do not predominantly invest in other Apollo funds or SIAs.


		Total AUM		Net Returns					Total AUM		Net Returns
	Vintage Year	As of March 31, 2017		For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016		Vintage Year	As of March 31, 2018		For the Three Months Ended March 31, 2018		For the Three Months Ended March 31, 2017
Credit:		(in millions)							(in millions)
Hedge Funds⁽¹⁾	Various	$	6,389	1	%	2	%	Various	$	6,775	1	%	1	%
CLOs⁽²⁾	Various	12,035		1		2		Various	12,336		1		1
SIAs / Other	Various	18,779		2		—		Various	26,171		—		2
Total		$	37,203						$	45,282


(1)	Hedge Funds primarily includes Apollo Credit Strategies Master Fund Ltd., and Apollo Credit Master Fund Ltd. ~~and Apollo Credit Short Opportunities Fund.~~

(2)

CLO returns are calculated based on gross return on invested assets, which excludes cash. Included within Total AUM of CLOs is $2.8 billion of AUM related to a standalone, self-managed asset management business established in connection with risk-retention rules, from which Apollo earns investment-related service fees, but for which Apollo does not provide management or advisory services. CLO returns exclude performance related to this AUM.

Permanent Capital

The following table summarizes the investment record for our permanent capital vehicles by segment, excluding Athene-related and Athora-related assets managed or advised by Athene Asset Management and AAME:


		Total AUM		Total Returns ⁽¹⁾					Total AUM		Total Returns⁽¹⁾
	IPO Year⁽²⁾	As of March 31, 2017		For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016		IPO Year⁽²⁾	As of March 31, 2018		For the Three Months Ended March 31, 2018		For the Three Months Ended March 31, 2017
Credit:		(in millions)							(in millions)
MidCap⁽³⁾	N/A	$	7,249	4	%	1	%	N/A	$	8,346	4	%	4	%
AIF	2013	390		9		1		2013	391		2		9
AFT	2011	432		2		2		2011	429		6		2
AINV⁽⁴⁾	2004	4,331		14		10		2004	4,472		(5	)	14
Real Estate:
Real Assets:
ARI(5)	2009	4,080		16	%	(3	) %	2009	4,305		—	%	16	%
Total		$	16,482						$	17,943


(1)	Total returns are based on the change in closing trading prices during the respective periods presented taking into account dividends and distributions, if any, as if they were reinvested without regard to commission.


(2)	An ~~IPO~~initial public offering (“IPO”) year represents the year in which the vehicle commenced trading on a national securities exchange.


(3)	MidCap is not a publicly traded vehicle and therefore IPO year is not applicable. The returns presented are a gross return based on NAV. The net returns based on NAV were 2%3% and 1%2% for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively.

(4)

All amounts are as of December 31, ~~2016,~~2017 except for total returns. Refer to www.apolloic.com for the most recent financial information on AINV. The information contained on AINV’s website is not part of this report. ~~Includes $1.5~~Included within Total AUM of AINV is $1.8 billion of AUM related to a non-traded business development company ~~sub-advised by Apollo. Total~~from which Apollo earns investment-related service fees, but for which Apollo does not provide management or advisory services. Net returns exclude performance related to this AUM.


(5)	All amounts are as of December 31, 2017 except for total returns. Refer to www.apolloreit.com for the ~~non-traded business development company.~~most recent financial information on ARI. The information contained on ARI’s website is not part of this report.

Athene and SIAs

As of March 31, ~~2017,~~2018, Apollo managed or advised ~~$73.1~~$86.6 billion of total AUM in accounts owned by or related to Athene and Athora, of which approximately ~~$16.4~~$19.5 billion was either sub-advised by Apollo or invested in Apollo funds and investment vehicles managed by Apollo. Of the approximately ~~$16.4~~$19.5 billion of AUM, the vast majority were in sub-advisory managed accounts that manage high grade credit asset classes, such as CLO debt, commercial mortgage backed securities, and insurance-linked securities.

As of March 31, ~~2017,~~2018, Apollo managed approximately ~~$19~~$22 billion of total AUM in SIAs, which include certain SIAs in the investment record tables above and capital deployed from certain SIAs across Apollo’s credit, private equity ~~credit~~ and real ~~estate~~assets funds.

Overview of Results of Operations

Revenues

Advisory and Transaction, ~~Fees from Related Parties,~~ Net. As a result of providing advisory services with respect to actual and potential credit, private equity, ~~credit,~~ and real ~~estate~~assets investments, we are entitled to receive fees for transactions related to the acquisition and, in certain instances, disposition of portfolio companies as well as fees for ongoing monitoring of portfolio company operations and directors’ fees. We also receive advisory fees for advisory services provided to certain credit funds. In addition, monitoring fees are generated on certain structured portfolio company investments. Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Such amounts are presented as a reduction to advisory and transaction fees, ~~from related parties,~~ net, in the condensed consolidated statements of ~~operations. See~~operations (see note 2 to our condensed consolidated financial statements for more detail on advisory and transaction fees, ~~from related parties, net.~~net).

The Management Fee Offsets are calculated for each fund as follows:

65%-100% for ~~private equity~~certain credit funds, gross advisory, transaction and other special fees;

65%-100% for ~~certain credit~~private equity funds, gross advisory, transaction and other special fees; and

100% for certain real ~~estate~~assets funds, gross advisory, transaction and other special fees.

Management ~~Fees from Related Parties.~~Fees. The significant growth of the assets we manage has had a positive effect on our revenues. Management fees are typically calculated based upon any of “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted costs of all unrealized portfolio investments,” “capital commitments,” “invested capital,” “adjusted assets,” “capital contributions,” or “stockholders’ equity,” each as defined in the applicable limited partnership agreement and/or management agreement of the unconsolidated funds.

~~Carried Interest Income~~Apollo expects more than $35 billion of fee-generating asset growth from ~~Related Parties.~~Fund IX and the Venerable transaction to drive nearly $270 million of annualized management fees (see note 14 to the condensed consolidated financial statements for further information regarding the Venerable transaction).

As a result of Fund IX’s investment period commencement on April 1, 2018, there was a corresponding decrease in fee-generating AUM and management fees related to Fund VIII, in accordance with its Limited Partnership Agreement, whereby Fund VIII will earn management fees on fee-generating invested capital at a lower fee rate (rather than third-party committed capital at a higher fee rate). The net impact of Fund IX’s investment period commencement, net of Fund VIII’s fee rate step-down, resulted in an addition of $17 billion of fee-generating AUM, which is included in fee-generating AUM as of March 31, 2018. This increase in fee-generating AUM is expected to generate $210 million of annualized management fees, which is based on Fund IX’s committed capital and Fund VIII’s fee-generating invested capital as of March 31, 2018. Fund VIII’s basis of fee-generating invested capital is subject to change and dependent upon timing of capital investment and realizations. Fund IX’s annualized management fee rate is based on the terms as defined in Fund IX’s Limited Partnership Agreement.

In connection with the Venerable transaction, Athene Holding Ltd. has signed a definitive agreement to reinsure approximately $19 billion of Voya’s fixed annuities, for which Athene Asset Management will provide asset management services. In addition, Athene will be Venerable’s strategic partner for fixed annuity blocks as opportunities arise going forward. The addition of the $19 billion of fee-generating AUM is expected to generate management fees at a fee rate of 0.30%, or approximately $57 million annually. This projection excludes incremental fee potential from sub-advisory mandates.

Performance Fees. The general partners of our funds ~~in general,~~ are entitled to an incentive return ~~that can~~of normally ~~amount~~up to ~~as much as~~ 20% of the total returns ~~on fund~~of a fund’s capital, depending upon performance of the underlying funds and subject to preferred returns and high water marks, as applicable. ~~The carried interest income from related parties is recognized in accordance with U.S. GAAP guidance applicable to accounting~~Performance fees, categorized as performance allocations, are accounted for ~~arrangement~~as an equity method investment, and effectively, the performance fees ~~based on a formula. In applying the U.S. GAAP guidance, the carried interest from related parties~~ for any period is based upon an assumed liquidation of the funds’ assets at the reporting date, and distribution of the net proceeds in accordance with the funds’ allocation provisions. Performance fees not accounted as an equity method investment, categorized as incentive fees, are deferred until fees are probable to not be significantly reversed. The majority of performance fees are comprised of performance allocations.

As of March 31, ~~2017,~~2018, approximately ~~54%~~55% of the value of our funds’ investments on a gross basis was determined using market-based valuation methods (i.e., reliance on broker or listed exchange quotes) and the remaining ~~46%~~45% was determined primarily by comparable company and industry multiples or discounted cash flow models. For our credit, private equity ~~credit~~ and real ~~estate~~assets segments, the percentage determined using market-based valuation methods as of March 31, ~~2017~~2018 was ~~24%~~70%, ~~73%~~28% and ~~42%~~41%, respectively. See “Item 1A. Risk Factors—Risks Related to Our Businesses—Our funds’ performance, and our performance, may be adversely affected by the financial performance of our funds’ portfolio companies and the industries in which our funds invest” in the ~~2016~~2017 Annual Report for a discussion regarding certain industry-specific risks that could affect the fair value of our private equity funds’ portfolio company investments.

~~Carried interest income fee rates can be as much as 20% for our private equity funds.~~ In our private equity funds, the Company does not earn ~~carried interest income~~performance fees until the investors in the fund have achieved cumulative investment returns on invested capital (including management fees and expenses) in excess of an 8% hurdle rate. Additionally, certain of our credit and real ~~estate~~assets funds have various ~~carried interest~~performance fee rates and hurdle rates. Certain of our credit and real ~~estate~~assets funds allocate ~~carried interest~~performance fees to the general partner in a similar manner as the private equity funds. In our private equity, certain credit and real ~~estate~~assets funds, so long as the investors achieve their priority returns, there is a catch-up formula whereby the Company earns a priority return for a portion of the return until the Company’s ~~carried interest income equates~~performance fees equate to its incentive fee rate for that fund; thereafter, the Company participates in returns from the fund at the ~~carried interest income~~performance fee rate. ~~Carried interest income is~~Performance fees, categorized as performance allocations, are subject to reversal to the extent that the ~~carried interest income~~performance fees distributed ~~exceeds~~exceed the amount due to the general partner based on a fund’s cumulative investment returns. The Company recognizes potential repayment of previously received ~~carried interest income~~performance fees as a general partner obligation representing all amounts previously distributed to the general partner that would need to be repaid to the Apollo funds if these funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual general partner obligation, however, would not become payable or realized until the end of a fund’s life or as otherwise set forth in the respective limited partnership agreement of the fund.

The table below presents an analysis of Apollo’s (i) ~~carried interest~~performance fees receivable on an unconsolidated basis and (ii) realized and unrealized ~~carried interest income (loss)~~performance fees for Apollo’s combined ~~segments as of and for the three months ended March 31, 2017:~~segments:

As of
March 31, 2017 For the Three Months Ended March 31, 2017
Carried Interest Receivable on an Unconsolidated Basis Unrealized
Carried Interest
Income (Loss) Realized
Carried Interest
Income Total
Carried Interest
Income (Loss)
(in thousands)
Private Equity Funds:
Fund VIII $ 421,260
$ 98,033
$ 57,812
$ 155,845
Fund VII⁽¹⁾
95,197
20,542
19,817
40,359
Fund VI⁽¹⁾
—
⁽³⁾
35,443
—
35,443
Fund IV and V 310
⁽³⁾
(5,794 ) —
(5,794 )
ANRP I and II 133,131
55,647
372
56,019
AAA/Other⁽²⁾⁽⁵⁾
343,560
(40,252 ) 77,460
37,208
Total Private Equity Funds 993,458
163,619
155,461
319,080
Total Private Equity Funds, net of profit share 634,696
108,603
80,209
188,812
Credit Category:
Drawdown 294,950
⁽³⁾
(8,401 ) 26,659
18,258
Liquid/Performing 55,582
6,534
3,551
10,085
Permanent capital vehicles ex AAM 43,592
8,189
726
8,915
Total Credit Funds 394,124
6,322
30,936
37,258
Total Credit Funds, net of profit share 133,327
4,107
17,204
21,311
Real Estate Funds:
CPI Funds 304
(59 ) —
(59 )
U.S. RE Fund I & II 22,512
2,249
64
2,313
Other⁽⁵⁾
12,309
414
—
414
Total Real Estate Funds 35,125
2,604
64
2,668
Total Real Estate Funds, net of profit share 20,016
570
38
608
Total $ 1,422,707
$ 172,545
$ 186,461
$ 359,006
Total, net of profit share $ 788,039
⁽⁴⁾
$ 113,280
$ 97,451
$ 210,731



	As of March 31, 2018
	As of March 31, 2018			For the Three Months Ended March 31, 2018
	Performance Fees Receivable on an Unconsolidated Basis			Unrealized Performance Fees			Realized Performance Fees		Total Performance Fees
	(in thousands)
Private Equity:
Fund VIII	$	749,229		$	(267,771	)	$	99,186	$	(168,585	)
Fund VII⁽¹⁾	89,077			18,579			5,213		23,792
Fund VI⁽¹⁾	34,821			(3,937		)	—		(3,937		)
Fund IV and V	—		⁽³⁾	718			—		718
ANRP I and II	30,395		⁽³⁾	(12,276		)	—		(12,276		)
AAA/Other⁽²⁾	63,029			(180,781		)	174,876		(5,905		)
Total Private Equity	966,551			(445,468		)	279,275		(166,193		)
Total Private Equity, net of profit share	594,486			(307,835		)	177,194		(130,641		)
Credit:
Drawdown	334,087		⁽³⁾	15,684			9,762		25,446
Liquid/Performing	4,071			2,481			21		2,502
Permanent capital vehicles	71,329			9,546			5,275		14,821
Total Credit	409,487			27,711			15,058		42,769
Total Credit, net of profit share	147,349			11,998			8,455		20,453
Real Assets Funds:
U.S. RE Fund I & II	16,364			(931		)	735		(196		)
Other⁽⁵⁾	8,765			(1,734		)	2,391		657
Total Real Assets	25,129			(2,665		)	3,126		461
Total Real Assets, net of profit share	14,449			(1,574		)	1,540		(34		)
Total	$	1,401,167		$	(420,422	)	$	297,459	$	(122,963	)
Total, net of profit share	$	756,284	⁽⁴⁾	$	(297,411	)	$	187,189	$	(110,222	)

(1)

As of March 31, ~~2017,~~2018, the remaining investments and escrow cash of Fund VII, ~~and~~ Fund VI, and ANRP II were valued at ~~107%~~99%, 92%, and ~~86%~~108% of the fund’s unreturned capital, respectively, which were below the required escrow ratio of 115%. As a result, these funds are required to place in escrow current and future ~~carried interest income~~performance fees distributions to the general partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation. As of March 31, ~~2017,~~2018, Fund VIVII had ~~$167.6~~$114.5 million of gross ~~carried interest income,~~performance fees, or ~~$110.7~~$65.2 million net of profit sharing, in escrow. As of March 31, ~~2017,~~2018, Fund ~~VII~~VI had ~~$58.6~~$167.6 million of gross ~~carried interest income,~~performance fees, or ~~$32.6~~$112.4 million net of profit sharing, in escrow. As of March 31, 2018, ANRP II had $10.7 million of gross performance fees, or $6.5 million net of profit sharing, in escrow. With respect to Fund VII, ~~and~~ Fund VI, and ANRP II, realized ~~carried interest income~~performance fees currently distributed to the general partner is limited to potential tax distributions ~~pursuant to~~per the fund’s partnership agreement.

(2)

~~AAA/Other includes $249.3~~The Company elected to receive the AAA performance fee payment in the form of Athene shares for $169.9 million, ~~of carried interest receivable,~~ or ~~$177.8~~$123.3 million net of profit ~~sharing, from AAA Investments, L.P. as~~sharing. The reduction to performance fees receivable was offset by a corresponding increase to investments within the condensed consolidated statement of March 31, 2017. Following a transaction that settled on April 3, 2017, the receivable balance declined to $204.2 million, or $145.6 million net of profit sharing, reflecting receipt of the carried interest amount that was presented within realized carried interest income for the three months ended March 31, 2017. If Apollo receives payment of any remaining carried interest in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such carried interest in cash.financial position. Other includes certain SIAs.

(3)

As of March 31, ~~2017,~~2018, certain credit funds and certain private equity funds had ~~$60.4~~$55.8 million and ~~$23.9~~$41.5 million, respectively, in general partner obligations to return previously distributed ~~carried interest income.~~performance fees. The fair value gain on investments and income at the fund level needed to reverse the general partner obligations for certain credit funds and certain private equity funds was ~~$328.3~~$296.9 million and ~~$164.5~~$183.6 million, respectively, as of March 31, ~~2017.~~2018.


(4)	There was a corresponding profit sharing payable of ~~$634.7~~$644.9 million as of March 31, ~~2017,~~2018, including profit sharing payable related to amounts in escrow and contingent consideration obligations of ~~$87.7~~$90.5 million.


~~(5)~~	~~Other includes certain SIAs.~~

The general partners of the private equity, credit and real estate funds listed in the table above were accruing carried interest income as of March 31, 2017. The investment manager of AINV accrues carried interest as it is earned. The general partners of certain of our credit funds accrue ~~carried interest~~performance fees, categorized as performance allocations, when the fair value of investments exceeds the cost basis of the individual investors’ investments in the fund, including any allocable share of expenses incurred in connection with such investments, which we refer to as “high water marks.” These high water marks are applied on an individual investor basis. Certain of our credit funds have investors with various high water marks, the achievement of which is subject to market conditions and investment performance.

~~Carried interest income~~

Performance fees from our private equity funds and certain credit and real ~~estate~~assets funds isare subject to contingent repayment by the general partner in the event of future losses to the extent that the cumulative ~~carried interest~~performance fees distributed from inception to date exceeds the amount computed as due to the general partner at the final distribution. These general partner obligations, if applicable, are included in due to related parties on the condensed consolidated statements of financial condition.

The following table summarizes our ~~carried interest~~performance fees since inception for our combined segments through March 31, ~~2017~~:2018:


	Carried Interest Since Inception⁽¹⁾										Performance Fees Since Inception⁽¹⁾
	Undistributed by Fund and Recognized		Distributed by Fund and Recognized⁽²⁾		Total Undistributed and Distributed by Fund and Recognized⁽³⁾		General Partner Obligation as of March 31, 2017⁽³⁾		Maximum Carried Interest Income Subject to Potential Reversal⁽⁴⁾		Undistributed by Fund and Recognized		Distributed by Fund and Recognized⁽²⁾		Total Undistributed and Distributed by Fund and Recognized⁽³⁾		General Partner Obligation as of March 31, 2018⁽³⁾		Maximum Performance Fees Subject to Potential Reversal⁽⁴⁾
	(in millions)										(in millions)
Private Equity Funds:
Private Equity:
Fund VIII	$	421.3	$	68.5	$	489.8	$	—	$	463.9	$	749.2	$	316.2	$	1,065.4	$	—	$	946.6
Fund VII	95.2		3,121.5		3,216.7		—		575.5		89.1		3,126.7		3,215.8		—		662.4
Fund VI	—		1,658.9		1,658.9		6.8		1,105.9		34.8		1,658.9		1,693.7		—		1,147.5
Fund IV and V	0.3		2,053.1		2,053.4		17.1		9.2		—		2,053.1		2,053.1		24.1		8.1
ANRP I and II	133.1		19.8		152.9		—		143.7		30.4		78.9		109.3		17.4		56.0
AAA/Other	343.6		213.0		556.6		—		266.2		63.0		535.2		598.2		—		80.6
Total Private Equity Funds	993.5		7,134.8		8,128.3		23.9		2,564.4
Credit Category⁽⁵⁾:
Total Private Equity											966.5		7,769.0		8,735.5		41.5		2,901.2
Credit⁽⁵⁾:
Drawdown	295.0		981.5		1,276.5		60.4		366.2		334.1		1,103.2		1,437.3		55.8		463.7
Liquid/Performing	55.6		493.1		548.7		—		72.3		4.1		532.9		537.0		—		3.4
Permanent capital vehicles ex AAM	36.3		—		36.3		—		36.3		63.4		—		63.4		—		63.4
Total Credit Funds	386.9		1,474.6		1,861.5		60.4		474.8
Real Estate Funds:
CPI Funds	0.3		9.6		9.9		—		0.3
U.S. RE Fund I & II	22.5		12.9		35.4		—		30.0
Total Credit											401.6		1,636.1		2,037.7		55.8		530.5
Real Assets:
U.S. RE Fund I and II											16.4		25.5		41.9		—		36.3
Other⁽⁶⁾	12.3		4.2		16.5		—		12.4		8.8		21.5		30.3		—		15.9
Total Real Estate Funds	35.1		26.7		61.8		—		42.7
Total Real Assets											25.2		47.0		72.2		—		52.2
Total	$	1,415.5	$	8,636.1	$	10,051.6	$	84.3	$	3,081.9	$	1,393.3	$	9,452.1	$	10,845.4	$	97.3	$	3,483.9


(1)	Certain funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to ~~$1.07~~$1.23 as of March 31, ~~2017.~~2018.


(2)	Amounts in “Distributed by Fund and Recognized” for the CPI, Gulf Stream Asset Management, LLC (“Gulf Stream”) and Stone Tower funds and SIAs are presented for activity subsequent to the respective acquisition dates.

(3)

Amounts were computed based on the fair value of fund investments on March 31, ~~2017. Carried interest income has~~2018. Performance fees have been allocated to and recognized by the general partner. Based on the amount ~~of carried interest income~~ allocated, a portion is subject to potential reversal or, to the extent applicable, has been reduced by the general partner obligation to return previously distributed ~~carried interest income or~~performance fees at March 31, ~~2017.~~2018. The actual determination and any required payment of any such general partner obligation would not take place until the final disposition of the fund’s investments based on contractual termination of the fund.

(4)

Represents the amount of ~~carried interest income~~performance fees that would be reversed if remaining fund investments became worthless on March 31, ~~2017.~~2018. Amounts subject to potential reversal of ~~carried interest income~~performance fees include amounts undistributed by a fund (i.e., the ~~carried interest~~performance fees receivable), as well as a portion of the amounts that have been distributed by a fund, net of taxes not subject to a general partner obligation to return previously distributed ~~carried interest income,~~performance fees, except for those funds that are gross of taxes as defined in the respective funds’ governing documents.


(5)	Amounts exclude AINV, as ~~carried interest income~~performance fees from this entity isare not subject to contingent repayment.


(6)	Other includes certain SIAs.

Expenses

Compensation and Benefits. Our most significant expense is compensation and benefits expense. This consists of fixed salary, discretionary and non-discretionary bonuses, profit sharing expense associated with the ~~carried interest income~~performance fees earned from credit, private equity, ~~credit~~ and real ~~estate~~assets funds and compensation expense associated with the vesting of non-cash equity-based awards.

Our compensation arrangements with certain partners and employees contain a significant performance-based incentive component. Therefore, as our net revenues increase, our compensation costs also rise or can be lower when net revenues decrease. In addition, our compensation costs reflect the increased investment in people as we expand geographically and create new funds.

In addition, certain professionals and selected other individuals have a profit sharing interest in the ~~carried interest income~~performance fees earned in relation to our private equity, certain credit and real ~~estate~~assets funds in order to better align their interests with our own and with those of the investors in these funds. Profit sharing expense is part of our compensation and benefits expense and is generally based upon a fixed percentage of credit, private equity ~~credit~~ and real ~~estate carried interest income on a pre-tax and a pre-consolidated basis.~~assets performance fees. Profit sharing expense can reverse during periods when there is a decline in ~~carried interest income~~performance fees that ~~was~~were previously recognized. Profit sharing amounts are normally distributed to employees after the corresponding investment gains have been realized and generally before preferred returns are achieved for the investors. Therefore, changes in our unrealized ~~gains (losses) for investments~~performance fees have the same effect on our profit sharing expense. Profit sharing expense increases when unrealized ~~gains increase.~~performance fees increases. Realizations only impact profit sharing expense to the extent that the effects on investments have not been recognized previously. If losses on other investments within a fund are subsequently realized, the profit sharing amounts previously distributed are normally subject to a general partner obligation to return ~~carried interest income~~performance fees previously distributed back to the funds. This general partner obligation due to the funds would be realized only when the fund is liquidated, which generally occurs at the end of the fund’s term. However, indemnification obligations also exist for ~~pre-reorganization~~ realized gains with respect to Fund IV, Fund V and Fund VI, which, although our Managing Partners and Contributing Partners would remain personally liable, may indemnify our Managing Partners and Contributing Partners for 17.5% to 100% of the previously distributed profits regardless of the fund’s future performance. See note 13 to our condensed consolidated financial statements for further ~~discussion of indemnification.~~information regarding the Company’s indemnification liability.

Each Managing Partner receives $100,000 per year in base salary for services rendered to us. Additionally, our Managing Partners can receive other forms of compensation. In connection with the 2007 Reorganization, the Managing Partners and Contributing Partners received AOG Units, which vested over a period of five to six years and certain employees were granted RSUs, which vested over a period of typically six years. In addition, AHL Awards (as defined in note 11 to our condensed consolidated financial statements) and other equity-based compensation awards have been granted to the Company and certain employees, which amortize over the respective vesting periods. In addition, the Company grants equity awards to certain employees, including RSUs, restricted Class A shares and options, that generally vest and become exercisable in quarterly installments or annual installments depending on the contract terms over a period of three to six years. See note 11 to our condensed consolidated financial statements for further discussion of ~~AOG Units and other~~ equity-based compensation.

Other Expenses. The balance of our other expenses includes interest, placement fees, and general, administrative and other operating expenses. Interest expense consists primarily of interest related to the 2013 AMH Credit Facilities, the 2024 Senior Notes and the 2026 Senior Notes as discussed in note 9 to our condensed consolidated financial statements. Placement fees are incurred in connection with our capital raising activities. General, administrative and other expenses includes occupancy expense, depreciation and amortization, professional fees and costs related to travel, information technology and administration. Occupancy expense represents charges related to office leases and associated expenses, such as utilities and maintenance fees. Depreciation and amortization of fixed assets is normally calculated using the straight-line method over their estimated useful lives, ranging from two to sixteen years, taking into consideration any residual value. Leasehold improvements are amortized over the shorter of the useful life of the asset or the expected term of the lease. Intangible assets are amortized based on the future cash flows over the expected useful lives of the assets.

Other Income (Loss)

Net Gains (Losses) from Investment Activities. ~~The performance of the consolidated Apollo funds has impacted our net gains (losses) from investment activities.~~ Net gains (losses) from investment activities include both realized gains and losses and the change in unrealized gains and losses in our investment portfolio between the opening reporting date and the closing reporting date. Net unrealized gains (losses) are a result of changes in the fair value of unrealized investments and reversal of unrealized gains (losses) due to dispositions of investments during the reporting period. Significant judgment and estimation goes into the assumptions that drive these models and the actual values realized with respect to investments could be materially different from values obtained based on the use of those models. The valuation methodologies applied impact the reported value of investment company holdings and their underlying portfolios in our condensed consolidated financial statements.

Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities. Changes in the fair value of the consolidated VIEs’ assets and liabilities and related interest, dividend and other income and expenses subsequent to consolidation are presented within net gains (losses) from investment activities of consolidated variable interest entities and are attributable to Non-Controlling Interests in the condensed consolidated statements of operations.

Other Income (Losses), Net. Other income (losses), net includes gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities, ~~reversal of a portion~~remeasurement of the tax receivable agreement liability related to the TCJA and other miscellaneous non-operating income and expenses.

Income Taxes. The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. As a result, except as described below, the Apollo Operating Group has not been subject to U.S. income

taxes. However, ~~these~~the U.S. entities, in some cases, are subject to New York City unincorporated business tax (“NYC ~~UBT,~~UBT”), and non-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition, certain consolidated entities are, or are treated as, corporations for U.S. and non-U.S. tax purposes and therefore subject to ~~U.S.~~ federal, state, local and ~~local~~foreign corporate income ~~tax, and the~~tax. The Company's provision for income taxes is accounted for in accordance with U.S. GAAP.

Significant judgment is required in determining ~~tax expense~~the provision for income taxes and in evaluating income tax positions, including evaluating uncertainties. We recognize the income tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained upon examination, including resolutions of any related appeals or litigation, based on the technical merits of the ~~position.~~positions. The tax benefit is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If a tax position is not considered more likely than not to be sustained, then no benefits of the position are recognized. The Company’s income tax positions are reviewed and evaluated quarterly to determine whether or not we have uncertain tax positions that require financial statement ~~recognition.~~recognition or de-recognition.

Deferred tax assets and liabilities are recognized for the expected future tax consequences, using currently enacted tax rates, of differences between the carrying amount of assets and liabilities and their respective tax ~~basis using currently enacted tax rates.~~basis. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Non-Controlling Interests

For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to owners other than Apollo. The aggregate of the income or loss and corresponding equity that is not owned by the Company is included in Non-Controlling Interests in the condensed consolidated financial statements. The Non-Controlling Interests relating to Apollo Global Management, LLC primarily include the ~~53.4%~~50.1% and ~~54.1%~~53.4% ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partners through their limited partner interests in Holdings as of March 31, ~~2017~~2018 and ~~2016,~~2017, respectively. Non-Controlling Interests also include limited partner interests in certain consolidated funds and VIEs.

The authoritative guidance for Non-Controlling Interests in the condensed consolidated financial statements requires reporting entities to present Non-Controlling Interest as equity and provides guidance on the accounting for transactions between an entity and Non-Controlling Interests. According to the guidance, (1) Non-Controlling Interests are presented as a separate component of shareholders’ equity on the Company’s condensed consolidated statements of financial condition, (2) net income (loss) includes the net income (loss) attributable to the Non-Controlling Interest holders on the Company’s condensed consolidated statements of operations, (3) the primary components of Non-Controlling Interest are separately presented in the Company’s condensed consolidated statements of changes in shareholders’ equity to clearly distinguish the interests in the Apollo Operating Group and other ownership interests in the consolidated entities and (4) profits and losses are allocated to Non-Controlling Interests in proportion to their ownership interests regardless of their basis.

Results of Operations

Below is a discussion of our condensed consolidated results of operations for the three months ended March 31, ~~2017~~2018 and ~~2016.~~2017. For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:


												For the Three Months Ended March 31,						Amount Change			Percentage Change
	For the Three Months Ended March 31,						Amount Change			Percentage Change		2018			2017			Amount Change			Percentage Change
	2017			2016			Amount Change			Percentage Change		(in thousands)
Revenues:	(in thousands)
Management fees from related parties	$	269,543		$	233,795		$	35,748		15.3	%
Advisory and transaction fees from related parties, net	15,067			7,999			7,068			88.4
Carried interest income (loss) from related parties	358,941			(120,968		)	479,909			NM
Management fees												$	286,726		$	269,543		$	17,183		6.4	%
Advisory and transaction, net												13,551			15,067			(1,516		)	(10.1	)
Investment income (loss):
Performance allocations												(124,165		)	352,593			(476,758		)	NM
Principal investment income (loss)												(12,994		)	38,553			(51,547		)	NM
Total Investment Income (Loss)												(137,159		)	391,146			(528,305		)	NM
Incentive fees												3,785			6,348			(2,563		)	(40.4	)
Total Revenues	643,551			120,826			522,725			432.6		166,903			682,104			(515,201		)	(75.5	)
Expenses:
Compensation and benefits:
Salary, bonus and benefits	101,613			97,234			4,379			4.5		115,826			101,613			14,213			14.0
Equity-based compensation	23,107			14,002			9,105			65.0		35,525			23,107			12,418			53.7
Profit sharing expense	144,324			(37,605		)	181,929			NM		(12,277		)	144,324			(156,601		)	NM
Total compensation and benefits	269,044			73,631			195,413			265.4
Total Compensation and Benefits												139,074			269,044			(129,970		)	(48.3	)
Interest expense	12,999			7,873			5,126			65.1		13,797			12,999			798			6.1
General, administrative and other	62,040			58,631			3,409			5.8		61,677			62,040			(363		)	(0.6	)
Placement fees	1,905			1,764			141			8.0		327			1,905			(1,578		)	(82.8	)
Total Expenses	345,988			141,899			204,089			143.8		214,875			345,988			(131,113		)	(37.9	)
Other Income (Loss):
Net gains (losses) from investment activities	34,517			(56,469		)	90,986			NM		(67,133		)	34,517			(101,650		)	NM
Net gains from investment activities of consolidated variable interest entities	4,108			1,319			2,789			211.4		6,532			4,108			2,424			59.0
Income (loss) from equity method investments	38,553			(3,817		)	42,370			NM
Interest income	803			585			218			37.3		3,559			803			2,756			343.2
Other income (loss), net	18,647			(253		)	18,900			NM
Other income, net												4,246			18,647			(14,401		)	(77.2	)
Total Other Income (Loss)	96,628			(58,635		)	155,263			NM		(52,796		)	58,075			(110,871		)	NM
Income (loss) before income tax provision	394,191			(79,708		)	473,899			NM		(100,768		)	394,191			(494,959		)	NM
Income tax (provision) benefit	(39,161		)	5,147			(44,308		)	NM
Income tax provision												(8,580		)	(39,161		)	30,581			(78.1	)
Net Income (Loss)	355,030			(74,561		)	429,591			NM		(109,348		)	355,030			(464,378		)	NM
Net (income) loss attributable to Non-Controlling Interests	(209,834		)	41,733			(251,567		)	NM		51,086			(209,834		)	260,920			NM
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)	$	178,024		NM		(58,262		)	145,196			(203,458		)	NM
Net income attributable to Series A Preferred Shareholders												(4,383		)	—			(4,383		)	NM
Net Income (Loss) Attributable to AGM Class A Shareholders												$	(62,645	)	$	145,196		$	(207,841	)	NM


Note:	“NM” denotes not meaningful. Changes from negative to positive amounts and positive to negative amounts are not considered meaningful. Increases or decreases from zero and changes greater than 500% are also not considered meaningful.

Revenues

Our revenues and other income include fixed components that result from measures of capital and asset valuations and variable components that result from realized and unrealized investment performance, as well as the value of successfully completed transactions.

Three Months Ended March 31, ~~2017~~2018 Compared to Three Months Ended March 31, ~~2016~~2017

Management fees ~~from related parties~~ increased by ~~$35.7~~$17.2 million for the three months ended March 31, ~~2017~~2018 as compared to the three months ended March 31, ~~2016.~~2017. This change was primarily attributable to ~~increased~~increases in management fees earned from Athene, EPF III, Apollo ~~European Principal Finance~~Credit Master Fund ~~III,~~Ltd., Apollo Total Return Fund L.P. ~~(“EPF III"), Athene~~ and ~~ANRP II~~Athora of ~~$9.0~~$8.8 million, ~~$8.2~~$6.4 million, $4.9 million, $3.5 million and ~~$4.0~~$2.4 million, respectively, as well as modest increases across most of our other funds and investment vehicles. Management fees earned from EPF III and ANRP II increased as a result of capital raises that occurred after March 31, 2016. This increase was partially offset by decreases in management fees earned ~~with respect to EPF II~~from Fund VI and Apollo Offshore Credit Fund Ltd. of ~~$5.2~~$5.7 million ~~resulting from a step down in fee basis from committed capital to invested capital~~and $4.6 million, respectively, during the three months ended March 31, ~~2017~~2018, as compared to the same period during ~~2016.~~2017. For additional details regarding changes in management fees in each segment, see “—Segment Analysis” below.

Advisory and transaction fees, ~~from related parties,~~ net, ~~increased~~decreased by ~~$7.1~~$1.5 million for the three months ended March 31, ~~2017~~2018 as compared to the three months ended March 31, ~~2016.~~2017. This change was primarily attributable to ~~an increase~~decreases in net advisory and transaction fees earned with respect to Fund VIII’s portfolio companies and certain sub-advisory arrangements of ~~$9.2~~$2.4 million, respectively, partially offset by ~~decreases~~an increase in net advisory and transaction fees earned with respect to ~~FCI II~~ANRP II’s portfolio companies of ~~$2.2~~$1.3 million during the three months ended March 31, ~~2017~~2018 as compared to the same period during ~~2016.~~2017.

~~Carried interest income from related parties increased by $479.9~~Performance allocations were $(124.2) million for the three months ended March 31, ~~2017~~2018 as compared to performance allocations of $352.6 million for the three months ended March 31, 2017. This change was primarily attributable to decreased performance allocations earned from our private equity funds of $485.3 million, offset by increased performance allocations earned from our credit funds of $10.7 million during the three months ended March 31, 2018 as compared to the same period in 2017. For additional details regarding changes in performance allocations in each segment, see “—Segment Analysis” below.

Principal investment loss was $13.0 million for the three months ended March 31, 2018, as compared to principal investment income of $38.6 million for the three months ended March 31, 2017. This change was primarily driven by decreases in the value of investments held by certain Apollo funds and other entities in which the Company has a direct interest, mainly with respect to Fund VIII and AAA of $38.6 million and $5.7 million, respectively, during the three months ended March 31, 2018 as compared to the same period in 2017.

Incentive fees decreased by $2.6 million for the three months ended March 31, 2018 as compared to the three months ended March 31, ~~2016. This change was~~2017, primarily attributable to ~~increased carried interest income earned~~a decrease in incentive fees recognized from ~~our private equity and credit funds~~a strategic investment account of ~~$465.4~~$3.0 million ~~and $13.3 million, respectively,~~ during the three months ended March 31, ~~2017~~2018 as ~~compared~~a result of adoption of the revenue recognition standard effective January 1, 2018. See note 2 to the ~~same period in 2016. For additional details~~condensed consolidated financial statements for further information regarding ~~changes in carried interest income in each segment, see “—Segment Analysis” below.~~adoption of the revenue recognition standard.

Expenses

Three Months Ended March 31, ~~2017~~2018 Compared to Three Months Ended March 31, ~~2016~~2017

Compensation and benefits ~~increased~~decreased by ~~$195.4~~$130.0 million for the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016.~~2017. This change was primarily attributable to ~~an increase~~a decrease in profit sharing expense of ~~$181.9~~$156.6 million due to ~~increased carried interest income~~decreased performance revenues during the three months ended March 31, ~~2017,~~2018, as compared to the same period in ~~2016.~~2017. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating ~~carried interest~~performance allocations in the period. This decrease was partially offset by an increase in salary, bonus and benefits of $14.2 million during the three months ended March 31, 2018, as compared to the same period in 2017 primarily due to increased headcount. In addition, equity-based compensation increased $12.4 million primarily attributable to a grant of RSUs under our omnibus equity incentive plan during the three months ended March 31, 2018 (see note 11 to the condensed consolidated financial statements).

Included in profit sharing expense is ~~$18.0~~$15.5 million and ~~$18.5~~$18.0 million for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively, related to a ~~performance based~~performance-based incentive arrangement for certain Apollo partners and employees designed to more closely align compensation on an annual basis with the overall realized performance of the Company (referred to herein as the “Incentive Pool”). ~~Allocations to participants in the Incentive Pool contain both a fixed component and a discretionary component, each of which may vary year to year.~~ The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period. See “—~~Critical Accounting Policies—~~Profit Sharing Expense” in the Critical Accounting Policies section for an overview of the Incentive Pool.

Interest expense increased ~~$5.1~~by $0.8 million for the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016~~2017 primarily as a result of the issuance of the ~~2026~~2048 Senior Notes in ~~May 2016,~~March 2018, as described in note 9 to our condensed consolidated financial statements.

~~General, administrative and other expense increased~~Placement fees decreased by ~~$3.4~~$1.6 million for the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016 as a result~~2017. This change was primarily driven by placement fees incurred in connection with capital raising activity relating to EPF III of increased professional fees as well as new fund organizational expenses related to the launch of Apollo Investment Fund IX, L.P. (together with its parallel funds and alternative investment vehicles, “Fund IX”) incurred$1.4 million during the three months ended March 31, ~~2017, as compared~~2017. Placement fees are incurred in connection with raising capital for new and existing funds. The fees are normally payable to ~~the same period~~placement agents, who are third parties that assist in ~~2016.~~identifying potential investors, securing commitments to invest from such potential investors, preparing or revising offering marketing materials, developing strategies for attempting to secure investments by potential investors and/or providing feedback and insight regarding issues and concerns of potential investors.

Other Income ~~(Loss)~~

Three Months Ended March 31, ~~2017~~2018 Compared to Three Months Ended March 31, ~~2016~~2017

Net losses from investment activities were $67.1 million for the three months ended March 31, 2018, as compared to net gains from investment activities ~~was~~of $34.5 million for the three months ended March 31, ~~2017, as compared~~2017. This change was primarily attributable to ~~net losses from~~a loss on the Company’s investment ~~activities of $56.5 million for~~in Athene Holding during the three months ended March 31, ~~2016. This change was primarily attributable to an increase~~2018, as compared a gain in the fair value of the Company’s investment in Athene Holding during the three months ended March 31, ~~2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower valuations of publicly traded comparable companies.~~2017. See note 56 to the condensed consolidated financial statements for further information regarding the Company’s investment in ~~Athene.~~Athene Holding.

~~Income~~Net gains from ~~equity method investments was $38.6~~investment activities of consolidated VIEs increased by $2.4 million for the three months ended March 31, ~~2017,~~2018, as compared to ~~a loss~~the three months ended March 31, 2017. See note 5 to the condensed consolidated financial statements for details regarding net gains from ~~equity method investments~~investment activities of ~~$3.8~~consolidated VIEs.

Interest income increased by $2.8 million for the three months ended March 31, 2016. The increase of $42.4 million was primarily driven by increases in the value of investments held by certain Apollo funds and other entities in which the Company has a direct interest, mainly with respect2018, as compared to ~~AAA, Fund VIII, Fund VII, MidCap and ANRP II of $14.9 million, $9.5 million, $5.5 million, $2.3 million and $2.0 million, respectively, during~~ the three months ended March 31, 2017 ~~as compared~~primarily due to ~~the same period in 2016.~~additional interest income earned from money market funds and U.S. Treasury securities held after March 31, 2017.

Other income, net ~~was $18.6~~decreased by $14.4 million for the three months ended March 31, ~~2017,~~2018, as compared to ~~other loss, net of $0.3 million for~~ the three months ended March 31, ~~2016. The increase of $18.9 million~~2017. This change was primarily attributable to insurance proceeds of $17.5 million received during the three months ended March 31, 2017 in connection with fees and expenses relating to a legal proceeding. This change was partially offset by income of $3.8 million recognized in connection with the assignment of a CLO collateral management agreement during the three months ended March 31, 2018.

Net Income Attributable to Non-Controlling Interests and Series A Preferred Shareholders

For information related to net income attributable to Non-Controlling Interests and net income attributable to Series A preferred shareholders, see note 12 to the condensed consolidated financial statements.

Income Tax Provision

The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. As a result, only a portion of the income we earn is subject to corporate-level tax in the United States and foreign jurisdictions. The provision for income taxes includes federal, state and local income taxes in the United States and foreign income taxes.

Three Months Ended March 31, ~~2017~~2018 Compared to Three Months Ended March 31, ~~2016~~2017

The income tax provision ~~was $39.2~~decreased by $30.6 million for the three months ended March 31, ~~2017,~~2018, as compared to ~~an income tax benefit of $5.1 million for~~ the three months ended March 31, ~~2016.~~2017. The ~~increase of $44.3 million~~decrease was ~~primarily~~ due to the following: i) reduction in the federal corporate income tax rate from 35% to 21% as a result of legislative reforms in the TCJA enacted on December 22, 2017, ii) a decrease in pre-tax GAAP net income during the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 and iii) an overall change in the mix of earnings ~~which~~when comparing the amount of earnings that are subject to corporate-level taxation ~~as well as an increase in Fee Related Earnings~~to those earnings that are not subject to corporate-level ~~taxation.~~tax as these earnings are passed through to Non-Controlling Interests and Class A shareholders. The provision for income taxes includes federal, state, ~~and~~ local ~~income taxes in the United States~~ and foreign income taxes atresulting in an effective income tax rate of ~~9.9%~~(8.5)% and ~~6.5%~~9.9% for the three months ended March 31, ~~2017~~2018 and ~~2016,~~2017, respectively. The most significant reconciling items between our U.S. federal statutory income tax rate and our effective income tax rate were due to the following: (i) income passed through to Non-Controlling Interests; (ii) income passed through to Class A shareholders; and (iii) state and local income taxes including NYC UBT (see note 8 to the condensed consolidated financial statements for further details regarding the Company’s income tax provision).

~~Non-Controlling Interests~~

~~Net income attributable to Non-Controlling Interests in the Apollo Operating Group consisted of the following:~~

For the Three Months Ended March 31,
2017 2016
(in thousands)
Net income (loss) $ 355,030
$ (74,561 )
Net income attributable to Non-Controlling Interests in consolidated entities (3,384 ) (2,035 )
Net income (loss) after Non-Controlling Interests in consolidated entities 351,646
(76,596 )
Adjustments:
Income tax provision (benefit)⁽¹⁾
39,161
(5,147 )
NYC UBT and foreign tax provision (benefit)⁽²⁾
(5,395 ) 951
Net loss in non-Apollo Operating Group entities 2
20
Total adjustments 33,768
(4,176 )
Net income (loss) after adjustments 385,414
(80,772 )
Approximate weighted average ownership percentage of Apollo Operating Group 53.6 % 54.2 %
Net income (loss) attributable to Non-Controlling Interests in Apollo Operating Group $ 206,450
$ (43,768 )


~~(1)~~	Reflects all taxes recorded in our condensed consolidated statements of operations. Of this amount, U.S. federal, state, and local corporate income taxes attributable to APO Corp. are added back to income of the Apollo Operating Group before calculating Non-Controlling Interests as the income allocable to the Apollo Operating Group is not subject to such taxes.


~~(2)~~	Reflects NYC UBT and foreign taxes that are attributable to the Apollo Operating Group and its subsidiaries related to its operations in the U.S. as partnerships and in non-U.S. jurisdictions as corporations. As such, these amounts are considered in the income attributable to the Apollo Operating Group.

Segment Analysis

Discussed below are our results of operations for each of our reportable segments. They represent the segment information available and utilized by our executive management, which consists of our Managing Partners, who operate collectively as our chief operating decision maker, to assess performance and to allocate resources. Management divides its operations into three reportable segments: credit, private equity ~~credit~~ and real ~~estate.~~assets. These segments were established based on the nature of investment activities in each underlying fund, including the specific type of investment made and the level of control over the investment. Segment results represent segment income (loss) before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent consideration and certain other charges associated with acquisitions. In addition, segment results exclude non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, as well as the assets, liabilities and operating results of the funds and VIEs that are included in the condensed consolidated financial statements.

Our financial results vary, since ~~carried interest,~~performance fees, which generally ~~constitutes~~constitute a large portion of the income from the funds that we manage, as well as the transaction and advisory fees that we receive, can vary significantly from quarter to quarter and year to year. As a result, we emphasize long-term financial growth and profitability to manage our business.

Credit

The following table sets forth our segment statement of operations information and EI within our credit segment.



	For the Three Months Ended March 31,						Total Change			Percentage Change
	2018			2017			Total Change			Percentage Change
	(in thousands)
Credit:
Revenues:
Management fees	$	183,070		$	158,342		$	24,728		15.6	%
Advisory and transaction fees, net	2,348			2,556			(208		)	(8.1	)
Performance fees⁽¹⁾
Unrealized	27,711			6,322			21,389			338.3
Realized	15,057			30,936			(15,879		)	(51.3	)
Total performance fees	42,768			37,258			5,510			14.8
Principal investment income	5,409			6,483			(1,074		)	(16.6	)
Total Revenues	233,595			204,639			28,956			14.1
Expenses:
Compensation and benefits:
Salary, bonus and benefits	61,074			54,882			6,192			11.3
Equity-based compensation	9,727			9,102			625			6.9
Profit sharing expense:
Unrealized	15,713			2,215			13,498			NM
Realized	6,602			13,445			(6,843		)	(50.9	)
Equity-based	1,791			287			1,504			NM
Total profit sharing expense	24,106			15,947			8,159			51.2
Total compensation and benefits	94,907			79,931			14,976			18.7
Non-compensation expenses
General, administrative and other	33,135			32,090			1,045			3.3
Placement fees	276			1,770			(1,494		)	(84.4	)
Total non-compensation expenses	33,411			33,860			(449		)	(1.3	)
Total Expenses	128,318			113,791			14,527			12.8
Other Income (Loss):
Net gains (losses) from investment activities	(55,267		)	31,094			(86,361		)	NM
Net interest loss	(4,971		)	(6,522		)	1,551			(23.8	)
Other income, net	3,946			811			3,135			386.6
Total Other Income (Loss)	(56,292		)	25,383			(81,675		)	NM
Non-Controlling Interest	(1,215		)	(934		)	(281		)	30.1
Economic Income	$	47,770		$	115,297		$	(67,527	)	(58.6	)%


(1)	Performance fees includes performance allocations and incentive fees.

Revenues

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Management fees increased by $24.7 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to increases in management fees earned from Athene, EPF III, Apollo Total Return Fund L.P. and Athora of $8.8 million, $6.4 million, $3.5 million and $2.4 million, respectively, during the three months ended March 31, 2018, as compared to the same period during 2017.

Performance fees increased by $5.5 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to increases in performance fees earned from FCI III and EPF II of $6.3 million and $4.9 million, respectively, partially offset by a decrease in performance fees earned from SCRF III of $3.6 million during the three months ended March 31, 2018, as compared to the same period during 2017.

The increase in performance fees earned from FCI III was due to higher valuations of the fund’s life settlements portfolio during the three months ended March 31, 2018. The increase in performance fees earned from EPF II was due to higher than expected realizations of UK hotel assets in the fund’s portfolio during the three months ended March 31, 2018 as compared to the same period in 2017. The decrease in performance fees related to SCRF III was attributable to performance fees being generated at a slower rate as the fund unwound its portfolio during the three months ended March 31, 2018.

Principal investment income decreased by $1.1 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily driven by decreases in income from Apollo’s equity ownership interest in COF III during the three months ended March 31, 2018, as compared to the same period in 2017.

Expenses

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Compensation and benefits expense increased by $15.0 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to an increase in profit sharing expense of $8.2 million during the three months ended March 31, 2018, as compared to the same period in 2017, as a result of a corresponding increase in performance fees as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating performance fees in the period. Profit sharing expense also increased as a result of a grant of RSUs under our omnibus equity incentive plan during the three months ended March 31, 2018 (see note 11 to the condensed consolidated financial statements). In addition, the change was attributable to an increase in salary, bonus and benefits of $6.2 million during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017 primarily due to increased headcount.

Included in profit sharing expense is $0.9 million and $2.5 million related to the Incentive Pool for the three months ended March 31, 2018 and 2017, respectively. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period.

Placement fees decreased by $1.5 million during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily driven by placement fees incurred in connection with capital raising activity relating to EPF III of $1.4 million during the three months ended March 31, 2017.

Other Income (Loss)

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Net losses from investment activities was $55.3 million for the three months ended March 31, 2018, as compared to net gains from investment activities of $31.1 million for the three months ended March 31, 2017. This change was primarily attributable to a loss on the Company’s investment in Athene Holding during the three months ended March 31, 2018, as compared a gain on the Company’s investment in Athene Holding during the three months ended March 31, 2017. See note 6 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene Holding.

Net interest loss decreased by $1.6 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017, primarily due to additional interest income earned from money market funds and U.S. Treasury securities held after March 31, 2017.

Other income, net increased by $3.1 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to income of $3.8 million recognized from the assignment of a CLO collateral management agreement during the three months ended March 31, 2018.

Non-Controlling Interests

For information related to Non-Controlling Interests, see note 12 to the condensed consolidated financial statements for further details.

Private Equity

The following table sets forth our segment statement of operations information and our supplemental performance measure, EI, within our private equity ~~segment for the three months ended March 31, 2017 and 2016 Prior period financial data has been updated to conform to the current presentation.~~segment.


	For the Three Months Ended March 31,						Total Change				Percentage Change		For the Three Months Ended March 31,						Total Change			Percentage Change
	2017			2016						2018				2017
	(in thousands)														(in thousands)
Private Equity:
Revenues:
Management fees from related parties	$	77,398		$	74,918		$	2,480			3.3	%
Advisory and transaction fees from related parties, net	11,772			2,713			9,059				333.9
Carried interest income (loss) from related parties:
Management fees													$	71,160		$	77,398		$	(6,238	)	(8.1	)%
Advisory and transaction fees, net													10,598			11,772			(1,174		)	(10.0	)
Performance fees⁽¹⁾
Unrealized⁽¹⁾	163,619			(146,335		)	309,954				NM		(445,468		)	163,619			(609,087		)	NM
Realized	155,461			—			155,461				NM		279,275			155,461			123,814			79.6
Total carried interest income (loss) from related parties	319,080			(146,335		)	465,415				NM
Total performance fees													(166,193		)	319,080			(485,273		)	NM
Principal investment income (loss)													(17,531		)	31,728			(49,259		)	NM
Total Revenues	408,250			(68,704		)	476,954				NM		(101,966		)	439,978			(541,944		)	NM
Expenses:
Compensation and benefits:
Salary, bonus and benefits	31,469			32,074			(605		)		(1.9	)	35,021			31,469			3,552			11.3
Equity-based compensation	7,095			7,385			(290		)		(3.9	)	6,772			7,095			(323		)	(4.6	)
Profit sharing expense:
Unrealized	55,016			(57,374		)	112,390				NM		(137,633		)	55,016			(192,649		)	NM
Realized	75,252			—			75,252				NM		102,082			75,252			26,830			35.7
Equity-based													12,601			—			12,601			NM
Total profit sharing expense	130,268			(57,374		)	187,642				NM		(22,950		)	130,268			(153,218		)	NM
Total compensation and benefits	168,832			(17,915		)	186,747				NM		18,843			168,832			(149,989		)	(88.8	)
Non-compensation expenses:
General, administrative and other	17,360			15,731			1,629				10.4		15,098			17,360			(2,262		)	(13.0	)
Placement fees	134			994			(860		)		(86.5	)	51			134			(83		)	(61.9	)
Total non-compensation expenses	17,494			16,725			769				4.6		15,149			17,494			(2,345		)	(13.4	)
Total Expenses	186,326			(1,190		)	187,516				NM		33,992			186,326			(152,334		)	(81.8	)
Other Income (Loss):
Income (loss) from equity method investments	31,728			(5,483		)	37,211				NM
Net gains (losses) from investment activities	3,396			(4,106		)	7,502				NM		(11,877		)	3,396			(15,273		)	NM
Net interest loss	(4,242		)	(2,428		)	(1,814		)		74.7		(3,927		)	(4,242		)	315			(7.4	)
Other income (loss), net	17,790			(124		)	17,914				NM
Other income, net													251			17,790			(17,539		)	(98.6	)
Total Other Income (Loss)	48,672			(12,141		)	60,813				NM		(15,553		)	16,944			(32,497		)	NM
Economic Income (Loss)	$	270,596		$	(79,655	)	$	350,251			NM		$	(151,511	)	$	270,596		$	(422,107	)	NM

(1)

~~Included in unrealized carried interest income (loss) from related parties for the three months ended March 31, 2017~~Performance fees includes performance allocations and 2016 was a reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income. See note 13 to our condensed consolidated financial statements for further detail regarding the general partner obligation.incentive fees.

Revenues

Three Months Ended March 31, ~~2017~~2018 Compared to Three Months Ended March 31, ~~2016~~2017

Management fees ~~from related parties increased~~decreased by ~~$2.5~~$6.2 million for the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016.~~2017. This change was primarily attributable to ~~an increase~~a decrease in management fees earned with respect to ~~ANRP II~~Fund VI of ~~$4.0~~$5.7 million during the three months ended March 31, ~~2017~~2018 as compared to the three months ended March 31, ~~2016 as a result~~2017. The decrease in management fees earned from Fund VI resulted from the termination of ~~capital raises for~~ the ~~fund that occurred after March 31, 2016.~~fund’s management fee agreement.

Advisory and transaction fees, ~~from related parties,~~ net ~~increased~~decreased by ~~$9.1~~$1.2 million for the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016.~~2017. This change was primarily attributable to ~~an increase~~a decrease in net advisory and transaction fees earned with respect to Fund VIII’s portfolio companies of ~~$9.2~~$2.4 million, partially offset by an increase in net advisory and transaction fees earned with respect to ANRP II’s portfolio companies of $1.3 million during the three months ended March 31, ~~2017~~2018, as compared to the same period during 2017.

Performance fees were $(166.2) million for the three months ended March 31, 2018, as compared to performance fees of $319.1 million for the three months ended March 31, 2017. This change was primarily attributable to decreases in performance fees earned from Fund VIII, ANRP I and Fund VI of $324.4 million, $41.8 million and $39.4 million, respectively, during the three months ended March 31, 2018 as compared to the three months ended March 31, ~~2016.~~2017. The decrease in performance fees earned from Fund VIII and Fund VI was primarily driven by depreciation in value in the funds’ public portfolio companies. The decrease in performance fees earned from ANRP I was primarily driven by depreciation in value in the fund’s private portfolio companies.

~~Carried interest income from related parties~~Principal investment loss was ~~$319.1~~$17.5 million for the three months ended March 31, ~~2017,~~2018, as compared to ~~carried interest loss~~principal investment income of ~~$146.3~~$31.7 million for the three months ended March 31, ~~2016.~~2017. This ~~increase of $465.4 million~~

change was primarily attributable to ~~increases~~decreases in ~~carried~~income from Apollo’s equity ownership interest ~~income earned from~~in Fund VIII ~~Fund VII, AAA/Other~~ and ~~Fund VI~~AAA of ~~$153.9 million, $90.4 million, $90.3~~$38.6 million and ~~$69.0~~$5.8 million, respectively, during the three months ended March 31, 2018, as compared to the same period in 2017.

Expenses

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Compensation and benefits expense decreased by $150.0 million for the three months ended March 31, 2018 as compared to the three months ended March 31, ~~2016. The increase in carried interest income earned from Fund VIII~~2017. This change was primarily ~~driven by the fund being above its priority return threshold as~~attributable to a decrease in profit sharing expense of March 31, 2017 and the fund being below its priority return threshold as of March 31, 2016. The increase in carried interest income earned from Fund VII was primarily driven by appreciation in the value of its privately held portfolio companies. AAA/Other’s increase in carried interest income was driven by appreciation in the value of its investment in Athene. The increase in carried interest income earned from Fund VI was primarily driven by appreciation in value in the fund’s public portfolio companies.

~~Expenses~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

~~Compensation and benefits expense increased by $186.7~~$153.2 million ~~for~~during the three months ended March 31, ~~2017~~2018, as compared to the ~~three months ended March 31, 2016. This change was primarily attributable to an increase~~same period in ~~profit sharing expense of $187.6 million~~2017, as a result of a corresponding ~~increase~~decrease in ~~carried interest income~~performance fees as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating ~~carried interest~~performance fees in the period. This change was partially offset by an increase in equity-based profit sharing expense as a result of a grant of RSUs under our omnibus equity incentive plan during the three months ended March 31, 2018 (see note 11 to the condensed consolidated financial statements).

Included in profit sharing expense is $14.1 million and $15.5 million related to the Incentive Pool for the three months ended March 31, 2018 and 2017, respectively. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period.

General, administrative and other decreased by $2.3 million during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The change was primarily driven by new fund organizational expenses related to the launch of Fund IX incurred during the three months ended March 31, 2017.

Other Income (Loss)

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Net losses from investment activities were $11.9 million for the three months ended March 31, 2018, as compared to net gains from investment activities of $3.4 million for the three months ended March 31, 2017. This change was primarily attributable to a loss on the Company’s investment in Athene Holding during the three months ended March 31, 2018, as compared a gain on the Company’s investment in Athene Holding during the three months ended March 31, 2017. See note 6 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene Holding.

Other income, net decreased by $17.5 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to insurance proceeds of $17.5 million received during the three months ended March 31, 2017 in connection with fees and expenses relating to a legal proceeding.

Real Assets

The following table sets forth our segment statement of operations information and EI within our real assets segment.



	For the Three Months Ended March 31,						Total Change			Percentage Change
	2018			2017			Total Change			Percentage Change
	(in thousands)
Real Assets:
Revenues:
Management fees	$	17,973		$	16,313		$	1,660		10.2	%
Advisory and transaction fees, net	48			739			(691		)	(93.5	)
Performance fees⁽¹⁾
Unrealized	(2,665		)	2,604			(5,269		)	NM
Realized	3,126			64			3,062			NM
Total performance fees	461			2,668			(2,207		)	(82.7	)
Principal investment income (loss)	(482		)	1,003			(1,485		)	NM
Total Revenues	18,000			20,723			(2,723		)	(13.1	)
Expenses:
Compensation and benefits:
Salary, bonus and benefits	10,436			8,370			2,066			24.7
Equity-based compensation	859			548			311			56.8
Profit sharing expense:
Unrealized	(1,091		)	2,034			(3,125		)	NM
Realized	1,586			26			1,560			NM
Equity-based	249			—			249			NM
Total profit sharing expense	744			2,060			(1,316		)	(63.9	)
Total compensation and benefits	12,039			10,978			1,061			9.7
Non-compensation expenses:
General, administrative and other	6,142			4,482			1,660			37.0
Placement fees	—			—			—			NM
Total non-compensation expenses	6,142			4,482			1,660			37.0
Total Expenses	18,181			15,460			2,721			17.6
Other Loss:
Net income from investment activities	7			—			7			NM
Net interest loss	(1,043		)	(1,224		)	181			(14.8	)
Other income, net	63			63			—			—
Total Other Loss	(973		)	(1,161		)	188			(16.2	)
Economic Income (Loss)	$	(1,154	)	$	4,102		$	(5,256	)	NM


(1)	Performance fees includes performance allocations and incentive fees.

Revenues

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Management fees increased by $1.7 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to an increase in management fees earned with respect to ARI of $1.5 million during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017, in connection with capital raises for the vehicle after March 31, 2017.

Performance fees decreased by $2.2 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to decreases in performance fees earned from U.S. RE Fund II and U.S. RE Fund I of $1.4 million and $1.1 million, respectively, during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The decrease in performance fees earned from U.S. RE Fund II was primarily due to the appreciation of a leisure asset during the three months ended March 31, 2017, that did not recur during the three months ended March 31, 2018. Performance fees earned from U.S. RE Fund I was generated at a slower rate as the fund continued to unwind during the three months ended March 31, 2018.

Principal investment loss was $0.5 million for the three months ended March 31, 2018, as compared principal investment income of $1.0 million for the three months ended March 31, 2017. This change was driven by decreases in the income

from Apollo’s equity ownership interest in U.S. RE Fund I and ARI of $1.0 million and $0.4 million, respectively, during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017.

Expenses

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Compensation and benefits increased by $1.1 million for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This change was primarily attributable to an increase in salary, bonus and benefits of $2.1 million during the three months ended March 31, 2018, as compared to the same period during 2017 primarily due to increased headcount. In addition, the change was attributable to an increase in equity-based compensation of $0.3 million during the three months ended March 31, 2018, as compared to the same period during 2017. These increases were partially offset by a decrease in profit sharing expense of $1.3 million during the three months ended March 31, 2018, as compared to the same period in 2017, as a result of a corresponding decrease in performance fees as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating performance fees in the period.

Included in profit sharing expense is $0.5 million related to the Incentive Pool for the three months ended March 31, 2018. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period.

General, administrative and other increased by ~~$1.6~~$1.7 million during the three months ended March 31, ~~2017,~~2018, as compared to the three months ended March 31, ~~2016. This change was primarily driven by new fund organizational expenses related to the launch of Fund IX incurred during the three months ended March 31,~~ 2017.

Placement fees decreased by $0.9 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily driven by a decrease in placement fees incurred in connection with capital raising activity relating to ANRP II of $0.8 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

~~Other Income (Loss)~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

Income from equity method investments was $31.7 million for the three months ended March 31, 2017, as compared to a loss from equity method investments of $5.5 million for the three months ended March 31, 2016. The increase of $37.2 million was driven by increases in income from Apollo’s equity ownership interest in AAA, Fund VIII and Fund VII of $14.9 million, $9.5 million and $5.5 million, respectively, as well as modest increases across most of our other equity method investments during the three months ended March 31, 2017, as compared to the same period in 2016.

Net gains from investment activities was $3.4 million for the three months ended March 31, 2017, as compared to net losses from investment activities of $4.1 million for the three months ended March 31, 2016. This change was primarily attributable to an increase in ~~the fair value of the Company’s investment in Athene~~professional fees during the three months ended March 31, 2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower valuations of publicly traded comparable companies. See note 5 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene.

Net interest loss increased by $1.8 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016, primarily due to additional interest expense incurred during the three months ended March 31, 2017 primarily as a result of the issuance of the 2026 Senior Notes in May 2016, as described in note 9 to our condensed consolidated financial statements.

Other income, net was $17.8 million for the three months ended March 31, 2017, as compared to other loss, net of $0.1 million for the three months ended March 31, 2016. The increase of $17.9 million was primarily attributable to insurance proceeds received during the three months ended March 31, 2017 in connection with fees and expenses relating to a legal proceeding.

~~Credit~~

The following table sets forth segment statement of operations information and EI within our credit segment for the three months ended March 31, 2017 and 2016. Prior period financial data has been updated to conform to the current presentation.

For the Three Months Ended March 31, Total Change Percentage Change
2017 2016
(in thousands)
Credit:
Revenues:
Management fees from related parties $ 158,342
$ 142,511
$ 15,831
11.1 %
Advisory and transaction fees from related parties, net 2,556
4,410
(1,854 ) (42.0 )
Carried interest income (loss) from related parties:
Unrealized⁽¹⁾
6,322
(21,179 ) 27,501
NM
Realized 30,936
45,152
(14,216 ) (31.5 )
Total carried interest income from related parties 37,258

23,973
13,285
55.4
Total Revenues 198,156
170,894
27,262
16.0
Expenses:
Compensation and benefits:
Salary, bonus and benefits 54,882
51,612
3,270
6.3
Equity-based compensation 9,102
8,560
542
6.3
Profit sharing expense:
Unrealized 2,215
(9,137 ) 11,352
NM
Realized 13,445
30,561
(17,116 ) (56.0 )
Realized: Equity-based 287
—
287
NM
Total profit sharing expense 15,947
21,424
(5,477 ) (25.6 )
Total compensation and benefits 79,931
81,596
(1,665 ) (2.0 )
Non-compensation expenses
General, administrative and other 32,090
30,486
1,604
5.3
Placement fees 1,770
707
1,063
150.4
Total non-compensation expenses 33,860
31,193
2,667
8.5
Total Expenses 113,791
112,789
1,002
0.9
Other Income (Loss):
Income from equity method investments 6,483
848
5,635
NM
Net gains (losses) from investment activities 31,094
(52,393 ) 83,487
NM
Net interest loss (6,522 ) (3,655 ) (2,867 ) 78.4
Other income (loss), net 811
(408 ) 1,219
NM
Total Other Income (Loss) 31,866
(55,608 ) 87,474
NM
Non-Controlling Interest (934 ) (2,385 ) 1,451
(60.8 )
Economic Income $ 115,297
$ 112
$ 115,185
NM

~~(1)~~

Included in unrealized carried interest income (loss) from related parties for the three months ended March 31, 2017 and 2016 was a reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income. See note 13 to our condensed consolidated financial statements for further detail regarding the general partner obligation.

~~Revenues~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

Management fees from related parties increased by $15.8 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to increases in management fees earned from EPF III, Athene and SCRF III of $9.0 million, $8.2 million and $1.7 million, respectively. Management fees earned from EPF III increased as a result of capital raises that occurred after March 31, 2016. This increase was partially offset by a decrease in management fees earned from EPF II of $5.2 million resulting from a step down in fee basis from committed capital to invested capital during the three months ended March 31, 2017, as compared to the same period during 2016.

Advisory and transaction fees from related parties, net, decreased by $1.9 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This decrease was primarily driven by a decrease in net advisory and transaction fees from FCI II of $2.2 million during the three months ended March 31, 2017, as compared to the same period during 2016.

Carried interest income from related parties increased by $13.3 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to increases in carried interest income earned from EPF II and Apollo Strategic Value Fund, L.P. (“SVF”) of $20.8 million and $6.7 million, respectively, during the three months ended March 31, 2017,2018 as compared to the same period in 2016. This was offset by decreases in carried interest income earned from a permanent capital vehicle and FCI II of $8.2 million and $7.6 million, respectively, during the three months ended March 31, 2017, as compared to the same period during 2016.

The increase in carried interest income earned from EPF II was primarily attributable to appreciation on the fund’s European commercial real estate portfolio as well as appreciation of certain of the fund’s shipping investments during the three months ended March 31, 2017. Carried interest losses with respect to EPF II during the three months ended 2016 were a result of the fund’s performance not exceeding the growth in preferred return requirements. There was minimal carried interest income earned from SVF during the three months ended March 31, 2017 as the fund went into liquidation, compared to carried interest losses earned from SVF during the three months ended March 31, 2016. Carried interest income earned from the permanent capital vehicle decreased during the three months ended March 31, 2017 as compared to the same period in 2016 as a result of a reserve taken on certain receivables during the three months ended March 31, 2017. The decrease in carried interest income earned from FCI II was primarily attributable to appreciation of the fund’s portfolio of opportunistic life asset investments as a result of a favorable increase in discount rates during the three months ended March 31, 2016 that did not recur in the current period.

~~Expenses~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

Compensation and benefits expense decreased by $1.7 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to a decrease in profit sharing expense of $5.5 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. Included in profit sharing expense is $2.5 million and $16.9 million related to the Incentive Pool for the three months ended March 31, 2017 and 2016, respectively. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular quarter. The decrease in the Incentive Pool was offset by an increase related to the profit sharing expense as a result of the corresponding increase in carried interest income as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds that are generating carried interest in the period. The decrease in profit sharing expense was partially offset by an increase in salary, bonus and benefits of $3.3 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

General, administrative and other increased by $1.6 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. The change was primarily driven by an increase in professional fees and research service expenses during the three months ended March 31, 2017, as compared to the same period in 2016.

Placement fees increased by $1.1 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily driven by placement fees incurred in connection with capital raising activity relating to EPF III of $1.4 million during the three months ended March 31, 2017.

~~Other Income~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

Income from equity method increased by $5.6 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This increase was driven by increases in income from Apollo’s equity ownership interest in MidCap, COF III, AINV and EPF II of $2.3 million, $1.4 million, $1.4 million and $0.5 million, respectively, during the three months ended March 31, 2017, as compared to the same period in 2016.

Net gains from investment activities was $31.1 million for the three months ended March 31, 2017, as compared to net losses from investment activities of $52.4 million for the three months ended March 31, 2016. This change was primarily attributable to an increase in the fair value of the Company’s investment in Athene during the three months ended March 31, 2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower

~~valuations of publicly traded comparable companies. See note 5 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene.~~

Net interest loss increased by $2.9 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016, primarily due to additional interest expense incurred during the three months ended March 31, 2017 primarily as a result of the issuance of the 2026 Senior Notes in May 2016, as described in note 9 to our condensed consolidated financial statements.

Other income, net was $0.8 million for the three months ended March 31, 2017, as compared to other loss, net of $0.4 million for the three months ended March 31, 2016. This change was primarily driven by foreign exchange gains during the three months ended March 31, 2017, compared to foreign exchange losses during the three months ended March 31, 2016.

~~Real Estate~~

The following table sets forth our segment statement of operations information and EI within our real estate segment for the three months ended March 31, 2017 and 2016. Prior period financial data has been updated to conform to the current presentation.

For the Three Months Ended March 31, Total Change Percentage Change
2017 2016
(in thousands)
Real Estate:
Revenues:
Management fees from related parties $ 16,313
$ 13,504
$ 2,809
20.8 %
Advisory and transaction fees from related parties, net 739
876
(137 ) (15.6 )
Carried interest income (loss) from related parties:
Unrealized 2,604
(3,377 ) 5,981
NM
Realized 64
4,771
(4,707 ) (98.7 )
Total carried interest income from related parties 2,668
1,394
1,274
91.4
Total Revenues 19,720
15,774
3,946
25.0
Expenses:

Compensation and benefits:

Salary, bonus and benefits 8,370
8,684
(314 ) (3.6 )
Equity-based compensation 548
775
(227 ) (29.3 )
Profit sharing expense:
Unrealized 2,034
(1,171 ) 3,205
NM
Realized 26
3,628
(3,602 ) (99.3 )
Total profit sharing expense 2,060
2,457
(397 ) (16.2 )
Total compensation and benefits 10,978
11,916
(938 ) (7.9 )
Non-compensation expenses:
General, administrative and other 4,482
6,144
(1,662 ) (27.1 )
Total non-compensation expenses 4,482
6,144
(1,662 ) (27.1 )
Total Expenses 15,460
18,060
(2,600 ) (14.4 )
Other Loss:
Income from equity method investments 1,003
776
227
29.3
Net interest loss (1,224 ) (808 ) (416 ) 51.5
Other income (loss), net 63
(29 ) 92
NM
Total Other Loss (158 ) (61 ) (97 ) 159.0
Economic Income (Loss) $ 4,102
$ (2,347 ) $ 6,449
NM

~~Revenues~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

Management fees from related parties increased by $2.8 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to increases in management fees earned with respect to ARI, Apollo Asia Real Estate Fund, L.P. (“Asia RE Fund”) and U.S. RE Fund II of $1.7 million, $0.5 million and $0.4 million, respectively, during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

Carried interest income from related parties increased by $1.3 million for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to an increase in carried interest income earned from U.S. RE Fund II of $1.8 million offset by a decrease in carried interest income earned from CPI funds in Europe of $0.6 million during the three months ended March 31, 2017, as compared to the same period during 2016. The increase in carried interest income earned from U.S. Real Estate Fund II is primarily the result of strong operating performance across many of the funds’ underlying properties and appreciation of several real estate investments during the three months ended March 31, 2017. The decrease in carried interest income earned from the CPI funds in Europe was attributable to the appreciation of the value of the underlying investments in one of the funds during the three months ended March 31, 2016 that did not recur in 2017.

~~Expenses~~

~~Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

General, administrative and other decreased by $1.7 million during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016. This change was primarily attributable to a decrease in professional fees and new fund organizational expenses related to U.S. RE Fund II during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

~~Summary of Combined Results~~

~~The following table is a summary of our combined segments EI for the three months ended March 31, 2017 and 2016. Prior period financial data has been updated to conform to the current presentation.~~

For the Three Months Ended March 31,
2017 2016
(in thousands)
Revenues:
Management fees from related parties $ 252,053
$ 230,933
Advisory and transaction fees from related parties, net 15,067
7,999
Carried interest income (loss) from related parties:
Unrealized⁽¹⁾
172,545
(170,891 )
Realized 186,461
49,923
Total carried interest income (loss) from related parties 359,006
(120,968 )
Total Revenues 626,126
117,964
Expenses:
Compensation and benefits:
Salary, bonus and benefits 94,721
92,370
Equity-based compensation 16,745
16,720
Profit sharing expense:
Unrealized 59,265
(67,682 )
Realized 88,723
34,189
Realized: Equity-based 287
—
Profit sharing expense 148,275
(33,493 )
Total compensation and benefits 259,741
75,597
Non-compensation expenses:
General, administrative and other 53,932
52,361
Placement fees 1,904
1,701
Total non-compensation expenses 55,836
54,062
Total Expenses 315,577
129,659
Other Income (Loss):
Income (loss) from equity method investments 39,214
(3,859 )
Net gains (losses) from investment activities 34,490
(56,499 )
Net interest loss (11,988 ) (6,891 )
Other income (loss), net 18,664
(561 )
Total Other Income (Loss) 80,380
(67,810 )
Non-Controlling Interests (934 ) (2,385 )
Economic Income (Loss) $ 389,995
$ (81,890 )
Income tax (provision) benefit (58,372 ) 8,926
Economic Net Income (Loss) $ 331,623
$ (72,964 )

~~(1)~~

Included in unrealized carried interest income (losses) from related parties for the three months ended March 31, 2017, and 2016 was a reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income. See note 13 to our condensed consolidated financial statements for further detail regarding the general partner obligation.

Summary of Fee Related Earnings

The following table is a summary of Fee Related ~~Earnings for the three months ended March 31, 2017 and 2016.~~Earnings.

For the Three Months Ended March 31,
2017 2016
(in thousands, except per share data)
Management Fees $ 252,053
$ 230,933
Advisory and Transaction Fees from Related Parties, net 15,067
7,999
Carried Interest Income from Related Parties⁽¹⁾
726
8,917
Salary, Bonus and Benefits (94,721 ) (92,370 )
Non-compensation Expenses (55,836 ) (54,062 )
Other Income (Loss) attributable to Fee Related Earnings⁽²⁾
18,120
(228 )
Non-Controlling Interest (934 ) (2,385 )
Fee Related Earnings $ 134,475
$ 98,804



	For the Three Months Ended March 31,
	2018			2017
	(in thousands)
Management fees	$	272,203		$	252,053
Advisory and transaction fees, net	12,994			15,067
Performance fees⁽¹⁾	5,275			726
Salary, bonus and benefits	(106,531		)	(94,721		)
Non-compensation expenses	(54,702		)	(55,836		)
Other income attributable to Fee Related Earnings⁽²⁾	4,875			18,120
Non-Controlling Interest	(1,215		)	(934		)
Fee Related Earnings	$	132,899		$	134,475


(1)	Represents ~~carried interest income~~performance fees earned from a publicly traded business development company we manage.


(2)	Includes $17.5 million in insurance proceeds ~~received~~recognized in connection with fees and expenses relating to a legal ~~proceeding.~~proceeding during the three months ended March 31, 2017.

Summary of Distributable Earnings

The following table is a reconciliation of Distributable Earnings per share of common and equivalents⁽¹⁾ to net distribution per share of common and ~~equivalent for the three months ended March 31, 2017 and 2016.~~equivalent.


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
	(in thousands, except per share data)						(in thousands, except per share data)
Distributable Earnings	$	239,605		$	104,755		$	206,753		$	239,605
Taxes and related payables⁽²⁾⁽¹⁾	(6,348		)	(2,273		)	(11,198		)	(6,348		)
Preferred distributions							(4,383		)	—
Distributable Earnings After Taxes and Related Payables	233,257			102,482			191,172			233,257
Add back: Tax and related payables attributable to common and equivalents	4,560			2			9,167			4,560
Distributable Earnings before certain payables⁽³⁾	237,817			102,484
Distributable Earnings before certain payables⁽²⁾							200,339			237,817
Percent to common and equivalents	47		%	47		%	51		%	47		%
Distributable Earnings before other payables attributable to common and equivalents	112,874			48,085			101,952			112,874
Less: Tax and related payables attributable to common and equivalents	(4,560		)	(2		)
Less: Taxes and related payables attributable to common and equivalents							(9,167		)	(4,560		)
Distributable Earnings attributable to common and equivalents	$	108,314		$	48,083		$	92,785		$	108,314
Distributable Earnings per share of common and equivalent⁽⁴⁾	$	0.57		$	0.25
Retained capital per share of common and equivalent⁽⁴⁾⁽⁵⁾	(0.08		)	—
Net distribution per share of common and equivalent⁽⁴⁾	$	0.49		$	0.25
Distributable Earnings per share of common and equivalent⁽³⁾							$	0.46		$	0.57
Retained capital per share of common and equivalent⁽³⁾⁽⁴⁾							(0.08		)	(0.08		)
Net distribution per share of common and equivalent⁽³⁾							$	0.38		$	0.49


(1)	~~Common and equivalents refers to Class A shares outstanding and RSUs that participate in distributions.~~

~~(2)~~

Represents the estimated current corporate, local and non-U.S. taxes as well as the payable under Apollo’s tax receivable agreement. DE After Taxes and Related Payables is calculated after current taxes and the impact of the tax receivable agreement (“TRA”). The TRA component of taxes used in calculating DE After Taxes was previously estimated based on the tax asset used to reduce the prior year’s tax liability. In 2018, the DE effective tax rate, using this estimation methodology, results in an increase in the tax rate despite the significantly reduced federal tax rate under tax reform. We believe it is more meaningful to estimate the current year impact of the TRA component of taxes when calculating DE After Taxes. The impact of this change is not significant to DE After Taxes and Related Payables as previously reported. DE After Taxes and Related Payables would have been $225.2 million for the three months ended March 31, 2017.


~~(3)~~(2)	Distributable earnings before certain payables represents Distributable Earnings before the deduction for the estimated current corporate taxes and the payable under Apollo’s tax receivable agreement.


~~(4)~~(3)	Per share calculations are based on end of period Distributable Earnings Shares Outstanding, which consists of total Class A shares outstanding, AOG Units and RSUs that participate in distributions (collectively referred to as “common & equivalents”).


~~(5)~~(4)	Retained capital is withheld pro-rata from common and equivalent holders and AOG Unit holders.

Summary of Non-U.S. GAAP Measures

The table below sets forth a reconciliation of net income (loss) attributable Apollo Global Management, LLC Class A Shareholders to our non-U.S. GAAP performance ~~measures for the three months ended March 31, 2017 and 2016:~~measures:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2017			2016			2018			2017
	(in thousands)						(in thousands)
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)
Net Income (Loss) Attributable to Apollo Global Management, LLC Class A Shareholders							$	(62,645	)	$	145,196
Preferred distributions							4,383			—
Net income attributable to Non-Controlling Interests in consolidated entities	3,384			2,035			5,979			3,384
Net income (loss) attributable to Non-Controlling Interests in the Apollo Operating Group	206,450			(43,768		)	(57,065		)	206,450
Net Income (Loss)	$	355,030		$	(74,561	)	$	(109,348	)	$	355,030
Income tax provision (benefit)	39,161			(5,147		)
Income (Loss) Before Income Tax Provision (Benefit)	$	394,191		$	(79,708	)
Income tax provision							8,580			39,161
Income (Loss) Before Income Tax Provision							$	(100,768	)	$	394,191
Transaction-related charges and equity-based compensation	(812		)	(147		)	1,852			(812		)
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)	(5,979		)	(3,384		)
Economic Income (Loss)	$	389,995		$	(81,890	)
Income tax (provision) benefit on Economic Income (Loss)	(58,372		)	8,926
Economic Income (Loss)⁽¹⁾							$	(104,895	)	$	389,995
Income tax provision on Economic Income (Loss)							(11,736		)	(58,372		)
Preferred distributions							(4,383		)	—
Economic Net Income (Loss)	$	331,623		$	(72,964	)	$	(121,014	)	$	331,623
Income tax provision (benefit) on Economic Income (Loss)	58,372			(8,926		)
Carried interest (income) loss from related parties⁽¹⁾	(358,280		)	129,885
Preferred distributions							4,383			—
Income tax provision on Economic Income (Loss)							11,736			58,372
Performance fees⁽²⁾							128,239			(358,280		)
Profit sharing expense	148,275			(33,493		)	1,900			148,275
Equity-based compensation⁽²⁾	16,745			16,720
(Income) loss from equity method investments	(39,214		)	3,859
Equity-based compensation⁽³⁾							17,358			16,745
Principal investment (income) loss							12,604			(39,214		)
Net (gains) losses from investment activities	(34,490		)	56,499			67,137			(34,490		)
Net interest loss	11,988			6,891			9,941			11,988
Other	(544		)	333			615			(544		)
Fee Related Earnings	$	134,475		$	98,804		$	132,899		$	134,475
Depreciation, amortization and other, net	2,513			2,581			2,589			2,513
Fee Related EBITDA	$	136,988		$	101,385		$	135,488		$	136,988
Net realized carried interest income⁽¹⁾	97,012			6,817
Fee Related EBITDA + 100% of Net Realized Carried Interest	$	234,000		$	108,202
Realized performance fees⁽⁴⁾							122,302			185,735
Realized profit sharing expense⁽⁴⁾							(63,647		)	(88,723		)
Fee Related EBITDA + 100% of Net Realized Performance Fees							$	194,143		$	234,000
Non-cash revenues	(843		)	(842		)	(842		)	(843		)
Realized income from equity method investments	18,436			4,349
Realized principal investment income							23,393			18,436
Net interest loss	(11,988		)	(6,891		)	(9,941		)	(11,988		)
Other	—			(63		)
Distributable Earnings	$	239,605		$	104,755		$	206,753		$	239,605
Taxes and related payables	(6,348		)	(2,273		)	(11,198		)	(6,348		)
Preferred distributions							(4,383		)	—
Distributable Earnings After Taxes and Related Payables	$	233,257		$	102,482		$	191,172		$	233,257


(1)	See note 15 for more details regarding Economic Income for the combined segments.


(2)	Excludes ~~carried interest income~~performance fees from a publicly traded business development company we manage.


~~(2)~~(3)	Includes equity-based compensation related to RSUs (excluding RSUs granted in connection with the 2007 private placement), share options and restricted share awards.


(4)	Excludes realized performance fees and realized profit sharing expense in the form of Athene shares.

Liquidity and Capital Resources

~~Historical~~Overview

~~Although we have managed our historical~~Apollo’s business model primarily derives revenues and cash flows from the assets it manages. Apollo targets operating expense levels such that fee income exceeds total operating expenses each period. The company intends to distribute to its shareholders on a quarterly basis substantially all of its distributable earnings after taxes and related payables in excess of amounts determined to be necessary or appropriate to provide for the conduct of the business. As a result, the Company requires limited capital resources to support the working capital or operating needs of the business. While primarily met by cash flows generated through fee income received, liquidity needs ~~by looking~~are also met (to a limited extent) through proceeds from borrowings and equity issuances as described in note 9 and note 12 to the condensed consolidated financial statements, respectively. The Company had cash and cash equivalents of $988 million at ~~deconsolidated~~March 31, 2018. The Company also has investments in U.S. Treasury securities, at fair value of approximately $226 million at March 31, 2018 with original maturities greater than three months when purchased.

Primary Sources & Uses of Cash

The Company has multiple sources of short-term liquidity to meet its capital needs, including cash on hand, annual cash flows from its activities, and available funds from the Company’s $500 million revolving credit facility as of March 31, 2018. The Company believes these sources will be sufficient to fund our ~~historical~~capital needs for at least the next twelve months. If the Company determines that market conditions are favorable after taking into account our liquidity requirements, we may seek to issue additional senior notes, preferred equity, or other financing instruments.

The section below discusses in more detail the Company’s primary sources and uses of cash and the primary drivers of cash flows within the Company’s condensed consolidated statements of cash flows for the three months ended March 31, 2018 and 2017:



	For the Three Months Ended March 31,
	2018		2017
	(in thousands)
Operating Activities	$	41,527	$	223,602
Investing Activities	97,215		(12,616		)
Financing Activities	80,185		86,482
Net Increase in Cash and Cash Equivalents, Restricted Cash and Cash Held at Consolidated Variable Interest Entities	$	218,927	$	297,468

Operating Activities

The Company’s operating activities support its asset management activities. The primary sources of cash within the operating activities section include: (a) management fees, (b) advisory and transaction fees, (c) realized performance revenues, and (d) realized principal investment income. The primary uses of cash within the operating activities section include: (a) compensation and non-compensation related expenses, (b) placement fees, and (c) interest and taxes.

During the three months ended 2018 and 2017, cash provided by operating activities primarily include cash inflows from the receipt of management fees, advisory and transaction fees, realized performance revenues, and realized principal investment income, offset by cash outflows for compensation, general, administrative, and other expenses. Net cash provided by operating activities also reflects the operating activity of our consolidated Funds and VIEs, which primarily include cash inflows from the sale of investments offset by cash outflows for purchases of investments.

Investing Activities

The Company’s investing activities support growth of its business. The primary sources of cash within the investing activities section include distributions from investments. The primary uses of cash within the investing activities section include: (a) capital expenditures, (b) investment purchases, including purchases of U.S. Treasury securities, and (c) equity method investments in the funds we manage.

During the three months ended 2018, cash provided by investing activities primarily reflected proceeds from maturities of U.S. Treasury securities, offset by purchases of U.S. Treasury securities and other investments.

During the three months ended 2017, cash used by investing activities primarily reflected net contributions to equity method investments, offset by repayment of related party loans.

Financing Activities

The Company’s financing activities reflect its capital market transactions and transactions with owners. The primary sources of cash within the financing activities section includes proceeds from debt and preferred equity issuances. The primary uses of cash within the financing activities section include: (a) dividend distributions, (b) tax receivable agreement payments, (c) share repurchases, (d) net share settlements, and (e) repayments of debt.

During the three months ended 2018, cash provided by financing activities primarily reflected proceeds from issuance of Series B Preferred shares, issuance of 2048 Senior Notes, partially offset by repayments on the term loan facility to AMH and distributions to Class A Shareholders and Non-Controlling interests.

During the three months ended 2017, cash provided by financing activities primarily reflected proceeds from issuance of Series A Preferred shares, offset by distributions to Class A Shareholders and Non-Controlling interests.

Future Debt Obligations

The Company had long-term debt of $1.4 billion at March 31, 2018, which includes $1.3 billion of Senior Notes with maturities in 2024, 2026 and 2048. See note 9 to the condensed consolidated financial statements for further information regarding the Company’s debt arrangements.

Contractual Obligations, Commitments and Contingencies

The Company had unfunded general partner commitments of $1.6 billion at March 31, 2018, of which $823 million related to Fund IX. For a summary and a description of the nature of the Company’s commitments, contingencies and contractual obligations, see note 14 to the condensed consolidated financial statements and “—Contractual Obligations, Commitments and Contingencies”. The Company’s commitments are primarily fulfilled through cash flows from operations and (to a limited extent) through borrowings and equity issuances as described in note 9 and note 12 to the condensed consolidated financial statements, respectively.

Consolidated Funds and VIEs

The Company manages its liquidity needs by evaluating unconsolidated cash flows; however, the Company’s financial statements reflect the ~~cash flows~~financial position of Apollo as well as ~~those of the~~Apollo’s consolidated ~~Apollo funds.~~

funds and VIE. The primary sources and uses of cash ~~flow activities of Apollo are:~~

~~Generating cash flow from operations;~~

~~Making investments in Apollo funds;~~

~~Meeting financing needs through credit agreements; and~~

~~Distributing cash flow to equity holders and Non-Controlling Interests.~~

~~Primary cash flow activities of the~~at Apollo’s consolidated ~~Apollo~~ funds and VIEs ~~are:~~

~~Raising~~include: (a) raising capital from their investors, which have been reflected historically as Non-Controlling Interests of the consolidated subsidiaries in our financial ~~statements;~~

~~Using~~statements, (b) using capital to make ~~investments;~~

~~Generating~~investments, (c) generating cash ~~flow~~flows from operations through distributions, interest and the realization of ~~investments;~~

~~Distributing~~investments, (d) distributing cash flow to ~~investors;~~investors, and

~~Issuing~~ (e) issuing debt to finance investments (CLOs).

~~While primarily met by cash flows generated through fee income~~Other Liquidity and ~~carried interest income received, working capital needs have also been met (to a limited extent) through borrowings as described in note 9 to the condensed consolidated financial statements.~~

We determine whether to make capital commitments to our funds in excess of our minimum required amounts based on a variety of factors, including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded, estimates regarding the amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising, and our general working capital requirements.

~~Cash Flows~~

Significant amounts from our condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 are summarized and discussed within the table and corresponding commentary below:

For the Three Months Ended March 31,
2017 2016
(in thousands)
Operating Activities $ 204,834
$ 124,194
Investing Activities (12,882 ) (56,999 )
Financing Activities 86,482
(135,114 )
Net Increase (Decrease) in Cash and Cash Equivalents $ 278,434
$ (67,919 )

~~Operating Activities~~

~~Our net cash provided by operating activities was $204.8 million and $124.2 million during the three months ended March 31, 2017 and 2016, respectively. These amounts were primarily driven by:~~

net income (loss) of $355.0 million and $(74.6) million during the three months ended March 31, 2017 and 2016, respectively, as well as non-cash adjustments, net of $(14.7) million and $76.4 million, respectively;

a net (increase) decrease in our carried interest receivable of $(168.7) million and $153.5 million during the three months ended March 31, 2017 and 2016, respectively, due to a change in the fair value of our funds that generate carried interest of $327.0 million and $(116.2) million during the three months ended March 31, 2017 and 2016, respectively, offset by

~~fund distributions to the Company of $163.2 million and $37.3 million during the three months ended March 31, 2017 and 2016, respectively;~~

purchases of investments held by consolidated VIEs in the amount of $187.6 million and $119.0 million, offset by proceeds from sales of investments held by consolidated VIEs in the amount of $120.9 million and $117.7 million during the three months ended March 31, 2017 and 2016, respectively;

a net increase (decrease) in changes to other assets and other liabilities of consolidated VIEs in the amount of $49.9 million and $(7.0) million during the three months ended March 31, 2017 and 2016, respectively;

~~a net (decrease) increase in due from and due to related parties in the amount of $(45.8) million and $12.5 million during the three months ended March 31, 2017 and 2016, respectively;~~

~~a net increase (decrease) in accrued compensation and benefits in the amount of $1.5 million and $(6.8) million during the three months ended March 31, 2017 and 2016, respectively;~~

a net increase (decrease) in our profit sharing payable of $103.3 million and $(32.7) million during the three months ended March 31, 2017 and 2016, respectively, due to profit sharing expense of $134.6 million and $(23.4) million during the three months ended March 31, 2017 and 2016, respectively, offset by payments of $50.1 million and $14.1 million during the three months ended ~~March 31, 2017 and 2016, respectively; and~~

~~a (decrease) increase in cash held at consolidated VIEs of $(14.7) million and $23.6 million during the three months ended March 31, 2017 and 2016, respectively.~~

~~Investing Activities~~

~~Our net cash used in investing activities was $(12.9) million and $(57.0) million during the three months ended March 31, 2017 and 2016, respectively. These amounts were primarily driven by:~~

~~net cash contributions to our equity method investments of $23.8 million and $32.2 million during the three months ended March 31, 2017 and 2016, respectively;~~

~~issuance of related party loans of $5.4 million during the three months ended March 31,2017;~~

~~repayment of related party loans of $17.7 million during the three months ended March 31,2017; and~~

~~purchases of investments in the amount of $24.6 million during the three months ended March 31,2016.~~

~~Financing Activities~~

Our net cash provided by (used in) financing activities was $86.5 million and $(135.1) million during the three months ended March 31, 2017 and 2016, respectively. These amounts were primarily driven by:

~~cash received, net of issuance costs, in connection with the issuance of Preferred shares of $264.7 million during the three months ended March 31, 2017;~~

~~cash distributions paid to our Class A shareholders of $87.1 million and $53.6 million, during the three months ended March 31, 2017 and 2016, respectively;~~

~~cash distributions paid to the Non-Controlling Interest holders in the Apollo Operating Group of $97.0 million and $60.5 million during the three months ended March 31, 2017 and 2016, respectively;~~

~~cash contributions from Non-Controlling Interest holders in consolidated VIEs of $28.6 million during the three months ended March 31, 2017;~~

~~cash used for purchases of Class A shares of $0.2 million and $12.9 million during the three months ended March 31, 2017 and 2016, respectively;~~

~~net distributions related to issuances of Class A shares in settlement of RSUs of $20.6 million and $22.0 million during the three months ended March 31, 2017 and 2016, respectively; and~~

~~issuance of debt of $18.4 million during the three months ended March 31, 2016.~~

~~Distributions~~

In addition to other distributions such as payments pursuant to the tax receivable agreement, see note 13 to the condensed consolidated financial statements for information regarding the quarterly distributions which were made at the sole discretion of the Company’s manager during 2017 and 2016.

Capital Resource Considerations

Future Cash Flows

Our ability to execute our business strategy, particularly our ability to increase our AUM, depends on our ability to establish new funds and to raise additional investor capital within such funds. Our liquidity will depend on a number of factors, such as our ability to project our financial performance, which is highly dependent on our funds and our ability to manage our projected costs, fund performance, ~~our~~ access to credit facilities, ~~our being in~~ compliance with existing credit agreements, as well as industry and market trends. Also during economic downturns the funds we manage might experience cash flow issues or liquidate entirely. In these situations we might be asked to reduce or eliminate the management fee and incentive fees we charge, which could adversely impact our cash flow in the future.

An increase in the fair value of our funds’ investments, by contrast, could favorably impact our liquidity through higher management fees where the management fees are calculated based on the net asset value, gross assets ~~and~~or adjusted assets. Additionally, higher ~~carried interest income~~performance fees not yet realized would generally result when investments appreciate over their cost basis which would not have an impact on the Company’s cash ~~flow.~~flow until realized.

Consideration of Financing Arrangements

As noted above, in limited circumstances, the Company may issue debt or preferred shares to supplement its liquidity. The decision to enter into a particular financing arrangement is made after careful consideration of various factors including the Company’s cash flows from operations, future cash needs, current sources of liquidity, demand for the Company’s debt or equity, and prevailing interest rates.

Revolver Facility

As further described in note 9 to the condensed consolidated financial statements, under the Company’s 2013 AMH Credit Facilities, the Company may borrow in an aggregate amount not to exceed $500 million plus additional amounts so long as a net leverage ratio not to exceed 3.75 to 1.00 is complied with. Borrowings under the Revolver Facility may be used for working capital and general corporate purposes, including without limitation, permitted acquisitions. As of March 31, ~~2017, Fund VII’s~~2018 and Fund VI’s remaining investments and escrow cash were valued at 107% and 86% of the fund’s unreturned capital, respectively, which was below the required escrow ratio of 115%. As a result, these funds are required to place in escrow current and future carried interest income distributions to the general partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation.

On April 20, 2010, the Company announced that it entered into a strategic relationship agreement with CalPERS. The strategic relationship agreement provides that Apollo will reduce fees charged to CalPERS on funds it manages, or in the future will manage, solely for CalPERS by $125 million over a five-year period or as close a period as required to provide CalPERS with that benefit. The agreement further provides that Apollo will not use a placement agent in connection with securing any future capital commitments from CalPERS. As of MarchDecember 31, 2017, the ~~Company had reduced fees charged~~Revolver Facility was undrawn.

Distributions

For information regarding the quarterly distributions which were made at the sole discretion of the Company’s manager during 2018 and 2017 to ~~CalPERS on~~Class A Shareholders, Non-Controlling Interest Holders in the ~~funds it manages by approximately $104.5 million.~~Apollo Operating Group and Participating Securities, see note 12 to the condensed consolidated financial statements.

Although ~~we expect~~the Company expects to pay distributions according to our distribution policy, we may not pay distributions according to our policy, or at all, if, among other things, we do not have the cash necessary to pay the intended distributions. To the extent we do not have cash on hand sufficient to pay distributions, we may have to borrow funds to pay distributions, or we may determine not to pay distributions. The declaration, payment and determination of the amount of our quarterly distributions are at the sole discretion of our manager.

On May 3, 2018, the Company declared a cash distribution of $0.38 per Class A share, which will be paid on May 31, 2018 to holders of record on May 18, 2018. Also, the Company declared a cash distribution of $0.398438 and $0.380729 per Series A and Series B Preferred shares, respectively, which will be paid on June 15, 2018 to holders of record on June 1, 2018.

Tax Receivable Agreement

The tax receivable agreement provides for the payment to the Managing Partners and Contributing Partners of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes that APO Corp. realizes subject to the agreement. For more information regarding the tax receivable agreement, see note 13 to the condensed consolidated financial statements.

APO Share Repurchases

In February 2016, Apollo ~~adopted~~announced its adoption of a ~~plan~~program to repurchase up to $250 million in the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through a reduction of Class A shares to be issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan, which we refer to as net share settlement. Under the share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise, with the size and timing of these repurchases depending on legal requirements, price, market and economic conditions and other factors. See note 12 to the condensed consolidated financial statements for further information regarding the Company’s share repurchase program and net share settlement during the three months ended March 31, 2017 and 2016.

AINV Share Repurchases

On March 11, 2016, it was announced that Apollo intended to embark on a program to purchase $50 million of AINV’s common stock, subject to certain regulatory approvals. Under the program, shares may be purchased from time to time in open market transactions and in accordance with applicable law. As of March 31, ~~2017,~~2018, Apollo had purchased approximately 871 thousand shares, or approximately $4.9 million of AINV’s common stock.

Athora

On April 14, 2017, Apollo made an unfunded commitment to ~~AGER Bermuda Holding Ltd. (“AGER”),~~Athora, a strategic platform established ~~by Apollo and Athene~~ to acquire or reinsure blocks of insurance business in the German and broader European life insurance market. The unfunded commitment of €125 million to purchase new Class B-1 equity interests in ~~AGER~~Athora during the commitment period may be reduced to the extent that certain employees, officers, directors and advisors of the Company, ~~AGER,~~Athora, Apollo and/or their respective affiliates hereafter commit to purchase from ~~AGER~~Athora more than €25 million of new equity interests in ~~AGER.~~Athora. Apollo further committed to purchase new Class C-1 equity interests in ~~AGER~~Athora on the closing date that represent a profits interest in ~~AGER~~Athora which, upon meeting certain vesting triggers, will be convertible by Apollo into additional Class B-1 equity interests in ~~AGER.~~Athora. Apollo and Athene ~~will be~~are minority investors in ~~AGER~~Athora and long term strategic partners with aggregate voting powers of 35% and 10%, respectively.

~~Carried interest income from our funds can be distributed to us on a current basis, but is subject to repayment by the subsidiaries of the Apollo Operating Group that act as~~For more information regarding unfunded general partner ~~of such funds in the event that certain specified return thresholds are not ultimately achieved. The Managing Partners, Contributing Partners~~commitments, see “—Contractual Obligations, Commitments and ~~certain other investment professionals have personally guaranteed, to the extent of their ownership interest, subject to certain limitations, the obligations of these~~Contingencies”.

subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to a particular Managing Partner’s or Contributing Partner’s distributions. Pursuant to the shareholders agreement dated July 13, 2007, as amended (the “Shareholders Agreement”), we agreed to indemnify each of our Managing Partners and certain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor of Fund IV, Fund V and Fund VI (including costs and expenses related to investigating the basis for or objecting to any claims made in respect of the guarantees) for all interests that our Managing Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.

Accordingly, in the event that our Managing Partners, Contributing Partners and certain investment professionals are required to pay amounts in connection with a general partner obligation to return previously distributed carried interest income with respect to Fund IV, Fund V and Fund VI, we will be obligated to reimburse our Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to pay even though we did not receive the distribution to which that general partner obligation related.

~~The Company has future debt obligations. See note 9 to the condensed consolidated financial statements for further information regarding the Company’s debt arrangements.~~

~~On March 7, 2017, Apollo issued 11,000,000~~6.375% Series A Preferred shares (the “Preferred shares”) for gross proceeds of $275.0 million, or $264.7 million net of issuance costs. See note 12 to the condensed consolidated financial statements for further information regarding the Company’s Preferred shares.Athene Holding Follow-on Offerings

On April ~~28, 2017, the Company declared~~4, 2014, Athene Holding completed an initial closing of a ~~cash distribution~~private placement offering of ~~$0.49 per Class A share,~~common equity in which will be paid on May 31, 2017 to holders of record on May 19, 2017. Also, the Company declared a cash distribution of $0.433854 per Preferred share, which will be paid on June 15, 2017 to holders of record on June 1, 2017.

~~Investment Management Agreements - Athene Asset Management~~

Apollo, through its consolidated subsidiary, AAM, provides asset management services to Athene, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions asset diligence hedging and other asset management services and receives management fees for providing these services.

~~As of March 31, 2017, AAM managed $68.2~~it raised $1.048 billion of ~~AUM~~primary commitments from third-party institutional and certain existing investors in ~~the Athene Accounts on which the Company earns a gross management fee of 0.40% per annum with certain limited exceptions.~~

On March 15, 2017, the Company and Athene announced an agreement to amend certain fee arrangements relating to investment management fees and sub-advisory fees that are paid by Athene to the Company. More specifically, the Company and Athene have agreed to enter into a revised fee agreement, which provides for, among other things, a fee of 0.30% per year (reduced from 0.40% per year) on all assets that the Company manages in accounts owned by Athene in the U.S. and Bermuda or in accounts supporting reinsurance ceded to U.S. and Bermuda subsidiaries of Athene Holding ~~by third-party insurers~~ (the “North American Accounts��) in excess of $65.846 billion (the level of assets in the North America Accounts as of December 31, 2016). The Company’s fee on the first $65.846 billion of assets in the North America Accounts remains 0.40% per year, subject to certain discounts and exceptions.

In addition, the Company and Athene also agreed to amend the sub-advisory agreements they have in place whereby, with limited exceptions, the Company will earn 0.40% per year on all assets in the North American Accounts explicitly sub-advised by the Company up to $10 billion, 0.35% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $10 billion up to $12.4 billion (the level of fee-paying sub-advised assets in the North American Accounts at December 31, 2016), 0.40% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $12.4 billion up to $16 billion and 0.35% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $16 billion.

The amendments to the investment management fees and sub-advisory fees are subject to the approval by Athene Holding’s shareholders at its 2017 annual general meeting of shareholders of certain Athene Holding bye-law amendments relating to the term and termination of the investment management agreements between the Company and Athene. However, upon such shareholder approval, the amendments to the investment management fees and sub-advisory fees will be effective retroactive to January 1, 2017.

AAM discounts certain fees due from Athene. For the total dollar amount of all liabilities sourced through Athene’s organic distribution channels during 2016 in excess of $5.1 billion (subject to certain exceptions, “Excess Liabilities”), AAM agreed to discount fees as follows:

During 2016, a discount of 0.40% per annum multiplied by such Excess Liabilities. The 2016 discount relating to such Excess Liabilities was intended to reasonably approximate a full discount of the AAM fee on the assets relating to such Excess Liabilities during the remainder of the 2016 calendar year.

For 2017, a discount of 0.20% per annum multiplied by such Excess Liabilities, resulting in a reasonable approximation of a 0.20% fee on the assets relating to such Excess Liabilities during the 2017 calendar year.

For 2018 and thereafter, a discount of 0.075% per annum, resulting in a reasonable approximation of a 0.325% fee on the assets relating to such Excess Liabilities during the 2018 calendar year and thereafter.

~~Investment Advisory Agreement - AAME~~

Apollo, through AAME, provides investment advisory services to Athene and receives a gross fee of 0.10% per annum on the Athene assets it advises. As of March 31, 2017, AAME provided investment advisory services with respect to $4.9 billion of AUM in the Athene Accounts, of which $0.5 billion is sub-advised by the Company.

~~Sub-Advisory Agreement and Fund Investments~~

Apollo provides sub-advisory services with respect to a portion of the assets in the Athene Accounts, pursuant to a master sub-advisory agreement among AAM and certain other Apollo subsidiaries. In addition from time to time, Athene also invests in funds and investment vehicles that Apollo manages. The Company broadly refers to “Athene Sub-Advised” AUM as those assets in the Athene Accounts which the Company explicitly sub-advises as well as those assets in the Athene Accounts which are invested directly in funds and investment vehicles Apollo manages (“Athene Assets Directly Invested”Private Placement”). ~~As of March 31, 2017, the Athene Sub-Advised AUM totaled $16.4 billion, of which $2.8 billion was Athene Assets Directly Invested.~~

With respect to assets in the Athene Accounts which the Company explicitly sub-advises, the Company earns up to 0.40% per annum on assets up to $10 billion and 0.35% per annum on all such assets in excess of $10 billion, with certain limited exceptions. These fees are in addition to the gross management fee of 0.40% per annum paid to AAM on the portion of these assets that it manages and the gross fee of 0.10% per annum paid to AAME on the portion of these assets that it advises. A majority of the assets in the Athene Accounts which the Company explicitly sub-advises are in accounts that invest in high-grade credit asset classes, such as CLO debt, commercial mortgage backed securities and insurance-linked securities.

With respect to Athene Assets Directly Invested, Apollo receives management fees and carried interest, if applicable, directly from the relevant funds under the investment management agreements and other governing documents of such funds. Fees paid to the Company related to such fund investments vary from 0% per annum to 1.75% per annum with respect to management fees and 0% to 20% with respect to carried interest. These fees are in addition to the gross management fee of 0.40% per annum paid to AAM on the portion of these assets that it manages and the gross fee of 0.10% per annum paid to AAME on the portion of these assets that it advises.

The Company refers to the portion of the AUM in the Athene Accounts that is not Athene Sub-Advised AUM as “Athene Non-Sub-Advised” AUM. Accordingly, as of March 31, 2017, Athene Non-Sub-Advised AUM totaled $56.7 billion, which includes $4.4 billion of Athene AUM for which AAME provides investment advisory services. Apollo incurs all expenses associated with its provision of services to Athene.

In connection with the Athene Private Placement, Athene Holding amended its registration rights agreement to provide (i) investors who are party to such agreement, including AAA Investments, the potential opportunity for liquidity on their shares of Athene Holding through sales in registered public offerings over a 15 month period beginning on the date of Athene Holding’s initial public offering (the “Athene IPO”) and (ii) Athene Holding the right to cause certain investors who are party to the registration rights agreement to include in such offerings a certain percentage of their common shares of Athene Holding subject to the terms and conditions set forth in the agreement. However, pursuant to the registration rights agreement, any shares of Athene Holding held by Apollo (other than shares distributed to AAA in payment of ~~carried interest~~performance fees to be sold for cash) will not be subject to such arrangements and instead will be subject to a lock-up period of two years following the effective date of the registration statement relating to the Athene IPO, but Athene Holding will not have the right to cause any shares owned by Apollo to be included in the Athene IPO or any follow-on offering. Apollo may elect to receive payment of ~~carried interest~~performance fees in cash or in common shares of Athene Holding (valued at the ~~then~~ fair market value); and if Apollo elects to receive payment of such ~~carried interest~~performance fees in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such ~~carried interest~~performance fees in cash. On March 16, 2017 and May 22, 2017, AAA announced a conditional distribution of freely tradeable common shares of Athene Holding to its unitholders. The distribution was conditioned upon the pricing of an underwritten follow-on secondary offering of Class A common shares of Athene Holding. On March 28, 2017 and June 6, 2017, Athene Holding announced the base follow-on offering size of 27.5 million shares and 16.2 million shares of Athene Holding, respectively, at a price of $48.50 per share ~~which was~~and $49.00 per share, respectively. The March and May offerings were subsequently increased to 31.6 million and 18.6 million shares of Athene Holding, respectively, after the underwriters’ exercise of a 15% over-allotment option. The ~~follow-on offering successfully closed on April 3, 2017.~~March and May offerings resulted in realizations of performance fees from AAA of $96.4 million, net of profit sharing expense.

Fund VII and Fund VI Escrow

~~Distributions~~As of March 31, 2018, the remaining investments and escrow cash of Fund VII, Fund VI and ANRP II were valued at 99%, 92% and 108% of the fund’s unreturned capital, respectively, which was below the required escrow ratio of 115%. As a result, these funds are required to ~~Managing Partners~~place in escrow current and ~~Contributing Partners~~future performance fees distributions to the general partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation.

Clawback

Performance fees from our private equity funds and certain credit and real assets funds is subject to contingent repayment by the general partner in the event of future losses to the extent that the cumulative performance fees distributed from inception to date exceeds the amount computed as due to the general partner at the final distribution. See “—Overview of Results of Operations - Performance Fees” for the maximum performance fees subject to potential reversal by each fund.

Indemnification Liability

The ~~three Managing Partners who became employees of Apollo on July 13, 2007 each receive a $100,000 base salary. Additionally,~~Company recorded an indemnification liability in the event that our Managing Partners, ~~can receive other forms of compensation. Any additional consideration will be~~Contributing Partners and certain investment professionals are required to pay amounts in connection with a general partner obligation to return previously distributed performance fees. See note 13 to the condensed consolidated financial statements for further information regarding the Company’s indemnification liability.

Equity-Based Profit Sharing Expense

Profit sharing amounts are generally not paid until the related performance fees are distributed to ~~them in their proportional ownership interest in Holdings. Additionally, as a result~~the general partner upon realization of the ~~tax receivable agreement, 85%~~fund’s investments. Under certain profit sharing arrangements, a portion of ~~any tax savings APO Corp. recognizes will be paid~~the performance fees distributed to the ~~Managing Partners.~~

~~Subsequent~~general partner is allocated by issuance of restricted shares, rather than cash to employees. See note 2 to the ~~2007 Reorganization,~~condensed consolidated financial statements for further information regarding the ~~Contributing Partners retained ownership interests in subsidiaries of~~accounting for the Apollo Operating Group. Therefore, any distributions that flow up to management or general partner entities in which the Contributing Partners retained ownership interests are shared pro rata with the Contributing Partners who have a direct interest in such entities prior to flowing up to the Apollo Operating Group. These distributions are considered compensation expense.

~~The Contributing Partners are entitled to receive the following:~~

Profit sharing related to private equity carried interest income, from direct ownership of advisory entities. Any changes in fair value of the underlying fund investments would result in changes to Apollo Global Management, LLC’sCompany’s profit sharing ~~payable;~~arrangements.

~~Additional consideration based~~Strategic Relationship Agreement with CalPERS

~~As a result of the tax receivable agreement, 85% of any tax savings APO Corp. recognizes will be paid to the Contributing Partners.~~

~~Potential Future Costs~~

~~We may make grants of RSUs~~funds it manages, or ~~other equity-based awards to employees and independent directors that we appoint~~ in the ~~future.~~future will manage, solely for CalPERS by $125 million over a five-year period or as close a period as required to provide CalPERS with that benefit. The agreement further provides that Apollo will not use a placement agent in connection with securing any future

capital commitments from CalPERS. As of March 31, 2018, the Company had reduced fees charged to CalPERS on the funds it manages by approximately $106.6 million.

Critical Accounting Policies

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that could affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates. A summary of our significant accounting policies is presented in note 2 to our condensed consolidated financial statements. The following is a summary of our accounting policies that are affected most by judgments, estimates and assumptions.

Consolidation

The Company assesses all entities with which it is involved for consolidation on a case by case basis depending on the specific facts and circumstances surrounding each entity. Pursuant to the consolidation guidance, the Company first evaluates whether it holds a variable interest in an entity. Apollo factors in all economic interests including proportionate interests through related parties, to determine if such interests are to be considered a variable interest. As Apollo’s interest in many of these entities is solely through market rate ~~performance~~ fees and/or insignificant indirect interests through related parties, Apollo is generally not considered to have a variable interest in many of these entities under the guidance and no further consolidation analysis is performed. For entities where the Company has determined that it does hold a variable interest, the Company performs an assessment to determine whether each of those entities qualify as a VIE.

The determination as to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity and therefore certain of Apollo’s funds may qualify as VIEs under the variable interest model whereas others may qualify as ~~VOEs~~voting interest entities (“VOEs”) under the voting interest model. The granting of substantive kick-out rights is a key consideration in determining whether a limited partnership or similar entity is a VIE and whether or not that entity should be consolidated.

Under the voting interest model, Apollo consolidates those entities it controls through a majority voting interest. Apollo does not consolidate those ~~voting interest entities (“VOEs”)~~VOEs in which substantive kick-out rights have been granted to the unaffiliated investors to either dissolve the fund or remove the general partner.

could potentially be significant to the VIE. If Apollo alone is not considered to have a controlling financial interest in the VIE but Apollo and its related parties under common control in the aggregate have a controlling financial interest in the VIE, Apollo will still be deemed to be the primary beneficiary if it is the party within the related party group that is most closely associated with the VIE. If Apollo and its related parties not under common control in the aggregate have a controlling financial interest in a VIE, then Apollo is deemed to be the primary beneficiary if substantially all the activities of the entity are performed on behalf of Apollo. Apollo determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, related parties of Apollo or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary.

The assessment of whether an entity is a VIE and the determination of whether Apollo should consolidate such VIE requires judgment by our management. Those judgments include, but are not limited to: (i) determining whether the total equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (ii) evaluating whether the holders of equity investment at risk, as a group, can make decisions that have a significant effect on the success of the entity, (iii) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive the expected residual returns from an entity and (iv) evaluating the nature of the relationship and activities of those related parties with shared power or under common control for purposes of determining which party within the related-party group is most closely associated with the VIE. Judgments are also made in determining whether a member in the equity group has a controlling financial interest including power to direct activities that most significantly impact the VIE’s economic performance and rights to receive benefits or obligations to absorb losses that could be potentially significant to the VIE. This analysis considers all relevant economic interests including proportionate interests held through related parties.

Revenue Recognition

~~Carried Interest Income (Loss) from Related Parties.~~Performance Fees. We earn ~~carried interest income~~performance fees from our funds as a result of such funds achieving specified performance criteria. Such ~~carried interest income~~performance fees generally isare earned based upon a fixed percentage of realized and unrealized gains of various funds after meeting any applicable hurdle rate or threshold minimum. ~~Carried interest income~~

Performance allocations are performance fees that are generally structured from a legal standpoint as an allocation of capital to the asset manager. Performance allocations from certain of the funds that we manage isare subject to contingent repayment and is generally paid to us as particular investments made by the funds are realized. If, however, upon liquidation of a fund, the aggregate amount paid to us as ~~carried interest~~performance fees exceeds the amount actually due to us based upon the aggregate performance of the fund, the excess (in certain cases net of taxes) is required to be returned by us to that fund. ~~For a majority of our credit funds, once the annual carried interest income has been determined, there generally is no look-back to prior periods~~We account for a potential contingent repayment, however, carried interest income on certain other credit funds can be subject to contingent repayment at the end of the life of the fund. We have elected to adopt Method 2 from U.S. GAAP guidance applicable to accounting for management fees based on a formula,performance allocations as an equity method investment, and ~~under this method,~~accordingly, we accrue ~~carried interest income~~performance allocations quarterly based on fair value of the underlying investments and separately assess if contingent repayment is necessary. The determination of ~~carried interest income~~performance allocations and contingent repayment considers both the terms of the respective partnership agreements and the current fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used. See “Investments, at Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments in our credit, private equity ~~credit~~ and real ~~estate~~assets funds.

Incentive fees are performance fees structured as a contractual fee arrangement rather than a capital allocation. Incentive fees are generally received from the management of CLOs, managed accounts and AINV. For a majority of our incentive fees, once the quarterly or annual incentive fees have been determined, there is no look-back to prior periods for a potential contingent repayment, however, certain other incentive fees can be subject to contingent repayment at the end of the life of the entity. In accordance with the new revenue recognition standard, certain incentive fees are considered a form of variable consideration and therefore are deferred until fees are probable to not be significantly reversed. There is significant judgment involved in determining if the incentive fees are probable to not be significantly reversed, but generally the Company will defer the revenue until the fees are crystallized or are no longer subject to clawback or reversal.

Management ~~Fees from Related Parties.~~Fees. The management fees related to our private equity funds are generally based on a fixed percentage of the committed capital or invested capital. The corresponding fee calculations that consider committed capital or invested capital are both objective in nature and therefore do not require the use of significant estimates or assumptions. Management fees related to our credit funds, ~~by contrast,~~ can be based on net asset value, gross assets, adjusted cost of all unrealized portfolio investments, capital commitments, adjusted assets, capital contributions, or stockholders’ equity all as defined in the respective partnership agreements. The credit management fee calculations that consider net asset value, gross assets, adjusted cost of all unrealized portfolio investments and adjusted assets are normally based on the terms of the respective partnership agreements and the current fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used. The management fees related to our private equity funds, by contrast, are generally based on a fixed percentage of the committed capital or invested capital. The corresponding fee calculations that consider committed capital or invested capital are both objective in nature and therefore do not require the use of significant estimates or assumptions. The management fees related to our real ~~estate~~assets funds are generally based on a specific percentage of the funds’ stockholders’ equity or committed or net invested capital or the capital accounts of the limited partners. See “Investments, at Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments in our credit, private equity ~~credit~~ and real ~~estate~~assets funds.

Investments, at Fair Value

by Apollo, a review is performed by an independent board of directors. The Company also retains independent valuation firms to provide third-party valuation consulting services to Apollo, which consist of certain limited procedures that management identifies and requests them to perform. The limited procedures provided by the independent valuation firms assist management with validating their valuation results or determining fair value. The Company performs various back-testing procedures to validate their valuation approaches, including comparisons between expected and observed outcomes, forecast evaluations and variance analyses. However, because of the inherent uncertainty of valuation, the estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

Credit Investments. The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models.

of the security and (iii) active brokers indicating executable quotes. In addition, when valuing a security based on broker quotes wherever possible Apollo tests the standard deviation amongst the quotes received and the variance between the concluded fair value and the value provided by a pricing service. When broker quotes are not available, we use pricing service quotes or other sources to mark a position. When relying on a pricing service as a primary source, (i) Apollo analyzes how the price has moved over the measurement period, (ii) reviews the number of brokers included in the pricing service’s population and (iii) validates the valuation levels with Apollo’s pricing team and traders.

Private Equity Investments. The majority of the illiquid investments within our private equity funds are valued using the market approach, which provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies and transactions in the industry.

Market Approach. The market approach is driven by current market conditions, including actual trading levels of similar companies and, to the extent available, actual transaction data of similar companies. Judgment is required by management when assessing which companies are similar to the subject company being valued. Consideration may also be given to any of the following factors: (1) the subject company’s historical and projected financial data; (2) valuations given to comparable companies; (3) the size and scope of the subject company’s operations; (4) the subject company’s individual strengths and weaknesses; (5) expectations relating to the market’s receptivity to an offering of the subject company’s securities; (6) applicable restrictions on transfer; (7) industry and market information; (8) general economic and market conditions; and (9) other factors deemed relevant. Market approach valuation models typically employ a multiple that is based on one or more of the factors described above. Enterprise value as a multiple of EBITDA is common and relevant for most companies and industries, however, other industry specific multiples are employed where available and appropriate. Sources for gaining additional knowledge related to comparable companies include public filings, annual reports, analyst research reports, and press releases. Once a comparable company set is determined, we review certain aspects of the subject company’s performance and determine how its performance compares to the group and to certain individuals in the group. We compare certain measurements such as EBITDA margins, revenue growth over certain time periods, leverage ratios and growth opportunities. In addition, we compare our entry multiple and its relation to the comparable set at the time of acquisition to understand its relation to the comparable set on each measurement date.

Income Approach. For investments where the market approach does not provide adequate fair value information, we rely on the income approach. The income approach is also used to validate the market approach within our private equity funds. The income approach provides an indication of fair value based on the present value of cash flows that a business or security is expected to generate in the future. The most widely used methodology for the income approach is a discounted cash flow method. Inherent in the discounted cash flow method are significant assumptions related to the subject company’s expected results, the determination of a terminal value and a calculated discount rate, which is normally based on the subject company’s weighted average cost of capital, or “WACC.” The WACC represents the required rate of return on total capitalization, which is comprised of a required rate of return on equity, plus the current tax-effected rate of return on debt, weighted by the relative percentages of equity and debt that are typical in the industry. The most critical step in determining the appropriate WACC for each subject company is to select companies that are comparable in nature to the subject company and the credit quality of the subject company. Sources for gaining additional knowledge about the comparable companies include public filings, annual reports, analyst research reports, and press releases. The general formula then used for calculating the WACC considers the after-tax rate of return on debt capital and the rate of return on common equity capital, which further considers the risk-free rate of return, market beta, market risk premium and small stock premium, if applicable. The variables used in the WACC formula are inferred from the comparable market data obtained. The Company evaluates the comparable companies selected and concludes on WACC inputs based on the most comparable company or analyzes the range of data for the investment.

The value of liquid investments, where the primary market is an exchange (whether foreign or domestic), is determined using period end market prices. Such prices are generally based on the close price on the date of determination.

~~Credit Investments.~~ ~~The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models.~~

Quoted market prices are valued based on the average of the “bid” and the “ask” quotes provided by multiple brokers wherever possible without any adjustments. Apollo designates certain brokers to value specific securities. In order to determine the designated brokers, Apollo considers the following: (i) brokers with which Apollo has previously transacted, (ii) the underwriter of the security and (iii) active brokers indicating executable quotes. In addition, when valuing a security based on broker quotes wherever possible Apollo tests the standard deviation amongst the quotes received and the variance between the concluded fair value and the value provided by a pricing service. When broker quotes are not available, we use pricing service quotes or other sources to mark a position. When relying on a pricing service as a primary source, (i) Apollo analyzes how the price has moved over the measurement period, (ii) reviews the number of brokers included in the pricing service’s population and (iii) validates the valuation levels with Apollo’s pricing team and traders.

Real ~~Estate~~Assets Investments. For the CMBS portfolio of Apollo’s funds, the estimated fair value of the CMBS portfolio is determined by reference to market prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarily represent what the funds would receive in an actual trade for the applicable instrument. Additionally, the loans held-for-investment are stated at the principal amount outstanding, net of deferred loan fees and costs. The loans in Apollo’s real ~~estate~~assets funds are evaluated for possible impairment on a quarterly basis. For Apollo’s real ~~estate~~assets funds, valuations of non-marketable underlying investments are determined using methods that include, but are not limited to (i) discounted cash flow estimates or comparable analysis prepared internally, (ii) third party appraisals or valuations by qualified real estate appraisers, and (iii) contractual sales value of investments/properties subject to bona fide purchase contracts.

Methods (i) and (ii) also incorporate consideration of the use of the income, cost, or sales comparison approaches of estimating property values.

Certain of our funds may also enter into foreign currency exchange contracts, total return swap contracts, credit default swap contracts, and other derivative contracts, which may include options, caps, collars and floors. Foreign currency exchange contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. If securities are held at the end of this period, the changes in value are recorded in income as unrealized gains or losses. Realized gains or losses are recognized when contracts are settled. Derivative contracts such as total return swaps and credit default swaps are recorded at fair value as an asset or liability, with changes in fair value recorded as unrealized appreciation or depreciation. Realized gains or losses are recognized at the termination of the contract based on the difference between the close-out price of the total return or credit default swap contract and the original contract price. Forward contracts are valued based on market rates obtained from counterparties or prices obtained from recognized financial data service providers.

The fair values of the investments in our funds can be impacted by changes to the assumptions used in the underlying valuation models. For further discussion on the impact of changes to valuation assumptions see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Sensitivity” in our ~~2016~~2017 Annual Report. There have been no material changes to the valuation approaches utilized during the periods that our financial results are presented in this report.

Fair Value of Financial Instruments

Except for the Company’s debt obligations (each as defined in note 9 to our condensed consolidated financial statements), Apollo’s financial instruments are recorded at fair value or at amounts whose carrying values approximate fair value. See “—Investments, at Fair Value” above. While Apollo’s valuations of portfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the actual realized gains or losses will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were based. Financial instruments’ carrying values generally approximate fair value because of the short-term nature of those instruments or variable interest rates related to the borrowings.

Profit Sharing Expense. Profit sharing expense is primarily a result of agreements with our Contributing Partners and employees to compensate them based on the ownership interest they have in the general partners of the Apollo funds. Therefore, changes in the fair value of the underlying investments in the funds we manage and advise affect profit sharing expense. The Contributing Partners and employees are allocated approximately 30% to 50% of the total ~~carried interest income~~performance fees which is driven primarily by changes in fair value of the underlying fund’s investments and is treated as compensation expense. Additionally, profit sharing expenses paid may be subject to clawback from employees, former employees and Contributing Partners to the extent not indemnified. When applicable, the accrual for potential clawback of previously distributed profit sharing amounts, which is a component of due from related parties on the condensed consolidated statements of financial condition, represents all amounts previously distributed to employees, former employees and Contributing Partners that would need to be returned to the general partner if the Apollo funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual general partner receivable, however, would not become realized until the end of a fund’s life.

Changes in the fair value of the contingent obligations that were recognized in connection with certain Apollo acquisitions are reflected in the Company’s condensed consolidated statements of operations as profit sharing expense.

The Incentive Pool enables certain partners and employees to earn discretionary compensation based on ~~carried interest~~performance fees realizations earned by the Company in a given year, which amounts are reflected in profit sharing expense in the accompanying

condensed consolidated financial statements. The Company adopted the Incentive Pool to attract and retain, and provide incentive to, partners and employees of the Company and to more closely align the overall compensation of partners and employees with the overall realized performance of the Company. Allocations to the Incentive Pool and to its participants contain both a fixed and a discretionary component and may vary year-to-year depending on the overall realized performance of the Company and the contributions and performance of each participant. There is no assurance that the Company will continue to compensate individuals through performance-based incentive arrangements in the future and there may be periods when the executive committee of the Company’s manager determines that allocations of realized ~~carried interest income~~performance fees are not sufficient to compensate individuals, which may result in an increase in salary, bonus and benefits.

Fair Value Option. Apollo has elected the fair value option for the Company’s investment in Athene Holding, the assets and liabilities of certain of its consolidated VIEs (including CLOs) ~~and~~, the Company’s ~~investments in its unconsolidated CLOs.~~U.S. Treasury securities with original maturities greater than three months when purchased and certain of the Company’s other investments. Such election is irrevocable and is applied to financial instruments on an individual basis at initial recognition. ~~Apollo has applied the fair value option for certain corporate loans, other investments and debt obligations held by the consolidated VIEs that otherwise would not have been carried at fair value.~~ See notes 3, 4,5, and 56 to the condensed consolidated financial statements for further ~~disclosure on the investments in Athene Holding and financial instruments of the consolidated VIEs for which the fair value option has been elected.~~disclosure.

Equity-Based Compensation. Equity-based compensation is accounted for in accordance with U.S. GAAP, which requires that the cost of employee services received in exchange for an award is generally measured based on the grant date fair value of the award. Equity-based awards that do not require future service (i.e., vested awards) are expensed immediately. Equity-based employee awards that require future service are recognized over the relevant service period. As discussed in note 2 to our condensed consolidated financial statements, in connection with the adoption of new share-based payment guidance during the quarter ended March 31, 2017, the Company made an accounting policy election to no longer estimate forfeitures in determining the number of equity-based awards that are expected to vest. Under the Company’s new policy, which was applied prospectively as of January 1, 2017, forfeitures are accounted for when they occur. Apollo’s equity-based awards consist of, or provide rights with respect to, AOG Units, RSUs, share options, restricted shares, AHL Awards and other equity-based compensation awards. For more information regarding Apollo’s equity-based compensation awards, see note 11 to our condensed consolidated financial statements. The Company’s assumptions made to determine the fair value on grant date are embodied in the calculations of compensation expense.

A significant part of our compensation expense is derived from amortization of RSUs. The fair value of all RSU grants after March 29, 2011 is based on the grant date fair value, which considers the public share price of the Company. RSUs are comprised of Plan Grants, which generally do not pay distributions until vested and, for grants made after 2011, the underlying shares are generally issued by March 15^th after the year in which they vest, and Bonus Grants, which pay distributions on both vested and unvested grants and are generally issued after vesting on an approximate two-month lag. For Plan Grants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions and lack of distributions until vested. For Bonus Grants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions.

We ~~utilize~~utilized the present value of a growing annuity formula to calculate a discount for the lack of pre-vesting distributions on Plan Grant RSUs. There were no ~~Plan Grants awarded during the three months ended March 31, 2016 and no~~ Bonus Grants awarded during the three months ended March 31, ~~2017 and 2016.~~2017. The weighted average for the inputs utilized for the shares granted ~~during the three months ended March 31, 2017~~ are presented in the table below for Plan Grants:



	~~For the Three Months Ended March 31, 2017~~
~~Distribution Yield~~⁽¹⁾	~~6.5%~~
~~Cost of Equity Capital Rate~~⁽²⁾	~~11.3%~~



	For the Three Months Ended March 31,
	2018	2017
Distribution Yield⁽¹⁾	5.3%	6.5%
Cost of Equity Capital Rate⁽²⁾	10.5%	11.3%


(1)	Calculated based on the historical distributions paid during the twelve months ended March 31, ~~2017~~2018 and the Company’s Class A share price as of the measurement date of the grant on a weighted average basis.


(2)	Assumes a discount rate that was equivalent to the opportunity cost of foregoing distributions on unvested Plan Grant RSUs as of the valuation date, based on the Capital Asset Pricing Model (“CAPM”). CAPM is a commonly used mathematical model for developing expected returns.

The following table summarizes the weighted average discounts for Plan ~~Grants for the three months ended March 31, 2017:~~Grants:



	~~For the Three Months Ended March 31, 2017~~
~~Plan Grants:~~
~~Discount for the lack of distributions until vested~~⁽¹⁾	~~11.0%~~



	For the Three Months Ended March 31,
	2018	2017
Plan Grants:
Discount for the lack of distributions until vested⁽¹⁾	10.5%	11.0%


(1)	Based on the present value of a growing annuity calculation.

We utilize the Finnerty Model to calculate a marketability discount on the Plan Grant and Bonus Grant RSUs to account for the lag between vesting and issuance. The Finnerty Model provides for a valuation discount reflecting the holding period restriction embedded in a restricted security preventing its sale over a certain period of time.

The Finnerty Model proposes to estimate a discount for lack of marketability such as transfer restrictions by using an option pricing theory. This model has gained recognition through its ability to address the magnitude of the discount by considering the volatility of a company’s stock price and the length of restriction. The concept underpinning the Finnerty Model is that a restricted security cannot be sold over a certain period of time. Further simplified, a restricted share of equity in a company can be viewed as having forfeited a put on the average price of the marketable equity over the restriction period (also known as an “Asian Put Option”). If we price an Asian Put Option and compare this value to that of the assumed fully marketable underlying security, we can effectively estimate the marketability discount.

The inputs utilized in the Finnerty Model are (i) length of holding period, (ii) volatility and (iii) distribution yield. The weighted average for the inputs utilized for the shares granted ~~during the three months ended March 31, 2017~~ are presented in the table below for Plan Grants and Bonus Grants:



	~~For the Three Months Ended March 31, 2017~~
~~Plan Grants:~~
~~Holding Period Restriction (in years)~~	~~0.2~~
~~Volatility~~⁽¹⁾	~~20.0%~~
~~Distribution Yield~~⁽²⁾	~~6.5%~~



	For the Three Months Ended March 31,
	2018	2017
Plan Grants
Holding Period Restriction (in years)	0.4	0.2
Volatility⁽¹⁾	22.9%	20.0%
Distribution Yield⁽²⁾	5.3%	6.5%
Bonus Grants
Holding Period Restriction (in years)	0.2	N/A
Volatility⁽¹⁾	22.5%	N/A
Distribution Yield⁽²⁾	5.3%	N/A


(1)	The Company determined the expected volatility based on the volatility of the Company’s Class A share price as of the grant date with consideration to comparable companies.


(2)	Calculated based on the historical distributions paid during the twelve months ended March 31, ~~2017~~2018 and the Company’s Class A share price as of the measurement date of the grant on a weighted average basis.

The following table summarizes the weighted average marketability discounts for Plan Grants ~~for the three months ended March 31, 2017:~~and Bonus Grants:



	~~For the Three Months Ended March 31, 2017~~
~~Plan Grants:~~
~~Marketability discount for transfer restrictions~~⁽¹⁾	~~2.0%~~



	For the Three Months Ended March 31,
	2018	2017
Plan Grants:
Marketability discount for transfer restrictions⁽¹⁾	3.4%	2.0%
Bonus Grants:
Marketability discount for transfer restrictions⁽¹⁾	2.3%	N/A


(1)	Based on the Finnerty Model calculation.

For awards prior to the adoption of the new share-based payment guidance, which was applied prospectively as of January 1, 2017, after the grant date fair value was determined, an estimated forfeiture rate was applied. The estimated fair value was determined and recognized over the vesting period on a straight-line basis and a 4.0% forfeiture rate was estimated for RSUs, based on the Company’s historical attrition rate as well as industry comparable rates. If employees were no longer associated with Apollo or if there was no turnover, we would revise its estimated compensation expense to the actual amount of expense based on the RSUs vested at the reporting date in accordance with U.S. GAAP.

Bonus Grants constitute a component of the discretionary annual compensation awarded to certain of our professionals. During 2016, the Company increased the default portion of annual compensation to be awarded as a discretionary Bonus Grant relative to the portion awarded in previous years. The increase in the proportion of discretionary annual compensation awarded as a Bonus Grant will be offset by a decrease in discretionary annual cash bonuses. These changes are intended to further align the interests of Apollo’s employees and stakeholders and strengthen the long-term commitment of our partners and employees.

Fair Value Measurements

See note 56 to our condensed consolidated financial statements for a discussion of the Company’s fair value measurements.

Recent Accounting Pronouncements

A list of recent accounting pronouncements that are relevant to Apollo and its industry is included in note 2 to our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

In the normal course of business, we engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. See note 14 to our condensed consolidated financial statements for a discussion of guarantees and contingent ~~obligations and note 2 for a discussion of derivatives.~~obligations.

Contractual Obligations, Commitments and Contingencies

As of March 31, ~~2017~~2018, the Company’s material contractual obligations consisted of lease obligations, contractual commitments as part of the ongoing operations of the funds and debt obligations. Fixed and determinable payments due in connection with these obligations are as follows:


	Remaining 2017		2018		2019		2020		2021		Thereafter		Total		Remaining 2018		2019		2020		2021		2022		Thereafter		Total
	(in thousands)														(in thousands)
Operating lease obligations⁽¹⁾	$	26,283	$	31,075	$	30,255	$	13,523	$	4,622	$	6,876	$	112,634	$	29,084	$	36,590	$	18,013	$	7,136	$	4,923	$	9,978	$	105,724
Other long-term obligations⁽²⁾⁽¹⁾	19,290		5,948		2,935		1,365		1,365		1,365		32,268		17,401		4,786		1,982		1,982		1,622		1,365		29,138
2013 AMH Credit Facilities - Term Facility⁽³⁾	5,123		6,830		6,830		6,830		300,342		—		325,955
2013 AMH Credit Facilities - Revolver Facility⁽⁴⁾	469		625		625		625		8		—		2,352
2024 Senior Notes⁽⁵⁾	15,000		20,000		20,000		20,000		20,000		548,333		643,333
2026 Senior Notes⁽⁶⁾	16,500		22,000		22,000		22,000		22,000		596,983		701,483
2013 AMH Credit Facilities - Revolver Facility⁽²⁾															469		625		625		8		—		—		1,727
2024 Senior Notes⁽³⁾															15,000		20,000		20,000		20,000		20,000		528,333		623,333
2026 Senior Notes⁽⁴⁾															16,500		22,000		22,000		22,000		22,000		574,983		679,483
2048 Senior Notes⁽⁵⁾															11,250		15,000		15,000		15,000		15,000		678,750		750,000
2014 AMI Term Facility I	219		293		293		293		14,872		—		15,970		253		337		337		17,076		—		—		18,003
2014 AMI Term Facility II	217		289		16,789		—		—		—		17,295		250		333		333		333		19,096		—		20,345
2016 AMI Term Facility I	237		316		316		316		18,095		—		19,280		204		272		272		272		272		21,470		22,762
2016 AMI Term Facility II	212		282		282		282		14,238		—		15,296		245		326		326		16,469		—		—		17,366
Obligations as of March 31, 2017	$	83,550	$	87,658	$	100,325	$	65,234	$	395,542	$	1,153,557	$	1,885,866
Obligations as of March 31, 2018															$	90,656	$	100,269	$	78,888	$	100,276	$	82,913	$	1,814,879	$	2,267,881


(1)	~~The Company has entered into sublease agreements and is expected to contractually receive approximately $0.5 million over the life of the agreements.~~


~~(2)~~	Includes (i) payments on management service agreements related to certain assets and (ii) payments with respect to certain consulting agreements entered into by the Company. Note that a significant portion of these costs are reimbursable by funds.


~~(3)~~	$300 million of the outstanding Term Facility matures in January 2021. The interest rate on the $300 million Term Facility as of March 31, 2017 was 2.28%. See note 9 of the condensed consolidated financial statements for further discussion of the 2013 AMH Credit Facilities.


~~(4)~~(2)	The commitment fee as of March 31, ~~2017~~2018 on the $500 million undrawn Revolver Facility was 0.125%. See note 9 of the condensed consolidated financial statements for further discussion of the 2013 AMH Credit Facilities.


~~(5)~~(3)	$500 million of the 2024 Senior Notes matures in May 2024. The interest rate on the 2024 Senior Notes as of March 31, ~~2017~~2018 was 4.00%. See note 9 of the condensed consolidated financial statements for further discussion of the 2024 Senior Notes.


~~(6)~~(4)	$500 million of the 2026 Senior Notes matures in May 2026. The interest rate on the 2026 Senior Notes as of March 31, ~~2017~~2018 was 4.40%. See note 9 of the condensed consolidated financial statements for further discussion of the 2026 Senior Notes.


(5)	$300 million of the 2048 Senior Notes matures in March 2048. The interest rate on the 2048 Senior Notes as of March 31, 2018 was 5.00%. See note 9 of the condensed consolidated financial statements for further discussion of the 2026 Senior Notes.


Note:	Due to the fact that the timing of certain amounts to be paid cannot be determined or for other reasons discussed below, the following contractual commitments have not been presented in the table above.

(i)

As noted previously, we have entered into a tax receivable agreement with our Managing Partners and Contributing Partners which requires us to pay to our Managing Partners and Contributing Partners 85% of any tax savings received by APO Corp. from our step-up in tax basis. The tax savings achieved may not ensure that we have sufficient cash available to pay this liability and we might be required to incur additional debt to satisfy this liability.


(ii)	Debt amounts related to the consolidated VIEs are not presented in the table above as the Company is not a guarantor of these non-recourse liabilities.

(iii)

In connection with the Stone Tower acquisition, the Company agreed to pay the former owners of Stone Tower a specified percentage of any future ~~carried interest income~~performance fees earned from certain of the Stone Tower funds, CLOs and strategic investment accounts. This contingent consideration liability is remeasured to fair value at each reporting period until the obligations are satisfied. See note 14 to the condensed consolidated financial statements for further information regarding the contingent consideration liability.


(iv)	Commitments from certain of our subsidiaries to contribute to the funds we manage and certain related parties.

Commitments

Certain of our management companies and general partners are committed to contribute to the funds we manage and certain related parties. While a small percentage of these amounts are funded by us, the majority of these amounts have historically been funded by our related parties, including certain of our employees and certain Apollo funds. The table below presents the commitment and remaining commitment amounts of Apollo and its related parties, the percentage of total fund commitments of Apollo and its related parties, the commitment and remaining commitment amounts of Apollo only (excluding related parties), and the percentage of total fund commitments of Apollo only (excluding related parties) for each credit, private equity ~~credit~~ and real ~~estate~~assets fund as of March 31, ~~2017~~2018 as follows ($ in millions):


Fund	Apollo and Related Party Commitments			% of Total Fund Commitments		Apollo Only (Excluding Related Party) Commitments		Apollo Only (Excluding Related Party) % of Total Fund Commitments		Apollo and Related Party Remaining Commitments		Apollo Only (Excluding Related Party) Remaining Commitments		Apollo and Related Party Commitments			% of Total Fund Commitments		Apollo Only (Excluding Related Party) Commitments		Apollo Only (Excluding Related Party) % of Total Fund Commitments		Apollo and Related Party Remaining Commitments		Apollo Only (Excluding Related Party) Remaining Commitments
Credit:
Apollo Credit Opportunity Fund III, L.P. (“COF III”)														$	358.1		10.45	%	$	83.1	2.43	%	$	89.6	$	21.6
Apollo Credit Opportunity Fund II, L.P. (“COF II”)														30.5			1.93		23.4		1.48		0.8		0.6
Apollo Credit Opportunity Fund I, L.P. (“COF I”)														449.2			30.26		29.7		2.00		237.1		4.2
Apollo European Principal Finance Fund III, L.P. (“EPF III”)⁽¹⁾														609.4			13.10		93.2		2.00		553.5		85.7
Apollo European Principal Finance Fund II, L.P. (“EPF II”)⁽¹⁾														413.3			11.69		60.2		1.70		102.1		19.1
Apollo European Principal Finance Fund, L.P. (“EPF I”)⁽¹⁾														330.4			20.74		21.8		1.37		53.8		5.0
Financial Credit Investment III, L.P. (“FCI III”)														224.3			11.76		0.1		0.01		129.0		0.1
Financial Credit Investment II, L.P. (“FCI II”)														244.6			15.72		—		—		122.1		—
Financial Credit Investment I, L.P. (“FCI I”)														151.3			27.07		—		—		97.8		—
Apollo Structured Credit Recovery Master Fund IV, L.P. (“SCRF IV”)														351.8			20.58		36.8		2.15		228.7		23.9
MidCap														1,672.6			80.23		110.9		5.32		199.0		31.0
Apollo Moultrie Credit Fund, L.P.														400.0			100.00		—		—		180.0		—
Apollo/Palmetto Short-Maturity Loan Portfolio, L.P.														300.0			100.00		—		—		—		—
Apollo Asia Private Credit Fund, L.P. (“APC”)														158.5			69.06		0.1		0.04		40.4		—
Apollo Energy Opportunity Fund, L.P. (“AEOF”)														125.5			12.01		25.5		2.44		92.8		18.9
Athora⁽¹⁾														615.0			22.99		153.8		5.75		504.7		126.2
VA Capital Company LLC⁽²⁾														229.1			44.41		118.3		22.93		229.1		118.3
Other Credit														2,496.5			Various		234.9		Various		1,090.2		102.7
Private Equity:
Fund IX⁽³⁾														1,847.5			7.47		822.5		3.33		1,847.5		822.5
Fund VIII	$	1,543.5		8.40	%	$	396.5	2.16	%	$	630.2	$	164.0	1,543.5			8.40		395.5		2.15		443.5		115.2
Fund VII	467.2			3.18		178.1		1.21		74.4		28.0		467.2			3.18		178.1		1.21		69.7		25.7
Fund VI	246.3			2.43		6.1		0.06		9.7		0.2		246.3			2.43		6.1		0.06		9.7		0.2
Fund V	100.0			2.67		0.5		0.01		6.2		—		100.0			2.67		0.5		0.01		6.2		—
Fund IV	100.0			2.78		0.2		0.01		0.5		—		100.0			2.78		0.2		0.01		0.5		—
AION	151.5			18.34		50.0		6.05		89.7		29.2		151.5			18.34		50.0		6.05		73.7		23.8
ANRP I	426.1			32.21		10.1		0.76		97.4		2.1		426.1			32.21		10.1		0.76		68.8		1.3
ANRP II	581.2			16.83		48.0		1.39		430.5		40.1		581.2			16.83		25.9		0.75		305.1		13.5
A.A. Mortgage Opportunities, L.P.	425.0			84.46		—		—		—		—		425.0			84.46		—		—		—		—
Apollo Rose, L.P.	299.1			100.00		—		—		134.8		—		299.1			100.00		—		—		74.3		—
Champ, L.P.	110.0			100.00		17.6		16		11.2		1.9		231.5			80.14		39.2		13.57		24.7		11.0
Apollo Royalties Management, LLC	108.6			100.00		—		—		—		—		108.6			100.00		—		—		—		—
Other Private Equity	110.5			Various		10.5		Various		63.7		6.1		140.5			Various		6.3		Various		22.1		0.9
Credit:
Apollo Credit Opportunity Fund III, L.P. (“COF III”)	358.1			10.45		83.1		2.43		81.1		19.3
Apollo Credit Opportunity Fund II, L.P. (“COF II”)	30.5			1.93		23.4		1.48		0.8		0.6
Apollo Credit Opportunity Fund I, L.P. (“COF I”)	449.2			30.25		29.7		2.00		237.1		4.2
Apollo European Principal Finance Fund III, L.P. (“EPF III”)⁽²⁾	491.4			17.85		66.4		2.41		491.4		66.4
Apollo European Principal Finance Fund II, L.P. (“EPF II”)⁽²⁾	409.6			12.08		63.4		1.87		111.8		20.7
Apollo European Principal Finance Fund, L.P. (“EPF I”)⁽²⁾	286.3			20.75		18.9		1.37		46.6		4.3
Financial Credit Investment II, L.P. (“FCI II”)	244.6			15.73		—		—		80.9		—
Financial Credit Investment I, L.P. (“FCI I”)	95.3			17.05		—		—		60.5		—
Apollo Structured Credit Recovery Master Fund III, L.P. (“SCRF III”)	230.2			18.59		3.6		0.29		91.4		1.4
Apollo Structured Credit Recovery Master Fund II, Ltd. (“SCRF II”)	7.8			7.47		—		—		—		—
MidCap	1,672.6			80.23		110.9		5.32		229.0		31.0
Apollo Moultrie Credit Fund, L.P.	400.0			100.00		—		—		255.0		—
Apollo/Palmetto Short-Maturity Loan Portfolio, L.P.	300.0			100.00		—		—		—		—
Apollo Asia Private Credit Fund, L.P. (“APC”)	158.5			69.06		0.1		0.04		—		—
Apollo Energy Opportunity Fund, L.P. (“AEOF”)	125.5			12.01		25.5		2.44		94.7		19.2
Other Credit	380.8			Various		208.2		Various		271.9		112.8
Real Estate:
U.S. RE Fund II	377.5			49.01		7.6		0.99		179.3		3.7
U.S. RE Fund I	434.2		⁽¹⁾	66.85		16.4		2.53		125.9		2.9
CPI Capital Partners North America, L.P.	7.6			1.27		2.1		0.35		0.6		0.2
CPI Capital Partners Europe, L.P.⁽²⁾	5.8			0.47		—		—		0.4		—
Real Assets:
U.S. RE Fund II⁽⁴⁾														400.4		⁽³⁾	46.45		4.7		0.55		197.0		2.6
U.S. RE Fund I⁽⁴⁾														435.5		⁽³⁾	66.18		16.8		2.55		123.2		2.8
CPI Capital Partners Europe, L.P.⁽¹⁾														6.7			0.47		—		—		—		—
CPI Capital Partners Asia Pacific, L.P.	6.9			0.53		0.5		0.04		0.1		—		6.9			0.53		0.5		0.04		0.1		—
Apollo Asia Real Estate Fund, L.P.	206.9			73.39		6.9		2.44		205.4		6.9
Other Real Estate	98.7			Various		1.7		Various		12.3		0.3
Asia RE Fund														455.9		⁽³⁾	77.47		8.4		1.42		337.7		6.3
Other Real Assets														81.2			Various		1.8		Various		11.6		0.2
Other:
Apollo SPN Investments I, L.P.	27.4			0.68		27.4		0.68		23.0		23.0		15.6			0.39		15.6		0.39		10.4		10.4
Total	$	11,474.4				$	1,413.4			$	4,147.5	$	588.5	$	17,230.3				$	2,574.0			$	7,576.5	$	1,593.7


(1)	Apollo’s commitment in these funds is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.23 as of March 31, 2018.

(2)

Commitment amounts in the table above represent Apollo and Athene’s initial capital commitment to VA Capital. Apollo and Athene each committed additional capital in the event that the third party investors do not fund their commitments in respect of the transaction. Inclusive of such additional commitments, Apollo and Athene have maximum commitments of $244.4 million and $229.6 million, respectively.


(3)	Apollo Only (Excluding Related Party) Remaining Commitments related to Fund IX are subject to future syndication to Apollo employees.


(4)	Figures for U.S. RE Fund I include base, additional, and co-investment commitments. A co-investment vehicle within U.S. RE Fund I is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to ~~$1.26~~$1.40 as of March 31, ~~2017.~~2018. Figures for U.S. RE Fund II and Asia RE Fund include co-investment commitments.


~~(2)~~	~~Apollo’s commitment in these funds is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.07 as of March 31, 2017.~~

On April 30, 2015, Apollo entered into the AAA Investments Credit Agreement (see note 13 of our condensed consolidated financial statements for further disclosure regarding this facility). Under the terms of the AAA Investments Credit Agreement, the Company shall make available to AAA Investments one or more advances at the discretion of AAA Investments in the aggregate amount not to exceed a balance of $10.0 million at an applicable rate of LIBOR plus 1.5%. The Company receives an annual commitment fee of 0.125% on the unused portion of the loan. As of March 31, 2017 and December 31, 2016, $4.0 million had been advanced by the Company and remained outstanding on the AAA Investments Credit Agreement.

The 2013 AMH Credit Facilities - Term Facility, 2024 Senior Notes, 2026 Senior Notes and ~~2026~~2048 Senior Notes will have future impacts on our cash uses. See note 9 of our condensed consolidated financial statements for information regarding the Company’s debt arrangements.

Contingent ~~Obligations—~~Obligation—~~Carried interest income~~Performance fees with respect to certain credit and private equity funds and ~~certain credit and~~ real ~~estate~~assets funds is subject to reversal in the event of future losses to the extent of the cumulative ~~carried interest~~performance fees recognized in income to date. See note 14 toof our condensed consolidated financial statements for a description of our contingent ~~obligations.~~obligation.

One of the Company’s subsidiaries, AGS, provides underwriting commitments in connection with securities offerings to the portfolio companies of the funds Apollo manages. As of March 31, 2018, there were no underwriting commitments outstanding related to such offerings.

As of March 31, 2018, one of the Company’s subsidiaries had unfunded contingent commitments of $4.9 million, to facilitate fundings at closing by lead arrangers for syndicated term loans issued by portfolio companies of funds managed by Apollo. The commitments expired on April 16, 2018, May 5, 2018 and May 7, 2018, respectively, and were not funded.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our predominant exposure to market risk is related to our role as investment manager and general partner for our funds and the sensitivity to movements in the fair value of their investments and resulting impact on ~~carried interest income~~performance fees and management fee revenues. Our direct investments in the funds also expose us to market risk whereby movements in the fair values of the underlying investments will increase or decrease both net gains (losses) from investment activities and income (loss) from equity method investments. For a discussion of the impact of market risk factors on our financial instruments see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Investments, at Fair Value.”

The fair value of our financial assets and liabilities of our funds may fluctuate in response to changes in the value of investments, foreign exchange, commodities and interest rates. The net effect of these fair value changes impacts the gains and losses from investments in our condensed consolidated statements of operations. However, the majority of these fair value changes are absorbed by the Non-Controlling Interests.

The Company is subject to a concentration risk related to the investors in its funds. Although there are more than 1,000 investors in Apollo’s active credit, private equity ~~credit~~ and real ~~estate~~assets funds, no individual investor accounts for more than 10% of the total committed capital to Apollo’s active funds.

Risks are analyzed across funds from the “bottom up” and from the “top down” with a particular focus on asymmetric risk. We gather and analyze data, monitor investments and markets in detail, and constantly strive to better quantify, qualify and circumscribe relevant risks.

Each risk management process is subject to our overall risk tolerance and philosophy and our enterprise-wide risk management framework. This framework includes identifying, measuring and managing market, credit and operational risks at each segment, as well as at the fund and Company level.

Each segment runs its own investment and risk management process subject to our overall risk tolerance and philosophy:

The investment process of our private equity funds involves a detailed analysis of potential acquisitions, and investment management teams assigned to monitor the strategic development, financing and capital deployment decisions of each portfolio investment.

Our credit funds continuously monitor a variety of markets for attractive trading opportunities, applying a number of traditional and customized risk management metrics to analyze risk related to specific assets or portfolios, as well as, fund-wide risks.

At the direction of the Company’s manager, the Company has established a risk committee comprised of various members of senior management including the Company’s Chief Financial Officer, Chief Legal Officer, and the Company’s Chief Risk Officer. The risk committee is tasked with assisting the Company’s manager in monitoring and managing enterprise-wide

risk. The risk committee generally meets on a quarterly basis and reports to senior management of the Company’s manager at such times as the committee deems appropriate and at least on an annual basis.

On at least a monthly basis, the Company’s risk department provides a summary analysis of fund level market and credit risk to the portfolio managers of the Company’s funds and the heads of the various business segments. On a periodic basis, the Company’s risk department presents a consolidated summary analysis of fund level market and credit risk to the Company’s risk committee. In addition, the Company’s Chief Risk Officer reviews specific investments from the perspective of risk mitigation and discusses such analysis with the Company’s risk committee and/or the executive committee of the Company’s manager at

such times as the Company’s Chief Risk Officer determines such discussions are warranted. On an annual basis, the Company’s Chief Risk Officer provides senior management of the Company’s manager with a comprehensive overview of risk management along with an update on current and future risk initiatives.

Impact on Management Fees—Our management fees are based on one of the following:

capital commitments to an Apollo fund;

capital invested in an Apollo fund;

the gross, net or adjusted asset value of an Apollo fund, as defined; or

as otherwise defined in the respective agreements.

Management fees could be impacted by changes in market risk factors and management could consider an investment permanently impaired as a result of (i) such market risk factors causing changes in invested capital or in market values to below cost, in the case of certain credit funds and our private equity ~~funds and certain credit~~ funds or (ii) such market risk factors causing changes in gross or net asset value, for the credit funds. The proportion of our management fees that are based on NAV is dependent on the number and types of our funds in existence and the current stage of each fund’s life cycle.

Impact on Advisory and Transaction Fees—We earn transaction fees relating to the negotiation of credit, private equity ~~credit~~ and real ~~estate~~assets transactions and may obtain reimbursement for certain out-of-pocket expenses incurred. Subsequently, on a quarterly or annual basis, ongoing advisory fees, and additional transaction fees in connection with additional purchases, dispositions, or follow-on transactions, may be earned. Management Fee Offsets and any broken deal costs, if applicable, are reflected as a reduction to advisory and transaction ~~fees from related parties.~~fees. Advisory and transaction fees will be impacted by changes in market risk factors to the extent that they limit our opportunities to engage in credit, private equity ~~credit~~ and real ~~estate~~assets transactions or impair our ability to consummate such transactions. The impact of changes in market risk factors on advisory and transaction fees is not readily predicted or estimated.

Impact on ~~Carried Interest Income~~Performance Fees—We earn ~~carried interest income~~performance fees from our funds as a result of such funds achieving specified performance criteria. Our ~~carried interest income~~performance fees will be impacted by changes in market risk factors. However, several major factors will influence the degree of impact:

the performance criteria for each individual fund in relation to how that fund’s results of operations are impacted by changes in market risk factors;

whether such performance criteria are annual or over the life of the fund;

to the extent applicable, the previous performance of each fund in relation to its performance criteria; and

whether each funds’ ~~carried interest~~performance fees distributions are subject to contingent repayment.

As a result, the impact of changes in market risk factors on ~~carried interest income~~performance fees will vary widely from fund to fund. The impact is heavily dependent on the prior and future performance of each fund, and therefore is not readily predicted or estimated.

Market Risk—We are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues and expenses will be adversely affected by changes in market conditions. Market risk is inherent in each of our investments and activities, including equity investments, loans, short-term borrowings, long-term debt, hedging instruments, credit default swaps and derivatives. Just a few of the market conditions that may shift from time to time, thereby exposing us to market risk, include fluctuations in interest and currency exchange rates, equity prices, changes in the implied volatility of interest rates and price deterioration. Volatility in debt and equity markets can impact our pace of capital deployment, the timing of receipt of transaction fee revenues and the timing of realizations. These market conditions could have an impact on the value of fund investments and rates of return. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on our results from operations and our overall financial condition.

We monitor market risk using certain strategies and methodologies which management evaluates periodically for appropriateness. We intend to continue to monitor this risk going forward and continue to monitor our exposure to all market factors.

Interest Rate Risk—Interest rate risk represents exposure we and our funds have to instruments whose values vary with the change in interest rates. These instruments include, but are not limited to, loans, borrowings, investments in interest bearing securities and derivative instruments. We may seek to mitigate risks associated with the exposures by having our funds take offsetting positions in derivative contracts. Hedging instruments allow us to seek to mitigate risks by reducing the effect of movements in the level of interest rates, changes in the shape of the yield curve, as well as, changes in interest rate volatility. Hedging instruments used to mitigate these risks may include related derivatives such as options, futures and swaps.

Credit Risk—Certain of our funds are subject to certain inherent risks through their investments.

Certain of our entities invest substantially all of their excess cash in open-end money market funds and money market demand accounts, which are included in cash and cash equivalents. The money market funds invest primarily in government securities and other short-term, highly liquid instruments with a low risk of loss. We continually monitor the funds’ performance in order to manage any risk associated with these investments.

Certain of our funds hold derivative instruments that contain an element of risk in the event that the counterparties may be unable to meet the terms of such agreements. We seek to minimize our risk exposure by limiting the counterparties with which our funds enter into contracts to banks and investment banks who meet established credit and capital guidelines. As of March 31, ~~2017,~~2018, we do not expect any counterparty to default on its obligations and therefore do not expect to incur any loss due to counterparty default.

Foreign Exchange Risk—Foreign exchange risk represents exposures our funds have to changes in the values of current fund holdings and future cash flows denominated in other currencies and investments in non-U.S. companies. The types of investments exposed to this risk include investments in foreign subsidiaries, foreign currency-denominated loans, foreign currency-denominated transactions, and various foreign exchange derivative instruments whose values fluctuate with changes in currency exchange rates or foreign interest rates. Instruments used to mitigate this risk are foreign exchange options, currency swaps, futures and forwards. These instruments may be used to help insulate our funds against losses that may arise due to volatile movements in foreign exchange rates and/or interest rates.

In our capacity as investment manager of the funds we manage, we continuously monitor a variety of markets for attractive opportunities for managing risk. For example, certain of the funds we manage may put in place foreign exchange hedges or borrowings with respect to certain foreign currency denominated investments to provide a hedge against foreign exchange exposure.

Non-U.S. Operations—We conduct business throughout the world and are continuing to expand into foreign markets. We currently have offices outside the U.S. in Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong and Shanghai and have been strategically growing our international presence. Our fund investments and our revenues are primarily derived from our U.S. operations. With respect to our non-U.S. operations, we are subject to risk of loss from currency fluctuations, social instability, changes in governmental policies or policies of central banks, expropriation, nationalization, unfavorable political and diplomatic developments and changes in legislation relating to non-U.S. ownership. Our funds also invest in the securities of companies which are located in non-U.S. jurisdictions. As we continue to expand globally, we will continue to focus on monitoring and managing these risk factors as they relate to specific non-U.S. investments.


ITEM 4.	CONTROLS AND PROCEDURES

We maintain “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission 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. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end

of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission 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.

No changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) occurred during our most recent quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

See note 14 to our condensed consolidated financial statements for a summary of the Company’s legal proceedings.

ITEM 1A. RISK FACTORS

For a discussion of our potential risks and uncertainties, see the information under the heading "Risk Factors" in our ~~2016~~2017 Annual Report, which is accessible on the Securities and Exchange Commission's website at www.sec.gov. There have been no material changes to the risk factors for the three months ended March 31, ~~2017.~~2018.

The risks described in our ~~2016~~2017 Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/ or operating results.


ITEM 2.	UNREGISTERED SALE OF EQUITY SECURITIES

On February 5, 2018, February 7, ~~2017~~2018 and ~~February 10, 2017,~~March 20, 2018, we issued ~~1,683,662~~341,214, 1,970,611 and ~~136~~861 Class A shares, respectively, net of taxes to Apollo Management Holdings, L.P., a subsidiary of Apollo Global Management, LLC, in connection with issuances of shares to participants in the Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Equity Plan”) for an aggregate purchase price of ~~$37.3~~$11.8 million, $66.2 million and ~~$3.0~~$28.9 thousand, respectively. The issuance was exempt from registration under the Securities Act in accordance with Section 4(a)(2) and Rule 506(b) thereof, as transactions by the issuer not involving a public offering. We determined that the purchaser of Class A shares in the transactions, Apollo Management Holdings, L.P., was an accredited investor.

Issuer Purchases of Equity Securities

The following table sets forth purchases of our Class A shares made by us or on our behalf during the fiscal quarter ended March 31, ~~2017.~~2018.

Period
Total Number of Class A Shares Purchased⁽¹⁾
Average Price
Paid per Share
January 1, 2017 through January 31, 2017 —
$ —
February 1, 2017 through February 28, 2017 —
—
March 1, 2017 through March 31, 2017 6,612
22.79
Total 6,612



Period	Number of Class A Shares Purchased⁽¹⁾	Average Price Paid per Share		Class A Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	Approximate Dollar Value of Class A Shares that May be Purchased Under the Plan or Programs
January 1, 2018 through January 31, 2018	—	$	—	—	$	130,216,401
February 1, 2018 through February 28, 2018	1,200,000	34.02		777,310	103,772,315
March 1, 2018 through March 31, 2018	—	—		—	103,772,315
Total	1,200,000			777,310

(1)

During the fiscal quarter ended March 31, ~~2017,~~2018, we repurchased 422,690 Class A shares at an average price paid per share of $34.02 in open-market transactions not pursuant to a publicly-announced repurchase plan or program. Such number of ~~our~~ Class A shares was equal to the number of Class A restricted shares issued under ~~our equity incentive plan~~the 2007 Equity Plan during the quarter and the prior quarter. ~~All such repurchases were made~~See note 12 for further information on Class A Shares.

(2)

In February 2016, the Company announced its adoption of a program to repurchase up to $250 million in ~~open-market~~the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through a reduction of Class A shares to be issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan, which we refer to as net share settlement. Under the share repurchase program, shares may be repurchased from time to time in open market transactions, ~~not pursuant to a publicly-announced repurchase plan~~in privately negotiated transactions or ~~program.~~otherwise, with the size

In February 2016, the Company announced its adoption of a program to repurchase up to $250 million in the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through a reduction of Class A shares to be issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan, which we refer to as net share settlement. Under the share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise, with the size

and timing of these repurchases depending on legal requirements, price, market and economic conditions and other factors. The Company expects that the share repurchase program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used to repurchase Class A shares. The share repurchase program does not require the Company to repurchase any specific number of Class A shares, and the share repurchase program may be suspended, extended, modified or discontinued at any time. Reductions of Class A shares issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan are not included in the table. ~~There were no~~The Company intends to continue the net share ~~repurchases made as part~~settlement program in excess of the ~~share~~$100 million pursuant to the repurchase program ~~during the three months ended March 31, 2017, and as of March 31, 2017, the approximate dollar value of Class A shares that may be purchased under the program is $137.1 million.~~announced in February 2016.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS



Exhibit Number		Exhibit Description

3.1		Certificate of Formation of Apollo Global Management, LLC (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

3.2		~~Second~~ Third Amended and Restated Limited Liability Company Agreement of Apollo Global Management, LLC dated March ~~7, 2017~~19, 2018 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March ~~7, 2017~~19, 2018 (File No. 001-35107)).

4.1		Specimen Certificate evidencing the Registrant’s Class A shares (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

4.2		Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)).

4.3		First Supplemental Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)).

4.4		Form of 4.000% Senior Note due 2024 (included in Exhibit 4.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107), which is incorporated by reference).

4.5		Second Supplemental Indenture dated as of January 30, 2015, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings X, L.P. and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

4.6		Third Supplemental Indenture dated as of February 1, 2016, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings XI, LLC and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

4.7		Fourth Supplemental Indenture dated as of May 27, 2016, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2016 (File No. 001-35107)).

*4.8		Fifth Supplemental Indenture dated as of April 13, 2017, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings XII, L.P. and Wells Fargo Bank, National Association, as ~~trustee.~~trustee (incorporated by reference to Exhibit 4.8 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

4.9		Form of 6.375% Series A Preferred Shares Certificate (incorporated by reference to Exhibit ~~3.2~~4.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 7, 2017 (File No. 001-35107)).



Exhibit Number		Exhibit Description

4.10		Sixth Supplemental Indenture dated as of March 15, 2018, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the registrant’s Form 8-K filed with the Securities and Exchange Commission on March 15, 2018 (File No. 001-35107)).

4.11		Form of 6.375% Series B Preferred Shares Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 19, 2018 (File No. 001-35107)).

10.1		Amended and Restated Limited Liability Company Operating Agreement of AGM Management, LLC dated as of July 10, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

*10.2		Fourth Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings I, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.3		Fourth Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings II, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.4		Fourth Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings III, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.5		Fourth Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IV, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.5 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

+10.6		Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.7		Agreement Among Principals, dated as of July 13, 2007, by and among Leon D. Black, Marc J. Rowan, Joshua J. Harris, Black Family Partners, L.P., MJR Foundation LLC, AP Professional Holdings, L.P. and BRH Holdings, L.P. (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.8		Shareholders Agreement, dated as of July 13, 2007, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowan and Joshua J. Harris (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

*10.9		Fifth Amended and Restated Exchange Agreement, dated as of April 28, 2017, by and among Apollo Global Management, LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, Apollo Principal Holdings XII, L.P., AMH Holdings (Cayman), L.P. and the Apollo Principal Holders (as defined therein) from time to time party ~~thereto.~~thereto (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).



Exhibit Number		Exhibit Description

10.10		Amended and Restated Tax Receivable Agreement, dated as of May 6, 2013, by and among APO Corp., Apollo Principal Holdings II, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings VI, Apollo Principal Holdings VIII, L.P., AMH Holdings (Cayman), L.P. and each Holder defined therein. (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q for the period ended June 30, 2016 (File No. 001-35107)).

10.11		Employment Agreement with Leon D. Black dated January 4, 2017 (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).



~~Exhibit~~ ~~Number~~		~~Exhibit Description~~

10.12		Employment Agreement with Marc J. Rowan dated January 4, 2017 (incorporated by reference to Exhibit 10.12 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).

10.13		Employment Agreement with Joshua J. Harris dated January 4, 2017 (incorporated by reference to Exhibit 10.13 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).

*10.14		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings V, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.14 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.15		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VI, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.15 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.16		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings VII, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.16 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.17		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VIII, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.17 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.18		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IX, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.18 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.19		Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings X, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.19 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.20		Second Amended and Restated Limited Liability Company Agreement of Apollo Principal Holdings XI, LLC dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.20 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*10.21		Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings XII, L.P. dated as of March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.21 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

10.22		Fourth Amended and Restated Limited Partnership Agreement of Apollo Management Holdings, L.P. dated as of October 30, 2012 (incorporated by reference to Exhibit 10.25 to the Registrant’s Form 10-Q for the period ended March 31, 2013 (File No. 001-35107)).



Exhibit Number		Exhibit Description


10.23		Settlement Agreement, dated December 14, 2008, by and among Huntsman Corporation, Jon M. Huntsman, Peter R. Huntsman, Hexion Specialty Chemicals, Inc., Hexion LLC, Nimbus Merger Sub, Inc., Craig O. Morrison, Leon Black, Joshua J. Harris and Apollo Global Management, LLC and certain of its affiliates (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).



~~Exhibit~~ ~~Number~~		~~Exhibit Description~~

10.24		First Amendment and Joinder, dated as of August 18, 2009, to the Shareholders Agreement, dated as of July 13, 2007, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowan and Joshua J. Harris (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.25		Joinder, dated as of May 5, 2016, to the Shareholders Agreement, dated as of July 13, 2007, as amended by the First Amendment and Joinder dated as of August 18, 2009, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, MJH Partners, L.P., Leon D. Black, Marc J. Rowan and Joshua J. Harris, and, solely in connection with Article VII of the Agreement, APO Corp., APO Asset Co., LLC, APO (FC), LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P. and Apollo Management Holdings, L.P. (incorporated by reference to Exhibit 10.24 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

*10.26		Joinder, dated as of May 3, 2017, to the Shareholders Agreement, dated as of July 13, 2007, as amended by the First Amendment and Joinder dated as of August 18, 2009, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, MJH Partners, L.P., Leon D. Black, Marc J. Rowan and Joshua J. Harris, and, solely in connection with Article VII of the Agreement, APO Corp., APO Asset Co., LLC, APO (FC), LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P. and Apollo Management Holdings, L.P. and as supplemented by the Joinder dated as of May 5, 2016, by and among Apollo Principal Holdings X, L.P., AMH Holdings (Cayman), L.P., Apollo Principal Holdings XI, LLC, APO (FC II), LLC and APO UK (FC), ~~Limited.~~Limited (incorporated by reference to Exhibit 10.26 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

10.27		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.28		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Plan Grants) (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.29		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Bonus Grants) (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.30		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for new independent directors) (incorporated by reference to Exhibit 10.31 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).



Exhibit Number		Exhibit Description

+10.31		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for continuing independent directors) (incorporated by reference to Exhibit 10.32 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.32		Form of Restricted Share Award Grant Notice and Restricted Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.33 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).



~~Exhibit~~ ~~Number~~		~~Exhibit Description~~

+10.33		Form of Share Award Grant Notice and Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Retired Partners) (incorporated by reference to Exhibit 10.34 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.34		Apollo Management Companies AAA Unit Plan (incorporated by reference to Exhibit 10.34 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.35		Non-Qualified Share Option Agreement pursuant to the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan with Marc Spilker dated December 2, 2010 (incorporated by reference to Exhibit 10.40 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.36		Amended Form of Independent Director Engagement Letter (incorporated by reference to Exhibit 10.38 to the Registrant’s Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)).

+10.37		Employment Agreement with Martin Kelly, dated July 2, 2012 (incorporated by reference to Exhibit 10.42 to the Registrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

*+10.38		Employment Agreement with John Suydam, dated July 19, 2017 (incorporated by reference to Exhibit 10.38 to the Registrant’s Form 10-Q for the period ended September 30, 2017 (File No. 001-35107))

10.39		Third Amended and Restated Exempted Limited Partnership Agreement of AMH Holdings (Cayman), L.P., dated March 7, ~~2017.~~2017 (incorporated by reference to Exhibit 10.38 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

+~~10.39~~10.40		Amended and Restated Limited Partnership Agreement of Apollo Advisors VI, L.P., dated as of April 14, 2005 and amended as of August 26, 2005 (incorporated by reference to Exhibit 10.41 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.40~~10.41		Third Amended and Restated Limited Partnership Agreement of Apollo Advisors VII, L.P. dated as of July 1, 2008 and effective as of August 30, 2007 (incorporated by reference to Exhibit 10.42 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.41~~10.42		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors I, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

~~+10.42~~

Exhibit Number		Exhibit Description

+10.43		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors II, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.44 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.43~~10.44		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Liquidity Advisors, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.45 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.44~~10.45		Second Amended and Restated Limited Partnership Agreement of Apollo Credit Liquidity CM Executive Carry, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.46 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).



~~Exhibit~~ ~~Number~~ +10.46		~~Exhibit Description~~

~~+10.45~~		Second Amended and Restated Limited Partnership Agreement Apollo Credit Opportunity CM Executive Carry I, L.P. dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.47 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.46~~10.47		Second Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity CM Executive Carry II, L.P. dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.48 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+~~10.47~~10.48		Second Amended and Restated Exempted Limited Partnership Agreement of AGM Incentive Pool, L.P., dated June 29, 2012 (incorporated by reference to Exhibit 10.49 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

~~10.48~~10.49		Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the other guarantors party thereto from time to time, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.50 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

~~10.49~~10.50		Guarantor Joinder Agreement, dated as of January 30, 2015, by Apollo Principal Holdings X, L.P. to the Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.49 to the Registrant’s Form 10-Q for the period ended March 31, 2015 (File No. 001-35107)).

~~10.50~~10.51		Guarantor Joinder Agreement, dated as of February 1, 2016, by Apollo Principal Holdings XI, LLC to the Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.48 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

~~10.51~~

Exhibit Number		Exhibit Description

10.52		Amendment No. 1, dated as of March 11, 2016, to the Credit Agreement, dated as of December 18, 2013, among Apollo Management Holdings, L.P., Apollo Management, L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., AAA Holdings, L.P., Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, ST Holdings GP, LLC and ST Management Holdings, LLC, the guarantors party thereto, the lenders party thereto, the issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 15, 2016 (File No. 001-35107)).

*10.5210.53		Guarantor Joinder Agreement, dated as of April 13, 2017, by Apollo Principal Holdings XII, L.P. to the Credit Agreement, dated as of December 18, 2013, as supplemented and as amended by Amendment No. 1 to the Credit Agreement dated as of March 11, 2016, among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative ~~agent.~~agent (incorporated by reference to Exhibit 10.52 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).



~~Exhibit~~ ~~Number~~ +10.54		~~Exhibit Description~~

~~+10.53~~		Form of Letter Agreement under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014 (incorporated by reference to Exhibit 10.56 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+~~10.54~~10.55		Form of Award Letter under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014 (incorporated by reference to Exhibit 10.57 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+~~10.55~~10.56		Amended and Restated Limited Partnership Agreement of Apollo EPF Advisors, L.P., dated as of February 3, 2011 (incorporated by reference to Exhibit 10.52 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+~~10.56~~10.57		First Amended and Restated Exempted Limited Partnership Agreement of Apollo EPF Advisors II, L.P. dated as of April 9, 2012 (incorporated by reference to Exhibit 10.53 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+~~10.57~~10.58		Amended and Restated Agreement of Exempted Limited Partnership of Apollo CIP Partner Pool, L.P., dated as of December 18, 2014 (incorporated by reference to Exhibit 10.54 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+~~10.58~~10.59		Form of Award Letter under the Amended and Restated Agreement of Exempted Limited Partnership Agreement of Apollo CIP Partner Pool, L.P. (incorporated by reference to Exhibit 10.55 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+~~10.59~~10.60		Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III (APO FC), L.P., dated as of December 18, 2014 (incorporated by reference to Exhibit 10.56 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+~~10.60~~10.61		Form of Award Letter under Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III (APO FC), L.P. (incorporated by reference to Exhibit 10.57 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

*+10.61

Exhibit Number		Exhibit Description

+10.62		Amended and Restated Agreement of Limited Partnership of Apollo Global Carry Pool Aggregator, L.P., dated May 4, 2017 and effective as of July 1, ~~2016.~~2016 (incorporated by reference to Exhibit 10.61 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107)).

*+~~10.62~~10.63		Form of Award Agreement for Apollo Global Carry Pool Aggregator, L.P. (incorporated by reference to Exhibit 10.62 to the Registrant’s Form 10-Q for the period ended March 31, 2017 (File No. 001-35107))

+10.64		Form of Letter Agreement under the Amended and Restated Limited Partnership Agreement of Apollo ANRP Advisors II, L.P. dated March 2, 2017 and effective as of August 21, 2015 (incorporated by reference to Exhibit 10.63 to the Registrant’s Form 10-Q for the period ended June 30, 2017 (File No. 001-35107)).

+10.65		Form of Award Letter under the Amended and Restated Limited Partnership Agreement of Apollo ANRP Advisors II, L.P. dated March 2, 2017 and effective as of August 21, 2015 (incorporated by reference to Exhibit 10.64 to the Registrant’s Form 10-Q for the period ended June 30, 2017 (File No. 001-35107)).

*31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).

*31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).

*32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

*32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

*101.INS		XBRL Instance Document



~~Exhibit~~ ~~Number~~		~~Exhibit Description~~


*101.SCH		XBRL Taxonomy Extension Scheme Document

*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB		XBRL Taxonomy Extension Label Linkbase Document

*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



*	Filed herewith.



+	Management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents

were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

SIGNATURES

Pursuant to the requirements 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.




		Apollo Global Management, LLC
		(Registrant)

Date: May ~~5, 2017~~8, 2018	By:	/s/ Martin Kelly
		Name:	Martin Kelly
		Title:	Chief Financial Officer (principal financial officer and authorized signatory)

- ~~122-~~120-



	Equity Held as of
	March 31, 2017		⁽⁵⁾	December 31, 2016		⁽⁵⁾
Private Equity⁽¹⁾⁽²⁾	$	455,626		$	428,581
Credit⁽¹⁾⁽³⁾	328,255			327,012
Real Estate	31,126			31,071
Total equity method investments⁽⁴⁾	$	815,007		$	786,664



	As of March 31, 2017						As of December 31, 2016
	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior Secured Notes⁽²⁾⁽³⁾	$	714,065	1.71	%		12.0	$	704,976	1.83	%		12.3
Subordinated Notes⁽²⁾⁽³⁾	88,926		N/A		⁽¹⁾	18.9	87,794		N/A		⁽¹⁾	19.2
Total	$	802,991					$	792,770



	As of March 31, 2017
	Level I⁽¹⁾		Level II⁽¹⁾		Level III		Total			Cost of Investments, at Fair Value
Assets
Investments, at fair value:
Investments of consolidated Apollo funds	$	4,535	$	4,424	$	643	$	9,602		$	9,665
Other investments	—		—		45,599		45,599			47,690
Investment in Athene Holding⁽²⁾	—		705,479		—		705,479			387,526
Total investments, at fair value	4,535		709,903		46,242		760,680		⁽⁷⁾	$	444,881
Investments of VIEs, at fair value⁽³⁾	—		848,274		137,344		985,618
Investments of VIEs, valued using NAV	—		—		—		5,435
Total investments of VIEs, at fair value	—		848,274		137,344		991,053
Derivative assets	—		942		—		942
Total Assets	$	4,535	$	1,559,119	$	183,586	$	1,752,675

Liabilities
Liabilities of consolidated Apollo funds	$	338	$	5,273	$	35	$	5,646
Liabilities of VIEs, at fair value⁽³⁾⁽⁵⁾	—		797,328		11,192		808,520
Contingent consideration obligations⁽⁶⁾	—		—		87,663		87,663
Derivative liabilities⁽⁴⁾	—		761		—		761
Total Liabilities	$	338	$	803,362	$	98,890	$	902,590



Distribution Declaration Date	Distribution per Class A Share		Distribution Payment Date	Distribution to Class A Shareholders		Distribution to Non-Controlling Interest Holders in the Apollo Operating Group		Total Distributions from Apollo Operating Group		Distribution Equivalents on Participating Securities
February 3, 2016	0.28		February 29, 2016	51.4		60.5		111.9		2.1
May 6, 2016	0.25		May 31, 2016	46.0		54.0		100.0		1.8
August 3, 2016	0.37		August 31, 2016	68.4		79.9		148.3		2.4
October 28, 2016	0.35		November 30, 2016	64.9		75.4		140.3		2.1
For the year ended December 31, 2016	$	1.25		$	230.7	$	269.8	$	500.5	$	8.4
February 3, 2017	$	0.45	February 28, 2017	$	84.2	$	97.0	$	181.2	$	2.9
For the three months ended March 31, 2017	$	0.45		$	84.2	$	97.0	$	181.2	$	2.9



	As of March 31, 2017			For the Three Months Ended March 31, 2017
	Carried Interest Receivable on an Unconsolidated Basis			Unrealized Carried Interest Income (Loss)			Realized Carried Interest Income		Total Carried Interest Income (Loss)
	(in thousands)
Private Equity Funds:
Fund VIII	$	421,260		$	98,033		$	57,812	$	155,845
Fund VII⁽¹⁾	95,197			20,542			19,817		40,359
Fund VI⁽¹⁾	—		⁽³⁾	35,443			—		35,443
Fund IV and V	310		⁽³⁾	(5,794		)	—		(5,794		)
ANRP I and II	133,131			55,647			372		56,019
AAA/Other⁽²⁾⁽⁵⁾	343,560			(40,252		)	77,460		37,208
Total Private Equity Funds	993,458			163,619			155,461		319,080
Total Private Equity Funds, net of profit share	634,696			108,603			80,209		188,812
Credit Category:
Drawdown	294,950		⁽³⁾	(8,401		)	26,659		18,258
Liquid/Performing	55,582			6,534			3,551		10,085
Permanent capital vehicles ex AAM	43,592			8,189			726		8,915
Total Credit Funds	394,124			6,322			30,936		37,258
Total Credit Funds, net of profit share	133,327			4,107			17,204		21,311
Real Estate Funds:
CPI Funds	304			(59		)	—		(59		)
U.S. RE Fund I & II	22,512			2,249			64		2,313
Other⁽⁵⁾	12,309			414			—		414
Total Real Estate Funds	35,125			2,604			64		2,668
Total Real Estate Funds, net of profit share	20,016			570			38		608
Total	$	1,422,707		$	172,545		$	186,461	$	359,006
Total, net of profit share	$	788,039	⁽⁴⁾	$	113,280		$	97,451	$	210,731



Period	Total Number of Class A Shares Purchased⁽¹⁾	Average Price Paid per Share
January 1, 2017 through January 31, 2017	—	$	—
February 1, 2017 through February 28, 2017	—	—
March 1, 2017 through March 31, 2017	6,612	22.79
Total	6,612