Apollo Global Management LLC (Form: 10-Q, Received: 08/11/2014 17:07:45)

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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 JUNE 30, 2014 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 filer” and “smaller reporting company” in Rule 12b-2 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 T

As of August 8, 2014 there were 156,771,918 Class A shares and 1 Class B share outstanding.

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	TABLE OF CONTENTS
		Page
PART I	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS

	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Financial Condition (Unaudited) as of June 30, 2014 and December 31, 2013	6

	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2014 and 2013	7

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2014 and 2013	8

	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the Six Months Ended June 30, 2014 and 2013	9

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2014 and 2013	10

	Notes to Condensed Consolidated Financial Statements (Unaudited)	11

ITEM 1A.	UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION	81

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	82

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	162

ITEM 4.	CONTROLS AND PROCEDURES	164

PART II	OTHER INFORMATION	164

ITEM 1.	LEGAL PROCEEDINGS	165

ITEM 1A.	RISK FACTORS	166

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	166

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	166

ITEM 4.	MINE SAFETY DISCLOSURES	166

ITEM 5.	OTHER INFORMATION	167

ITEM 6.	EXHIBITS	168

SIGNATURES		174

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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 private equity, credit or real estate 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 ("SEC") on March 3, 2014 (the "2013 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 quarterly 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;

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

“Apollo funds” and “our funds” refer to the funds, alternative asset companies and other entities that are managed by the Apollo Operating Group;

“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 for the funds, partnerships and accounts to which we provide investment management 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 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 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 funds, partnerships and accounts we manage, and the structured portfolio company investments of the funds, partnerships and accounts we manage, 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 that we manage; and


(v)	the fair value of any other assets that we manage for the funds, partnerships and accounts to which we provide investment management services, plus unused credit facilities, including capital commitments to such funds, partnerships and accounts for investments

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that may require pre-qualification 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 no or nominal 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;

Fee-generating AUM consists of assets we manage for the funds, partnerships and accounts to which we provide investment management services and on which we earn management fees or, monitoring fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds, partnerships and accounts we manage. 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 investments of the funds, partnerships and accounts we manage are generally based on the total value of such structured portfolio investments, which normally include leverage, less any portion of such total value that is already considered in fee-generating AUM.

Non-fee generating AUM consists of assets that do not produce management fees or monitoring fees. These assets generally consist of 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 ownership;


(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 AUM refers to the AUM that may eventually produce carried interest income. All funds for which we are

entitled to receive a carried interest income allocation are included in Carry Eligible AUM, which consists of the following:

(i) Carry Generating AUM refers to funds' invested capital that is currently above its hurdle rate or preferred return, and the funds' profit is allocated to the general partner in accordance with the applicable limited partnership agreements or other governing agreements;


(ii)	AUM Not Currently Generating Carry refers to funds' invested capital that is currently below its hurdle rate or preferred return; and


(iii)	Uninvested Carry Eligible AUM refers to available capital for investment or reinvestment subject to the provisions of applicable limited partnership agreements or other governing agreements that are not currently part of the NAV or fair value of investments that may eventually produce carried interest income, which would be allocated to 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.

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We use non-fee generating AUM combined with fee-generating AUM as a performance measure of our 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;

“carried interest,” “carried interest income,” and “incentive income” 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;

“feeder funds” refer to funds that operate by placing substantially all of their assets in, and conducting substantially all of their investment and trading activities through, a master fund, which is designed to facilitate collective investment by the participating feeder funds. With respect to certain of our funds that are organized in a master-feeder structure, the feeder funds are permitted to make investments outside the master fund when deemed appropriate by the fund’s investment manager;

“gross IRR” of a private equity fund represents the cumulative investment-related cash flows for all of the investors in the fund on the basis of the actual timing of investment inflows and outflows (for unrealized investments assuming disposition on June 30, 2014 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;

“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;

“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 private equity fund means the gross IRR applicable to all investors, including related parties which may not pay fees, net of management fees, organizational expenses, transaction costs, and certain other fund expenses (including interest incurred by the fund itself). The realized and the estimated unrealized value is adjusted such that up to 20.0% of the unrealized gain is allocated to the general partner, thereby reducing the balance attributable to fund investors’ carried interest all offset to the extent of interest income, and measures returns based on amounts that, if distributed, would be paid to investors of the fund, to the extent that a private equity fund exceeds all requirements detailed within the applicable fund agreement;

“net return” represents the calculated return that is based on month-to-month changes in net assets and is calculated using the returns that have been geometrically linked based on capital contributions, distributions and dividend reinvestments, as applicable;

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

“permanent capital” means capital of publicly traded vehicles 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, such as AP Alternative Assets, L.P. ("AAA"), Apollo Investment Corporation ("AINV"), Apollo Commercial Real Estate Finance, Inc. ("ARI"), Apollo Residential Mortgage, Inc. ("AMTG"), Apollo Tactical Income Fund Inc. ("AIF"), and Apollo Senior Floating Rate Fund Inc. ("AFT"); such publicly traded vehicles may be required, or elect, to return all or a portion of capital gains and investment income;

“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; and

“Strategic Investors” refer to the California Public Employees’ Retirement System, or “CalPERS,” and an affiliate of the Abu Dhabi Investment Authority, or “ADIA.”

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

JUNE 30, 2014 AND DECEMBER 31, 2013

(dollars in thousands, except share data)



	June 30, 2014			December 31, 2013
Assets:
Cash and cash equivalents	$	1,093,657		$	1,078,120
Cash and cash equivalents held at consolidated funds	1,989			1,417
Restricted cash	7,646			9,199
Investments	2,882,683			2,393,883
Assets of consolidated variable interest entities:
Cash and cash equivalents	1,189,378			1,095,170
Investments, at fair value	13,692,172			14,126,362
Other assets	445,705			280,718
Carried interest receivable	1,988,073			2,287,075
Due from affiliates	247,797			317,247
Fixed assets, net	37,781			40,251
Deferred tax assets	665,120			660,199
Other assets	68,925			44,170
Goodwill	49,243			49,243
Intangible assets, net	77,222			94,927
Total Assets	$	22,447,391		$	22,477,981
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	61,359		$	38,159
Accrued compensation and benefits	85,409			41,711
Deferred revenue	272,727			279,479
Due to affiliates	574,272			595,371
Profit sharing payable	963,922			992,240
Debt	999,008			750,000
Liabilities of consolidated variable interest entities:
Debt, at fair value	12,179,012			12,423,962
Other liabilities	607,141			605,063
Other liabilities	37,363			63,274
Total Liabilities	15,780,213			15,789,259
Commitments and Contingencies (see note 13)
Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Class A shares, no par value, unlimited shares authorized, 156,296,748 and 146,280,784 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively	—			—
Class B shares, no par value, unlimited shares authorized, 1 share issued and outstanding at June 30, 2014 and December 31, 2013	—			—
Additional paid in capital	2,413,115			2,624,582
Accumulated deficit	(1,425,244		)	(1,568,487		)
Appropriated partners’ capital	1,405,064			1,581,079
Accumulated other comprehensive (loss) income	(952		)	95
Total Apollo Global Management, LLC shareholders’ equity	2,391,983			2,637,269
Non-Controlling Interests in consolidated entities	3,134,473			2,669,730
Non-Controlling Interests in Apollo Operating Group	1,140,722			1,381,723
Total Shareholders’ Equity	6,667,178			6,688,722
Total Liabilities and Shareholders’ Equity	$	22,447,391		$	22,477,981

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 (dollars in thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Advisory and transaction fees from affiliates, net	$	60,786		$	65,085		$	176,851		$	112,504
Management fees from affiliates	226,420			155,070			436,211			305,517
Carried interest income from affiliates	284,946			277,106			450,490			1,388,313
Total Revenues	572,152			497,261			1,063,552			1,806,334
Expenses:
Compensation and benefits:
Equity-based compensation	28,711			43,501			87,689			88,787
Salary, bonus and benefits	89,832			69,282			170,362			142,678
Profit sharing expense	160,778			127,244			264,737			550,864
Total Compensation and Benefits	279,321			240,027			522,788			782,329
Interest expense	4,524			7,594			7,638			15,112
Professional fees	20,211			21,665			39,663			37,725
General, administrative and other	25,291			26,037			49,969			48,978
Placement fees	3,489			3,120			5,275			12,478
Occupancy	10,418			10,149			20,321			19,954
Depreciation and amortization	11,115			14,195			22,834			28,813
Total Expenses	354,369			322,787			668,488			945,389
Other Income (Loss):
Net (losses) gains from investment activities	(9,534		)	1,116			213,874			53,249
Net gains (losses) from investment activities of consolidated variable interest entities	43,425			(35,198		)	91,160			12,663
Income from equity method investments	30,701			20,090			53,611			47,880
Interest income	2,726			3,049			6,054			6,140
Other income, net	2,238			2,778			19,769			4,076
Total Other Income (Loss)	69,556			(8,165		)	384,468			124,008
Income before income tax provision	287,339			166,309			779,532			984,953
Income tax provision	(35,037		)	(18,139		)	(67,586		)	(36,718		)
Net Income	252,302			148,170			711,946			948,235
Net income attributable to Non-controlling Interests	(180,634		)	(89,433		)	(568,109		)	(640,520		)
Net Income Attributable to Apollo Global Management, LLC	$	71,668		$	58,737		$	143,837		$	307,715
Net Income Per Class A Share:
Net Income Available to Class A Share – Basic	$	0.33		$	0.32		$	0.64		$	1.94
Net Income Available to Class A Share –Diluted	$	0.33		$	0.32		$	0.64		$	1.93
Weighted Average Number of Class A Shares – Basic	152,852,427			137,289,147			150,328,495			134,285,776
Weighted Average Number of Class A Shares – Diluted	152,852,427			137,289,147			150,328,495			138,104,463

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 (dollars in thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net Income	$	252,302		$	148,170		$	711,946		$	948,235
Other Comprehensive Loss, net of tax:
Net loss from change in fair value of cash flow hedge instruments	(1,043		)	—			(1,043		)	—
Net loss on available-for-sale securities (from equity method investment)	—			(3		)	(4		)	(5		)
Total Other Comprehensive Loss, net of tax	(1,043		)	(3		)	(1,047		)	(5		)
Comprehensive Income	251,259			148,167			710,899			948,230
Comprehensive Income attributable to Non-Controlling Interests	(146,166		)	(129,676		)	(508,818		)	(642,521		)
Comprehensive Income Attributable to Apollo Global Management, LLC	$	105,093		$	18,491		$	202,081		$	305,709

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(dollars in thousands, except share data)



	Apollo Global Management, LLC Shareholders
	Class A Shares	Class B Shares	Additional Paid in Capital			Accumulated Deficit			Appropriated Partners’ Capital			Accumulated Other Comprehensive Income (Loss)			Total Apollo Global Management, LLC Total Shareholders’ Equity			Non- Controlling Interests in Consolidated Entities			Non- Controlling Interests in Apollo Operating Group			Total Shareholders’ Equity
Balance at January 1, 2013	130,053,993	1	$	3,043,334		$	(2,142,020	)	$	1,765,360		$	144		$	2,666,818		$	1,893,212		$	1,143,353		$	5,703,383
Dilution impact of issuance of Class A shares	—	—	4,545			—			—			—			4,545			—			—			4,545
Capital increase related to equity-based compensation	—	—	68,058			—			—			—			68,058			—			19,163			87,221
Capital contributions	—	—	—			—			—			—			—			444,678			—			444,678
Distributions	—	—	(258,816		)	—			(95,906		)	—			(354,722		)	(78,927		)	(439,017		)	(872,666		)
Distributions related to deliveries of Class A shares for RSUs	2,899,114	—	10,911			(41,763		)	—			—			(30,852		)	—			—			(30,852		)
Purchase of AAA units	—	—	—			—			—			—			—			(62,326		)	—			(62,326		)
Net transfers of AAA ownership interest to (from) Non-Controlling Interests in consolidated entities	—	—	(1,921		)	—			—			—			(1,921		)	1,921			—			—
Satisfaction of liability related to AAA RDUs	—	—	1,027			—			—			—			1,027			—			—			1,027
Exchange of AOG Units for Class A shares	8,769,364	—	64,631			—			—			—			64,631			—			(50,819		)	13,812
Net income (loss)	—	—	—			307,715			(2,001		)	—			305,714			30,792			611,729			948,235
Net loss on available-for-sale securities (from equity method investment)	—	—	—			—			—			(5		)	(5		)	—			—			(5		)
Balance at June 30, 2013	141,722,471	1	$	2,931,769		$	(1,876,068	)	$	1,667,453		$	139		$	2,723,293		$	2,229,350		$	1,284,409		$	6,237,052
Balance at January 1, 2014	146,280,784	1	$	2,624,582		$	(1,568,487	)	$	1,581,079		$	95		$	2,637,269		$	2,669,730		$	1,381,723		$	6,688,722
Dilution impact of issuance of Class A shares	—	—	3,184			—			—			—			3,184			—			—			3,184
Capital increase related to equity-based compensation	—	—	72,590			—			—			—			72,590			—			—			72,590
Capital contributions	—	—	—			—			135,356			—			135,356			432,804			—			568,160
Distributions	—	—	(337,282		)	—			(370,662		)	—			(707,944		)	(172,895		)	(513,741		)	(1,394,580		)
Distributions related to deliveries of Class A shares for RSUs	3,797,843	—	7,108			(594		)	—			—			6,514			—			—			6,514
Purchase of AAA units	—	—	—			—			—			—			—			(312		)	—			(312		)
Net transfers of AAA ownership interest to (from) Non-Controlling Interests in consolidated entities	—	—	(3,423		)	—			—			—			(3,423		)	3,423			—			—
Satisfaction of liability related to AAA RDUs	—	—	1,183			—			—			—			1,183			—			—			1,183
Exchange of AOG Units for Class A shares	6,218,121	—	45,173			—			—			—			45,173			—			(34,355		)	10,818
Net income	—	—	—			143,837			59,291			—			203,128			201,723			307,095			711,946
Change in cash flow hedge instruments	—	—	—			—			—			(1,043		)	(1,043		)	—			—			(1,043		)
Net loss on available-for-sale securities (from equity method investment)	—	—	—			—			—			(4		)	(4		)	—			—			(4		)
Balance at June 30, 2014	156,296,748	1	$	2,413,115		$	(1,425,244	)	$	1,405,064		$	(952	)	$	2,391,983		$	3,134,473		$	1,140,722		$	6,667,178

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(dollars in thousands, except share data)



	2014			2013
Cash Flows from Operating Activities:
Net income	$	711,946		$	948,235
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation	87,689			88,787
Non-cash management fees	(14,946		)	—
Depreciation and amortization	5,129			5,766
Amortization of intangible assets	17,705			23,047
Amortization of debt issuance costs	2,655			320
Unrealized (gains) losses from investment in HFA and other investments	(8,833		)	2,092
Non-cash interest income	(1,725		)	(1,656		)
Income from equity awards received for directors’ fees	(242		)	(516		)
Distribution of earnings from equity method investments	29,878			49,556
Income from equity method investments	(53,611		)	(47,880		)
Change in market value on derivatives	(14,039		)	(284		)
Change in fair value of contingent obligations	4,793			9,919
Excess tax benefits from share-based payment arrangements	(7,108		)	—
Deferred taxes, net	19,687			31,509
Net loss on disposal of assets	38			29
Changes in assets and liabilities:
Carried interest receivable	299,002			(136,488		)
Due from affiliates	(119,833		)	(34,517		)
Other assets	(14,697		)	(16,938		)
Accounts payable and accrued expenses	30,308			5,044
Accrued compensation and benefits	43,763			19,778
Deferred revenue	(6,752		)	44,298
Due to affiliates	(70,636		)	(37,598		)
Profit sharing payable	(8,028		)	40,550
Other liabilities	4,134			501
Apollo Funds related:
Net realized gains from investment activities	(16,876		)	(84,326		)
Net unrealized (gains) losses from investment activities	(214,042		)	58,505
Net realized gains on debt	(357		)	(83,397		)
Net unrealized losses on debt	6,528			156,249
Distributions from investment activities	—			62,189
Change in cash held at consolidated variable interest entities	(94,208		)	165,208
Purchases of investments	(4,348,386		)	(4,512,398		)
Proceeds from sale of investments and liquidating distributions	4,796,355			4,967,429
Change in other assets	(164,987		)	(111,683		)
Change in other liabilities	37,008			254,558
Net Cash Provided by Operating Activities	$	937,312		$	1,865,888

Cash Flows from Investing Activities:
Purchases of fixed assets	(2,710		)	(4,669		)
Proceeds from disposals of fixed assets	13			1,381
Cash contributions to equity method investments	(71,563		)	(52,040		)
Cash distributions from equity method investments	27,560			46,225
Change in restricted cash	1,553			3
Net Cash Used in Investing Activities	$	(45,147	)	$	(9,100	)
Cash Flows from Financing Activities:
Principal repayments of debt	(250,000		)	(9,545		)
Issuance of debt	499,008			—
Issuance costs	(5,478		)	—
Distributions related to cash flow hedge instruments	(1,052		)	—
Satisfaction of tax receivable agreement	(32,032		)	—
Satisfaction of contingent obligations	(25,083		)	—
Distributions related to deliveries of Class A shares for RSUs	(594		)	(41,763		)
Distributions to Non-Controlling Interests in consolidated entities	(8,023		)	(6,448		)
Contributions from Non-Controlling Interests in consolidated entities	2,040			304
Distributions paid	(303,591		)	(230,008		)
Distributions paid to Non-Controlling Interests in Apollo Operating Group	(513,741		)	(439,017		)
Excess tax benefits from share-based payment arrangements	7,108			—
Apollo Funds related:
Issuance of debt	1,168,967			332,250
Principal repayment of debt	(1,418,961		)	(1,420,175		)
Purchase of AAA units	(312		)	(62,326		)
Distributions paid	(360,905		)	(95,906		)
Distributions paid to Non-Controlling Interests in consolidated variable interest entities	(19,414		)	(72,479		)
Contributions from Non-Controlling Interests in consolidated variable interest entities	386,007			444,374
Net Cash Used in Financing Activities	$	(876,056	)	$	(1,600,739	)
Net Increase in Cash and Cash Equivalents	16,109			256,049
Cash and Cash Equivalents, Beginning of Period	1,079,537			947,451
Cash and Cash Equivalents, End of Period	$	1,095,646		$	1,203,500
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	6,865		$	23,746
Interest paid by consolidated variable interest entities	76,856			63,219
Income taxes paid	23,266			2,513
Supplemental Disclosure of Non-Cash Investing Activities:
Non-cash contributions to equity method investments	$	—		$	904
Non-cash distributions from equity method investments	(2,966		)	(1,364		)
Supplemental Disclosure of Non-Cash Financing Activities:
Declared and unpaid distributions	(33,691		)	(28,809		)
Non-cash contributions to Non-Controlling Interests in consolidated entities from Appropriated Partners' Capital	9,757			—
Non-cash distributions from Non-Controlling Interests in consolidated entities to Appropriated Partners' Capital	(135,357		)	—
Non-cash contributions from Non-Controlling Interests in Apollo Operating Group related to equity-based compensation	—			19,163
Satisfaction of liability related to AAA RDUs	1,183			1,027
Net transfers of AAA ownership interest to Non-Controlling Interests in consolidated entities	3,423			1,921
Net transfer of AAA ownership interest from Apollo Global Management, LLC	(3,423		)	(1,921		)
Unrealized loss on available for sale securities (from equity method investment)	(4		)	(5		)
Capital increases related to equity-based compensation	72,590			68,058
Dilution impact of issuance of Class A shares	3,184			4,545
Tax benefits related to deliveries of Class A shares for RSUs	—			(10,911		)
Adjustments related to exchange of Apollo Operating Group units:
Deferred tax assets	$	58,696		$	92,080
Due to affiliates	(47,878		)	(78,268		)
Additional paid in capital	(10,818		)	(13,812		)
Non-Controlling Interest in Apollo Operating Group	34,355			50,819

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 AND BASIS OF PRESENTATION

Apollo Global Management, LLC (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 private equity, credit and real estate funds as well as strategic investment accounts ("SIAs"), 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 for the investments made and carried interest income 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; and


•	Real estate —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.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“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. 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 variable interest entities but which the Company controls through a majority voting interest. Intercompany accounts and transactions have been eliminated upon consolidation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 included in the 2013 Annual Report.

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

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 (the "Managing Partners").

As of June 30, 2014 , the Company owned, through three 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, and APO (FC), LLC, an Anguilla limited liability company that is treated as a corporation for U.S. federal income tax purposes (collectively, the “Intermediate Holding Companies”), 41.2% 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.

A.P. 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 June 30, 2014 , Holdings owned the remaining 58.8% of the economic interests in the Apollo Operating Group. The Company consolidates the financial

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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.

Apollo also entered into an exchange agreement with Holdings (as amended, the “Exchange Agreement”) that allows the holders of the AOG Units (and certain permitted transferees thereof), subject to the applicable vesting and minimum retained ownership requirements and transfer restrictions to exchange, upon notice (subject to the terms of the Exchange Agreement), 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. Under 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 will be correspondingly increased.

In May 2013, the Company completed its public offering for resale of approximately 24.3 million Class A shares owned by the California Public Employees' Retirement System, or "CalPERS," and an affiliate of the Abu Dhabi Investment Authority (the "Strategic Investors") and certain of its Managing Partners, Contributing Partners and employees (collectively, the “Selling Shareholders”) at a price to the public of $25.00 per Class A share, which included approximately 3.2 million Class A shares sold by the Selling Shareholders upon the exercise in full of the underwriters' option to purchase additional shares (the “Secondary Offering”). In connection with the Secondary Offering, certain holders of AOG Units exchanged their AOG Units for Class A shares and approximately 8.8 million Class A shares were issued by the Company in the exchange. No proceeds were received by the Company from the sale of Class A shares by the Selling Shareholders in the Secondary Offering. All underwriting costs were borne by the Selling Shareholders. The Company incurred approximately $3.0 million of fees, consisting of legal and professional fees and filing costs, as a result of the Secondary Offering.

As a result of the exchange of AOG Units into Class A shares from the Secondary Offering, the Company's economic interest in the Apollo Operating Group increased and Holdings' economic interest in the Apollo Operating Group decreased, resulting in a transfer of $50.8 million to Apollo Global Management, LLC's shareholders' equity from Non-Controlling Interests in the Apollo Operating Group.

In November 2013, certain holders of AOG Units exchanged their AOG Units for Class A shares and approximately 2.2 million Class A shares were issued by the Company in the exchange. The dilution of Holdings' economic interest in the Apollo Operating Group as a result of the exchange resulted in a transfer of $12.2 million to Apollo Global Management, LLC's shareholders' equity from Non-Controlling Interests in the Apollo Operating Group.

In May 2014, certain holders of AOG Units exchanged their AOG Units for Class A Shares and approximately 6.2 million Class A shares were issued by the Company in the exchange. The dilution of Holdings' economic interest in the Apollo Operating Group, as a result of the exchange, resulted in a transfer of $34.4 million to Apollo Global Management, LLC's shareholders' equity from Non-Controlling Interests in the Apollo Operating Group.

2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation —The types of entities with which Apollo is involved generally include subsidiaries (i.e. 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). 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 its consolidation policy, the Company first considers the appropriate consolidation guidance to apply including consideration of whether the entity qualifies for certain scope exceptions and whether the entity should be evaluated under either the previous rules on consolidation of variable interest entities (“VIEs”) or the amended consolidation rules depending on whether or not the entity qualifies for the deferral as further described below. The Company then performs an assessment to determine whether that entity qualifies as a VIE. An entity in which Apollo holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk (as a group) lack either the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity’s activities that have a significant effect on the success of the legal entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the legal entity,

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

their rights to receive the expected residual returns of the legal entity, or both and substantially all of the legal entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities (“VOEs”) under the voting interest model.

Under the voting interest model, Apollo consolidates those entities it controls through a majority voting interest or through other means, including those VOEs in which the general partner is presumed to have control. Apollo does not consolidate those VOEs in which the presumption of control by the general partner has been overcome through either the granting of substantive rights to the unaffiliated investors to either dissolve the fund or remove the general partner (“kick-out rights”) or the granting of substantive participating rights.

As previously indicated, the consolidation assessment, including 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 whereas others may qualify as VOEs. The granting of substantive kick-out rights is a key consideration in determining whether an entity is a VIE and whether or not that entity should be consolidated. For example, when the unaffiliated holders of equity investment at risk of a fund with sufficient equity to permit the fund to finance its activities without additional subordinated financial support are not granted substantive kick-out rights and the Company is not part of the group of holders of equity investment at risk, the fund is generally determined to be a VIE, as the holders of equity investment at risk as a group lack the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity. Alternatively, when the unaffiliated holders of equity investment at risk are granted substantive kick-out rights, the fund is generally determined to be a VOE. However, in certain cases where the Company holds a substantive equity investment at risk in the fund, the fund may be determined to be a VOE even though substantive kick-out rights were not granted to the unaffiliated holders of equity investment at risk. In these cases, the Company is part of the group of holders of equity investment at risk and therefore the holders of equity investment at risk as a group do not lack the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity.

If the entity is determined to be a VIE under the conditions above, the Company then assesses whether the entity should be consolidated by applying either the previous consolidation rules or the amended consolidation rules depending on whether the entity qualifies for the deferral of the amended consolidation rules as further described below.

VIEs that qualify for the deferral of the amended consolidation rules because certain conditions are met, including if the entities have all the attributes of an investment company and are not securitization or asset-backed financing entities, will continue to apply the previous consolidation rules. VIEs that are securitization or asset-backed financing entities will apply the amended consolidation rules. Under both sets of rules, VIEs for which Apollo is determined to be the primary beneficiary are consolidated.

With respect to VIEs such as Apollo's funds that qualify for the deferral of the amended consolidation rules and therefore apply the previous consolidation rules, Apollo is determined to be the primary beneficiary if its involvement, through holding interests directly or indirectly in the VIE or contractually through other variable interests (e.g., carried interest and management fees), would be expected to absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both. In cases where two or more Apollo related parties hold a variable interest in a VIE, and the aggregate variable interest held by those parties would, if held by a single party, identify that party as the primary beneficiary, then the Company is determined to be the primary beneficiary to the extent it is the party within the related party group that is most closely associated with the VIE.

For VIEs such as Apollo's CLOs that apply the amended consolidation rules, the Company is determined to be the primary beneficiary if it holds a controlling financial interest defined as possessing both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) 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. CLOs are generally determined to be VIEs if they are formed solely to issue collateralized notes in the legal form of debt and therefore do not have sufficient total equity investment at risk to permit the entity to finance its activities without additional subordinated financial support. With respect to such CLOs, Apollo generally possesses a controlling financial interest in, and therefore consolidates, such CLOs in accordance with the amended consolidation rules when Apollo's role as collateral manager provides the Company with the power to direct the activities that most significantly impact the CLO’s economic performance and the Company has the right to receive certain benefits from the CLO (e.g., incentive fees) that could potentially be significant to the CLO.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

redemptions (either by Apollo, affiliates 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 judgments. Under both sets of rules, 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 two or more parties’ equity interests should be aggregated, (iv) 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 (v) evaluating the nature of the relationship and activities of the parties involved in determining which party within a related-party group is most closely associated with the VIE. Where the VIEs have qualified for the deferral, judgments are also made in estimating cash flows to evaluate which member within the equity group absorbs a majority of the expected losses or residual returns of the VIE. Where the VIEs have not qualified for the deferral, 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.

Certain of the consolidated VIEs were formed to issue collateralized notes in the legal form of debt backed by financial assets. The difference between the fair value of the assets and liabilities of these VIEs is presented within appropriated partners’ capital in the condensed consolidated statements of financial condition as these VIEs are funded solely with debt. Changes in the fair value of the assets and liabilities of these VIEs and the related interest and other income is presented within net gains from investment activities of consolidated variable interest entities and net income attributable to Non-Controlling Interests in the condensed consolidated statements of operations. Such amounts are recorded within appropriated partners’ capital as, in each case, the VIE’s note holders, not Apollo, will ultimately receive the benefits or absorb the losses associated with the VIE’s assets and liabilities.

Assets and liability amounts of the consolidated VIEs are shown in separate sections within the condensed consolidated statements of financial condition as of June 30, 2014 and December 31, 2013 .

For additional disclosures regarding VIEs, see note 4 . Intercompany transactions and balances, if any, have been eliminated in consolidation.

Equity Method Investments —For investments in entities over which the Company exercises significant influence but which do not meet the requirements for consolidation, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or loss of such entities. Income (loss) from equity method investments is recognized as part of other income (loss) in the condensed consolidated statements of operations. The carrying amounts of equity method investments are reflected 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.

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. As of June 30, 2014 , the Non-Controlling Interests relating to Apollo Global Management, LLC primarily includes the 58.8% ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partners through their limited partner interests in Holdings and other ownership interests in consolidated entities, which primarily consist of the approximately 97.5% ownership interest held by limited partners in AP Alternative Assets, L.P. ("AAA") as of June 30, 2014 . Non-Controlling Interests also include limited partner interests of Apollo managed funds in certain consolidated VIEs.

Non-Controlling Interests are presented as a separate component of shareholders’ equity on the Company’s condensed consolidated statements of financial condition. The primary components of Non-Controlling Interests are separately presented in the Company’s condensed consolidated statements of changes in shareholders’ equity to clearly distinguish the interest in the Apollo Operating Group and other ownership interests in the consolidated entities. Net income (loss) includes the net income (loss) attributable to the holders of Non-Controlling Interests on the Company’s condensed consolidated statements of operations. Profits and losses are allocated to Non-Controlling Interests in proportion to their relative ownership interests regardless of their basis.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Revenues —Revenues are reported in three separate categories that include (i) advisory and transaction fees from affiliates, net, which relate to the investments of the funds 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; (ii) management fees from affiliates, 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 affiliates, which is normally based on the performance of the funds subject to preferred return.

Advisory and Transaction Fees from Affiliates, 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 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 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 presented net on the Company’s condensed consolidated statements of operations, and any receivable from the respective funds is presented in Due from Affiliates on the condensed consolidated statements of financial condition.

Advisory and transaction fees from affiliates, 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 included in other assets on the condensed consolidated statements of financial condition.

As a result of providing advisory services to certain private equity 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 included in “Due from Affiliates,” which is discussed further in note 12 . 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 affiliates are presented net of the Management Fee Offset in the condensed consolidated statements of operations.

Management Fees from Affiliates —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.

Carried Interest Income from Affiliates —Apollo is entitled to an incentive return that can normally amount to as much as 20% of the total returns on funds’ capital, depending upon performance. Performance-based fees are assessed as a percentage of the investment performance of the funds. The carried interest income from affiliates for any period is based 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 affiliates 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 affiliates, 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.

Deferred Revenue —Apollo earns management fees subject to the Management Fee Offset. 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 management 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 classified as deferred revenue in the condensed consolidated statements of financial condition. A portion of any

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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 management company are presented on a gross basis, any Management Fee Offsets calculated are presented as a reduction to Advisory and Transaction Fees from Affiliates 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. When Apollo receives a payment from a portfolio company that exceeds the advisory fees earned at that point in time, the excess payment is classified 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 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.

Investments, at Fair Value —The Company follows U.S. GAAP attributable to fair value measurements which, among other things, requires enhanced disclosures about investments that are measured and reported 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 was elected. The unrealized gains and losses resulting from changes in the fair value are reflected as net gains (losses) from investment activities and net gains (losses) from investment activities of the consolidated variable interest entities, respectively, in the condensed consolidated statements of operations. In accordance with U.S. GAAP, investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level I —Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed derivatives. As required by U.S. GAAP, the Company does not adjust the quoted price for these investments, 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. Investments 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 investments exhibit higher levels of liquid market observability as compared to Level III investments. The Company subjects broker quotes to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level II investment. These criteria include, but are not limited to, the number and quality of broker quotes, the standard deviation of obtained broker quotes, and the percentage deviation from independent pricing services.

Level III —Pricing inputs are unobservable for the investment and includes situations where there is little observable market activity for the investment. The inputs into the determination of fair value may require significant management judgment or estimation. Investments that are included in this category generally include general and limited partner interests in corporate private equity and real estate 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 investment would qualify for treatment as a

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Level II or Level III investment. Some of the factors the Company considers include the number of broker quotes obtained, the quality of the broker quotes, the standard deviations of the observed broker quotes and the corroboration of the broker quotes to 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, an investment’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 investment when the fair value is based on unobservable inputs.

In cases where an investment or financial instrument that is measured and reported at fair value is transferred between levels of the fair value hierarchy, the Company accounts for the transfer as of the end of the reporting period.

Private Equity Investments

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.

Valuation approaches used to estimate the fair value of investments 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 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 and a calculated discount rate.

On a quarterly basis, Apollo utilizes a valuation committee, consisting of members from senior management, to review and approve the valuation results related to its funds' private equity investments. 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, 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.

Credit Investments

The majority of the investments in Apollo’s credit funds are valued based on quoted market prices and valuation models. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value utilizing recognized pricing services, market participants or other sources. When market quotations are not available, a model based approach is used to determine fair value. The credit funds 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. Realized gains or losses are recognized when contracts are settled. Total return swap contracts 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.

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FINANCIAL STATEMENTS

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

illiquid credit investments also may use the income approach or market approach. The valuation approaches used consider, as applicable, market risks, credit risks, counterparty risks and foreign currency risks.

On a quarterly basis, Apollo utilizes a valuation committee consisting of members from senior management, to review and approve the valuation results related to its funds' credit investments. 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 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.

Real Estate Investments

The estimated fair value of commercial mortgage-backed securities (“CMBS”) in Apollo’s 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 Company evaluates its loans for possible impairment on a quarterly basis. For Apollo’s opportunistic and value added real estate 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.

On a quarterly basis, Apollo utilizes a valuation committee, consisting of members from senior management, to review and approve the valuation results related to its funds' real estate investments. 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 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.

Fair Value of Financial Instruments

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.

Except for the Company’s debt obligations related to the 2013 AMH Credit Facilities and 2024 Senior Notes (each as defined in note 9 ), 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.

Fair Value Option —Apollo has elected the fair value option for the Company's investment in Athene Holding Ltd. ("Athene Holding"), the convertible notes issued by HFA Holdings Limited (“HFA”) and for the assets and liabilities of the consolidated VIEs. 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. For the convertible notes issued by HFA, Apollo has elected to separately present interest income from other changes in the fair value of the convertible notes in the condensed consolidated statements of operations. See notes 3 , 4 , and 5 for further disclosure on the investments in Athene Holding, HFA 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)

Financial Instruments held by Consolidated VIEs

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.

The consolidated VIEs also have debt obligations that are recorded at fair value. The primary valuation methodology used to determine fair value for debt obligations is market quotation. Prices are based on the average of the “bid” and “ask” prices. In the event that market quotations are not available, a model based approach is used. The model based approach used to estimate the fair values of debt obligations for which market quotations are not available is the discounted cash flow method, which includes consideration of the cash flows of the debt obligation based on projected quarterly interest payments and quarterly amortization. Debt obligations are discounted based on the appropriate yield curve given the loan’s respective maturity and credit rating. Management uses its discretion and judgment in considering and appraising relevant factors for determining the valuations of its debt obligations.

Goodwill and Intangible Assets

Goodwill and indefinite-life intangible assets must be reviewed annually for impairment or more frequently if circumstances indicate impairment may have occurred. Identifiable finite-life intangible assets, by contrast, are amortized over their estimated useful lives, which are periodically re-evaluated for impairment or when circumstances indicate an impairment may have occurred. Apollo amortizes its identifiable finite-life intangible assets using a method of amortization reflecting the pattern in which the economic benefits of the finite-life intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, Apollo uses the straight-line method of amortization. At June 30, 2014 , the Company performed its annual impairment testing. As the fair value of the Company’s reporting units was in excess of the carrying value as of June 30, 2014 , there was no impairment of goodwill and there was no impairment of indefinite-life intangible assets at such time.

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. The Company estimates forfeitures for equity-based awards that are not expected to vest. Equity-based awards granted to non-employees for services provided to affiliates are remeasured to fair value at the end of each reporting period and expensed over the relevant service period.

Salaries, Bonus and Benefits —Salaries, bonus and benefits include base salaries, discretionary and non-discretionary bonuses, severance and employee benefits. Bonuses are generally accrued over the related service period.

Also included within salaries, bonus and benefits is the expense related to profits interests issued to certain employees whereby they are entitled to a share in earnings and any appreciation in the value of a subsidiary of the Company during their term of employment. The expense related to these profits interests is recognized ratably over the requisite service period and thereafter will be recognized at the time the distributions are determined.

The Company sponsors a 401(k) Savings Plan whereby U.S. based employees are entitled to participate in the plan based upon satisfying certain eligibility requirements. The Company may provide discretionary contributions from time to time. No contributions relating to this plan were made by the Company for the three and six months ended June 30, 2014 and 2013 .

Profit Sharing Expense —Profit sharing expense primarily consists of a portion of carried interest recognized in one or more funds allocated to employees and former employees. Profit sharing expense is recognized on an accrued basis as the related carried interest income is earned. Profit sharing expense can be reversed during periods when there is a decline in carried interest

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

income that was previously recognized. Additionally, profit sharing expenses previously distributed may be subject to clawback from employees, former employees and Contributing Partners.

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 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.

Other Income (Loss)

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 the Company’s investment portfolio between the opening reporting date and the closing reporting date. The condensed consolidated financial statements include the net realized and unrealized gains (losses) of investments, at fair value. For the Company's investments held by AAA (see note 3 ), a portion of the net gains (losses) from investment activities are attributable to Non-Controlling Interests in the condensed consolidated statements of operations.

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 (Loss), Net —Other income (loss), net includes the recognition of bargain purchase gains as a result of Apollo acquisitions, gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities of foreign subsidiaries, reversal of a portion of the tax receivable agreement liability (see note 12 ), gains (losses) arising from the remeasurement of derivative instruments associated with fees from certain of the Company’s affiliates and other miscellaneous non-operating income and expenses.

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 net losses, the net loss is reduced for distributions declared on participating securities 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 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 potential Class A shares had been issued. The numerator is adjusted for any changes in income or loss that would result from the issuance of these potential Class A shares.

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 affiliates, contingent consideration obligations related to acquisitions, non-cash compensation, and fair value of investments and debt in the consolidated and unconsolidated funds and VIEs. Actual results could differ materially from those estimates.

Condensed Consolidated Statements of Cash Flows— During the second quarter of 2014, the Company identified that return on capital related to cash distributions from equity method investments had been previously reported as cash flows provided by investing activities. Cash flows received from equity method investments should have been separately identified as either return of investment or return on investment. Cash flows from the return of investment should be presented in cash flow provided by investing activities and return on investment presented within cash flows provided by operating activities. The Company

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

restated the previously presented cash flows for these cash distributions from equity method investments and in doing so, for the six months ended June 30, 2013, the condensed consolidated statement of cash flows was restated to increase net cash flows provided by operating activities by $49.6 million with a corresponding decrease in net cash flows provided by investing activities. The Company has evaluated the effect of the incorrect presentation both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements. The impact to previously presented periods is as follows:



	For the three months ended March 31, 2013		For the three months ended March 31, 2014		For the nine months ended September 30, 2013		For the year ended December 31, 2013		For the year ended December 31, 2012		For the year ended December 31, 2011
Net Cash Provided by Operating Activities - as previously reported	$	885,125	$	389,178	$	927,029	$	1,025,382	$	265,551	$	743,821
Reclassification adjustment	19,899		23,261		77,563		109,076		66,063		24,674
Net Cash Provided by Operating Activities - as restated	$	905,024	$	412,439	$	1,004,592	$	1,134,458	$	331,614	$	768,495



	For the three months ended March 31, 2013			For the three months ended March 31, 2014			For the nine months ended September 30, 2013			For the year ended December 31, 2013			For the year ended December 31, 2012			For the year ended December 31, 2011
Net Cash Provided by (Used in)Investing Activities - as previously reported	$	462		$	(1,520	)	$	87,296		$	111,727		$	(84,791	)	$	(129,536	)
Reclassification adjustment	(19,899		)	(23,261		)	(77,563		)	(109,076		)	(66,063		)	(24,674		)
Net cash (Used in) Provided by Investing Activities - as restated	$	(19,437	)	$	(24,781	)	$	9,733		$	2,651		$	(150,854	)	$	(154,210	)

Recent Accounting Pronouncements

In April 2013, the Financial Accounting Standards Board ("FASB") issued guidance that requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. The financial statements prepared using the liquidation basis of accounting should present relevant information about the expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities. Liabilities should be recognized and measured in accordance with U.S. GAAP that otherwise applies to those liabilities. The guidance requires an entity to accrue and separately present the costs that it expects to incur and the income that it expects to earn during the expected duration of the liquidation, including any costs associated with the sale or settlement of those assets and liabilities. Additionally, the amended guidance requires disclosures about an entity’s plan for liquidation, the methods and significant assumptions used to measure assets and liabilities, the type and amount of costs and income accrued, and the expected duration of the liquidation process. The guidance is effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. The guidance provides that entities should apply the requirements prospectively from the day that liquidation becomes imminent. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2013, the FASB issued guidance to change the assessment of whether an entity is an investment company by developing a new two-tiered approach that requires an entity to possess certain fundamental characteristics while allowing judgment in assessing certain typical characteristics. The fundamental characteristics that an investment company must have include the following: (1) it obtains funds from one or more investors and provides the investor(s) with investment management services; (2) it commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income or both; and (3) it does not obtain returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests. The typical characteristics of an investment company

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

that an entity should consider before concluding whether it is an investment company include the following: (1) it has more than one investment; (2) it has more than one investor; (3) it has investors that are not related parties of the parent or the investment manager; (4) it has ownership interests in the form of equity or partnership interests; and (5) it manages substantially all of its investments on a fair value basis. The new approach requires an entity to assess all of the characteristics of an investment company and consider its purpose and design to determine whether it is an investment company. The guidance includes disclosure requirements about an entity’s status as an investment company and financial support provided or contractually required to be provided by an investment company to its investees. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2013. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2013, the FASB issued guidance to eliminate the diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the new guidance, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carry forward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statement as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date (e.g. an entity should not evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized tax benefit being settled). The guidance does not require new recurring disclosures. The guidance applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exists at the reporting date. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The guidance provides that the amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date, although retrospective application is permitted. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In April 2014, the FASB issued guidance to improve the definition of discontinued operations and to enhance convergence between the FASB’s and International Accounting Standard Board’s (IASB) reporting requirements for discontinued operations. The new definition of discontinued operations limits discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. The new guidance affects entities that have either of the following: (1) a component of an entity that either is disposed of or meets the criteria under current guidance to be classified as held for sale or (2) a business or nonprofit activity that, on acquisition, meets the criteria under current guidance to be classified as held for sale. The guidance is effective for all disposals (or classifications as held for sale) of components of an entity and all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications has held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company is in the process of evaluating the impact that this guidance will have on its condensed consolidated financial statements.

In May 2014, the FASB issued guidance to establish a comprehensive and converged standard on revenue recognition to enable financial statement users to better understand and consistently analyze an entity’s revenue across industries, transactions, and geographies. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also specifies the accounting for certain costs to obtain or fulfill a contract with a customer. The new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Qualitative and quantitative information is required to be disclosed about: (1) contracts with customers, (2) significant judgments and changes in judgments, and (3) assets recognized from costs to obtain or fulfill a contract. The new guidance will apply to all entities. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. Early

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

application is not permitted. The Company is in the process of evaluating the impact that this guidance will have on its condensed consolidated financial statements, including the timing of the recognition of carried interest income.

In June 2014, the FASB issued guidance to resolve diversity in practice in the accounting for share-based payments where the terms of an award provide that a performance target could be achieved after the requisite service period. The new guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Accordingly, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The new guidance applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early application is permitted. The Company is in the process of evaluating the impact that this guidance will have on its condensed consolidated financial statements.

In August 2014, the FASB issued guidance to eliminate diversity in practice in the accounting for measurement differences in both the initial consolidation and subsequent measurement of the financial assets and the financial liabilities of a collateralized financing entity. A reporting entity that consolidates a collateralized financing entity within the scope of the new guidance may elect to measure the financial assets and the financial liabilities of that collateralized financing entity using either the measurement alternative included in the new guidance or the existing guidance on fair value measurement. When the measurement alternative is not elected for a consolidated collateralized financing entity within the scope of the new guidance, the new guidance clarifies that (1) the fair value of the financial assets and the fair value of the financial liabilities of the consolidated collateralized financing entity should be measured using the requirements of the existing guidance on fair value measurement and (2) any differences in the fair value of the financial assets and the fair value of the financial liabilities of that consolidated collateralized financing entity should be reflected in earnings and attributed to the reporting entity in the consolidated statement of income (loss). When a reporting entity elects the measurement alternative included in the new guidance for a collateralized financing entity, the reporting entity should measure both the financial assets and the financial liabilities of that collateralized financing entity in its consolidated financial statements using the more observable of the fair value of the financial assets and the fair value of the financial liabilities. The new guidance clarifies that when the measurement alternative is elected, a reporting entity’s consolidated net income (loss) should reflect the reporting entity’s own economic interests in the collateralized financing entity, including (1) changes in the fair value of the beneficial interests retained by the reporting entity and (2) beneficial interests that represent compensation for services. Beneficial interests retained by the reporting entity that represent compensation for services (for example, management fees or servicing fees) and nonfinancial assets that are held temporarily by a collateralized financing entity should be measured in accordance with other applicable guidance. The guidance applies to a reporting entity that is required to consolidate a collateralized financing entity under the existing variable interest entity guidance when (1) the reporting entity measures all of the financial assets and the financial liabilities of that consolidated collateralized financing entity at fair value in the consolidated financial statements based on other guidance and (2) the changes in the fair values of those financial assets and financial liabilities are reflected in earnings. The guidance is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015. Early adoption is permitted as of the beginning of an annual period. The Company is in the process of evaluating the impact that this guidance will have on its condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

3 . INVESTMENTS

The following table represents Apollo’s investments:



	As of June 30, 2014		As of December 31, 2013
Investments, at fair value	$	2,436,061	$	2,012,027
Other investments	446,622		381,856
Total Investments	$	2,882,683	$	2,393,883

Investments, at Fair Value

Investments, at fair value, consist of financial instruments held by AAA, the Company's investment in Athene Holding, investments held by the Apollo Credit Senior Loan Fund, L.P. ("Apollo Senior Loan Fund"), the Company’s investment in HFA and other investments held by the Company at fair value. As of June 30, 2014 and December 31, 2013 , the net assets of the consolidated funds (excluding VIEs) were $2,176.1 million and $1,971.1 million , respectively. The following investments, except the investments in Athene Holding, HFA and Other Investments, are presented as a percentage of net assets of the consolidated funds:



	As of June 30, 2014										As of December 31, 2013
	Fair Value										Fair Value
Investments, at Fair Value – Affiliates	Private Equity		Credit		Total		Cost		% of Net Assets of Consolidated Funds		Private Equity		Credit		Total		Cost		% of Net Assets of Consolidated Funds
AAA	$	2,146,979	$	—	$	2,146,979	$	1,494,358	98.7	%	$	1,942,051	$	—	$	1,942,051	$	1,494,358	98.5	%
Athene Holding	$	18,939	$	188,314	$	207,253	$	207,253	N/A		—		—		—		—		N/A
Apollo Senior Loan Fund	—		30,657		30,657		30,319		1.4		—		29,603		29,603		29,226		1.5
HFA	—		50,091		50,091		62,944		N/A		—		39,534		39,534		61,218		N/A
Other Investments	1,081		—		1,081		4,017		N/A		839		—		839		4,159		N/A
Total	$	2,166,999	$	269,062	$	2,436,061	$	1,798,891	100.1	%	$	1,942,890	$	69,137	$	2,012,027	$	1,588,961	100.0	%

Securities

As of June 30, 2014 and December 31, 2013 , the sole investment held by AAA was its investment in AAA Investments, L.P. (“AAA Investments”), which is measured based on AAA’s share of net asset value of AAA Investments. The following table represents the sole investment of AAA Investments, which constitutes more than five percent of the net assets of the funds that the Company consolidates (excluding VIEs) as of the aforementioned dates:



	As of June 30, 2014							As of December 31, 2013
	Instrument Type	Fair Value		Cost		% of Net Assets of Consolidated Funds		Instrument Type	Fair Value		Cost		% of Net Assets of Consolidated Funds
Athene Holding	Equity	$	2,149,593	$	1,317,090	98.8	%	Equity	$	1,950,010	$	1,331,942	98.9	%

As of June 30, 2014 , AAA Investments portfolio consisted of a single investment in the economic equity of Athene Holding. Athene Holding is the ultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding provides insurance products focused primarily on the retirement market and its business centers primarily on issuing or reinsuring fixed indexed annuities. See note 12 for further information regarding Athene.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

On October 31, 2012, AAA Investments consummated a transaction whereby substantially all of its assets were contributed to Athene in exchange for common shares of Athene Holding, cash and a short term promissory note (the “AAA Transaction”). Following receipt of required regulatory consents, AAA Investments transferred its remaining investments to Athene Holding on July 29, 2013. After the AAA Transaction, Athene Holding was AAA’s only material investment. As of December 31, 2013, AAA, through its investment in AAA Investments was the largest shareholder of Athene Holding with an economic ownership stake of approximately 72.5% (without giving effect to restricted common shares issued under Athene's management equity plan and conversion of AAA Investments' note receivable) and effectively held 45% of the voting power of Athene.

At December 31, 2013, Athene’s fair value was determined using the embedded value method which was based on the present value of the future expected regulatory distributable income generated by the net assets plus the excess capital (i.e., the capital in excess of what is required to be held against Athene’s liabilities). The net assets of Athene consist of the current and projected assets less the current and projected liabilities related to in force insurance contracts. The assets considered capital in excess are fair valued in accordance with the fair value policies disclosed in note 2 . The approach of using actuarially projected asset and liability income to value an insurance company is widely used by market participants in the insurance industry, particularly in private company acquisitions. The embedded value of the in force insurance contracts incorporates actuarial projections of expected income utilizing most recently available policyholder contract and experience data, industry information and assumptions, general economic and market conditions, and other factors deemed relevant, including the cost of capital. In addition, consideration is also given to comparable company multiples in the determination of fair value.

The Company, through its consolidation of AAA, had an approximate 68% fully diluted ownership interest in Athene (after giving effect to restricted common shares issued under Athene's management equity plan and conversion of AAA Investments' note receivable) through AAA’s investment in AAA Investments as of December 31, 2013. AAA Investments’ ownership interest in Athene is held indirectly through its subsidiaries and is comprised of common shares and a promissory note which can be settled in cash or common shares of Athene Holding at AAA Investments’ option. Based on the above, the Company had an approximate 1.9% economic ownership interest in the common equity of Athene Holding, as of December 31, 2013. The approximate 1.9% economic ownership interest is calculated as the Company’s approximate 2.6% ownership interest in AAA plus the Company’s approximate 0.06% economic ownership interest in AAA Investments multiplied by AAA Investments’ approximate 68% fully diluted ownership interest in Athene, as of December 31, 2013. The remaining ownership interest in AAA is recognized in the Company’s condensed consolidated statements of operations as non-controlling interest in consolidated entities.

As further described in note 12 , in the second quarter of 2014, Athene Holding raised $1.218 billion of net equity commitments (the “Athene Private Placement”), which was priced at $26 per common share of Athene Holding. As of June 30, 2014, AAA Investments' ownership stake in Athene was reduced as a result of the Athene Private Placement and the issuance of 3.7 million unrestricted common shares of Athene Holding under Athene’s management equity plan resulting in an approximate 47.8% economic ownership stake (calculated as if the commitments in the Athene Private Placement closed through June 30, 2014 were fully drawn down but without giving effect to (i) restricted common shares issued under Athene’s management equity plan or the (ii) conversion to common shares of AAA Investments’ note receivable from Athene, or (iii) common shares to be issued under the Amended AAA Services Agreement or the Amended Athene Services Agreement subsequent to June 30, 2014 ) and effectively 45% of the voting power of Athene. As discussed further in note 12 , in connection with the Athene Private Placement, the Athene Services Derivative was settled on April 29, 2014 by delivery to Apollo of shares of Athene Holding. The settlement of the AAA Services Derivative has resulted in a transfer of shares of Athene from AAA Investments to Apollo which reduced AAA Investments cost basis in Athene.

Given the observability of the Athene Private Placement, and the proximity to the June 30, 2014 financial statement date, the $26 per share price was considered to be the best measure of fair value and was therefore utilized for valuing the Athene investment at June 30, 2014 . In addition, consideration was also given to a market comparable multiple approach based on Athene’s U.S. GAAP equity book value excluding accumulated other comprehensive income.

The Company, through its consolidation of AAA, had an approximate 47.8% economic ownership interest in Athene (calculated as described above ) through AAA’s investment in AAA Investments as of June 30, 2014. AAA Investments’ ownership interest in Athene is held indirectly through its subsidiaries.

In addition, the Company had an approximate 5.8% economic ownership interest in Athene Holding as of June 30, 2014, which comprises Apollo’s direct ownership of 4.6% of the economic equity of Athene Holding plus an additional 1.2% economic ownership interest, which is calculated as the Company’s approximate 2.6% economic ownership interest in AAA plus the Company’s approximate 0.06% economic ownership interest in AAA Investments multiplied by AAA Investments’

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

approximate 47.8% economic ownership interest in Athene as of June 30, 2014 . The remaining ownership interest in AAA is recognized in the Company’s condensed consolidated statements of operations as non-controlling interest in consolidated entities.

Athene Holding

In connection with the Athene Private Placement, both the Athene Services Derivative and the AAA Services Derivative were settled on April 29, 2014 by delivery to Apollo of common shares of Athene Holding, and as a result, such derivatives were terminated. Following settlement of these derivatives, future monitoring fees and management fees paid to Apollo pursuant to the Amended Athene Services Agreement and the Amended AAA Services Agreement, respectively, will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the Exchange Act).

The Company elected the fair value option for its investment in Athene Holding at the time of settlement of the Athene Services Derivative and AAA Services Derivative. The Company has classified this investment as a Level III asset in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. The investment is valued based on the price of a common share of Athene Holding, which as of June 30, 2014 was determined to be the $26 per common share price at which shares were offered in the Athene Private Placement. See note 5 for further discussion regarding fair value leveling and note 12 for further information regarding Athene.

Apollo Senior Loan Fund

On December 31, 2011, the Company invested an initial $26.0 million in the Apollo Senior Loan Fund. As a result, the Company became the sole investor in the fund and therefore consolidated the assets and liabilities of the fund. The fund invests in U.S. denominated senior secured loans, senior secured bonds and other income generating fixed-income investments. At least 90% of the Apollo Senior Loan Fund’s portfolio of investments must consist of senior secured, floating rate loans or cash or cash equivalents. Up to 10% of the Apollo Senior Loan Fund’s portfolio may consist of non-first lien fixed income investments and other income generating fixed income investments, including but not limited to senior secured bonds. The Apollo Senior Loan Fund may not purchase assets rated (tranche rating) at B3 or lower by Moody’s, or equivalent rating by another nationally recognized rating agency.

The Company has classified the instruments associated with the Apollo Senior Loan Fund investment as Level II and Level III investments. All Level II and Level III investments of the Apollo Senior Loan Fund were valued using broker quotes. See note 5 for further discussion regarding fair value leveling.

HFA

On March 7, 2011, the Company invested $52.1 million (including expenses related to the purchase) in a convertible note with an aggregate principal amount of $50.0 million and received 20,833,333 stock options issued by HFA, an Australian based specialist global funds management company.

The terms of the convertible note allow the Company to convert the note, in whole or in part, into common shares of HFA at an exchange rate equal to the principal plus accrued payment-in-kind interest (or “PIK” interest) divided by US$0.98 at any time, and convey participation rights, on an as-converted basis, in any dividends declared in excess of $6.0 million per annum, as well as seniority rights over HFA common equity holders. Unless previously converted, repurchased or canceled, the note will be converted on the eighth anniversary of its issuance, on March 11, 2019. Additionally, the note has a percentage coupon interest of 6% per annum, paid via principal capitalization (PIK interest) for the first four years, and thereafter either in cash or via principal capitalization at HFA’s discretion. The PIK interest provides for the Company to receive additional common shares of HFA if the note is converted. The Company has elected the fair value option for the convertible note. The convertible note is valued using an “if-converted basis,” which is based on a hypothetical exit through conversion to common equity (for which a quoted price exists) as of the valuation date. The Company separately presents interest income in the condensed consolidated statements of operations from other changes in the fair value of the convertible note. The terms of the stock options allow for the Company to acquire 20,833,333 fully paid ordinary shares of HFA at an exercise price in Australian Dollars (“A$”) of A$8.00 (exchange rate of A$1.00 to $0.94 and A$1.00 to $0.91 as of June 30, 2014 and 2013 , respectively) per stock option. The stock options became exercisable upon issuance and expire on the eighth anniversary of the issuance date. The stock options are accounted for as a derivative and

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

are valued at their fair value under U.S. GAAP at each reporting date. The Company has classified the instruments associated with the HFA investment as Level III investments. See note 5 for further discussion regarding fair value leveling.

The following table presents PIK interest income included in interest income in the condensed consolidated statements of operations for the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2014		2013		2014		2013
Interest income	$	854	$	833	$	1,725	$	1,656

The following table presents the unrealized (loss) gain related to the convertible note and stock options within net gains from investment activities in the condensed consolidated statements of operations for the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014		2013
Change in net unrealized (losses) gains due to changes in fair values	$	(9,181	)	$	(5,752	)	$	8,833	$	(1,722	)

Effective July 2, 2014, Apollo entered into a buy-back agreement with HFA, in which HFA agreed to repurchase the convertible note at its face value of $50 million . As a result, the fair value of Apollo's investment in HFA at June 30, 2014 was $50 million , resulting in a $9.2 million unrealized loss and $8.8 million unrealized gain for the three and six months ended June 30, 2014, respectively.

Net Gains from Investment Activities

Net gains from investment activities in the condensed consolidated statements of operations include net realized gains from sales of investments, and the change in net unrealized gains resulting from changes in fair value of the consolidated funds’ investments and realization of previously unrealized gains. Additionally, net gains from investment activities include changes in the fair value of the investment in HFA and other investments held at fair value. The following tables present Apollo’s net gains from investment activities for the three and six months ended June 30, 2014 and 2013 :



	For the Three Months Ended June 30, 2014
	Private Equity			Credit			Total
Realized gains on sales of investments	$	—		$	41		$	41
Change in net unrealized losses due to changes in fair values	(436		)	(9,139		)	(9,575		)
Net Losses from Investment Activities	$	(436	)	$	(9,098	)	$	(9,534	)

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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 June 30, 2013
	Private Equity		Credit			Total
Realized gains on sales of investments	$	—	$	167		$	167
Change in net unrealized gains (losses) due to changes in fair values	7,064		(6,115		)	949
Net Gains (Losses) from Investment Activities	$	7,064	$	(5,948	)	$	1,116



	For the Six Months Ended June 30, 2014
	Private Equity		Credit		Total
Realized gains on sales of investments	$	—	$	153	$	153
Change in net unrealized gains due to changes in fair values	204,927		8,794		213,721
Net Gains from Investment Activities	$	204,927	$	8,947	$	213,874



	For the Six Months Ended June 30, 2013
	Private Equity		Credit			Total
Realized gains on sales of investments	$	—	$	408		$	408
Change in net unrealized gains (losses) due to changes in fair values	54,833		(1,992		)	52,841
Net Gains (Losses) from Investment Activities	$	54,833	$	(1,584	)	$	53,249

Other Investments

Other Investments primarily consist of equity method investments. Apollo’s share of operating income generated by these investments is recorded within income from equity method investments in the condensed consolidated statements of operations.

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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 income from equity method investments for the three and six months ended June 30, 2014 and 2013 :



	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2014				2013				2014				2013
Investments:
Private Equity Funds:
AAA Investments	$	—			$	6			$	124			$	33
Apollo Investment Fund V, L.P. (“Fund V”)	—				(1		)		10				6
Apollo Investment Fund VI, L.P. (“Fund VI”)	(352		)		(5		)		(822		)		1,073
Apollo Investment Fund VII, L.P. (“Fund VII”)	14,074				11,064				23,304				31,477
Apollo Investment Fund VIII, L.P. (“Fund VIII”)	(278		)		—				(512		)		—
Apollo Natural Resources Partners, L.P. (“ANRP”)	249				152				235				163
AION Capital Partners Limited (“AION”)	5,488				369				8,275				553
Apollo Asia Private Credit Fund, L.P. (“APC”)	5				2				7				3
VC Holdings, L.P. Series A (“Vantium A/B”)	(6		)		—				(6		)		13
VC Holdings, L.P. Series C (“Vantium C”)	(203		)		1,333				3,485				1,325
VC Holdings, L.P. Series D (“Vantium D”)	(437		)		46				(1,912		)		(1		)
Other	—				8				—				—
Total Private Equity Funds ⁽²⁾	18,540				12,974				32,188				34,645
Credit Funds:
Apollo Special Opportunities Managed Account, L.P. (“SOMA”)	124				30				575				414
Apollo Value Investment Fund, L.P. (“VIF”)	2				(1		)		6				6
Apollo Strategic Value Fund, L.P. (“SVF”)	—				(2		)		(1		)		1
Apollo Credit Liquidity Fund, L.P. (“ACLF”)	508				(36		)		686				668
Apollo Lincoln Fixed Income Fund, L.P.	6				—				6				—
Apollo Structured Credit Recovery Fund III LP	14				—				14				—
Apollo Total Return Fund (Onshore) LP	1				—				2				—
Apollo/Artus Investors 2007-I, L.P. (“Artus”)	—				(2		)		—				(2		)
Apollo Credit Opportunity Fund I, L.P. (“COF I”)	681				563				897				4,137
Apollo Credit Opportunity Fund II, L.P. (“COF II”)	86				(304		)		252				584
Apollo Credit Opportunity Fund III, L.P. ("COF III")	487				(11		)		1,145				(11		)
Apollo European Principal Finance Fund, L.P. (“EPF I”)	1,420				3,079				2,723				2,748
Apollo European Principal Finance Fund II, L.P. (“EPF II”)	2,292				23				2,196				86
Apollo Investment Europe II, L.P. (“AIE II”)	30				349				176				406
Apollo Palmetto Strategic Partnership, L.P. (“Palmetto”)	265				259				1,126				842
Apollo Senior Floating Rate Fund Inc. (“AFT”)	(1		)		(3		)		—				5
Apollo Residential Mortgage, Inc. (“AMTG”)	211			⁽¹⁾	22			⁽¹⁾	299			⁽¹⁾	508			⁽¹⁾
Apollo European Credit, L.P. (“AEC”)	29				71				146				147
Apollo European Strategic Investments, L.P. (“AESI”)	120				106				243				258
Apollo Centre Street Partnership, L.P. (“ACSP”)	296				108				808				289
Apollo Investment Corporation (“AINV”)	2,040			⁽¹⁾	2,037			⁽¹⁾	5,216			⁽¹⁾	1,410			⁽¹⁾
Apollo SK Strategic Investments, L.P. ("SK")	42				23				122				49
Apollo SPN Investments I, L.P.	85				501				267				88
Apollo Tactical Income Fund Inc. (“AIF”)	3				(10		)		2				(5		)
Apollo Franklin Partnership, L.P. ("Franklin Fund")	216				(7		)		432				(7		)
Apollo Zeus Strategic Investments, L.P. ("Zeus")	130				—				277				—
Total Credit Funds ⁽²⁾	9,087				6,795				17,615				12,621
Real Estate Funds:
Apollo Commercial Real Estate Finance, Inc. (“ARI”)	2,696			⁽¹⁾	93			⁽¹⁾	3,060			⁽¹⁾	316			⁽¹⁾
AGRE U.S. Real Estate Fund, L.P.	385				227				677				241
CPI Capital Partners North America L.P.	(5		)		16				(5		)		74
CPI Capital Partners Asia Pacific, L.P.	(6		)		(6		)		(7		)		(4		)
Apollo GSS Holding (Cayman), L.P.	(7		)		(1		)		74				(5		)
BEA/AGRE China Real Estate Fund, L.P.	11				(8		)		9				(8		)
Total Real Estate Funds ⁽²⁾	3,074				321				3,808				614
Total	$	30,701			$	20,090			$	53,611			$	47,880


(1)	Amounts are reported a quarter in arrears.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


(2)	Certain funds invest across multiple segments. Presentation in the table above is based on majority of fund investment classification.

Other investments as of June 30, 2014 and December 31, 2013 consisted of the following:



	Equity Held as of
	June 30, 2014			% of Ownership			December 31, 2013			% of Ownership
Investments:
Private Equity Funds:
AAA Investments	$	1,293		0.057	%		$	1,168		0.057	%
Fund IV	8			0.024			9			0.019
Fund V	90			0.020			94			0.020
Fund VI	8,094			0.107			9,964			0.103
Fund VII	139,650			1.246			137,960			1.258
Fund VIII	20,247			3.406			4,310			3.996
ANRP	4,668			0.804			3,735			0.831
AION	17,993			6.043			6,425			9.970
APC	42			0.045			49			0.046
Vantium A/B	9			6.450			15			6.450
Vantium C	148			2.071			1,233			2.071
Vantium D	90			6.345			2,190			6.345
Total Private Equity Funds ⁽⁵⁾	192,332						167,152
Credit Funds:
SOMA	7,405			0.844			6,833			0.853
VIF	157			0.071			151			0.124
SVF	11			0.033			17			0.079
ACLF	5,176			3.289			4,559			3.341
COF I	10,469			1.845			10,077			1.850
COF II	3,405			1.413			5,015			1.428
COF III	18,337			2.447			6,720			2.450
EPF I	16,552			1.465			19,332			1.363
EPF II	39,883			1.838			23,212			1.994
AIE II	3,790			3.062			4,500			2.772
Palmetto	13,898			1.186			16,054			1.186
AFT	95			0.034			95			0.034
AMTG ⁽³⁾	4,187		⁽¹⁾	0.642		⁽¹⁾	4,015		⁽²⁾	0.632		⁽²⁾
AEC	2,589			1.081			2,482			1.230
AESI	3,994			0.990			3,732			0.956
ACSP	10,815			2.473			7,690			2.465
AINV ⁽⁴⁾	61,167		⁽¹⁾	2.918		⁽¹⁾	55,951		⁽²⁾	2.933		⁽²⁾
SK	1,836			1.017			1,714			0.997
Apollo SPN Investments I, L.P.	4,443			0.666			4,457			0.828
CION Investment Corporation	1,000			0.337			1,000			0.716
AIF	96			0.036			94			0.036
Franklin Fund	10,610			9.195			10,178			9.107
Zeus	5,602			3.386			1,678			3.383
Apollo Lincoln Fixed Income Fund, L.P.	606			0.990			—			—
Apollo Structured Credit Recovery Master Fund III, L.P.	1,863			2.439			—			—
Apollo Total Return Fund L.P.	82			0.052			—			—
Total Credit Funds ⁽⁵⁾	228,068						189,556
Real Estate:
ARI ⁽³⁾	13,836		⁽¹⁾	1.887		⁽¹⁾	11,550		⁽²⁾	1.500		⁽²⁾
AGRE U.S. Real Estate Fund, L.P.	8,471			1.845			9,473			1.845
CPI Capital Partners North America, L.P.	153			0.411			272			0.416
CPI Capital Partners Europe, L.P.	5			0.001			5			0.001
CPI Capital Partners Asia Pacific, L.P.	99			0.042			106			0.042
Apollo GSS Holding (Cayman), L.P.	3,576			4.751			3,670			3.460
BEA/AGRE China Real Estate Fund, L.P.	82			1.031			72			1.031
Total Real Estate Funds ⁽⁵⁾	26,222						25,148
Total	$	446,622					$	381,856

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


(1)	Amounts are as of March 31, 2014.


(2)	Amounts are as of September 30, 2013.


(3)	Investment value includes the fair value of RSUs granted to the Company as of the grant date. These amounts are not considered in the percentage of ownership until the RSUs are vested and issued to the Company, at which point the RSUs are converted to common stock and delivered to the Company.


(4)	The value of the Company’s investment in AINV was $59,475 and $57,249 based on the quoted market price as of June 30, 2014 and December 31, 2013 , respectively.


(5)	Certain funds invest across multiple segments. Presentation in the table above is based on majority of fund investment classification.

As of June 30, 2014 and December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 , on an individual or aggregate basis, no equity method investment held by Apollo met the significance criteria as defined by the SEC. As such, Apollo is not required to present separate financial statements or summarized income statement information for any of its equity method investments.

4 . 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. The purpose of such VIEs is to provide strategy-specific investment opportunities for investors in exchange for management and performance based fees. The investment strategies of the entities that the Company manages may vary by entity; however, the fundamental risks of such entities have similar characteristics, including loss of invested capital and the return of carried interest income previously distributed to the Company by certain private equity, credit, and real estate entities. The nature of the Company’s involvement with VIEs includes direct and indirect investments and fee arrangements. The Company does not provide performance guarantees and has no other financial obligations to provide funding to VIEs other than its own capital commitments. There is no recourse to the Company for the consolidated VIEs’ liabilities.

The assets and liabilities of the consolidated VIEs are comprised primarily of investments and debt, at fair value, and are included within assets and liabilities of consolidated variable interest entities, respectively, in the condensed consolidated statements of financial condition.

Consolidated Variable Interest Entities

Apollo has consolidated VIEs in accordance with the policy described in note 2 . The majority of the consolidated VIEs 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. Through its role as collateral manager of these VIEs, it was determined that Apollo had the power to direct the activities that most significantly impact the economic performance of these VIEs. Additionally, Apollo determined that the potential fees that it could receive 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.

The assets of these consolidated VIEs are not available to creditors of the Company. In addition, the investors in these consolidated VIEs have no recourse against the assets of the Company. The Company has elected the fair value option for financial instruments held by its consolidated VIEs, which includes investments in loans and corporate bonds, as well as debt obligations held by such consolidated VIEs. 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 .

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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 of Consolidated Variable Interest Entities

The following table presents net gains (losses) from investment activities of the consolidated VIEs for the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
Net unrealized gains (losses) from investment activities	$	10,449		$	(138,181	)	$	9,538		$	(113,061	)
Net realized (losses) gains from investment activities	(192		)	32,988			16,822			83,918
Net gains (losses) from investment activities	10,257			(105,193		)	26,360			(29,143		)
Net unrealized gains (losses) from debt	7,591			(68,013		)	(6,528		)	(156,249		)
Net realized gains from debt	—			91,000			357			83,397
Net gains (losses) from debt	7,591			22,987			(6,171		)	(72,852		)
Interest and other income	147,142			152,501			318,136			329,626
Other expenses	(121,565		)	(105,493		)	(247,165		)	(214,968		)
Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities	$	43,425		$	(35,198	)	$	91,160		$	12,663

Senior Secured Notes and Subordinated Note s—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 June 30, 2014 and December 31, 2013 :



	As of June 30, 2014						As of December 31, 2013
	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⁾	$	11,636,675	1.34	%		7.0	$	11,877,744	1.31	%		7.3
Subordinated Notes ⁽²⁾⁽³⁾	973,467		N/A		⁽¹⁾	7.8	963,099		N/A		⁽¹⁾	8.1
Total	$	12,610,142					$	12,840,843


(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 June 30, 2014 and December 31, 2013 was $12,179 million and $12,424 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 June 30, 2014 and December 31, 2013 , the fair value of the consolidated VIE assets was $15,327 million and $15,502 million , respectively. This collateral consisted of cash and cash equivalents, investments, at fair value, and other assets.

The consolidated VIEs’ debt obligations contain various customary loan covenants as described above. As of June 30, 2014 , the Company was not aware of any instances of non-compliance with any of these covenants.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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 June 30, 2014 and December 31, 2013 . In addition, the tables present the maximum exposure to losses relating to those VIEs.



	As of June 30, 2014
	Total Assets			Total Liabilities				Apollo Exposure
Total	$	13,889,028	⁽¹⁾	$	(991,382	)	⁽²⁾	$	28,826	⁽³⁾


(1)	Consists of $466,850 in cash, $12,755,983 in investments and $666,195 in receivables.


(2)	Represents $545,173 in debt and other payables, $442,907 in securities sold, not purchased, and $3,302 in capital withdrawals payable.

(3)

Represents Apollo’s direct equity method 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, is $4,148 million as of June 30, 2014 as discussed in note 13 .



	As of December 31, 2013
	Total Assets			Total Liabilities				Apollo Exposure
Total	$	12,866,498	⁽¹⁾	$	(1,311,279	)	⁽²⁾	$	34,665	⁽³⁾


(1)	Consists of $354,686 in cash, $12,034,487 in investments and $477,325 in receivables.


(2)	Represents $1,161,549 in debt and other payables, $106,532 in securities sold, not purchased, and $43,198 in capital withdrawals payable.

(3)

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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 by the fair value hierarchy as of June 30, 2014 and December 31, 2013 , respectively:



	As of June 30, 2014
	Level I ⁽⁵⁾		Level II ⁽⁵⁾		Level III		Total
Assets
Investment in AAA Investments ⁽¹⁾	$	—	$	—	$	2,146,979	$	2,146,979
Investments held by Apollo Senior Loan Fund ⁽¹⁾	—		29,670		987		30,657
Investments in HFA and Other ⁽¹⁾	—		—		51,172		51,172
Investment in Athene Holding ⁽²⁾	—		—		207,253		207,253
AAA/Athene Receivable ⁽²⁾	—		—		55,836		55,836
Investments of VIEs, at fair value ⁽⁴⁾	117		11,640,193		2,051,862		13,692,172
Total Assets	$	117	$	11,669,863	$	4,514,089	$	16,184,069

Liabilities
Debt of VIEs, at fair value ⁽⁴⁾	$	—	$	1,967,676	$	10,211,336	$	12,179,012
Contingent Consideration Obligations ⁽³⁾	—		—		115,220		115,220
Total Liabilities	$	—	$	1,967,676	$	10,326,556	$	12,294,232



	As of December 31, 2013
	Level I ⁽⁵⁾		Level II ⁽⁵⁾		Level III		Total
Assets
Investment in AAA Investments ⁽¹⁾	$	—	$	—	$	1,942,051	$	1,942,051
Investments held by Apollo Senior Loan Fund ⁽¹⁾	—		28,711		892		29,603
Investments in HFA and Other ⁽¹⁾	—		—		40,373		40,373
Athene and AAA Services Derivatives ⁽²⁾	—		—		130,709		130,709
Investments of VIEs, at fair value ⁽⁴⁾	3,455		12,203,370		1,919,537		14,126,362
Total Assets	$	3,455	$	12,232,081	$	4,033,562	$	16,269,098

Liabilities
Debt of VIEs, at fair value ⁽⁴⁾	$	—	$	2,429,815	$	9,994,147	$	12,423,962
Contingent Consideration Obligations ⁽³⁾	—		—		135,511		135,511
Total Liabilities	$	—	$	2,429,815	$	10,129,658	$	12,559,473


(1)	See note 3 for further disclosure regarding the investment in AAA Investments, investments held by Apollo Senior Loan Fund, and investments in HFA and Other.


(2)	See note 12 for further disclosure regarding the Athene Services Derivative, the AAA Services Derivative, the investment in Athene Holding and the AAA/Athene Receivable.


(3)	See note 13 for further disclosure regarding Contingent Consideration Obligations.


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


(5)	All Level I and Level II investments and liabilities were valued using third party pricing.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

There were no transfers of financial assets into Level I for the three and six months ended June 30, 2014 and 2013 . The following table summarizes the fair value transfers of financial assets between Level II and Level III for positions that existed as of the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2014		2013		2014		2013
Transfers from Level I into Level II ⁽¹⁾	$	4,084	$	—	$	4,084	$	—
Transfers from Level III into Level II ⁽¹⁾	161,665		444,462		471,607		782,756
Transfers from Level II into Level III ⁽¹⁾	440,893		194,452		582,246		467,045


(1)	Transfers between Level I, II and III were a result of subjecting the broker quotes on these investments 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.

There were no transfers of financial liabilities into or out of Level I for the three and six months ended June 30, 2014 . In addition, there were no transfers of financial liabilities between Level I, Level II or Level III for the three and six months ended June 30, 2013 . The following table summarizes the fair value transfers of financial liabilities between Level II and Level III for positions that existed as of the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2014		2013		2014		2013
Transfers from Level III into Level II ⁽¹⁾	$	137,108	$	—	$	207,427	$	—
Transfers from Level II into Level III ⁽¹⁾	57,819		—		374,071		—


(1)	Transfers between Level II and III were a result of subjecting the broker quotes on these financial liabilities 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 tables summarize the changes in fair value in financial assets, which are measured at fair value and characterized as Level III investments, for the three and six months ended June 30, 2014 and 2013 , respectively:



	For the Three Months Ended June 30, 2014
	Investment in AAA Investments			Investments held by Apollo Senior Loan Fund			Investments in HFA and Other			Athene and AAA Services Derivatives			Investment in Athene Holding		AAA/Athene Receivable		Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	2,147,415		$	—		$	59,324		$	206,476		$	—	$	—	$	1,837,451		$	4,250,666
Elimination of investments attributable to consolidation of VIEs	—			—			—			—			—		—		13,524			13,524
Fees	—			—			—			(1,306		)			55,836		—			54,530
Purchases	—			1,990			855			—			2,083		—		49,861			54,789
Sale of investments/Distributions	—			(1,503		)	(65		)	—			—		—		(116,549		)	(118,117		)
Net realized gains (losses)	—			10			—			24,242			—		—		(20,248		)	4,004
Changes in net unrealized (losses) gains	(436		)	8			(8,942		)	(24,242		)	—		—		9,077			(24,535		)
Transfer into Level III	—			482			—			—			—		—		440,411			440,893
Transfer out of Level III	—			—			—			—			—		—		(161,665		)	(161,665		)
Settlement of derivatives ⁽¹⁾	—			—			—			(205,170		)	205,170		—		—			—
Balance, End of Period	$	2,146,979		$	987		$	51,172		$	—		$	207,253	$	55,836	$	2,051,862		$	4,514,089
Change in net unrealized losses included in Net Gains from Investment Activities related to investments still held at reporting date	$	(436	)	$	5		$	(8,942	)	$	—		$	—	$	—	$	—		$	(9,373	)
Change in net unrealized gains included in Net Gains from Investment Activities of Consolidated VIEs related to investments still held at reporting date	—			—			—			—			—		—		1,273			1,273
Change in net unrealized gains included in Other Income, net related to assets still held at reporting date	—			—			—			—			—		—		—			—


(1)	See note 12 for further disclosure regarding the settlement of the Athene Services Derivative, the AAA Services Derivative and the investment in Athene Holding.

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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 June 30, 2013
	Investment in AAA Investments		Investments held by Apollo Senior Loan Fund		Investments in HFA and Other			Athene and AAA Services Derivatives		Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	1,652,029	$	—	$	55,407		$	24,127	$	1,765,988		$	3,497,551
Elimination of investments attributable to consolidation of VIEs	—		—		—			—		19,302			19,302
Fees	—		—		—			23,705		—			23,705
Purchases	—		—		833			—		538,507			539,340
Sale of investments/Distributions	—		—		—			—		(319,231		)	(319,231		)
Net realized losses	—		—		—			—		(2,566		)	(2,566		)
Changes in net unrealized gains (losses)	7,064		—		(5,848		)	284		6,304			7,804
Transfer into Level III	—		437		—			—		194,015			194,452
Transfer out of Level III	—				—			—		(444,462		)	(444,462		)
Balance, End of Period	$	1,659,093	$	437	$	50,392		$	48,116	$	1,757,857		$	3,515,895
Change in net unrealized gains (losses) included in Net Gains (Losses) from Investment Activities related to investments still held at reporting date	$	7,064	$	—	$	(5,848	)	$	—	$	—		$	1,216
Change in net unrealized gains included in Net Gains from Investment Activities of Consolidated VIEs related to investments still held at reporting date	—		—		—			—		3,850			3,850
Change in net unrealized gains included in Other Income, net related to assets still held at reporting date	—		—		—			284		—			284

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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 Six Months Ended June 30, 2014
	Investment in AAA Investments		Investments held by Apollo Senior Loan Fund			Investments in HFA and Other			Athene and AAA Services Derivatives			Investment in Athene Holding		AAA/Athene Receivable		Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	1,942,051	$	892		$	40,373		$	130,709		$	—	$	—	$	1,919,537		$	4,033,562
Elimination of investments attributable to consolidation of VIEs	—		—			—			—			—		—		(1,096		)	(1,096		)
Fees	—		—			—			60,422					55,836		—			116,258
Purchases	—		1,990			1,725			—			2,083		—		314,924			320,722
Sale of investments/Distributions	—		(1,509		)	(143		)	—			—		—		(297,984		)	(299,636		)
Net realized gains (losses)	—		10			—			24,242			—		—		(21,202		)	3,050
Changes in net unrealized gains (losses)	204,928		36			9,217			(10,203		)	—		—		26,612			230,590
Transfer into Level III	—		482			—			—			—		—		581,764			582,246
Transfer out of Level III	—		(914		)	—			—			—		—		(470,693		)	(471,607		)
Settlement of derivatives ⁽¹⁾	—		—			—			(205,170		)	205,170		—		—			—
Balance, End of Period	$	2,146,979	$	987		$	51,172		$	—		$	207,253	$	55,836	$	2,051,862		$	4,514,089
Change in net unrealized gains included in Net Gains from Investment Activities related to investments still held at reporting date	$	204,928	$	3		$	9,217		$	—		$	—	$	—	$	—		$	214,148
Change in net unrealized gains included in Net Gains from Investment Activities of Consolidated VIEs related to investments still held at reporting date	—		—			—			—			—		—		14,212			14,212
Change in net unrealized gains included in Other Income, net related to assets still held at reporting date	—		—			—			—			—				—			—


(1)	See note 12 for further disclosure regarding the settlement of the Athene Services Derivative, the AAA Services Derivative and the investment in Athene Holding.

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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 Six Months Ended June 30, 2013
	Investment in AAA Investments			Investments held by Apollo Senior Loan Fund			Investments in HFA and Other			Athene and AAA Services Derivatives		Investments of Consolidated VIEs			Total
Balance, Beginning of Period	$	1,666,448		$	590		$	50,311		$	2,126	$	1,643,465		$	3,362,940
Elimination of investments attributable to consolidation of VIEs	—			—			—			—		15,400			15,400
Fees	—			—			—			45,706		—			45,706
Purchases	—			22			2,268			—		922,668			924,958
Sale of investments/Distributions	(62,188		)	—			(902		)	—		(506,092		)	(569,182		)
Net realized losses	—			—			—			—		(7,008		)	(7,008		)
Changes in net unrealized gains (losses)	54,833			9			(1,285		)	284		4,951			58,792
Transfer into Level III	—			437			—			—		466,608			467,045
Transfer out of Level III	—			(621		)	—			—		(782,135		)	(782,756		)
Balance, End of Period	$	1,659,093		$	437		$	50,392		$	48,116	$	1,757,857		$	3,515,895
Change in net unrealized gains (losses) included in Net Gains (Losses) from Investment Activities related to investments still held at reporting date	$	54,833		$	9		$	(1,285	)	$	—	$	—		$	53,557
Change in net unrealized losses included in Net Gains from Investment Activities of Consolidated VIEs related to investments still held at reporting date	—			—			—			—		(6,916		)	(6,916		)
Change in net unrealized gains included in Other Income, net related to assets still held at reporting date	—			—			—			284		—			284

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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 fair value in financial liabilities, which are measured at fair value and characterized as Level III liabilities:



	For the Three Months Ended June 30,
	2014										2013
	Debt of Consolidated VIEs			Contingent Consideration Obligations				Total			Debt of Consolidated VIEs			Contingent Consideration Obligations				Total
Balance, Beginning of Period	$	10,422,320		$	126,473			$	10,548,793		$	11,347,332		$	131,231			$	11,478,563
Elimination of debt attributable to consolidation of VIEs	22,118			—				22,118			19,326			—				19,326
Additions	145,001			—				145,001			—			—				—
Payments	(282,171		)	(10,525		)		(292,696		)	(508,400		)	(20,377		)		(528,777		)
Net realized losses	—			—				—			(91,000		)	—				(91,000		)
Changes in net unrealized (gains) losses	(16,643		)	(728		)	⁽¹⁾	(17,371		)	68,013			(3,512		)	⁽¹⁾	64,501
Transfers into Level III	57,819			—				57,819			—			—				—
Transfers out of Level III	(137,108		)	—				(137,108		)	—			—				—
Balance, End of Period	$	10,211,336		$	115,220			$	10,326,556		$	10,835,271		$	107,342			$	10,942,613
Change in net unrealized gains included in Net Gains from Investment Activities of consolidated VIEs related to liabilities still held at reporting date	$	(16,856	)	$	—			$	(16,856	)	$	(17,662	)	$	—			$	(17,662	)


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



	For the Six Months Ended June 30,
	2014										2013
	Debt of Consolidated VIEs			Contingent Consideration Obligations				Total			Debt of Consolidated VIEs			Contingent Consideration Obligations				Total
Balance, Beginning of Period	$	9,994,147		$	135,511			$	10,129,658		$	11,834,955		$	142,219			$	11,977,174
Elimination of debt attributable to consolidation of VIEs	6,724			—				6,724			15,389			—				15,389
Additions	895,967			—				895,967			332,250			—				332,250
Payments	(840,779		)	(25,084		)		(865,863		)	(1,420,175		)	(44,796		)		(1,464,971		)
Net realized gains	(357		)	—				(357		)	(83,397		)	—				(83,397		)
Changes in net unrealized (gains) losses	(11,010		)	4,793			⁽¹⁾	(6,217		)	156,249			9,919			⁽¹⁾	166,168
Transfers into Level III	374,071			—				374,071			—			—				—
Transfers out of Level III	(207,427		)	—				(207,427		)	—			—				—
Balance, End of Period	$	10,211,336		$	115,220			$	10,326,556		$	10,835,271		$	107,342			$	10,942,613
Change in net unrealized (gains) losses included in Net Gains from Investment Activities of consolidated VIEs related to liabilities still held at reporting date	$	(22,012	)	$	—			$	(22,012	)	$	75,214		$	—			$	75,214


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

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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 quantitative inputs and assumptions used for financial assets and liabilities categorized in Level III of the fair value hierarchy as of June 30, 2014 and December 31, 2013 :



	As of June 30, 2014
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Investments of Consolidated Apollo Funds:
AAA Investments ⁽¹⁾	$	2,146,979	Net Asset Value	N/A	N/A	N/A
Apollo Senior Loan Fund	987		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Investments in HFA and Other:
HFA	50,091		Transaction	Sale Price	N/A	N/A
Other	1,081		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Investment in Athene Holding	207,253		Transaction	Private Placement Price	$26.00	N/A
AAA/Athene Receivable	55,836		Transaction	Private Placement Price	$26.00	N/A
Investments of Consolidated VIEs:
Bank Debt Term Loans	40,492		Other	N/A	N/A	N/A
Bank Debt Term Loans	7,895		Market Comparable Companies	Comparable Multiples	5.0x	5.0x
Corporate Loans/Bonds	1,977,730		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Stocks	604		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Stocks	25,141		Market Comparable Companies	Comparable Multiples	5.0x - 10.7x	5.71x
Total Investments of Consolidated VIEs	2,051,862
Total Financial Assets	$	4,514,089
Financial Liabilities
Liabilities of Consolidated VIEs:
Subordinated Notes	$	795,390	Discounted Cash Flow	Discount Rate	10.0% - 15.0%	11.8%
				Default Rate	1.0% - 2.0%	1.4%
				Recovery Rate	75.0%	75.0%
Senior Secured Notes	2,304,645		Discounted Cash Flow	Discount Rate	1.6% - 1.9%	1.7%
				Default Rate	2.0%	2.0%
				Recovery Rate	15.0% - 70.0%	66.0%
Senior Secured and Subordinated Notes	7,111,301		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Total Liabilities of Consolidated VIEs	10,211,336
Contingent Consideration Obligation	115,220		Discounted Cash Flow	Discount Rate	11.0% - 19.0%	16.2%
Total Financial Liabilities	$	10,326,556


(1)	The following table summarizes a look-through of the Company’s Level III investments by valuation methodology of the underlying securities held by AAA Investments:



	As of June 30, 2014
					% of Investment of AAA Investments
Approximate values based on net asset value of the underlying funds, which are based on the funds' underlying investments that are valued using the following:
Transaction	$	2,149,593		⁽³⁾	100	%
Total Investments	2,149,593				100	%
Other net liabilities ⁽⁴⁾	(2,614		)
Total Net Assets	$	2,146,979


(2)	These securities are valued primarily using broker quotes.


(3)	Represents the investment by AAA Investments in Athene, which is valued using the price at which the Athene Holding shares were offered in the Athene Private Placement. The unobservable inputs and respective ranges used are the same as noted for the Investment in Athene

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Holding and the AAA/Athene Receivable in the table above. See note 12 for discussion of the Athene Private Placement and the investment in Athene Holding.

(4)

Balances include other assets, liabilities and general partner interests of AAA Investments. Balance at June 30, 2014 is primarily comprised of $125.0 million in assets, less $5.0 million and $122.6 million in liabilities and net assets allocated to the general partner, respectively. Carrying values approximate fair value for other assets and liabilities. The assets are primarily comprised of a note receivable from an affiliate, which is a Level III asset valued using the price at which the Athene Holding shares were offered in the Athene Private Placement. The unobservable inputs and respective ranges used are the same as noted for the Athene and AAA Services Derivatives in the table above.



	As of December 31, 2013
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Investments of Consolidated Apollo Funds:
AAA Investments ⁽¹⁾	$	1,942,051	Net Asset Value	N/A	N/A	N/A
Apollo Senior Loan Fund	892		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Investments in HFA and Other	40,373		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Athene and AAA Services Derivatives	130,709		Discounted Cash Flows	Discount Rate	15.0%	15.0%
Athene and AAA Services Derivatives	130,709		Discounted Cash Flows	Implied Multiple	1.1x	1.1x
Investments of Consolidated VIEs:
Bank Debt Term Loans	18,467		Other	N/A	N/A	N/A
Stocks	7,938		Market Comparable Companies	Comparable Multiples	6.0x - 9.5x	7.9x
Corporate Loans/Bonds	1,893,132		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Total Investments of Consolidated VIEs	1,919,537
Total Financial Assets	$	4,033,562
Financial Liabilities
Liabilities of Consolidated VIEs:
Subordinated Notes	$	835,149	Discounted Cash Flow	Discount Rate	10.0% - 12.0%	10.8%
				Default Rate	1.0% - 1.5%	1.3%
				Recovery Rate	75.0%	75.0%
Senior Secured Notes	2,132,576		Discounted Cash Flow	Discount Rate	1.9% - 2.2%	2.0%
				Default Rate	2.0%	2.0%
				Recovery Rate	30.0% - 70.0%	65.2%
Senior Secured and Subordinated Notes	7,026,422		Third Party Pricing ⁽²⁾	N/A	N/A	N/A
Total Liabilities of Consolidated VIEs	9,994,147
Contingent Consideration Obligation	135,511		Discounted Cash Flow	Discount Rate	10.5% - 18.5%	15.3%
Total Financial Liabilities	$	10,129,658


(1)	The following table summarizes a look-through of the Company’s Level III investments by valuation methodology of the underlying securities held by AAA Investments:



	As of December 31, 2013
					% of Investment of AAA Investments
Approximate values based on net asset value of the underlying funds, which are based on the funds underlying investments that are valued using the following:
Discounted Cash Flow	$	1,950,010		⁽³⁾	100	%
Total Investments	1,950,010				100	%
Other net liabilities ⁽⁴⁾	(7,959		)
Total Net Assets	$	1,942,051

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


(2)	These securities are valued primarily using broker quotes.


(3)	Represents the investment by AAA Investments in Athene, which is valued using a discounted cash flow model. The unobservable inputs and respective ranges used in the discounted cash flow model are the same as noted for the Athene and AAA Services Derivatives in the table above.

(4)

Balances include other assets, liabilities and general partner interests of AAA Investments. Balance at December 31, 2013 is primarily comprised of net assets allocated to the general partner of $102.1 million less $89.0 million in note receivable from an affiliate. Carrying values approximate fair value for other assets and liabilities (except for the note receivable from an affiliate) and, accordingly, extended valuation procedures are not required. The note receivable from an affiliate is a Level III asset valued using a discounted cash flow model. The unobservable inputs and respective ranges used in the discounted cash flow model are the same as noted for the Athene and AAA Services Derivatives in the table above.

Investment in Athene Holding and AAA/Athene Receivable

As of June 30, 2014 , the significant unobservable input used in the fair value measurement of the investment in Athene Holding is the price at which the Athene Holding shares were offered in the Athene Private Placement. The shares in the private placement offering were offered at $26 per share. Given the proximity to the June 30, 2014 financial statement date, the $26 per share price was considered to be the best measure of fair value and was therefore utilized for valuing the Athene investment at June 30, 2014 . In addition, consideration was also given to a market comparable multiple approach based on Athene’s U.S. GAAP equity book value excluding accumulated other comprehensive income.

Consolidated VIEs

Investments

The significant unobservable inputs used in the fair value measurement of the bank debt term loans and stocks include the discount rate applied and the 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

The significant unobservable inputs used in the fair value measurement of the subordinated and senior secured notes include the discount rate applied in the valuation models, default and recovery rates applied in the valuation models. These 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 subordinated and senior secured notes; conversely a decrease in the discount rate can significantly increase the fair value of subordinated and senior secured notes. The discount rate is determined based on the market rates an investor would expect for similar subordinated and senior secured notes with similar risks.

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 weighted average cost of capital for the Company. See note 13 for further discussion of the contingent consideration obligations.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

6 . CARRIED INTEREST RECEIVABLE

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



	As of June 30, 2014		As of December 31, 2013
Private Equity	$	1,577,536	$	1,867,771
Credit	395,086		408,342
Real Estate	15,451		10,962
Total Carried Interest Receivable	$	1,988,073	$	2,287,075

The table below provides a roll-forward of the carried interest receivable balance for the six months ended June 30, 2014 :



	Private Equity			Credit			Real Estate			Total
Carried interest receivable, January 1, 2014	$	1,867,771		$	408,342		$	10,962		$	2,287,075
Change in fair value of funds	290,960			153,825			5,705			450,490
Fund cash distributions to the Company	(581,195		)	(167,081		)	(1,216		)	(749,492		)
Carried Interest Receivable, June 30, 2014	$	1,577,536		$	395,086		$	15,451		$	1,988,073

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 high watermark provisions.

7 . PROFIT SHARING PAYABLE

Profit sharing payable from private equity, credit and real estate funds consisted of the following:



	As of June 30, 2014		As of December 31, 2013
Private Equity	$	687,442	$	751,192
Credit	267,660		234,504
Real Estate	8,820		6,544
Total Profit Sharing Payable	$	963,922	$	992,240

The table below provides a roll-forward of the profit sharing payable balance for the six months ended June 30, 2014 :



	Private Equity			Credit			Real Estate		Total
Profit sharing payable, January 1, 2014	$	751,192		$	234,504		$	6,544	$	992,240
Profit sharing expense ⁽¹⁾	181,989			80,533			2,215		264,737
Payments/other	(245,739		)	(47,377		)	61		(293,055		)
Profit sharing payable, June 30, 2014	$	687,442		$	267,660		$	8,820	$	963,922


(1)	Includes both of the following: (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 (see notes 5 and 13 ) recognized in connection with certain Apollo acquisitions.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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. APO Corp., a wholly-owned subsidiary of the Company, is subject to U.S. federal, state and local corporate income taxes. Certain other subsidiaries of the Company are subject to New York City Unincorporated 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 provision for income taxes totaled $35.0 million and $18.1 million for the three months ended June 30, 2014 and 2013 , respectively, and $67.6 million and $36.7 million for the six months ended June 30, 2014 and 2013 , respectively. The Company’s effective tax rate was approximately 12.2% and 10.9% for the three months ended June 30, 2014 and 2013 , respectively, and 8.7% and 3.7% , for the six months ended June 30, 2014 and 2013 , respectively.

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 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 files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. 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 June 30, 2014 , Apollo and its predecessor entities’ U.S. federal, state, local and foreign income tax returns for the years 2010 through 2013 are open under the general statute of limitations provisions and therefore subject to examination. In addition, the State of New York is examining APO Corp.’s tax returns for tax years 2008 to 2010. The Internal Revenue Service is examining the tax returns of Apollo Global Management, LLC and Apollo Management Holdings, L.P. for the tax year 2011. The tax returns of APO Corp. for tax years 2010 and 2011 are being examined by the Internal Revenue Service in connection with the filing of a net operating loss carryback claim to the 2010 tax year.

The Company has recorded a deferred tax asset for the future amortization of tax basis intangibles as a result of the 2007 Reorganization. In connection with the Secondary Offering, as disclosed in note 1, the Company recognized an additional step-up in tax basis of intangibles as a result of the exchange of AOG Units for Class A shares in May 2013. The Company recognized an additional step-up in tax basis of intangibles as a result of an exchange of AOG units for Class A shares in November 2013 and May 2014. As a result of the exchanges of AOG Units for Class A shares, there were increases in the deferred tax asset established from the 2007 Reorganization which was recorded in deferred tax assets in the condensed consolidated statements of financial condition for the expected tax benefit associated with these increases. A related tax receivable agreement liability was recorded in due to affiliates 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 12 ). The increases in the deferred tax asset less the related liability resulted in increases to additional paid-in capital which was recorded in the condensed consolidated statements of changes in shareholders’ equity for the six months ended June 30, 2014 and 2013. The amortization period for these tax basis intangibles is 15 years . Accordingly, the related deferred tax assets will reverse over the same period. The tables below present the transactions during the year ended December 31, 2013 and for the six months ended June 30, 2014 related to the exchange of AOG Units for Class A shares and the resulting impact to the deferred tax asset, tax receivable agreement liability and additional paid-in capital.



	For the Year Ended December 31, 2013
Date of 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
For the Year Ended December 31, 2013	$	149,327	$	126,928	$	22,399

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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 Six Months Ended June 30, 2014
Date of 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
For the Six months ended June 30, 2014	$	58,696	$	47,878	$	10,818

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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 June 30, 2014				As of December 31, 2013
	Outstanding Balance		Annualized Weighted Average Interest Rate ⁽¹⁾		Outstanding Balance		Annualized Weighted Average Interest Rate
2013 AMH Credit Facilities - Term Facility	$	500,000	1.37	%	$	750,000	1.37	%
2024 Senior Notes	499,008		4.00	%	—		—
Total Debt	$	999,008	1.66	%	$	750,000	1.37	%

(1) Includes impact of any amortization of note discount and interest rate hedge.

2007 AMH Credit Agreement —On April 20, 2007, Apollo Management Holdings, L.P. (“AMH”), a subsidiary of the Company which is a Delaware limited partnership, entered into a $1.0 billion seven year credit agreement (the “2007 AMH Credit Agreement”). Interest payable under the 2007 AMH Credit Agreement was based on Eurodollar LIBOR or Alternate Base Rate ("ABR") as determined by the borrower. On December 20, 2010, Apollo amended the 2007 AMH Credit Agreement to extend the maturity date of $995.0 million (including the $90.9 million of fair value debt repurchased by the Company) of the term loan from April 20, 2014 to January 3, 2017 and modified certain other terms of the 2007 AMH Credit Agreement. On December 20, 2010, an affiliate of AMH that was a guarantor under the 2007 AMH Credit Agreement repurchased approximately $180.8 million of the term loan in connection with the extension of the maturity date of such loan and thus the 2007 AMH Credit Agreement (excluding the portions held by AMH affiliates) had a remaining balance of $728.3 million .

The interest rate on the $723.3 million , net ( $995.0 million portion less amount repurchased by the Company) of the loan at June 30, 2013 was 3.99% and the interest rate on the remaining $5.0 million portion of the loan at June 30, 2013 was 1.24% . Interest expense incurred by the Company related to the 2007 AMH Credit Agreement was $7.3 million and $14.6 million for the three and six months ended June 30, 2013 , respectively. Amortization expense related to the 2007 AMH Credit Agreement was $0.1 million and $0.3 million for the three and six months ended June 30, 2013 , respectively.

The outstanding loans under the 2007 AMH Credit Agreement were refinanced on December 18, 2013 with the net proceeds from the 2013 AMH Credit Facilities (as defined below). Additionally, the net proceeds were used to pay fees and expenses associated with the 2013 AMH Credit Facilities. The 2007 AMH Credit Agreement and all related loan documents and security with respect thereto were terminated in connection with the refinancing.

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 a final maturity date of January 18, 2019.

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. Under the terms of the 2013 AMH Credit Facilities, the applicable margin ranges from 1.125% to 1.75% for LIBOR loans and 0.125% to 0.75% for alternate base rate loans, and the undrawn revolving commitment fee ranges from 0.125% to 0.25% , in each case depending on the Company’s corporate rating assigned by Standard & Poor’s Ratings Group, Inc. The 2013 AMH Credit Facilities do not require any scheduled amortization payments or other mandatory prepayments (except with respect to overadvances on the Revolver Facility) prior to the final maturity date, and the Borrowers may prepay the loans and/or terminate or reduce the revolving commitments under the 2013 AMH Credit Facilities at any time without penalty. In connection with the issuance of the 2024 Senior Notes (as defined below), $250 million of the proceeds were used to repay a portion of the Term Facility outstanding with third party lenders at par. The interest rate on the $500 million Term Facility as of June 30, 2014 was 1.36% and the commitment fee as of June 30, 2014 on the $500 million undrawn Revolver Facility was 0.125% . Interest expense incurred by the Company related to the 2013 AMH Credit Facilities was $2.4 million and $5.2 million for the three and six months ended June 30, 2014 , respectively.

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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 June 30, 2014 and December 31, 2013 , $500 million and $750 million of the Term Facility was outstanding with third-party lenders, respectively, and there was approximately $271.7 million of the Term Facility that was held by a subsidiary of the Company. As of June 30, 2014 and December 31, 2013 , the Revolver Facility was undrawn. The estimated fair value of the Company’s long-term debt obligation related to the 2013 AMH Credit Facilities is believed to be approximately $501.3 million based on obtained broker quotes as of June 30, 2014 . The $500.0 million carrying value of debt that is recorded on the condensed consolidated statements of financial condition at June 30, 2014 is the amount for which the Company expects to settle the 2013 AMH Credit Facilities. The Company has determined that the long-term debt obligation related to the 2013 AMH Credit Facilities would be categorized as a Level III liability in the fair value hierarchy based on the Company's number of broker quotes obtained, the quality of the broker quotes, the standard deviations of the observed broker quotes and the corroboration of the broker quotes to independent pricing services.

In accordance with U.S. GAAP, the Company determined that the refinancing of the outstanding loans under the 2007 AMH Credit Agreement resulted in a debt extinguishment. The Company capitalized debt issuance costs of $6.6 million incurred in relation to the 2013 AMH Credit Facilities, which was recorded in other assets in the condensed consolidated statements of financial condition as of December 31, 2013 to be amortized over the life of the term loan and line of credit. In connection with the repayment of the Term Facility, $1.9 million of unamortized debt issuance costs were recognized by the Company as loss on extinguishment recorded in other income, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2014. Debt issuance cost amortization expense related to the 2013 AMH Credit Facilities was $0.3 million and $0.6 million for the three and six months ended June 30, 2014 , respectively.

The 2013 AMH Credit Facilities are guaranteed and collateralized 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., 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). 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 .

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% . 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 amortized into interest expense on the condensed consolidated statements of operations over the term of the 2024 Senior Notes. Interest expense incurred by the Company related to the 2024 Senior Notes was $1.7 million for the three and six months ended June 30, 2014 .

The Company capitalized debt issuance costs of $5.5 million incurred in connection with the issuance of the 2024 Senior Notes, which was recorded in other assets in the condensed consolidated statements of financial condition as of June 30, 2014 to be amortized over the term of the notes. Debt issuance cost amortization expense related to the issuance of the 2024 Senior Notes was $0.1 million for the three and six months ended June 30, 2014 .

The 2024 Senior Notes are 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., AMH Holdings (Cayman), L.P. and any other entity that is required to become a guarantor of the notes under the terms of the indenture governing the 2024 Senior Notes (the "2024 Senior Notes Indenture"). The 2024 Senior Notes Indenture includes covenants that restrict the ability of AMH and, as applicable, the guarantors to incur indebtedness secured by liens on voting stock or profit participating

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

equity interests of their respective subsidiaries or merge, consolidate or sell, transfer or lease assets. The 2024 Senior Notes Indenture also provides for customary events of default.

The estimated fair value of the Company's long-term debt obligation related to the 2024 Senior Notes is believed to be approximately $502.3 million based on obtained broker quotes as of June 30, 2014 . The face amount of $500.0 million related to the 2024 Senior Notes is the amount the Company is obligated to settle the 2024 Senior Notes. The Company has determined that the long-term debt obligation related to the 2024 Senior Notes would be categorized as a Level II liability in the fair value hierarchy based on the number of broker quotes obtained, the quality of the broker quotes, the standard deviations of the observed broker quotes and the corroboration of the broker quotes to independent pricing services.

The net (deficit) assets of each Borrower are summarized as follows:



Borrower	Net (Deficit) Assets as of June 30, 2014	Net (Deficit) Assets as of December 31, 2013
AMH and subsidiaries ⁽¹⁾	$(500,644)	$(689,958)
Apollo Principal Holdings I, L.P.	1,295,592	1,570,336
Apollo Principal Holdings II, L.P. ⁽²⁾	124,477	167,844
Apollo Principal Holdings III, L.P.	442,413	661,106
Apollo Principal Holdings IV, L.P.	160,761	163,329
Apollo Principal Holdings V, L.P.	54,603	53,116
Apollo Principal Holdings VI, L.P.	285,719	239,876
Apollo Principal Holdings VII, L.P.	133,290	99,250
Apollo Principal Holdings VIII, L.P.	31,278	16,784
Apollo Principal Holdings IX L.P.	81,606	152,010


(1)	Includes Apollo Management, L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., AAA Holdings, L.P. and ST Management Holdings, LLC, which are subsidiaries of AMH. AMH is wholly owned by AMH Holdings (Cayman), L.P.


(2)	Includes ST Holdings GP, LLC, which is a subsidiary of Apollo Principal Holdings II, L.P.

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 net losses, the net loss is reduced for distributions declared on participating securities 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.

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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 presents basic and diluted net income (loss) per Class A share using the two-class method for the three and six months ended June 30, 2014 and 2013 :



	Basic and Diluted
	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2014				2013				2014				2013
Numerator:
Net income attributable to Apollo Global Management, LLC	$	71,668			$	58,737			$	143,837			$	307,715
Distributions declared on Class A shares	(129,988		)	⁽¹⁾	(80,782		)	⁽²⁾	(290,855		)	⁽¹⁾	(219,529		)	⁽²⁾
Distributions on participating securities	(20,950		)		(14,300		)		(46,427		)		(39,292		)
Earnings allocable to participating securities	—			⁽³⁾	—			⁽³⁾	—			⁽³⁾	(7,723		)
Undistributed (loss) income attributable to Class A shareholders: Basic	(79,270		)		(36,345		)		(193,445		)		41,171
Dilution effect on undistributed income attributable to Class A shareholders	—				—				—				6,216
Dilution effect on distributable income attributable to participating securities	—				—				—				(778		)
Undistributed (loss) income attributable to Class A shareholders: Diluted	$	(79,270	)		$	(36,345	)		$	(193,445	)		$	46,609
Denominator:
Weighted average number of Class A shares outstanding: Basic	152,852,427				137,289,147				150,328,495				134,285,776
Dilution effect of share options and unvested RSUs	—				—				—				3,818,687
Weighted average number of Class A shares outstanding: Diluted	152,852,427				137,289,147				150,328,495				138,104,463
Net income (loss) per Class A share: Basic
Distributed Income	$	0.85			$	0.59			$	1.93			$	1.63
Undistributed (Loss) Income	(0.52		)		(0.27		)		(1.29		)		0.31
Net Income per Class A Share: Basic	$	0.33			$	0.32			$	0.64			$	1.94
Net Income per Class A Share: Diluted ⁽⁴⁾
Distributed income	$	0.85			$	0.59			$	1.93			$	1.59
Undistributed (Loss) Income	(0.52		)		(0.27		)		(1.29		)		0.34
Net Income per Class A Share: Diluted	$	0.33			$	0.32			$	0.64			$	1.93


(1)	The Company declared a $1.08 and $0.84 distribution on Class A shares on February 7, 2014 and May 8, 2014, respectively.


(2)	The Company declared a $1.05 and $0.57 distribution on Class A shares on February 8, 2013 and May 6, 2013, respectively.


(3)	No allocation of 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.

(4)

For the three and six months ended June 30, 2014 and three months ended June 30, 2013, the Company had an undistributed loss attributable to Class A shareholders and as such there was no dilution. For the three and six months ended June 30, 2014 and the three months ended June 30, 2013, AOG Units, restricted share units ("RSUs"), share options and participating securities were anti-dilutive and were accordingly excluded from the diluted earnings per share calculation. For the six months ended June 30, 2013 , share options and unvested RSUs were determined to be dilutive and were accordingly included in the diluted earnings per share calculation. For the six months ended June 30, 2013, the AOG Units and participating securities were determined to be anti-dilutive and were accordingly excluded from the diluted earnings per share calculation.

On October 24, 2007, the Company commenced the granting of restricted share units ("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. 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." As of June 30, 2014 , approximately 21.6 million vested RSUs and 4.3 million unvested RSUs were eligible for participation in distribution equivalents.

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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 RSU participating securities do not have a mandatory redemption amount and the holders of the participating securities are not obligated to fund losses, 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 vesting requirements and 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. A limited partner must exchange one partnership unit in each of the Apollo Operating Group partnerships to effectuate an exchange for one Class A share. As disclosed in note 1 , in connection with the Secondary Offering, certain holders of AOG Units exchanged their AOG Units for Class A shares and approximately 8.8 million Class A shares were issued by the Company in the exchange. In November 2013, certain holders of AOG Units exchanged their AOG Units for Class A shares and approximately 2.3 million Class A shares were issued by the Company in the exchange. In May 2014, certain holders of AOG Units exchanged their AOG Units for Class A Shares and approximately 6.2 million Class A shares were issued by the Company in the exchange.

If all of the outstanding AOG Units were exchanged for Class A shares, the result would be an additional 222,736,477 Class A shares added to the basic earnings per share calculation.

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 had a super voting power of 222,736,477 votes as of June 30, 2014 .

The table below presents transactions in Class A shares during each quarter during the six months ended June 30, 2014, each quarter during the year ended December 31, 2013 and the resulting impact on the Company’s and Holdings’ ownership interests in the Apollo Operating Group:



Date	Type of Class A Shares Transaction	Number of Shares Issued in Class A Shares Transaction (in thousands)	Apollo Global Management, LLC ownership% in Apollo Operating Group before Class A Shares Transaction	Apollo Global Management, LLC ownership% in Apollo Operating Group after Class A Shares Transaction	Holdings ownership% in Apollo Operating Group before Class A Shares Transaction	Holdings ownership% in Apollo Operating Group after Class A Shares Transaction
Quarter Ended March 31, 2013	Issuance	2,091	35.1%	35.5%	64.9%	64.5%
Quarter Ended June 30, 2013	Issuance/Offering	9,577	35.5%	38.0%	64.5%	62.0%
Quarter Ended September 30, 2013	Issuance	1,977	38.0%	38.3%	62.0%	61.7%
Quarter Ended December 31, 2013	Issuance/Exchange	2,581	38.3%	39.0%	61.7%	61.0%
Quarter Ended March 31, 2014	Issuance	2,672	39.0%	39.4%	61.0%	60.6%
Quarter Ended June 30, 2014	Issuance/Exchange	7,344	39.4%	41.2%	60.6%	58.8%

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

11 . EQUITY-BASED COMPENSATION

AOG Units

The fair value of the AOG Units of approximately $5.6 billion was charged to compensation expense on a straight-line basis over the five or six year service period, as applicable. For the three and six months ended June 30, 2013 , $15.0 million and $30.0 million of compensation expense was recognized, respectively. The AOG Units were fully vested and amortized as of June 30, 2013.

RSUs

On October 24, 2007, the Company commenced the granting of RSUs under the Company’s 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 after March 29, 2011 is based on the grant date fair value, which considers the public share price of the Company. For Plan Grants, the fair value is based on grant date fair value, and is discounted primarily for transfer restrictions and lack of distributions until vested. For Bonus Grants, the fair value is discounted primarily for transfer restrictions and in certain cases timing of distributions. For Plan Grants that are not eligible for distributions on unvested shares, the discount for the lack of distributions until vested based on the present value of a growing annuity calculation had a weighted average of 42.9% and 26.0% for the three months ended June 30, 2014 and 2013, respectively, and 40.0% and 22.0% for the six months ended June 30, 2014 and 2013 , respectively. Additionally, for Plan Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation, after considering the discount for lack of pre-vesting distributions, had a weighted average of 5.0% and 5.2% for the three months ended June 30, 2014, and 2013, respectively, and 5.0% and 5.2% for the six months ended June 30, 2014 and 2013 , respectively. For Bonus Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation had a weighted average of 3.0% and 4.8% for the three months ended June 30, 2014 and 2013, respectively, and 3.0% and 4.9% for the six months ended June 30, 2014 and 2013 , respectively. The total fair value is charged to compensation expense on a straight-line basis over the vesting period, which is generally up to six years , with the first installment vesting one year after grant and quarterly vesting thereafter (for Plan Grants) or annual vesting over three years (for Bonus Grants). The actual forfeiture rate was 0.6% and 2.9% for the three months ended June 30, 2014 and 2013, respectively, and 7.2% and 3.8% for the six months ended June 30, 2014 and 2013 , respectively. For the three months ended June 30, 2014 and 2013 , $13.4 million and $26.7 million of compensation expense was recognized, respectively. For the six months ended June 30, 2014 and 2013 , $44.5 million and $54.2 million of compensation expense was recognized, respectively.

In addition, during 2014, the Company has granted RSUs with certain performance conditions. Equity-based compensation expense is recognized only when the performance conditions are met or deemed probable. For the three and six months ended June 30, 2014, no equity-based compensation expense has been recognized relating to performance-based RSUs.

The following table summarizes RSU activity for the six months ended June 30, 2014 :



	Unvested		Weighted Average Grant Date Fair Value		Vested		Total Number of RSUs Outstanding
Balance at January 1, 2014	8,777,286		$	14.32	22,793,751		31,571,037
Granted	3,108,248		22.49		—		3,108,248
Forfeited ⁽²⁾	(851,700	)	10.10		—		(851,700	)
Delivered	—		15.24		(2,799,155	)	(2,799,155	)
Vested ⁽²⁾	(1,578,823	)	17.65		1,578,823		—
Balance at June 30, 2014	9,455,011		$	16.83	21,573,419		31,028,430		⁽¹⁾


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


(2)	In connection with the departure of an employee from the Company, 625,000 RSUs previously granted to such employee vested immediately and 625,000 RSUs previously granted to such employee were forfeited as of March 26, 2014. As a result, the Company recorded an incremental compensation expense of $17.5 million related to the relevant RSU award for the six months ended June 30, 2014 .

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Units Expected to Vest —As of June 30, 2014 , approximately 8,900,000 RSUs were expected to vest over the next 3.6 years .

Share Options

The following options have been granted under the Company's 2007 Omnibus Equity Incentive Plan:



Date of Grant	Options Granted	Vesting Terms
December 2, 2010 ⁽¹⁾	5,000,000	Vested and became exercisable with respect to 4/24 of the option shares on December 31, 2011 and the remainder vest in equal installments over each of the remaining 20 quarters with full vesting on December 31, 2016; 1,250,000 of these options were forfeited during the quarter ended March 31, 2014.
January 22, 2011	555,556	Half of such options that vested and became exercisable on December 31, 2011 were exercised on March 5, 2012 and the other half that were due to become exercisable on December 31, 2012 were forfeited during the quarter ended March 31, 2012.
April 9, 2011	25,000	Vested and became exercisable with respect to half of the option shares on December 31, 2011 and the other half vested in four equal quarterly installments starting on March 31, 2012 and ending on December 31, 2012 and are fully vested as of the date of this report.
July 9, 2012	50,000	Will vest and become exercisable with respect to 4/24 of the option shares on June 30, 2013 and the remainder will vest in equal installments over each of the remaining 20 quarters with full vesting on June 30, 2018.
December 28, 2012	200,000	Will vest and become exercisable with respect to 4/24 of the option shares on June 30, 2013 and the remainder will vest in equal installments over each of the remaining 20 quarters with full vesting on June 30, 2018.

(1)

In connection with the departure of an employee from the Company, 1,250,000 share options that were previously granted to such employee vested immediately and 1,250,000 share options that were previously granted to such employee were forfeited as of March 26, 2014. As a result, the Company recorded an incremental compensation expense of $28.1 million related to the relevant option award agreement for the six months ended June 30, 2014 .

For the three months ended June 30, 2014 and 2013 , $0.0 million and $1.2 million of compensation expense was recognized as a result of these grants, respectively. For the six months ended June 30, 2014 and 2013 , $28.1 million and $2.5 million of compensation expense was recognized as a result of these grants, respectively.

There were no share options granted during the six months ended June 30, 2014 . Apollo measures the fair value of each option award on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for options granted during 2012 and 2011:

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



Assumptions:	2012			2011
Risk-free interest rate	1.11		%	2.79		%
Weighted average expected dividend yield	8.13		%	2.25		%
Expected volatility factor ⁽¹⁾	45.00		%	40.22		%
Expected life in years	6.66			5.72
Fair value of options per share	$	3.01		$	8.44


(1)	The Company determined the expected volatility based on comparable companies using daily stock prices and the volatility of the Company’s share price.

The following table summarizes the share option activity for the six months ended June 30, 2014 :



	Options Outstanding		Weighted Average Exercise Price		Aggregate Fair Value			Weighted Average Remaining Contractual Term
Balance at January 1, 2014	2,950,003		$	8.69	$	16,124		7.08
Exercised	(1,462,500	)	8.01		(8,204		)	—
Forfeited	(1,250,000	)	8.00		(7,025		)	—
Balance at June 30, 2014	237,503		16.49		$	895		8.42
Exercisable at June 30, 2014	70,834		$	16.94	$	226		8.47

Options Expected to Vest — As of June 30, 2014 , approximately 157,000 options were expected to vest.

The expected life of the options granted represents the period of time that options are expected to be outstanding and is based on the contractual term of the option. Unamortized compensation cost related to unvested share options at June 30, 2014 was $0.5 million and is expected to be recognized over a weighted average period of 4.0 years .

Delivery of Class A Shares - RSUs and Share Options

During the six months ended June 30, 2014 , the Company delivered Class A shares in settlement of vested RSUs and exercised share options. The delivery of Class A shares in settlement of vested RSUs and exercised share options does not cause a transfer of amounts in the condensed consolidated statements of changes in shareholders’ equity to the Class A shareholders. The delivery of Class A shares in settlement of vested RSUs and exercised share options causes the income allocated to the Non-Controlling Interests to shift to the Class A shareholders from the date of delivery forward. During the six months ended June 30, 2014 , the Company delivered 3,797,843 Class A shares in settlement of vested RSUs and exercised share options, which caused the Company’s ownership interest in the Apollo Operating Group to increase to 39.6% from 39.0% . The gross value of the settlement of these shares was $128.3 million , based on Apollo's share price at the time of the delivery.

Restricted Share Awards—Athene Holding

Athene Holding granted restricted share awards ("AHL Awards") to certain employees of Apollo. The AHL Awards granted to employees of Athene Asset Management, L.P. ("AAM") are accounted for as a prepaid compensation asset within other assets and deferred revenue in the condensed consolidated statements of financial condition. As the awards vest, the deferred revenue is recognized as management fees and the prepaid compensation asset is recognized as compensation expense over the vesting period. The fair value of the awards to employees is based on the grant date fair value, which utilizes the equity value of Athene Holding, less discounts for transfer restrictions. The awards granted are recognized as liability awards remeasured each period to reflect the fair value of the prepaid compensation asset and deferred revenue and any changes in these values are recorded in the condensed consolidated statements of operations.

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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 and six months ended June 30, 2014, $14.9 million of management fees and $14.9 million of equity-based compensation expense was recognized in the condensed consolidated statements of operations, respectively.

Equity-Based Compensation Allocation

Equity-based compensation is allocated based on ownership interests. Therefore, the amortization of the AOG Units is allocated to shareholders’ equity attributable to Apollo Global Management, LLC 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 June 30, 2014 :



	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 and Share Options	$	13,425	—	%	—			$	13,425
AHL Awards	14,946		58.8		8,912			6,034
Other equity-based compensation awards	340		58.8		203			137
Total Equity-Based Compensation	$	28,711			9,115			19,596
Less other equity-based compensation awards ⁽²⁾					(9,115		)	(5,688		)
Capital Increase Related to Equity-Based Compensation					$	—		$	13,908

Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the six months ended June 30, 2014 :



	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 and Share Options	$	71,624	—	%	—			$	71,624
AHL Awards	14,946		58.8		8,912			6,034
Other equity-based compensation awards	1,119		58.8		676			443
Total Equity-Based Compensation	$	87,689			9,588			78,101
Less other equity-based compensation awards ⁽²⁾					(9,588		)	(5,511		)
Capital Increase Related to Equity-Based Compensation					$	—		$	72,590


(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.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the three months ended June 30, 2013 :



	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
AOG Units	$	15,004	62.0	%	$	9,461		$	5,543
RSUs and Share Options	27,776		—		—			27,776
AHL Awards	462		62.0		291			171
Other equity-based compensation awards	259		62.0		163			96
Total Equity-Based Compensation	$	43,501			9,915			33,586
Less other equity-based compensation awards ⁽²⁾					(454		)	181
Capital Increase Related to Equity-Based Compensation					$	9,461		$	33,767

Below is a reconciliation of the equity-based compensation allocated to Apollo Global Management, LLC for the six months ended June 30, 2013 :



	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
AOG Units	$	30,008	62.0	%	$	19,163		$	10,845
RSUs and Share Options	56,505		—		—			56,505
AHL Awards	1,757		62.0		1,089			668
Other equity-based compensation awards	517		62.0		321			196
Total Equity-Based Compensation	$	88,787			20,573			68,214
Less other equity-based compensation awards ⁽²⁾					(1,410		)	(156		)
Capital Increase Related to Equity-Based Compensation					$	19,163		$	68,058


(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 . RELATED PARTY TRANSACTIONS AND INTERESTS IN CONSOLIDATED ENTITIES

The Company typically facilitates the initial payment of certain operating costs incurred by the funds that it manages as well as their affiliates. These costs are normally reimbursed by such funds and are included in due from affiliates.

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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 affiliates and due to affiliates are comprised of the following:



	As of June 30, 2014		As of December 31, 2013
Due from Affiliates:
Due from private equity funds	$	48,400	$	57,582
Due from portfolio companies	22,883		23,484
Due from credit funds ⁽¹⁾	157,202		216,750
Due from Contributing Partners, employees and former employees	3,315		2,659
Due from real estate funds	15,965		12,119
Other	32		4,653
Total Due from Affiliates	$	247,797	$	317,247
Due to Affiliates:
Due to Managing Partners and Contributing Partners in connection with the tax receivable agreement	$	539,170	$	525,483
Due to private equity funds	2,077		825
Due to credit funds	257		1,773
Distributions payable to employees	32,768		67,290
Total Due to Affiliates	$	574,272	$	595,371


(1)	As of June 30, 2014 includes unsettled AAA and Athene management fee receivable as discussed in "Athene" below. As of December 31, 2013, includes Athene Services Derivative as discussed in "Athene" below.

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 the Secondary Offering. 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 20 years . In connection with the amendment of the AMH partnership agreement in April of 2010, the tax receivable agreement was revised to reflect the Managing Partners’ agreement to defer 25% , or $12.1 million , of the required payments pursuant to the tax receivable agreement that are attributable to the 2010 fiscal year for a period of four years until 2015.

In April 2013, Apollo made a $30.4 million cash payment pursuant to the tax receivable agreement resulting from the realized tax benefit for the 2012 tax year. Included in the payment was approximately $7.6 million and approximately $0.3 million of interest paid to the Managing Partners and Contributing Partners, respectively.

In April 2014, Apollo made a $32.0 million cash payment pursuant to the tax receivable agreement resulting from the realized tax benefit for the 2013 tax year. Included in the payment was approximately $8.3 million and approximately $0.5 million of interest paid to the Managing Partners and Contributing Partners, respectively.

As disclosed in note 1, in May 2013, the Intermediate Holding Companies acquired approximately 8.8 million Class A shares of Apollo Global Management, LLC, which were used to acquire an equal number of AOG Units from certain Managing Partners and Contributing Partners in connection with the Secondary Offering. This exchange was taxable for U.S. federal income tax purposes, and resulted in APO Corp. recording a U.S. federal income tax basis adjustment of approximately $145.7 million in

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

the intangible assets of certain Apollo Operating Group entities.

As disclosed in note 1, during November 2013 and May 2014, the Intermediate Holding Companies acquired approximately 2.2 million and 6.2 million Class A shares of Apollo Global Management, LLC, respectively, which were used to acquire an equal number of AOG Units from certain Managing Partners and Contributing Partners in connection with an exchange of AOG Units for Class A shares. These exchanges were taxable for U.S. federal income tax purposes, and resulted in APO Corp. recording a U.S. federal income tax basis adjustment of approximately $56.4 million and $97.6 million during November 2013 and May 2014, respectively, in the intangible assets of certain Apollo Operating Group entities.

Pursuant to the tax receivable agreement, the Managing Partners and Contributing Partners who exchanged AOG Units for Class A shares will receive payment from APO Corp. of 85% of the amount of the actual cash tax savings, if any, in U.S. Federal, state, local and foreign income tax that APO Corp. realizes as a result of these increases in tax deductions and tax basis, and certain other tax benefits, including imputed interest expense. APO Corp. retains the benefit from the remaining 15% of actual cash tax savings. As a result of the May 2013, November 2013, and May 2014 exchanges, a $174.8 million liability was recorded to estimate the amount of these future expected payments to be made by APO Corp. to the Managing Partners and Contributing Partners pursuant to the tax receivable agreement.

Due from Contributing Partners, Employees and Former Employees

As of June 30, 2014 and December 31, 2013 , due from Contributing Partners, Employees and Former Employee balances include various amounts due to the Company including director fee receivables.

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 2013 and 2014 (in millions, except per share data):



Distribution Declaration Date	Distribution per Class A Share Amount		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 8, 2013	$	1.05	February 28, 2013	$	138.7	$	252.0		$	390.7	$	25.0
April 12, 2013	—		April 12, 2013	—		55.2		⁽¹⁾	55.2		—
May 6, 2013	0.57		May 30, 2013	80.8		131.8			212.6		14.3
August 8, 2013	1.32		August 30, 2013	189.7		305.2			494.9		30.8
November 7, 2013	1.01		November 29, 2013	147.7		231.2			378.9		24.1
For the year ended December 31, 2013	$	3.95		$	556.9	$	975.4		$	1,532.3	$	94.2
February 7, 2014	$	1.08	February 26, 2014	$	160.9	$	247.3		$	408.2	$	25.5
April 3, 2014	—		April 3, 2014	—		49.5		⁽¹⁾	49.5		—
May 8, 2014	0.84		May 30, 2014	130.0		188.4			318.4		20.9
June 16, 2014	—		June 16, 2014	—		28.5		⁽¹⁾	$	28.5	—
For the six months ended June 30, 2014	$	1.92		$	290.9	$	513.7		$	804.6	$	46.4


(1)	On April 12, 2013, April 3, 2014 and June 16, 2014, the Company made a $0.23 , $0.22 and $0.13 distribution, respectively, to the non-controlling interest holders in the Apollo Operating Group, respectively.

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FINANCIAL STATEMENTS

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

Indemnity

Carried interest income from certain funds that the Company manages can be distributed to us on a current basis, but is subject to repayment by the subsidiary of the Apollo Operating Group that acts as general partner of the fund 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 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. An existing shareholders agreement includes clauses that 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, we 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. There was no indemnification liability recorded as of June 30, 2014 and December 31, 2013 .

Athene

Athene Holding is the ultimate parent of various insurance company operating subsidiaries. Through its subsidiaries, Athene Holding provides insurance products focused primarily on the retirement market and its business centers primarily on issuing or reinsuring fixed indexed annuities.

Athene Asset Management receives a management fee equal to 0.40% per annum on all assets under management in the Athene Accounts, with certain limited exceptions. In addition, the Company receives sub-advisory management fees and carried interest income with respect to a portion of the assets in the Athene Accounts. Athene Asset Management and other Apollo subsidiaries incur all expenses associated with their provision of services to Athene, including but not limited to, asset allocation services, direct asset management services, risk management, asset and liability matching management, mergers and acquisitions asset diligence, hedging and other services.

In connection with the AAA Transaction, a subsidiary of AAA Investments contributed three investment partnerships to Athene (the "Contributed Partnerships"). The Contributed Partnerships pay a quarterly management fee and carried interest to Apollo with respect to the assets contributed in the AAA Transaction. With respect to capital invested in an Apollo fund, Apollo receives management fees directly from the relevant funds under the investment management agreements with such funds and not pursuant to the services agreement with the Contributed Partnerships. In addition, carried interest is payable by the Contributed Partnerships with respect to each investment or group of investments (as specified in the particular partnership agreement), at a rate of 20% of the profit of such investment or group of investments, subject to applicable hurdle rates. Each investment or group of investments is treated separately for the purposes of calculating carried interest. The contributed assets also included certain investments in funds managed by Apollo, carried interest on which is assessed at the fund level.

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FINANCIAL STATEMENTS

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

monitoring fees paid to Apollo pursuant to the Amended Athene Services Agreement, will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the Exchange Act). Unsettled monitoring fees pursuant to the Amended Athene Services Agreement are recorded as due from affiliates in the condensed consolidated statements of financial condition. For the three and six months ended June 30, 2014 , Apollo earned $51.4 million and $110.1 million , respectively, related to this monitoring fee. For the three and six months ended June 30, 2013 , Apollo earned $21.2 million and $40.7 million , respectively, related to this monitoring fee. The monitoring fee is recorded in advisory and transaction fees from affiliates, net, in the condensed consolidated statements of operations. As of June 30, 2014, Apollo had a receivable of $52.8 million recorded in due from affiliates on the condensed consolidated statements of financial condition. As of December 31, 2013 , Apollo had a $116.4 million receivable, which was accounted for as a derivative recorded in due from affiliates on the condensed consolidated statements of financial condition.

In accordance with the services agreement among AAA, AAA Investments and the other service recipients party thereto and Apollo (the "AAA Services Agreement"), Apollo receives a management fee for managing the assets of AAA Investments. In connection with each of the consummation of the AAA Transaction, on October 31, 2012, and the initial closing of the Athene Private Placement on April 4, 2014, the AAA Services Agreement was amended (the "Amended AAA Services Agreement"). Pursuant to the Amended AAA Services Agreement, the parties agreed that there will be no management fees payable by AAA Investments with respect to the Excluded Athene Shares. AAA Investments will continue to pay Apollo the same management fee on its investment in Athene (other than with respect to the Excluded Athene Shares), except that Apollo agreed that the obligation to pay the existing management fee shall terminate on December 31, 2014 (although services will continue through December 31, 2020). As of June 30, 2014, Apollo had a receivable of $3.1 million recorded in due from affiliates on the condensed consolidated statements of financial condition. As of December 31, 2013 , Apollo had a $14.3 million receivable, which was accounted for as a derivative recorded in due from affiliates on the condensed consolidated statements of financial condition. The total management fees earned by Apollo related to the Amended AAA Services Agreement and the Contributed Partnerships for the three and six months ended June 30, 2014 were $2.6 million (of which $0.4 million related to the Amended AAA Services Agreements, as described above) and $5.5 million (of which $0.8 million related to the Amended AAA Services Agreement, as described above) respectively, which is recorded in management fees from affiliates in the condensed consolidated statements of operations. The total management fees earned by Apollo related to the Amended AAA Services Agreement and the Contributed Partnerships for the three and six months ended June 30, 2013 were $2.5 million (of which $0.6 million related to the Amended AAA Services Agreement, as described above) and $5.6 million (of which $1.2 million related to the Amended AAA Services Agreement, as described above) respectively, which is recorded in management fees from affiliates in the condensed consolidated statements of operations.

In addition, Apollo, as general partner of AAA Investments, is generally entitled to a carried interest that allocates to it 20% of the realized returns (net of related expenses, including borrowing costs) on the investments of AAA Investments, except that Apollo will not be entitled to receive any carried interest in respect of the Excluded Athene Shares. Carried interest receivable from AAA Investments will be paid in common shares of Athene Holding (valued at the then fair market value) if there is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the Exchange Act) or paid in cash if AAA sells the shares of Athene Holding. For the three and six months ended June 30, 2014 , the Company recorded carried interest income less the related profit sharing expense of $0.0 million and $14.6 million , from AAA Investments, which is recorded in the condensed consolidated statements of operations. For the three and six months ended June 30, 2013, the Company recorded carried interest income less the related profit sharing expense of $5.9 million and $7.3 million , respectively, from AAA Investments, which is recorded in the condensed consolidated statements of operations. As of June 30, 2014 and December 31, 2013 , the Company had a $121.3 million and a $100.9 million carried interest receivable, respectively, related to AAA Investments. As of June 30, 2014 and December 31, 2013 , the Company had a related profit sharing payable of $34.7 million and $28.8 million , respectively, recorded in profit sharing payable in the condensed consolidated statements of financial condition.

For the three and six months ended June 30, 2014 , Apollo earned revenues in the aggregate totaling $112.5 million and $267.1 million , respectively, consisting of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering the related profit sharing expense and changes in the market value of the Athene Services Derivative and the AAA Services Derivative discussed above, which is recorded in the condensed consolidated statements of operations. For the three and six months ended June 30, 2013 , Apollo earned revenues in the aggregate totaling $59.2 million and $122.3 million , respectively, consisting of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering the related profit sharing expense and changes in the market value of the Athene Services Derivative and the AAA Services Derivative discussed above, which is recorded in the condensed consolidated statements of operations.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Prior to the settlement of the Athene Services Derivative and the AAA Services Derivatives, the Amended Athene Services Agreement and the Amended AAA Services Agreement together with the Athene Services Derivative and the AAA Services Derivative, met the definition of a derivative under U.S. GAAP. The Company had classified these derivatives as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. After the settlement of the Athene Services Derivative and the AAA Services Derivatives the unsettled shares receivable recorded in due from affiliates related to the Amended Athene Services Agreement and the Amended AAA Services Agreement are valued at fair value based on the price of a common share of Athene Holding. The Company had classified the derivative and the shares receivable as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. See note 5 for further discussion regarding fair value measurements.

Prior to the settlement of the Athene Services Derivative and the AAA Services Derivative, the change in unrealized market value of the derivatives was reflected in other income, net in the condensed consolidated statements of operations. For the three and six months ended June 30, 2014 , there were $0.0 million and $14.0 million of changes in market value recognized related to these derivatives, respectively. For the three and six months ended June 30, 2013 , there were $0.3 million of changes in market value recognized related to these derivatives.

On April 4, 2014, Athene Holding completed an initial closing of a private placement offering of common equity in which it raised $1.048 billion of primary commitments from third-party institutional and certain existing investors in Athene Holding (the “Athene Private Placement”). Shares in the Athene Private Placement were offered at a price per common share of Athene Holding of $26 . In connection with the Athene Private Placement, Athene raised an additional $80 million of third party capital at $26 per share, all of which was used to buy back a portion of the shares of one of its existing investors at a price of $26 per share in a transaction that was consummated on April 29, 2014. As announced by AAA on June 24, 2014, a second closing of the Athene Private Placement occurred in which Athene Holding raised $170 million of commitments primarily from employees of Athene and its affiliates at a price per common share of Athene Holding of $26. The Athene Private Placement offering was concluded during the second quarter with the exception of the final closing on approximately $60 million of additional commitments from affiliates of Athene which are expected to close in the third quarter.

As of June 30, 2014 , AAA Investments’ ownership stake in Athene was reduced as a result of the Athene Private Placement and the issuance of 3.7 million unrestricted common shares of Athene Holding under Athene's management equity plan resulting in an approximate 47.8% economic ownership stake (calculated as if the commitments in the Athene Private Placement closed through June 30, 2014 were fully drawn down but without giving effect to (i) restricted common shares issued under Athene’s management equity plan, (ii) conversion to common shares of AAA Investments’ note receivable from Athene, or (iii) common shares to be issued under the Amended AAA Services Agreement or the Amended Athene Services Agreement, and effectively 45% of the voting power.

As a result of the above transactions, Apollo directly owned 4.6% of the economic equity of Athene Holding as of June 30, 2014 (calculated as if the commitments in the Athene Private Placement closed through June 30, 2014 were fully drawn down but without giving effect to (i) restricted common shares issued under Athene’s management equity plan or the (ii) conversion to common shares of AAA Investments’ note receivable from Athene, or (iii) common shares to be issued under the Amended AAA Services Agreement or the Amended Athene Services Agreement.

Regulated Entities

Apollo Global Securities, LLC (“AGS”) is a registered broker dealer with the United States Securities and Exchange Commission ("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 June 30, 2014 . From time to time, this entity is involved in transactions with affiliates of Apollo, including portfolio companies of the funds Apollo manages, whereby AGS earns underwriting and transaction fees for its services.

Apollo Management International LLP, is authorized and regulated by the U.K. Financial Conduct Authority and as such is subject to the capital requirements of the U.K. Financial Conduct Authority. This entity has continuously operated in excess of these regulatory capital requirements.

Certain other of the Company's U.S. and non-U.S. subsidiaries are subject to various regulations, including a number of U.S. entities that are registered as investment advisors with the SEC. To the extent applicable, these entities have continuously operated in excess of any minimum regulatory capital requirements.

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FINANCIAL STATEMENTS

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

Interests in Consolidated Entities

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



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
AAA ⁽¹⁾	$	932		$	(6,531	)	$	(198,337	)	$	(52,213	)
Interest in management companies and a co-investment vehicle ⁽²⁾	(4,909		)	(4,309		)	(8,494		)	(8,145		)
Other consolidated entities	9,806			7,647			5,108			29,566
Net loss (income) attributable to Non-Controlling Interests in consolidated entities	5,829			(3,193		)	(201,723		)	(30,792		)
Net (income) loss attributable to Appropriated Partners’ Capital ⁽³⁾	(34,468		)	40,243			(59,291		)	2,001
Net income attributable to Non-Controlling Interests in the Apollo Operating Group	(151,995		)	(126,483		)	(307,095		)	(611,729		)
Net Income attributable to Non-Controlling Interests	$	(180,634	)	$	(89,433	)	$	(568,109	)	$	(640,520	)
Net loss (income) attributable to Appropriated Partners’ Capital ⁽⁴⁾	34,468			(40,243		)	59,291			(2,001		)
Comprehensive Income Attributable to Non-Controlling Interests	$	(146,166	)	$	(129,676	)	$	(508,818	)	$	(642,521	)


(1)	Reflects the Non-Controlling Interests in the net (income) loss of AAA and is calculated based on the Non-Controlling Interests ownership percentage in AAA, which was approximately 97.5% and 97.3% as of June 30, 2014 and 2013, respectively. As of June 30, 2014 and 2013 , Apollo owned approximately 2.5% and 2.7% of AAA, respectively.


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


(3)	Reflects net income of the consolidated CLOs classified as VIEs.


(4)	Appropriated Partners’ Capital is included in total Apollo Global Management, LLC shareholders’ equity and is therefore not a component of comprehensive income attributable to Non-Controlling Interests on the condensed consolidated statements of comprehensive income.

13 . COMMITMENTS AND CONTINGENCIES

Financial Guarantees— Apollo has provided financial guarantees on behalf of certain employees for the benefit of unrelated third-party lenders in connection with their capital commitments to certain funds managed by the Company. As of June 30, 2014 , the maximum exposure relating to these financial guarantees approximated $0.3 million . Apollo has historically not incurred any liabilities as a result of these agreements and does not expect to in the future. Accordingly, no liability has been recorded in the accompanying condensed consolidated financial statements.

Investment Commitments— As a limited partner, general partner and manager of the Apollo private equity, credit and real estate funds, Apollo has unfunded capital commitments as of June 30, 2014 , and December 31, 2013 of $835.7 million and $843.7 million , respectively.

Apollo has an ongoing obligation to acquire additional common units of AAA in an amount equal to 25% of the aggregate after-tax cash distributions, if any, that are made by AAA to Apollo's affiliates pursuant to the carried interest distribution rights that are applicable to investments made through AAA Investments.

In September 2013, an indirect subsidiary of Apollo Global Management, LLC agreed to invest up to approximately €18.2 million ( $23.9 million ) in a limited partnership (the "KBCD Partnership"), a wholly-owned subsidiary of which has agreed to acquire a minority stake in KBC Bank Deutschland AG, the German subsidiary of Belgian KBC Group NV (and certain third party purchasers agreed to acquire, in aggregate, all of the other shares in KBC Bank Deutschland AG). The aforementioned indirect subsidiary of Apollo Global Management, LLC is the general partner of the KBCD Partnership. The limited partners of the KBCD Partnership are managed by subsidiaries of Apollo Global Management, LLC. The acquisition is subject to regulatory approval, which is expected to conclude during the second half of 2014. Consequently, there is no assurance that the acquisition will close.

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FINANCIAL STATEMENTS

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

Debt Covenants— Apollo’s debt obligations contain various customary loan covenants. As of June 30, 2014 , the Company was not aware of any instances of non-compliance with the financial covenants contained in the 2013 AMH Credit Facilities and 2024 Senior Notes.

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 agencies regarding its business.

In March 2012, plaintiffs filed two putative class actions, captioned Kelm v. Chase Bank (No. 12-cv-332) and Miller v. 1-800-Flowers.com, Inc. (No. 12-cv-396), in the District of Connecticut on behalf of a class of consumers alleging online fraud. The defendants included, among others, Trilegiant Corporation, Inc. (“Trilegiant”), its parent company, Affinion Group, LLC (“Affinion”), and Apollo Global Management, LLC (“AGM”), which is affiliated with funds that are the beneficial owners of 68% of Affinion’s common stock. In both cases, plaintiffs allege that Trilegiant, aided by its business partners, who include e-merchants and credit card companies, developed a set of business practices intended to create consumer confusion and ultimately defraud consumers into unknowingly paying fees to clubs for unwanted services. Plaintiffs allege that AGM is a proper defendant because of its indirect stock ownership and ability to appoint the majority of Affinion’s board. The complaints assert claims under the Racketeer Influenced Corrupt Organizations Act; the Electronic Communications Privacy Act; the Connecticut Unfair Trade Practices Act; and the California Business and Professional Code, and seek, among other things, restitution or disgorgement, injunctive relief, compensatory, treble and punitive damages, and attorneys’ fees. The allegations in Kelm and Miller are substantially similar to those in Schnabel v. Trilegiant Corp. (No. 3:10-cv-957), a putative class action filed in the District of Connecticut in 2010 that names only Trilegiant and Affinion as defendants. The court has consolidated the Kelm, Miller, and Schnabel cases under the caption In re: Trilegiant Corporation, Inc. and ordered that they proceed on the same schedule. On June 18, 2012, the court appointed lead plaintiffs’ counsel, and on September 7, 2012, plaintiffs filed their consolidated amended complaint (“CAC”), which alleges the same causes of action against AGM as did the complaints in the Kelm and Miller cases. Defendants filed motions to dismiss on December 7, 2012, plaintiffs filed opposition papers on February 7, 2013, and defendants filed replies on April 5, 2013. On December 5, 2012, plaintiffs filed another putative class action, captioned Frank v. Trilegiant Corp. (No. 12-cv-1721), in the District of Connecticut, naming the same defendants and containing allegations substantially similar to those in the CAC. On January 23, 2013, plaintiffs moved to transfer and consolidate Frank into In re: Trilegiant. On June 13, 2013, the Court extended all defendants’ deadlines to respond to the Frank complaint until 21 days after a ruling on the motion to transfer and consolidate. On July 24, 2013 the Frank court transferred the case to Judge Bryant, who is presiding over In re: Trilegiant,and on March 28, 2014, Judge Bryant granted the motion to consolidate. On September 25, 2013, the Court held oral argument on Defendants’ motions to dismiss. On March 28, 2014, the Court granted in part and denied in part motions to dismiss filed by Affinion and Trilegiant on behalf of all defendants, and also granted separate motions to dismiss filed by certain defendants, including AGM. On that same day, the Court directed the Clerk to terminate AGM as a defendant in the consolidated action. On April 28, 2014, plaintiffs moved for interlocutory review of certain of the Court’s motion-to-dismiss rulings, not including its order granting AGM’s separate dismissal motion. Defendants filed a response on May 23, 2014, and plaintiffs replied on June 5, 2014.

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. CalPERS, one of our Strategic Investors, 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 United States Securities and Exchange Commission 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 in fact alleges that Apollo was defrauded by Arvco, Villalobos, and Buenrostro. Finally, 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 recently 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

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FINANCIAL STATEMENTS

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

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. On August 7, 2014, the government filed a superseding indictment against Mr. Villalobos asserting additional charges. Trial is now scheduled for February 23, 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 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 seek to recover purported fees they 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 has stayed this action pending the result in the criminal case against Mr. Villalobos. For these reasons, no estimate of possible loss, if any, can be made at this time.

On July 9, 2012, Apollo was served with a subpoena by the New York Attorney General’s Office regarding Apollo’s fee waiver program. The subpoena is part of what we understand to be an industry-wide investigation by the New York Attorney General into the tax implications of the fee waiver program implemented by numerous private equity and hedge funds. Under the fee waiver program, individual fund managers for certain Apollo-managed funds prospectively elected to waive their management fees. Program participants received an interest in the future profits, if any, that would be earned on the invested amounts representing waived fees. They receive such profits from time to time in the ordinary course when distributions are made generally, as provided for in the applicable fund governing documents and waiver agreements. Four Apollo funds implemented the program, but the investment period for all funds was terminated as of December 31, 2012. Apollo believes its fee waiver program complies with all applicable laws, and is cooperating with the investigation.

On May 19, 2013, Apollo was served with a subpoena by the New York State Department of Financial Services (the “DFS”) regarding its investments in any annuity or life businesses, or annuity contracts or life policies. The subpoena is part of what we understand to be an industry-wide investigation by the DFS into investments by financial institutions in annuity and life insurance companies. Apollo is cooperating with the investigation.

Although the ultimate outcome of these matters cannot be ascertained at this time, Apollo is of the opinion, after consultation with counsel, that the resolution of any such matters to which it is a party at this time will not have a material adverse effect on the condensed consolidated financial statements. Legal actions material to Apollo could, however, arise in the future.

Commitments— Apollo leases office space and certain office equipment under various lease and sublease arrangements, which expire on various dates through 2024. 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 June 30, 2014 , the approximate aggregate minimum future payments required for operating leases were as follows:



	Remaining 2014		2015		2016		2017		2018		Thereafter		Total
Aggregate minimum future payments	$	19,531	$	38,323	$	37,001	$	35,041	$	31,668	$	53,586	$	215,150

Expenses related to non-cancellable contractual obligations for premises, equipment, auto and other assets were $10.9 million and $10.7 million for the three months ended June 30, 2014 and 2013, respectively, and $21.5 million and $21.3 million for the six months ended June 30, 2014 and 2013 , respectively.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Other Long-term Obligations— These obligations relate to payments with respect to certain consulting agreements entered into by Apollo Investment Consulting LLC, a subsidiary of Apollo. A significant portion of these costs are reimbursable by funds or portfolio companies. As of June 30, 2014 , fixed and determinable payments due in connection with these obligations were as follows:



	Remaining 2014		2015		2016		2017		2018		Thereafter		Total
Other long-term obligations	$	3,409	$	2,057	$	104	$	—	$	—	$	—	$	5,570

Contingent Obligations— Carried interest income with respect to private equity funds and certain credit and real estate funds is subject to reversal in the event of future losses to the extent of the cumulative carried interest 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 June 30, 2014 and that would be reversed approximates $4.1 billion . Management views the possibility of all of the investments becoming worthless as remote. Carried interest income is 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. The table below indicates the potential future reversal of carried interest income:



	As of June 30, 2014
Private Equity Funds:
Fund VII	$	1,824,225
Fund VI	1,302,604
Fund V	74,943
Fund IV	5,150
AAA/Other	188,445
Total Private Equity Funds	3,395,367
Credit Funds:
U.S. Performing Credit	308,265
Structured Credit	60,255
European Credit Funds	79,038
Non-Performing Loans	221,996
Opportunistic Credit	65,673
Total Credit Funds	735,227
Real Estate Funds:
CPI Funds	7,210
AGRE U.S. Real Estate Fund, L.P.	5,836
Other	3,904
Total Real Estate Funds	16,950
Total	$	4,147,544

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 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.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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 June 30, 2014 , there were no underwriting commitments outstanding related to such offerings.

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 earned from certain of the Stone Tower funds, CLOs, and strategic investment accounts. This contingent consideration liability had an acquisition date fair value of $117.7 million , which was determined based on the present value of estimated future carried interest payments, and is recorded in profit sharing payable in the condensed consolidated statements of financial condition. The fair value of the contingent obligation was $101.7 million and $121.4 million as of June 30, 2014 and December 31, 2013 , respectively, and was recorded in profit sharing payable in the condensed consolidated statements of financial condition.

In connection with the Gulf Stream acquisition, the Company agreed to make payments to the former owners of Gulf Stream under a contingent consideration obligation which required the Company to transfer cash to the former owners of Gulf Stream based on a specified percentage of carried interest income. The contingent liability had a fair value of $13.5 million and $14.1 million as of June 30, 2014 and December 31, 2013 , respectively, which was recorded in profit sharing payable in the condensed consolidated statements of financial condition.

The contingent consideration obligations will be remeasured to fair value at each reporting period until the obligations are satisfied. The changes in the fair value of the contingent consideration obligations will be 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 5 for further information regarding fair value measurements.

14 . MARKET AND CREDIT RISK

In the normal course of business, Apollo encounters market and credit risk concentrations. Market risk reflects changes in the value of investments due to changes in interest rates, credit spreads or other market factors. Credit risk includes the risk of default on Apollo’s investments, where the counterparty is unable or unwilling to make required or expected payments.

The Company is subject to a concentration risk related to the investors in its funds. As of June 30, 2014 , there were more than 1,000 investors in Apollo’s active private equity, credit and real estate funds, and no individual investor accounted for more than 10% of the total committed capital to Apollo’s active funds.

Apollo’s derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. Apollo seeks to minimize this risk by limiting its counterparties to highly rated major financial institutions with good credit ratings. Management does not expect any material losses as a result of default by other parties.

Substantially all amounts on deposit with major financial institutions that exceed insured limits are invested in interest-bearing accounts with U.S. money center banks.

Apollo is exposed to economic risk concentrations insofar as Apollo is dependent on the ability of the funds that it manages to compensate it for the services it provides to these funds. Further, the incentive income component of this compensation is based on the ability of such funds to generate returns above certain specified thresholds.

Additionally, Apollo is exposed to interest rate risk. Apollo has debt obligations that have variable rates. Interest rate changes may therefore affect the amount of interest payments, future earnings and cash flows. At June 30, 2014 and December 31, 2013 , $500.0 million and $750.0 million of Apollo’s de bt balance (excluding debt of the consolidated VIEs) had a variable interest rate, respectively.

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

15 . SEGMENT REPORTING

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


•	Real Estate —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 affiliated funds.

The Company’s financial results vary since carried interest, which generally constitutes a large portion of the income from the funds that Apollo manages, as well as the transaction and advisory fees that the Company receives, can vary significantly from quarter to quarter and year to year. As a result, the Company emphasizes long-term financial growth and profitability to manage its business.

The tables below present the financial data for Apollo’s reportable segments further separated between the management business and incentive business as of June 30, 2014 and 2013 , and for the three and six months ended June 30, 2014 and 2013 , respectively, which management believes is useful to the reader. The Company’s management business has fairly stable revenues and expenses except for transaction fees, while its incentive business is more volatile and can have significant fluctuations as it is affected by changes in the fair value of investments due to market performance. The financial results of the management entities, as reflected in the “management” business section of the segment tables that follow, generally include management fee revenues, advisory and transaction fees and expenses exclusive of profit sharing expense. The financial results of the advisory entities, as reflected in the “incentive” business sections of the segment tables that follow, generally include carried interest income, investment income and profit sharing expense.

During the fourth quarter of 2013, certain reclassifications were made to prior period financial data within salary, bonus and benefits and profit sharing expense to conform to the current presentation. The impact of these reclassifications on management business ENI and incentive business ENI is reflected in the table below for Apollo’s three reportable segments for the three and six months ended June 30, 2013 .



	Impact of Reclassification on Management Business Economic Net Income (Loss)
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Three Months Ended June 30, 2013	$4,861	$(4,432)	$(429)



	Impact of Reclassification on Management Business Economic Net Income (Loss)
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Six Months Ended June 30, 2013	$9,899	$(8,951)	$(948)

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



	Impact of Reclassification on Incentive Business Economic Net (Loss) Income
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Three Months Ended June 30, 2013	$(5,976)	$5,392	$584



	Impact of Reclassification on Incentive Business Economic Net (Loss) Income
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Six Months Ended June 30, 2013	$(9,540)	$8,611	$929

As it relates to the reclassifications described above, the impact to the combined segments Economic Net Income (Loss) for all periods presented was zero .

Economic Net Income (Loss)

ENI is a key performance measure used by management in evaluating the performance of Apollo’s private equity, credit and real estate segments. Management believes the components of ENI such as the amount of management fees, advisory and transaction fees and carried interest income are indicative of the Company’s performance. Management also uses ENI 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 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 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.

ENI is a measure of profitability and has certain limitations in that it does not take into account certain items included under U.S. GAAP. ENI represents segment income (loss) attributable to Apollo Global Management, LLC, which excludes the impact of (i) non-cash charges related to RSUs granted in connection with the 2007 private placement and amortization of AOG Units, (ii) income tax expense, (iii) amortization of intangibles associated with the 2007 Reorganization as well as acquisitions (iv) Non-Controlling Interests excluding the remaining interest held by certain individuals who receive an allocation of income from certain of our credit management companies and (v) non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the funds and VIEs that are included in the 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)

The following table presents the financial data for Apollo’s reportable segments as of and for the three months ended June 30, 2014 :



	As of and for the Three Months Ended June 30, 2014
	Private Equity Segment		Credit Segment			Real Estate Segment		Total Reportable Segments
Revenues:
Advisory and transaction fees from affiliates, net	$	5,178	$	55,609		$	—	$	60,787
Management fees from affiliates	82,045		134,605			12,208		228,858
Carried interest income from affiliates	187,709		96,909			4,986		289,604
Total Revenues	274,932		287,123			17,194		579,249
Expenses	170,107		143,056			16,812		329,975
Other Income	14,346		3,355			3,211		20,912
Non-Controlling Interests	—		(3,124		)	—		(3,124		)
Economic Net Income	$	119,171	$	144,298		$	3,593	$	267,062
Total Assets	$	2,689,643	$	2,251,624		$	195,452	$	5,136,719

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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 reconciles the total segments to Apollo Global Management, LLC’s condensed consolidated financial statements as of and for the three months ended June 30, 2014 :



	As of and for the Three Months Ended June 30, 2014
	Total Reportable Segments				Consolidation Adjustments and Other				Consolidated
Revenues	$	579,249			$	(7,097	)	⁽¹⁾	$	572,152
Expenses	329,975				24,394			⁽²⁾	354,369
Other income	20,912				48,644			⁽³⁾	69,556
Non-Controlling Interests	(3,124		)		(177,510		)		(180,634		)
Economic Net Income	$	267,062		⁽⁵⁾	N/A				N/A
Total Assets	$	5,136,719			$	17,310,672		⁽⁶⁾	$	22,447,391


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


(2)	Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 private placement. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.


(3)	Results from the following:



	For the Three Months Ended June 30, 2014
Net loss from investment activities	$	(354	)
Net gains from investment activities of consolidated variable interest entities	43,425
Gain from equity method investments ⁽⁴⁾	4,835
Other Income, net	738
Total Consolidation Adjustments	$	48,644


(4)	Includes $1,785 reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.


(5)	The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the condensed consolidated statements of operations consists of the following:



	For the Three Months Ended June 30, 2014
Economic Net Income	$	267,062
Income tax provision	(35,037		)
Net income attributable to Non-Controlling Interests in Apollo Operating Group	(151,995		)
Non-cash charges related to equity-based compensation ⁽⁷⁾	233
Amortization of intangible assets	(8,595		)
Net Income Attributable to Apollo Global Management, LLC	$	71,668


(6)	Represents the addition of assets of consolidated funds and the consolidated VIEs.


(7)	Includes the impact of non-cash charges related to amortization of RSU Plan Grants made in connection with the 2007 private placement as discussed in note 11 to our condensed consolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.

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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 additional financial data for Apollo’s reportable segments for the three months ended June 30, 2014 :



	For the Three Months Ended June 30, 2014
	Private Equity								Credit
	Management		Incentive			Total			Management			Incentive		Total
Revenues:
Advisory and transaction fees from affiliates, net	$	5,178	$	—		$	5,178		$	55,609		$	—	$	55,609
Management fees from affiliates	82,045		—			82,045			134,605			—		134,605
Carried interest income from affiliates:
Unrealized (losses) gains	—		(10,394		)	(10,394		)	—			47,174		47,174
Realized gains	—		198,103			198,103			10,009			39,726		49,735
Total Revenues	87,223		187,709			274,932			200,223			86,900		287,123
Compensation and benefits ⁽¹⁾	33,670		115,894			149,564			61,303			42,069		103,372
Other expenses ⁽²⁾	20,543		—			20,543			39,684			—		39,684
Total Expenses	54,213		115,894			170,107			100,987			42,069		143,056
Other Income	927		13,419			14,346			3,164			191		3,355
Non-Controlling Interests	—		—			—			(3,124		)	—		(3,124		)
Economic Net Income	$	33,937	$	85,234		$	119,171		$	99,276		$	45,022	$	144,298


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.



	For the Three Months Ended June 30, 2014
	Real Estate
	Management			Incentive		Total
Revenues:
Advisory and transaction fees from affiliates, net	$	—		$	—	$	—
Management fees from affiliates	12,208			—		12,208
Carried interest income from affiliates:
Unrealized gains	—			988		988
Realized gains	—			3,998		3,998
Total Revenues	12,208			4,986		17,194
Compensation and benefits ⁽¹⁾	8,441			2,817		11,258
Other expenses ⁽²⁾	5,554			—		5,554
Total Expenses	13,995			2,817		16,812
Other Income	135			3,076		3,211
Economic Net (Loss) Income	$	(1,652	)	$	5,245	$	3,593


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

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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 financial data for Apollo’s reportable segments as of and for the three months ended June 30, 2013 :



	For the Three Months Ended June 30, 2013
	Private Equity Segment		Credit Segment			Real Estate Segment			Total Reportable Segments
Revenues:
Advisory and transaction fees from affiliates, net	$	41,663	$	22,148		$	1,273		$	65,084
Management fees from affiliates	65,684		90,387			13,206			169,277
Carried interest income (loss) from affiliates	228,590		53,314			(6,281		)	275,623
Total Revenues	335,937		165,849			8,198			509,984
Expenses	173,311		100,063			10,960			284,334
Other Income	13,042		4,885			1,074			19,001
Non-Controlling Interests	—		(3,254		)	—			(3,254		)
Economic Net Income (Loss)	$	175,668	$	67,417		$	(1,688	)	$	241,397
Total Assets	$	2,796,517	$	2,007,122		$	150,850		$	4,954,489

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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 reconciles the total reportable segments to Apollo Global Management, LLC’s financial statements as of and for the three months ended June 30, 2013 :



	For the Three Months Ended June 30, 2013
	Total Reportable Segments				Consolidation Adjustments and Other				Consolidated
Revenues	$	509,984			$	(12,723	)	⁽¹⁾	$	497,261
Expenses	284,334				38,453			⁽²⁾	322,787
Other income (loss)	19,001				(27,166		)	⁽³⁾	(8,165		)
Non-Controlling Interests	(3,254		)		(86,179		)		(89,433		)
Economic Net Income	$	241,397		⁽⁵⁾	N/A				N/A
Total Assets	$	4,954,489			$	15,665,535		⁽⁶⁾	$	20,620,024


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


(2)	Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 private placement and equity-based compensation expense comprising amortization of AOG Units and amortization of intangible assets. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.


(3)	Results from the following:



	For the Three Months Ended June 30, 2013
Net gains from investment activities	$	6,868
Net losses from investment activities of consolidated variable interest entities	(35,198		)
Gain from equity method investments ⁽⁴⁾	742
Interest	422
Total Consolidation Adjustments	$	(27,166	)


(4)	Includes $(1,055) reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.


(5)	The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the condensed consolidated statements of operations consists of the following:



	For the Three Months Ended June 30, 2013
Economic Net Income	$	241,397
Income tax provision	(18,139		)
Net income attributable to Non-Controlling Interests in Apollo Operating Group	(126,483		)
Non-cash charges related to equity-based compensation ⁽⁷⁾	(26,736		)
Amortization of intangible assets	(11,302		)
Net Income Attributable to Apollo Global Management, LLC	$	58,737


(6)	Represents the addition of assets of consolidated funds and the consolidated VIEs.


(7)	Includes the impact of non-cash charges related to amortization of AOG Units and RSU Plan Grants made in connection with the 2007 private placement as discussed in note 11 to our condensed consolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.

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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 additional financial data for Apollo’s reportable segments for the three months ended June 30, 2013 :



	For the Three Months Ended June 30, 2013
	Private Equity								Credit
	Management		Incentive			Total			Management			Incentive			Total
Revenues:
Advisory and transaction fees from affiliates, net	$	41,663	$	—		$	41,663		$	22,148		$	—		$	22,148
Management fees from affiliates	65,684		—			65,684			90,387			—			90,387
Carried interest income from affiliates:
Unrealized losses	—		(509,667		)	(509,667		)	—			(58,843		)	(58,843		)
Realized gains	—		738,257			738,257			10,029			102,128			112,157
Total Revenues	107,347		228,590			335,937			122,564			43,285			165,849
Compensation and benefits ⁽¹⁾	33,216		113,322			146,538			43,425			18,385			61,810
Other expenses ⁽²⁾	26,773		—			26,773			38,253			—			38,253
Total Expenses	59,989		113,322			173,311			81,678			18,385			100,063
Other Income	872		12,170			13,042			4,072			813			4,885
Non-Controlling Interests	—		—			—			(3,254		)	—			(3,254		)
Economic Net Income	$	48,230	$	127,438		$	175,668		$	41,704		$	25,713		$	67,417


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses excludes amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.



	For the Three Months Ended June 30, 2013
	Real Estate
	Management			Incentive			Total
Revenues:
Advisory and transaction fees from affiliates, net	$	1,273		$	—		$	1,273
Management fees from affiliates	13,206			—			13,206
Carried interest income (loss) from affiliates:
Unrealized losses	—			(6,439		)	(6,439		)
Realized gains	—			158			158
Total Revenues	14,479			(6,281		)	8,198
Compensation and benefits ⁽¹⁾	9,394			(4,464		)	4,930
Other expenses ⁽²⁾	6,030			—			6,030
Total Expenses	15,424			(4,464		)	10,960
Other Income	255			819			1,074
Economic Net Loss	$	(690	)	$	(998	)	$	(1,688	)


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

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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 financial data for Apollo’s reportable segments as of and for the six months ended June 30, 2014 :



	As of and for the Six Months Ended June 30, 2014
	Private Equity Segment		Credit Segment			Real Estate Segment		Total Reportable Segments
Revenues:
Advisory and transaction fees from affiliates, net	$	42,814	$	133,089		$	949	$	176,852
Management fees from affiliates	161,466		266,234			24,988		452,688
Carried interest income from affiliates	290,960		163,261			4,642		458,863
Total Revenues	495,240		562,584			30,579		1,088,403
Expenses	301,591		296,932			34,893		633,416
Other Income	36,439		46,892			4,375		87,706
Non-Controlling Interests	—		(6,380		)	—		(6,380		)
Economic Net Income	$	230,088	$	306,164		$	61	$	536,313
Total Assets	$	2,689,643	$	2,251,624		$	195,452	$	5,136,719

The following table reconciles the total segments to Apollo Global Management, LLC’s condensed consolidated financial statements as of and for the six months ended June 30, 2014 :



	As of and for the Six Months Ended June 30, 2014
	Total Reportable Segments				Consolidation Adjustments and Other				Consolidated
Revenues	$	1,088,403			$	(24,851	)	⁽¹⁾	$	1,063,552
Expenses	633,416				35,072			⁽²⁾	668,488
Other income	87,706				296,762			⁽³⁾	384,468
Non-Controlling Interests	(6,380		)		(561,729		)		(568,109		)
Economic Net Income	$	536,313		⁽⁵⁾	N/A				N/A
Total Assets	$	5,136,719			$	17,310,672		⁽⁶⁾	$	22,447,391


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


(2)	Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 private placement. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.


(3)	Results from the following:



	For the Six Months Ended June 30, 2014
Net gains from investment activities	$	205,041
Net gains from investment activities of consolidated variable interest entities	91,160
Loss from equity method investments ⁽⁴⁾	(550		)
Other Income, net	1,111
Total Consolidation Adjustments	$	296,762

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


(4)	Includes $2,113 reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.


(5)	The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the condensed consolidated statements of operations consists of the following:



	For the Six Months Ended June 30, 2014
Economic Net Income	$	536,313
Income tax provision	(67,586		)
Net income attributable to Non-Controlling Interests in Apollo Operating Group	(307,095		)
Non-cash charges related to equity-based compensation ⁽⁷⁾	(90		)
Amortization of intangible assets	(17,705		)
Net Income Attributable to Apollo Global Management, LLC	$	143,837


(6)	Represents the addition of assets of consolidated funds and the consolidated VIEs.


(7)	Includes the impact of non-cash charges related to amortization of RSU Plan Grants made in connection with the 2007 private placement as discussed in note 11 to our condensed consolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.

The following tables present additional financial data for Apollo’s reportable segments for the six months ended June 30, 2014 :



	For the Six Months Ended June 30, 2014
	Private Equity								Credit
	Management		Incentive			Total			Management			Incentive		Total
Revenues:
Advisory and transaction fees from affiliates, net	$	42,814	$	—		$	42,814		$	133,089		$	—	$	133,089
Management fees from affiliates	161,466		—			161,466			266,234			—		266,234
Carried interest income (loss) from affiliates:
Unrealized (losses) gains	—		(303,983		)	(303,983		)	—			39,276		39,276
Realized gains	—		594,943			594,943			18,473			105,512		123,985
Total Revenues	204,280		290,960			495,240			417,796			144,788		562,584
Compensation and benefits ⁽¹⁾	80,388		181,989			262,377			140,298			80,535		220,833
Other expenses ⁽²⁾	39,214		—			39,214			76,099			—		76,099
Total Expenses	119,602		181,989			301,591			216,397			80,535		296,932
Other Income	2,621		33,818			36,439			7,499			39,393		46,892
Non-Controlling Interests	—		—			—			(6,380		)	—		(6,380		)
Economic Net Income	$	87,299	$	142,789		$	230,088		$	202,518		$	103,646	$	306,164


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

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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 Six Months Ended June 30, 2014
	Real Estate
	Management			Incentive		Total
Revenues:
Advisory and transaction fees from affiliates, net	$	949		$	—	$	949
Management fees from affiliates	24,988			—		24,988
Carried interest income from affiliates:
Unrealized gains	—			644		644
Realized gains	—			3,998		3,998
Total Revenues	25,937			4,642		30,579
Compensation and benefits ⁽¹⁾	21,396			2,215		23,611
Other expenses ⁽²⁾	11,282			—		11,282
Total Expenses	32,678			2,215		34,893
Other Income	552			3,823		4,375
Economic Net (Loss) Income	$	(6,189	)	$	6,250	$	61


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses exclude amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

The following table presents the financial data for Apollo’s reportable segments as of and for the six months ended June 30, 2013 :



	For the Six Months Ended June 30, 2013
	Private Equity Segment		Credit Segment			Real Estate Segment			Total Reportable Segments
Revenues:
Advisory and transaction fees from affiliates, net	$	66,280	$	43,825		$	2,398		$	112,503
Management fees from affiliates	131,956		174,751			26,797			333,504
Carried interest income (loss) from affiliates	1,219,583		187,089			(5,329		)	1,401,343
Total Revenues	1,417,819		405,665			23,866			1,847,350
Expenses	618,846		219,085			28,441			866,372
Other Income	37,225		20,302			2,088			59,615
Non-Controlling Interests	—		(6,718		)	—			(6,718		)
Economic Net Income (Loss)	$	836,198	$	200,164		$	(2,487	)	$	1,033,875
Total Assets	$	2,796,517	$	2,007,122		$	150,850		$	4,954,489

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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 reconciles the total reportable segments to Apollo Global Management, LLC’s financial statements as of and for the six months ended June 30, 2013 :



	For the Six Months Ended June 30, 2013
	Total Reportable Segments				Consolidation Adjustments and Other				Consolidated
Revenues	$	1,847,350			$	(41,016	)	⁽¹⁾	$	1,806,334
Expenses	866,372				79,017			⁽²⁾	945,389
Other income	59,615				64,393			⁽³⁾	124,008
Non-Controlling Interests	(6,718		)		(633,802		)		(640,520		)
Economic Net Income	$	1,033,875		⁽⁵⁾	N/A				N/A
Total Assets	$	4,954,489			$	15,665,535		⁽⁶⁾	$	20,620,024


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


(2)	Represents the addition of expenses of consolidated funds and the consolidated VIEs and expenses related to RSUs granted in connection with the 2007 private placement and equity-based compensation expense comprising amortization of AOG Units and amortization of intangible assets. Includes non-cash expenses related to equity awards granted by unconsolidated affiliates to employees of the Company.


(3)	Results from the following:



	For the Six Months Ended June 30, 2013
Net gains from investment activities	$	54,971
Net gains from investment activities of consolidated variable interest entities	12,663
Loss from equity method investments ⁽⁴⁾	(827		)
Interest	860
Other losses, net	(3,274		)
Total Consolidation Adjustments	$	64,393


(4)	Includes $(1,427) reflecting the remaining interest of certain individuals who receive an allocation of income from a private equity co-investment vehicle.


(5)	The reconciliation of Economic Net Income to Net Income Attributable to Apollo Global Management, LLC reported in the condensed consolidated statements of operations consists of the following:



	For the Six Months Ended June 30, 2013
Economic Net Income	$	1,033,875
Income tax provision	(36,718		)
Net income attributable to Non-Controlling Interests in Apollo Operating Group	(611,729		)
Non-cash charges related to equity-based compensation ⁽⁷⁾	(54,666		)
Amortization of intangible assets	(23,047		)
Net Income Attributable to Apollo Global Management, LLC	$	307,715


(6)	Represents the addition of assets of consolidated funds and the consolidated VIEs.


(7)	Includes the impact of non-cash charges related to amortization of AOG Units and RSU Plan Grants made in connection with the 2007 private placement as discussed in note 11 to our condensed consolidated financial statements. Additionally, includes non-cash revenues related to equity awards granted by unconsolidated affiliates to employees of the Company.

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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 additional financial data for Apollo’s reportable segments for the six months ended June 30, 2013 :



	For the Six Months Ended June 30, 2013
	Private Equity						Credit
	Management		Incentive		Total		Management			Incentive		Total
Revenues:
Advisory and transaction fees from affiliates, net	$	66,280	$	—	$	66,280	$	43,825		$	—	$	43,825
Management fees from affiliates	131,956		—		131,956		174,751			—		174,751
Carried interest income from affiliates:
Unrealized gains ⁽¹⁾	—		187,947		187,947		—			14,404		14,404
Realized gains	—		1,031,636		1,031,636		19,080			153,605		172,685
Total Revenues	198,236		1,219,583		1,417,819		237,656			168,009		405,665
Compensation and benefits ⁽²⁾	68,963		501,143		570,106		88,781			53,728		142,509
Other expenses ⁽³⁾	48,740		—		48,740		76,576			—		76,576
Total Expenses	117,703		501,143		618,846		165,357			53,728		219,085
Other Income	2,504		34,721		37,225		8,527			11,775		20,302
Non-Controlling Interests	—		—		—		(6,718		)	—		(6,718		)
Economic Net Income	$	83,037	$	753,161	$	836,198	$	74,108		$	126,056	$	200,164

(1)

Included in unrealized carried interest income from affiliates for the six months ended June 30, 2013 was a reversal of $19.3 million of the entire general partner obligation to return previously distributed carried interest income to SOMA. The general partner obligation is recognized based upon a hypothetical liquidation of the funds' 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.


(2)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(3)	Other expenses excludes amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

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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 Six Months Ended June 30, 2013
	Real Estate
	Management			Incentive			Total
Revenues:
Advisory and transaction fees from affiliates, net	$	2,398		$	—		$	2,398
Management fees from affiliates	26,797			—			26,797
Carried interest income (loss) from affiliates:
Unrealized losses	—			(5,841		)	(5,841		)
Realized gains	—			512			512
Total Revenues	29,195			(5,329		)	23,866
Compensation and benefits ⁽¹⁾	19,043			(4,008		)	15,035
Other expenses ⁽²⁾	13,406			—			13,406
Total Expenses	32,449			(4,008		)	28,441
Other Income	1,393			695			2,088
Economic Net Loss	$	(1,861	)	$	(626	)	$	(2,487	)


(1)	Compensation and benefits includes equity-based compensation expense related to the management business for RSUs (excluding RSUs granted in connection with the 2007 private placement) and share options.


(2)	Other expenses excludes amortization of intangibles associated with the 2007 Reorganization as well as acquisitions.

16 . SUBSEQUENT EVENTS

On July 8, 2014, the Company issued 475,170 Class A shares in settlement of vested RSUs. This issuance caused the Company's ownership interest in the Apollo Operating Group to increase from 41.2% to 41.3% .

On August 6, 2014, the Company declared a cash distribution of $0.46 per Class A share, which will be paid on August 29, 2014 to holders of record on August 22, 2014.

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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)



	June 30, 2014
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIE's		Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	1,093,657		$	—	$	—		$	1,093,657
Cash and cash equivalents held at consolidated funds	—			1,989		—			1,989
Restricted cash	7,646			—		—			7,646
Investments	797,350			2,177,635		(92,302		)	2,882,683
Assets of consolidated variable interest entities
Cash and cash equivalents	—			1,189,378		—			1,189,378
Investments, at fair value	—			13,692,895		(723		)	13,692,172
Other assets	—			446,397		(692		)	445,705
Carried interest receivable	2,049,841			—		(61,768		)	1,988,073
Due from affiliates	254,590			—		(6,793		)	247,797
Fixed assets, net	37,781			—		—			37,781
Deferred tax assets	665,120			—		—			665,120
Other assets	64,660			4,265		—			68,925
Goodwill	88,852			—		(39,609		)	49,243
Intangible assets, net	77,222			—		—			77,222
Total Assets	$	5,136,719		$	17,512,559	$	(201,887	)	$	22,447,391
Liabilities and Shareholders' Equity
Liabilities:
Accounts payable and accrued expenses	$	60,284		$	1,075	$	—		$	61,359
Accrued compensation and benefits	85,409			—		—			85,409
Deferred revenue	272,727			—		—			272,727
Due to affiliates	572,737			1,535		—			574,272
Profit sharing payable	963,922			—		—			963,922
Debt	999,008			—		—			999,008
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			12,179,627		(615		)	12,179,012
Other liabilities	—			607,104		37			607,141
Due to affiliates	—			69,291		(69,291		)	—
Other liabilities	31,581			5,782		—			37,363
Total Liabilities	2,985,668			12,864,414		(69,869		)	15,780,213

Shareholders' Equity:
Apollo Global Management, LLC shareholders' equity:
Additional paid in capital	2,414,886			—		(1,771		)	2,413,115
Accumulated deficit	(1,458,376		)	2,176,198		(2,143,066		)	(1,425,244		)
Appropriated partners' capital	—			1,444,780		(39,716		)	1,405,064
Accumulated other comprehensive income (loss)	37,841			—		(38,793		)	(952		)
Total Apollo Global Management, LLC shareholders' equity	994,351			3,620,978		(2,223,346		)	2,391,983
Non-Controlling Interests in consolidated entities	15,978			1,027,167		2,091,328			3,134,473
Non-Controlling Interests in Apollo Operating Group	1,140,722			—		—			1,140,722
Total Shareholders' Equity	2,151,051			4,648,145		(132,018		)	6,667,178
Total Liabilities and Shareholders' Equity	$	5,136,719		$	17,512,559	$	(201,887	)	$	22,447,391

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APOLLO GLOBAL MANAGEMENT, LLC

CONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(dollars in thousands, except share data)



	December 31, 2013
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIE's		Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	1,078,120		$	—	$	—		$	1,078,120
Cash and cash equivalents held at consolidated funds	—			1,417		—			1,417
Restricted cash	9,199			—		—			9,199
Investments	509,712			1,971,654		(87,483		)	2,393,883
Assets of consolidated variable interest entities
Cash and cash equivalents	—			1,095,170		—			1,095,170
Investments, at fair value	—			14,127,480		(1,118		)	14,126,362
Other assets	—			280,718		—			280,718
Carried interest receivable	2,366,766			—		(79,691		)	2,287,075
Due from affiliates	323,177			—		(5,930		)	317,247
Fixed assets, net	40,251			—		—			40,251
Deferred tax assets	660,199			—		—			660,199
Other assets	42,333			1,837		—			44,170
Goodwill	88,852			—		(39,609		)	49,243
Intangible assets, net	94,927			—		—			94,927
Total Assets	$	5,213,536		$	17,478,276	$	(213,831	)	$	22,477,981
Liabilities and Shareholders' Equity
Liabilities:
Accounts payable and accrued expenses	$	37,880		$	279	$	—		$	38,159
Accrued compensation and benefits	41,711			—		—			41,711
Deferred revenue	279,479			—		—			279,479
Due to affiliates	594,518			853		—			595,371
Profit sharing payable	992,240			—		—			992,240
Debt	750,000			—		—			750,000
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			12,424,839		(877		)	12,423,962
Other liabilities	—			609,413		(4,350		)	605,063
Due to affiliates	—			81,272		(81,272		)	—
Other liabilities	60,647			2,627		—			63,274
Total Liabilities	2,756,475			13,119,283		(86,499		)	15,789,259

Shareholders' Equity:
Apollo Global Management, LLC shareholders' equity:
Additional paid in capital	2,624,113			—		469			2,624,582
Accumulated deficit	(1,587,536		)	1,971,682		(1,952,633		)	(1,568,487		)
Appropriated partners' capital	—			1,620,928		(39,849		)	1,581,079
Accumulated other comprehensive income (loss)	33,774			—		(33,679		)	95
Total Apollo Global Management, LLC shareholders' equity	1,070,351			3,592,610		(2,025,692		)	2,637,269
Non-Controlling Interests in consolidated entities	4,987			766,383		1,898,360			2,669,730
Non-Controlling Interests in Apollo Operating Group	1,381,723			—		—			1,381,723
Total Shareholders' Equity	2,457,061			4,358,993		(127,332		)	6,688,722
Total Liabilities and Shareholders' Equity	$	5,213,536		$	17,478,276	$	(213,831	)	$	22,477,981

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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, 2013 filed with the SEC on March 3, 2014 (the "2013 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 contrarian, value-oriented investors in private equity, credit and real estate with significant distressed expertise and a flexible mandate in the majority of our funds that 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 24 years and lead a team of 790 employees, including 303 investment professionals, as of June 30, 2014 .


(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; and


(iii)	Real estate —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.

Our financial results vary since carried interest, 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 June 30, 2014 , approximately 96% of our total AUM was in funds with a contractual life at inception of seven years or more, and 7% of our total AUM was in permanent capital vehicles with unlimited duration.

As of June 30, 2014 , we had total AUM of $167.5 billion across all of our businesses. On December 31, 2013, Apollo Investment Fund VIII, L.P. ("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 June 30, 2014, Fund VIII had $17.6 billion of uncalled commitments remaining. Additionally, Apollo Investment Fund VII, L.P. ("Fund VII") held a final closing in December 2008, raising a total of $14.7 billion, and as of June 30, 2014 , Fund VII had $3.3 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 26% net IRR on a compound annual basis from inception through June 30, 2014 . For further detail related to fund performance metrics across all of our businesses, see “—The Historical Investment Performance of Our Funds.”

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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 the date of the filing of this Quarterly Report on Form 10-Q.

(1)

The Strategic Investors hold 28.70% of the Class A shares outstanding and 11.86% of the economic interests in the Apollo Operating Group. The Class A shares held by investors other than the Strategic Investors represent 33.41% of the total voting power of our shares entitled to vote and 29.45% of the economic interests in the Apollo Operating Group. Class A shares held by the Strategic Investors do not have voting rights. However, such Class A shares will become entitled to vote upon transfers by a Strategic Investor in accordance with the agreements entered into in connection with the investments made by the Strategic Investors.

(2)

Our Managing Partners own BRH Holdings GP, Ltd., which in turn holds our only outstanding Class B share. The Class B share represents 66.59% 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 51.98% 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 58.69% of the limited partner interests in each Apollo Operating Group entity ("AOG Units"). The AOG Units held by Holdings are exchangeable for Class A shares. Our Managing Partners, through their interests in BRH and Holdings, beneficially own 51.98% of the AOG Units. Our Contributing Partners, through their ownership interests in Holdings, beneficially own 6.71% 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 41.31% of the limited partner interests in each Apollo Operating Group entity, held through 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.

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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. Fluctuations in equity prices, which may be volatile, can significantly impact the valuation of our funds' portfolio companies and related income we may recognize. In the U.S., the S&P 500 Index rose 4.7% in the second quarter of 2014, following a 1.3% rise in the first quarter of 2014. Outside the U.S., world equity markets also appreciated in the second quarter of 2014. The MSCI All Country World ex USA Index was up 4.0% in the second quarter of 2014 following a 0.1% decline in the first quarter of 2014. Importantly, we believe that the generally positive momentum in the equity markets overall has been accommodative for continued equity capital markets activity, including IPOs and secondary offerings of the portfolio companies within our funds.

Conditions in the credit markets also have a significant impact on our business. Credit indices continued to rise in the second quarter of 2014, with the BofAML HY Master II Index up 2.6% and the S&P/LSTA Leveraged Loan Index up 1.4%. Benchmark interest rates declined during the second quarter of 2014 with the U.S. 10-year Treasury down approximately 20 basis points to 2.5%, due to increased geopolitical risk as well as unattractive comparative yields elsewhere partially driven by aggressive policy prescriptions by the European Central Bank.

In terms of economic conditions in the U.S., the Bureau of Economic Analysis reported that real GDP increased at an annual rate of 4.0% in the second quarter of 2014, an improvement over the 2.1% decrease in the first quarter of 2014 which was driven by lower levels of activity resulting from the country's unusually harsh winter weather. As of July 2014, The International Monetary Fund estimated that the U.S. economy will expand by 1.7% in 2014, slightly lower than the 1.9% growth in 2013, in part due to the aforementioned contraction in the first quarter of 2014. Additionally, the U.S. unemployment rate continued to decline and stood at 6.1% as of June 30, 2014 , compared to 6.7% as of March 31, 2014. The decline versus the prior quarter end was partially attributable to a further drop in the labor force participation rate.

Amid the generally favorable backdrop of elevated asset prices and positive equity market momentum, Apollo continued to generate realizations for fund investors, albeit at a slower pace versus the prior quarter. Apollo returned $1.7 billion and $18.1 billion of capital and realized gains to the limited partners of the funds it manages during the second quarter of 2014 and for the past 12 months ended June 30, 2014 , respectively. Apollo reported $4.5 billion and $20.1 billion of new capital raised during the second quarter of 2014 and over past 12 months, respectively. Apollo’s fundraising activities for the quarter included a $2.5 billion to recognize AUM from co-investment vehicles that was not previously included within AUM. Aside from that adjustment, in general, institutional investors continue to allocate capital towards alternative investment managers for more attractive risk-adjusted returns in a low rate environment.

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 investors by focusing on opportunities that management believes are often overlooked by other investors. We believe Apollo’s expertise in credit and its focus on nine core industry sectors, combined with more than 20 years of investment experience, has allowed Apollo to respond quickly to changing environments. Apollo’s core industry sectors cover chemicals, natural resources, consumer and retail, distribution and transportation, financial and business services, manufacturing and industrial, media and cable and leisure, packaging and materials and the satellite and wireless industries. 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.

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Managing Business Performance

We believe that the presentation of Economic Net Income (Loss) supplements a reader’s understanding of the economic operating performance of each of our segments.

Economic Net Income (Loss)

Economic Net Income (Loss) ("ENI") is a measure of profitability and does not take into account certain items included under U.S. GAAP. ENI represents segment income (loss) attributable to Apollo Global Management, LLC, which excludes the impact of non-cash charges related to restricted share units ("RSUs") granted in connection with the 2007 private placement and amortization of AOG Units, income tax expense, amortization of intangibles associated with the reorganization of the Company's predecessor businesses on July 13, 2007 (the "2007 Reorganization") as well as acquisitions, Non-Controlling Interests (excluding the remaining interest held by certain individuals who receive an allocation of income from certain of our credit management companies) and non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the funds and VIEs that are included in the condensed consolidated financial statements. Adjustments relating to income tax expense, intangible asset amortization and Non-Controlling Interests are common in the calculation of supplemental measures of performance in our industry. 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.



	Impact of Reclassification on Management Business Economic Net Income (Loss)
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Three Months Ended June 30, 2013	$4,861	$(4,432)	$(429)



	Impact of Reclassification on Management Business Economic Net Income (Loss)
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Six Months Ended June 30, 2013	$9,899	$(8,951)	$(948)



	Impact of Reclassification on Incentive Business Economic Net (Loss) Income
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Three Months Ended June 30, 2013	$(5,976)	$5,392	$584



	Impact of Reclassification on Incentive Business Economic Net (Loss) Income
	Private Equity Segment	Credit Segment	Real Estate Segment
For the Six Months Ended June 30, 2013	$(9,540)	$8,611	$929

As it relates to the reclassifications described above, the impact to the combined segments' ENI for all periods presented was zero.

ENI is a key performance measure used for understanding the performance of our operations from period to period and although not every company in our industry defines these metrics in precisely the same way we do, we believe that this metric,

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as we use it, facilitates comparisons with other companies in our industry. We use ENI to evaluate the performance of our private equity, credit and real estate segments. Management believes the components of ENI such as the amount of management fees, advisory and transaction fees, net and carried interest income are indicative of the Company’s performance. Management also uses ENI 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. As the amount of fees, investment income, and ENI is indicative of the performance of the management companies and advisors within each segment, management can assess the need for additional resources and the location for deployment of the new hires based on the results of this measure.

•

Decisions related to capital deployment such as providing capital to facilitate growth for our business and/or to facilitate expansion into new businesses. As the amount of fees, investment income, and ENI is indicative of the performance of the management companies and advisors within each segment, management can assess the availability and need to provide capital to facilitate growth or expansion into new businesses based on the results of this measure.

•

Decisions 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 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.

ENI does not take into account certain items included when calculating net income under U.S. GAAP and as such, we do not rely solely on ENI as a performance measure and also consider our U.S. GAAP results. The following items, which are significant to our business, are excluded when calculating ENI:

(i)

non-cash charges related to RSUs granted in connection with the 2007 private placement and amortization of AOG Units (the costs associated with the 2007 private placement are expected to be recurring components of our costs but at a diminishing rate, we may be able to incur lower cash compensation costs with the granting of equity-based compensation). The AOG Units were fully vested and amortized as of June 30, 2013;


(ii)	income tax, which represents a necessary and recurring element of our operating costs and our ability to generate revenue because ongoing revenue generation is expected to result in future income tax expense;


(iii)	amortization of intangible assets associated with the 2007 Reorganization and acquisitions, which is a recurring item until all intangibles have been fully amortized;


(iv)	Non-Controlling Interests, excluding the remaining interest held by certain individuals who receive an allocation of income from certain of our credit management companies, which is expected to be a recurring item and represents the aggregate of the income or loss that is not owned by the Company; and


(v)	non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company.

We believe that ENI 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.

The following summarizes the adjustments to ENI that reconcile ENI to the net income (loss) attributable to Apollo Global Management, LLC determined in accordance with U.S. GAAP:


•	Inclusion of the impact of RSUs granted in connection with the 2007 private placement and non-cash equity-based compensation expense comprising amortization of AOG Units. Management assesses our performance based on management fees, advisory and transaction fees, and carried interest income generated by the business and excludes the impact of non-cash charges related

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to RSUs granted in connection with the 2007 private placement and amortization of AOG Units because these non-cash charges are not viewed as part of our core operations. The AOG Units were fully vested and amortized as of June, 2013.

•

Inclusion of the impact of income taxes as we do not take income taxes into consideration when evaluating the performance of our segments or when determining compensation for our employees. Additionally, income taxes at the segment level (which exclude APO Corp.’s corporate taxes) are not meaningful, as the majority of the entities included in our segments operate as partnerships and therefore are only subject to New York City unincorporated business taxes ("NYC UBT") and foreign taxes when applicable.


•	Inclusion of amortization of intangible assets associated with the 2007 Reorganization and subsequent acquisitions as these non-cash charges are not viewed as part of our core operations.

•

Carried interest income, management fees and other revenues from Apollo funds are reflected on an unconsolidated basis. As such, ENI excludes the Non-Controlling Interests in consolidated funds, which remain consolidated in our condensed consolidated financial statements. Management views the business as an alternative investment management firm and therefore assesses performance using the combined total of carried interest income and management fees from each of our funds. One exception is the Non-Controlling Interest related to certain individuals who receive an allocation of income from certain of our credit management companies, which is deducted from ENI to better reflect the performance attributable to shareholders.

ENI 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 ENI as a measure of operating performance, not as a measure of liquidity. ENI should not be considered in isolation or as a substitute for operating income, net income, operating cash flows, investing and financing activities, or other income or cash flow statement data prepared in accordance with U.S. GAAP. The use of ENI without consideration of related U.S. GAAP measures is not adequate due to the adjustments described above. Management compensates for these limitations by using ENI 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 ENI to our U.S. GAAP net income (loss) attributable to Apollo Global Management, LLC can be found in the notes to our condensed consolidated financial statements.

Operating Metrics

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

Assets Under Management

Assets Under Management, or AUM, refers to the assets we manage for the funds, partnerships and accounts to which we provide investment management 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 plus the capital that such funds, partnerships and accounts are entitled to call from investors pursuant to capital commitments;


(ii)	the net asset value ("NAV") of the credit funds, partnerships and accounts for which we provide investment management services, other than certain CLOs and 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 funds, partnerships and accounts we manage, and the structured portfolio company investments of the funds, partnerships and accounts we manage, which includes the leverage used by such structured portfolio company investments;

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

(v)

the fair value of any other assets that we manage for the funds, partnerships and accounts to which we provide investment management services, plus unused credit facilities, including capital commitments to such funds, partnerships and accounts for investments that may require pre-qualification 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 no or nominal 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 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.

We use AUM as a performance measure of our investment activities, as well as to monitor fund size in relation to professional resource and infrastructure needs.

Assets Under Management—Fee-Generating/Non-Fee Generating

Fee-generating AUM consists of assets we manage for the funds, partnerships and accounts to which we provide investment management services and on which we earn management fees or monitoring fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds, partnerships and accounts we manage. 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 investments of the funds, partnerships and accounts we manage, 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 consists of assets that do not produce management fees or monitoring fees. These assets generally consist of the following: (a) fair value above invested capital for those funds that earn management fees based on invested capital, (b) net asset values related to general partner and co-investment ownership, (c) unused credit facilities, (d) available commitments on those funds that generate management fees on invested capital, (e) structured portfolio company investments that do not generate monitoring fees and (f) the difference between gross asset and net asset value for those funds that earn management fees based on net asset value.

Carry Eligible AUM refers to the AUM that may eventually produce carried interest income. All funds for which we are entitled to receive a carried interest income allocation are included in Carry Eligible AUM, which consists of the following:


(i)	Carry Generating AUM refers to funds' invested capital that is currently above its hurdle rate or preferred return, and the funds' profit is allocated to the general partner in accordance with the applicable limited partnership agreements or other governing agreements.


(i)	AUM Not Currently Generating Carry refers to funds' invested capital that is currently below its hurdle rate or preferred return.


(i)	Uninvested Carry Eligible AUM refers to available capital for investment or reinvestment subject to the provisions of applicable limited partnership agreements or other governing agreements that are not currently part of the NAV or fair value of investments that may eventually produce carried interest income, which would be allocated to the general partner.

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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.

The table below presents fee-generating and non-fee generating AUM by segment as of June 30, 2014 and 2013 and December 31, 2013 . Changes in market conditions and additional funds raised have had significant impacts to Apollo's AUM:



	As of June 30,						As of December 31,
	2014			2013			2013
	(in millions)
Total Assets Under Management	$	167,496	⁽¹⁾	$	113,116	⁽¹⁾	$	161,177	⁽¹⁾
Fee-generating	130,329			79,290			128,368
Non-fee generating	37,167		⁽¹⁾	33,826		⁽¹⁾	32,809		⁽¹⁾

Private Equity	51,585			40,213			49,908
Fee-generating	33,554			26,014			34,173
Non-fee generating	18,031			14,199			15,735

Credit	105,725			62,212			100,886
Fee-generating	90,780			47,507			88,249
Non-fee generating	14,945			14,705			12,637

Real Estate	9,056			9,473			9,289
Fee-generating	5,995			5,769			5,946
Non-fee generating	3,061			3,704			3,343


(1)	As of June 30, 2014 and 2013 and December 31, 2013 , includes $1.1 billion, $1.2 billion and $1.1 billion of commitments, respectively, that have yet to be deployed to an Apollo fund within Apollo's three segments.

The table below sets forth AUM with the potential to earn management fees in the future, which is a component of Non-Fee Generating AUM, as of June 30, 2014 and 2013 and December 31, 2013.



	As of June 30,						As of December 31,
	2014			2013			2013
	(in millions)
Private Equity	$	2,060		$	7,778		$	4,225
Credit	3,471			2,711			3,312
Real Estate	414			660			640
Total AUM with Future Management Fee Potential	$	7,026	⁽¹⁾	$	12,368	⁽¹⁾	$	9,246	⁽¹⁾


(1)	As of June 30, 2014 and 2013 and December 31, 2013, includes $1.1 billion, $1.2 billion and $1.1 billion of commitments, respectively, that have yet to be deployed to an Apollo fund within Apollo's three segments.

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The following table presents Carry Eligible AUM and Carry Generating AUM for each of Apollo's three segments as of June 30, 2014 and 2013 and December 31, 2013:



	Carry Eligible AUM						Carry Generating AUM
	As of June 30,				As of December 31,		As of June 30,				As of December 31,
	2014		2013		2013		2014		2013		2013
	(in millions)
Private equity	$	44,543	$	32,131	$	45,050	$	24,381	$	25,332	$	24,791
Credit	38,234		33,979		34,580		28,036		24,164		23,539
Real estate	2,525		3,166		3,041		821		573		941
Total ⁽¹⁾⁽²⁾	$	86,412	$	70,498	$	83,729	$	53,238	$	50,069	$	49,271


(1)	As of June 30, 2014 and 2013 and December 31, 2013, includes $1.1 billion, $1.2 billion and $1.1 billion of commitments, respectively, that have yet to be deployed to an Apollo fund within Apollo's three segments.


(2)	As of June 30, 2014 and 2013 and December 31, 2013, includes $27.7 billion, $12.6 billion and $28.7 billion of Uninvested Carry Eligible

AUM, respectively, and $5.4 billion, $7.8 billion and $5.8 billion of AUM Not Currently Generating Carry, respectively.

Fee-Generating AUM

During the three months ended June 30, 2014 , our total fee-generating AUM increased primarily due to subscriptions and increases in leverage and was partially offset by distributions, unrealized losses and net movements between fee-generating and non-fee generating AUM. The fee-generating AUM of our private equity funds decreased primarily due to distributions and net movements between fee-generating and non-fee generating AUM which was offset primarily by subscriptions. The fee-generating AUM of our credit funds increased during the three months ended June 30, 2014 primarily due to increases in leverage and subscriptions, and offset by distributions and net segment transfers. The fee-generating AUM of our real estate segment increased primarily due to net segment transfers and subscriptions offset by distributions.

When the fair value of an investment exceeds invested capital, we are normally entitled to carried interest income on the difference between the fair value once realized and invested capital after also considering certain expenses and preferred return amounts, as specified in the respective partnership agreements; however, we generally do not earn management fees on such excess.

With respect to our private equity funds and certain of our credit and real estate funds, we charge management fees on the amount of committed or invested capital and we generally are entitled to realized carried interest on the realized gains on the disposition of such funds’ investments. Certain funds may have current fair values below invested capital; however, the management fee would still be computed on the invested capital for such funds. With respect to ARI and AMTG, we receive management fees on stockholders' equity as defined in the applicable management agreement. In addition, our fee-generating AUM reflects leverage vehicles that generate monitoring fees on value in excess of fund commitments. As of June 30, 2014 , our total fee-generating AUM is comprised of approximately 98% of assets that earn management fees and the remaining balance of assets earn monitoring fees.

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The Company’s entire fee-generating AUM is subject to management or monitoring fees. The components of fee-generating AUM by segment as of June 30, 2014 and 2013 and December 31, 2013 are presented below:



	As of June 30, 2014
	Private Equity			Credit		Real Estate		Total
	(in millions)
Fee-generating AUM based on capital commitments	$	20,074		$	6,552	$	113	$	26,739
Fee-generating AUM based on invested capital	11,115			2,148		3,800		17,063
Fee-generating AUM based on gross/adjusted assets	704			73,965		1,847		76,516
Fee-generating AUM based on leverage	1,613			757		—		2,370
Fee-generating AUM based on NAV	48			7,358		235		7,641
Total Fee-Generating AUM	$	33,554	⁽¹⁾	$	90,780	$	5,995	$	130,329


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at June 30, 2014

was 71 months.



	As of June 30, 2013
	Private Equity			Credit		Real Estate		Total
	(in millions)
Fee-generating AUM based on capital commitments	$	16,052		$	5,053	$	159	$	21,264
Fee-generating AUM based on invested capital	6,491			2,499		3,554		12,544
Fee-generating AUM based on gross/adjusted assets	646			31,351		1,789		33,786
Fee-generating AUM based on leverage	2,825			2,128		—		4,953
Fee-generating AUM based on NAV	—			6,476		267		6,743
Total Fee-Generating AUM	$	26,014	⁽¹⁾	$	47,507	$	5,769	$	79,290


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at June 30, 2013

was 69 months.



	As of December 31, 2013
	Private Equity			Credit		Real Estate		Total
	(in millions)
Fee-generating AUM based on capital commitments	$	19,630		$	5,834	$	156	$	25,620
Fee-generating AUM based on invested capital	11,923			1,649		3,753		17,325
Fee-generating AUM based on gross/adjusted assets	925			72,202		1,769		74,896
Fee-generating AUM based on leverage	1,695			1,587		—		3,282
Fee-generating AUM based on NAV	—			6,977		268		7,245
Total Fee-Generating AUM	$	34,173	⁽¹⁾	$	88,249	$	5,946	$	128,368


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, 2013

was 75 months.

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The following table presents total AUM and fee-generating AUM amounts for our private equity segment by strategy:



	Total AUM							Fee-Generating AUM
	As of June 30,					As of December 31,		As of June 30,					As of December 31,
	2014		2013			2013		2014		2013			2013
	(in millions)
Traditional Private Equity Funds	$	44,852	$	37,555	₍₁₎	$	45,872	$	30,195	$	23,572	⁽¹⁾	$	31,094
Natural Resources	1,414		1,293			1,367		1,295		1,295			1,295
Other ⁽²⁾	5,319		1,365		⁽¹⁾	2,669		2,064		1,147		⁽¹⁾	1,784
Total	$	51,585	$	40,213		$	49,908	$	33,554	$	26,014		$	34,173


(1)	Reclassified to conform with current presentation.


(2)	Includes co-investments contributed to Athene Holding Ltd. ("Athene Holding") and its subsidiaries (together with Athene Holding, "Athene") by AAA, through its investment in AAA Investments, as part of the AAA Transaction as discussed in note 3 to the condensed consolidated financial statements.

The following table presents total AUM and fee-generating AUM amounts for our credit segment by strategy:



	Total AUM						Fee-Generating AUM
	As of June 30,				As of December 31,		As of June 30,				As of December 31,
	2014		2013		2013		2014		2013		2013
	(in millions)
Athene ⁽¹⁾	$	50,569	$	25,363	$	50,345	$	50,569	$	19,413	$	50,345
U.S. Performing Credit	24,776		12,544		22,177		19,275		8,235		17,510
Structured Credit	12,361		9,084		12,779		8,578		9,084		9,362
Opportunistic Credit	8,630		6,502		7,068		5,813		4,507		4,763
Non-Performing Loans	5,720		6,307		5,688		4,154		4,431		4,330
European Credit	3,669		2,412		2,829		2,391		1,837		1,939
Total	$	105,725	$	62,212	$	100,886	$	90,780	$	47,507	$	88,249


(1)	Excludes AUM that is either sub-advised by Apollo or invested in Apollo funds and investment vehicles across its private equity, credit and real estate funds.

The following table presents total AUM and fee-generating AUM amounts for our real estate segment by strategy:



	Total AUM						Fee-Generating AUM
	As of June 30,				As of December 31,		As of June 30,				As of December 31,
	2014		2013		2013		2014		2013		2013
	(in millions)
Debt	$	5,704	$	5,784	$	5,731	$	4,162	$	3,519	$	3,701
Equity	3,352		3,689		3,558		1,833		2,250		2,245
Total	$	9,056	$	9,473	$	9,289	$	5,995	$	5,769	$	5,946

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The following tables summarize changes in total AUM for each of Apollo's three segments for the three and six months ended June 30, 2014 and 2013 :



	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2014				2013				2014				2013
	(in millions)
Change in Total AUM:
Beginning of Period	$	159,326		⁽¹⁾	$	114,269		⁽¹⁾	$	161,177		⁽¹⁾	$	113,379		⁽¹⁾
Income	1,580				2,277				3,395				6,334
Subscriptions/Capital raised	4,517			⁽²⁾	6,926				6,060			⁽²⁾	8,126
Distributions	(1,722		)	⁽³⁾	(7,186		)		(6,091		)	⁽³⁾	(10,582		)
Redemptions	(147		)		(665		)		(320		)		(1,018		)
Leverage/Other ⁽⁴⁾	3,942				(2,505		)		3,275				(3,123		)
End of Period	$	167,496		⁽¹⁾	$	113,116		⁽¹⁾	$	167,496		⁽¹⁾	$	113,116		⁽¹⁾
Change in Private Equity AUM:
Beginning of Period	$	48,086			$	39,205			$	49,908			$	37,832
Income	1,200				1,233				1,588				4,515
Subscriptions/Capital raised	2,496			⁽²⁾	5,834				2,820			⁽²⁾	5,838
Distributions	(735		)	⁽³⁾	(5,669		)		(3,757		)	⁽³⁾	(7,571		)
Redemptions	—				(19		)		—				(19		)
Net segment transfers	(11		)		850				(11		)		1,062
Leverage	549				(1,221		)		1,037				(1,444		)
End of Period	$	51,585			$	40,213			$	51,585			$	40,213
Change in Credit AUM:
Beginning of Period	$	101,228			$	63,535			$	100,886			$	64,406
Income	162				1,165				1,484				1,896
Subscriptions/Capital raised	1,807			⁽²⁾	627				2,799			⁽²⁾	1,300
Distributions	(516		)		(1,285		)		(1,458		)		(2,641		)
Redemptions	(13		)		(356		)		(186		)		(709		)
Net segment transfers	(272		)		(256		)		(498		)		(495		)
Leverage/Other ⁽⁴⁾	3,329				(1,218		)		2,698				(1,545		)
End of Period	$	105,725			$	62,212			$	105,725			$	62,212
Change in Real Estate AUM:
Beginning of Period	$	8,899			$	9,412			$	9,289			$	8,800
Income (loss)	202				(125		)		288				(81		)
Subscriptions/Capital raised	214				465				441				988
Distributions	(471		)		(232		)		(876		)		(370		)
Redemptions ⁽⁵⁾	(134		)		(290		)		(134		)		(290		)
Net segment transfers	283				309				509				560
Leverage	63				(66		)		(461		)		(134		)
End of Period	$	9,056			$	9,473			$	9,056			$	9,473


(1)	As of June 30, 2014 and 2013 , March 31, 2014 and 2013 , and December 31, 2013 and 2012 includes $1.1 billion, $1.2 billion, $1.1 billion, $2.1 billion, $1.1 billion and $2.3 billion of commitments, respectively, that have yet to be deployed to an Apollo fund within Apollo's three segments.


(2)	For the three and six months ended June 30, 2014, includes $2.5 billion of AUM from co-investment vehicles that was raised in prior periods.


(3)	During the three months ended June 30, 2014, an additional $0.5 billion of cash was received and distributed in connection with two dispositions of fund related investments. This cash was included within distributions for the first quarter of 2014.


(4)	Represents changes in used and available leverage, and includes the changes in NAV on AUM managed by Athene Asset Management that is not sub-advised by Apollo.


(5)	Represents release of unfunded commitments primarily related to two legacy Citi Property Investors ("CPI") real estate funds that were past their investment periods.

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The following tables summarize changes in total fee-generating AUM and fee-generating AUM for each of Apollo's three segments for the three and six months ended June 30, 2014 and 2013 :



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
	(in millions)
Change in Total Fee-Generating AUM:
Beginning of Period	$	128,537		$	81,633		$	128,368		$	81,934
(Loss) Income	(111		)	2,917			786			3,090
Subscriptions/Capital raised	889			1,084			2,183			2,163
Distributions	(1,110		)	(4,298		)	(2,573		)	(5,209		)
Redemptions	(9		)	(340		)	(163		)	(710		)
Net movements between Fee-Generating and Non-Fee Generating	(629		)	256			(481		)	421
Leverage/Other ⁽¹⁾	2,762			(1,962		)	2,209			(2,399		)
End of Period	$	130,329		$	79,290		$	130,329		$	79,290
Change in Private Equity Fee-Generating AUM:
Beginning of Period	$	34,207		$	27,868		$	34,173		$	27,932
(Loss) Income	(44		)	2,070			(46		)	2,131
Subscriptions/Capital raised	131			39			455			43
Distributions	(176		)	(3,201		)	(480		)	(3,295		)
Redemptions	—			(19		)	—			(19		)
Net segment transfers	(11		)	—			(11		)	196
Net movements between Fee-Generating and Non-Fee Generating	(508		)	(193		)	(465		)	(190		)
Leverage	(45		)	(550		)	(72		)	(784		)
End of Period	$	33,554		$	26,014		$	33,554		$	26,014
Change in Credit Fee-Generating AUM:
Beginning of Period	$	88,404		$	48,488		$	88,249		$	49,518
(Loss) Income	(139		)	923			746			985
Subscriptions/Capital raised	575			572			1,392			1,204
Distributions	(484		)	(879		)	(1,228		)	(1,629		)
Redemptions	(9		)	(321		)	(163		)	(691		)
Net segment transfers	(272		)	(259		)	(498		)	(706		)
Net movements between Fee-Generating and Non-Fee Generating	(102		)	395			1			441
Leverage/Other ⁽¹⁾	2,807			(1,412		)	2,281			(1,615		)
End of Period	$	90,780		$	47,507		$	90,780		$	47,507
Change in Real Estate Fee-Generating AUM:
Beginning of Period	$	5,926		$	5,277		$	5,946		$	4,484
Income (Loss)	72			(76		)	86			(26		)
Subscriptions/Capital raised	183			473			336			916
Distributions	(450		)	(218		)	(865		)	(285		)
Net segment transfers	283			259			509			510
Net movements between Fee-Generating and Non-Fee Generating	(19		)	54			(17		)	170
End of Period	$	5,995		$	5,769		$	5,995		$	5,769


(1)	Represents changes in used and available leverage, and includes the changes in NAV on AUM managed by Athene Asset Management that is not sub-advised by Apollo.

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Private Equity

During the three months ended June 30, 2014 , the AUM in our private equity segment increased by $3.5 billion, or 7.3%. This increase was a result of subscriptions of $2.4 billion from co- investment vehicles that was raised in prior periods, increases in unrealized gains of $1.2 billion that was primarily attributable to Fund VII and a $0.6 billion increase in leverage from Fund VII. Offsetting this increase was distributions of $0.7 billion that was primarily attributable to Apollo Investment Fund VI, L.P. ("Fund VI").

During the three months ended June 30, 2013 , the AUM in our private equity segment increased by $1.0 billion, or 2.6%. This increase was a result of subscriptions of $5.8 billion in Fund VIII and $1.2 billion of income that was primarily attributable to Fund VII. Offsetting this increase was $5.7 billion of distributions, including $2.5 billion with respect to Fund VII and $2.5 billion with respect to Fund VI.

During the six months ended June 30, 2014 , the AUM in our private equity segment increased by $1.7 billion, or 3.4%. This increase was a result of subscriptions of $2.8 billion primarily attributable to co-investment vehicles that was raised in prior periods and AION Capital Partners Limited (“AION”), $1.6 billion of income that was primarily attributable to improved unrealized gains in Fund VII and $1.1 billion of leverage. Offsetting this increase were distributions of $3.8 billion, including $1.9 billion with respect to Fund VII and $1.5 billion with respect to Fund VI.

During the six months ended June 30, 2013 , the AUM in our private equity segment increased by $2.4 billion, or 6.3%. This increase was a result of subscriptions of $5.8 billion in Fund VIII and $4.5 billion of income that was primarily attributable to improved unrealized gains in our private equity funds, including $1.7 billion in Fund VI and $2.7 billion in Fund VII and $1.1 billion of net segment transfers. Offsetting this increase were distributions of $7.6 billion, including $3.9 billion in Fund VII and $2.9 billion with respect to Fund VI and $1.4 billion of decreased leverage.

Credit

During the three months ended June 30, 2014 , AUM in our credit segment increased by $4.5 billion, or 4.4%. There were increases in leverage of $3.3 billion, subscriptions of $1.8 billion, and $0.2 billion of increased income. Included in subscriptions was $0.4 billion in Apollo Investment Europe III, L.P. ("AIE III") and $0.4 billion in Apollo Credit Opportunity Fund III, L.P. ("COF III"). These increases were offset by distributions of $0.5 billion and decreases of $0.3 billion due to redemptions and net segment transfers.

During the three months ended June 30, 2013 , AUM in our credit segment decreased by $1.3 billion, or 2.1%. This decrease consisted of $1.3 billion of distributions, $1.2 billion of decreased leverage, redemptions of $0.4 billion and net segment transfers of $0.3 billion. This decrease in AUM was offset by $1.2 billion of income that was primarily attributable to improved unrealized gains across our credit funds, and additional subscriptions of $0.6 billion, primarily attributable to Apollo Investment Corporation ("AINV") and Apollo Credit Master Fund Ltd. ("ACF").

During the six months ended June 30, 2014 , AUM in our credit segment increased by $4.8 billion, or 4.8%. This increase was a result of $2.7 billion of leverage, subscriptions of $2.8 billion and $1.5 billion of increased income. Included in subscriptions was $0.5 billion from Financial Credit Investment II, L.P. ("FCI II"), $0.4 billion from AIE III and $0.6 billion from COF III. These increases were offset by $1.5 billion of distributions and $0.7 billion in redemptions and net segment transfers.

During the six months ended June 30, 2013 , AUM in our credit segment decreased by $2.2 billion, or 3.4%. This decrease was a result of $2.6 billion of distributions, a decrease in leverage of $1.5 billion, $0.7 billion of redemptions and $0.5 billion of net segment transfers. Offsetting this decrease was $1.9 billion of increased income and $1.3 billion of subscriptions.

Real Estate

During the three months ended June 30, 2014 , AUM in our real estate segment increased by $0.2 billion, or 1.8%. This increase was the result of an increase in subscriptions of $0.2 billion in Apollo Commercial Real Estate Finance, Inc. (“ARI”), $0.2 billion of increased income and $0.2 billion in redemptions and net segment transfers. These increases were partially offset by $0.5 billion in distributions.

During the three months ended June 30, 2013 , AUM in our real estate segment increased by $0.1 billion, or 0.6%, which was primarily the result of $0.5 billion of additional subscriptions and $0.3 billion of net segment transfers. These increases were partially offset by redemptions of $0.3 billion and distributions of $0.2 billion.

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During the six months ended June 30, 2014 , AUM in our real estate segment decreased by $0.2 billion, or 2.5%, which was primarily the result of $0.9 billion of distributions and a $0.5 billion decrease in leverage. These decreases were partially offset by $0.4 billion of additional subscriptions, $0.3 billion of increased income and $0.5 billion of net segment transfers.

During the six months ended June 30, 2013 , AUM in our real estate segment increased by $0.7 billion, or 7.6%, which was primarily the result of $1.0 billion of additional subscriptions and net segment transfers of $0.6 billion. These increases were partially offset by $0.4 billion of distributions.

Dollars Invested and Uncalled Commitments

Dollars invested is the aggregate amount of capital, including capital commitments from the limited partner investors in our funds, that have been invested by our multi-year drawdown, commitment-based funds and strategic investment accounts ("SIAs") that have a defined maturity date and for funds and SIAs in our real estate debt strategy during a reporting period. Uncalled commitments, by contrast, represents unfunded capital commitments that certain of Apollo’s funds and SIAs have received from limited partners to fund future or current investments and expenses as of the reporting date. Dollars invested 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 transaction fees and incentive income to the extent fee generating. Dollars invested 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 dollars invested and uncalled commitments as key operating metrics since we believe the results measure our investment activities.

Dollars Invested

The following table summarizes by segment the dollars invested 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:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2014		2013		2014		2013
	(in millions)
Private equity	$	413	$	177	$	969	$	1,368
Credit	1,010		474		2,739		1,609
Real Estate ⁽¹⁾	882		828		1,376		1,676
Total dollars invested	$	2,305	$	1,479	$	5,084	$	4,653


(1)	Included in dollars invested is $793 million and $1,177 million for the three and six months ended June 30, 2014, respectively, and $713 million and $1,347 million for the three and six months ended June 30, 2013, respectively, for funds in Apollo's real estate debt strategy.

Uncalled Commitments

The following table summarizes the uncalled commitments by segment during the specified reporting periods:



	As of June 30, 2014		As of June 30, 2013		As of December 31, 2013
	(in millions)
Private equity	$	23,538	$	13,026	$	23,689
Credit	7,447		5,829		7,113
Real Estate	875		1,020		971
Total Uncalled Commitments ⁽¹⁾⁽²⁾	$	32,941	$	21,092	$	32,852


(1)	As of June 30, 2014 and 2013 and December 31, 2013 , includes $1.1 billion, $1.2 billion and $1.1 billion of commitments, respectively, that have yet to be deployed to an Apollo fund within Apollo's three segments.


(2)	As of June 30, 2014 and 2013 and December 31, 2013 , $29.2 billion, $19.4 billion, and $29.5 billion, respectively, represents the amount of capital available for investment or reinvestment subject to the provisions of the applicable limited partnership agreements or other governing agreements.

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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. There can be no assurance that any Apollo fund will continue to achieve the same results in the future.

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, in part because:


•	market conditions during previous periods were significantly more favorable for generating positive performance, particularly in our private equity business, than the market conditions we have experienced for the last few years and may experience in the future;


•	our funds’ returns have benefited from investment opportunities and general market conditions that may not exist and may not repeat themselves, and there can be no assurance that our current or future funds will be able to avail themselves of profitable investment opportunities;


•	our private equity funds’ rates of return, which are calculated on the basis of net asset value of the funds’ investments, reflect unrealized gains, which may never be realized;


•	our funds’ returns have benefited from investment opportunities and general market conditions that may not repeat themselves, including the availability of debt capital on attractive terms and the availability of distressed debt opportunities, and we may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly;


•	the historical returns that we present are derived largely from the performance of our earlier private equity funds, whereas future fund returns will depend increasingly on the performance of our newer funds, which may have little or no realized investment track record;


•	Fund VIII, Fund VII and Fund VI are several times larger than our previous private equity funds, and this additional capital may not be deployed as profitably as our prior funds;


•	the attractive returns of certain of our funds have been driven by the rapid return of invested capital, which has not occurred with respect to all of our funds and we believe is less likely to occur in the future;


•	our track record with respect to our credit and real estate funds is relatively short as compared to our private equity funds;


•	in recent years, there has been increased competition for private equity investment opportunities resulting from the increased amount of capital invested in private equity

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funds and periods of high liquidity in debt markets, which may result in lower returns for the funds; and


•	our newly established funds may generate lower returns during the period that they take to deploy their capital; consequently, we do not provide return information for any funds which have not been actively investing capital for at least 24 months prior to the valuation date as we believe this information is not meaningful.

Finally, our private equity IRRs have historically varied greatly from fund to fund. For example, Apollo Investment Fund IV, L.P. ("Fund IV") has generated a 12% gross IRR and a 9% net IRR since its inception through June 30, 2014 , while Apollo Investment Fund V, L.P. ("Fund V") has generated a 61% gross IRR and a 44% net IRR since its inception through June 30, 2014 . 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" in the 2013 Annual Report.

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Investment Record

The following table summarizes the investment record by segment of Apollo's multi-year drawdown, commitment based funds and strategic investment accounts (“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. All amounts are as of June 30, 2014 , unless otherwise noted:



																As of June 30, 2014						As of December 31, 2013
	Strategy	Vintage Year	Committed Capital		Total Invested Capital		Realized			Unrealized ⁽¹⁾			Total Value			Gross IRR			Net IRR			Gross IRR			Net IRR
			(in millions)
Private Equity: ⁽²⁾
Fund VIII	Traditional Private Equity Funds	2013	$	18,377	$	688	$	—		$	688		$	688		NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾
Fund VII	Traditional Private Equity Funds	2008	14,677		15,102		21,580			11,034			32,614			39	%		30	%		39	%		30	%
Fund VI	Traditional Private Equity Funds	2006	10,136		12,457		14,045			7,495			21,540			14			11			15			12
Fund V	Traditional Private Equity Funds	2001	3,742		5,192		12,537			430			12,967			61			44			61			44
Fund IV	Traditional Private Equity Funds	1998	3,600		3,481		6,776			26			6,802			12			9			12			9
Fund III	Traditional Private Equity Funds	1995	1,500		1,499		2,695			—			2,695			18			11			18			11
Fund I, II & MIA ⁽⁴⁾	Traditional Private Equity Funds	1990/ 1992	2,220		3,773		7,924			—			7,924			47			37			47			37
Subtotal			$	54,252	$	42,192	$	65,557		$	19,673		$	85,230		39	%	⁽⁵⁾	26	%	⁽⁵⁾	39	%	⁽⁵⁾	26	%	⁽⁵⁾
AION	Other	2013	825		134		—			167			167			NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾
ANRP	Natural Resources	2012	1,323		475		25			589			614			20	%		9	%		18	%		7	%
Total Private Equity			$	56,400	$	42,801	$	65,582		$	20,429		$	86,011
Credit: ⁽⁶⁾
ACRF III ⁽⁷⁾	Structured Credit	—	$	205	$	64	$	—		$	106		$	106		NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾
COF III ⁽⁷⁾	Opportunistic Credit	—	1,421		651		79			701			780			NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾
FCI II	Structured Credit	2013	1,555		653		5			678			683			NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾	NM		⁽³⁾
EPF II ⁽⁸⁾	Non-Performing Loans	2012	3,659		1,811		143			2,007			2,150			28	%		10	%		NM		⁽³⁾	NM		⁽³⁾
FCI	Structured Credit	2012	559		443		170			450			620			14			11			NM		⁽³⁾	NM		⁽³⁾
AEC	European Credit	2012	292		539		389			193			582			17			11			19	%		12	%
AIE II ⁽⁸⁾	European Credit	2008	283		911		1,336			107			1,443			20			17			20			17
COF I	U.S. Performing Credit	2008	1,485		1,611		3,871			567			4,438			30			27			30			27
COF II	U.S. Performing Credit	2008	1,583		2,176		2,905			238			3,143			14			11			14			11
EPF I ⁽⁸⁾	Non-Performing Loans	2007	1,773		2,330		2,466			1,169			3,635			22			17			21			16
ACLF	U.S. Performing Credit	2007	984		1,449		2,429			187			2,616			13			12			13			11
Total Credit			$	13,799	$	12,638	$	13,793		$	6,403		$	20,196
Real Estate: ⁽⁶⁾
AGRE U.S. Real Estate Fund, L.P ⁽⁹⁾	Equity	2012	$	869	$	530	$	283		$	397		$	680		17	%		13	%		17	%		14	%
AGRE Debt Fund I, LP	Debt	2011	957		954		259			838			1,097			13			12			13			11
CPI Capital Partners North America ⁽¹⁰⁾	Equity	2006	600		453		350			30			380			16			11			17			13
CPI Capital Partners Asia Pacific ⁽¹⁰⁾	Equity	2006	1,292		1,176		1,461			223			1,684			35			30			37			33
CPI Capital Partners Europe ^(8)(10)	Equity	2006	1,591		1,050		277			512			789			5			4			2			1
CPI Other ⁽¹¹⁾	Equity	Various	2,399		N/A		N/A		⁽¹¹⁾	N/A		⁽¹¹⁾	N/A		⁽¹¹⁾	NM		⁽¹¹⁾	NM		⁽¹¹⁾	NM		⁽¹¹⁾	NM		⁽¹¹⁾
Total Real Estate			$	7,708	$	4,163	$	2,630		$	2,000		$	4,630


(1)	Figures include the market values, estimated fair value of certain unrealized investments and capital committed to investments.


(2)	Amounts presented are computed based on actual timing of the funds' cash inflows and outflows .


(3)	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.

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(4)

Fund I and Fund II were structured such that investments were made from either fund depending on which fund had available capital. Apollo does not differentiate between Fund I and Fund II investments for purposes of performance figures because they are not meaningful on a separate basis and do not demonstrate the progression of returns over time. 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 Global Management, LLC did not receive the economics associated with these entities. The investment performance of these funds is presented to illustrate fund performance associated with Apollo's managing partners and other investment professionals.


(5)	Total IRR is calculated based on total cash flows for all funds presented.


(6)	The investment record table for the credit and real estate funds and SIAs presented is computed based on the actual dates of capital contributions, distributions and ending limited partners’ capital as of the specified date.


(7)	COF III and Apollo Structured Recovery Fund III, L.P. ("ACRF III") were launched during 2013 and 2014, respectively and have not established their vintage year.


(8)	Funds are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.36 as of June 30, 2014 .


(9)	AGRE U.S. Real Estate Fund, L.P., a closed-end private investment fund has $154 million of co-invest commitments raised, which are included in the figures in the table above. The co-invest entity within AGRE U.S. Real Estate Fund is denominated in GBP and translated into U.S. dollars at an exchange rate of £1.00 to $1.71 as of June 30, 2014 ..

(10)

As part of the CPI acquisition, Apollo acquired general partner interests in fully invested funds. The gross and net IRRs are presented in the investment record table above since acquisition on November 12, 2010. The net IRRs from the inception of the respective fund to June 30, 2014 were (7)%, 7% and (7)% for the CPI Capital Partners North America, Asia Pacific and Europe funds, respectively. These net IRRs were 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.

(11)

CPI Other consists of 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. CPI Other fund performance is a result of invested capital prior to Apollo’s management of these funds. Return and certain other performance data are therefore not considered meaningful as Apollo performs primarily an administrative role.

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 June 30, 2014 :



	Total Invested Capital		Total Value		Gross IRR ⁽¹⁾
	(in millions)
Distressed for Control	$	5,611	$	16,741	29	%
Non-Control Distressed	6,169		9,411		71
Total	11,780		26,152		49
Buyout Equity, Portfolio Company Debt and Other Credit ⁽²⁾	30,412		59,078		23
Total	$	42,192	$	85,230	39	%


(1)	IRR information is presented gross and does not give effect to management fees, incentive compensation, certain other expenses and taxes.


(2)	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 our Fund VIII, Fund VII, Fund VI and Fund V private equity portfolios based on investment strategy. All amounts are as of June 30, 2014 :

Fund VIII ⁽¹⁾



	Total Invested Capital		Total Value
	(in millions)
Buyout Equity and Portfolio Company Debt	$	688	$	688
Total	$	688	$	688

Fund VII ⁽¹⁾



	Total Invested Capital		Total Value
	(in millions)
Buyout Equity and Portfolio Company Debt	$	10,333	$	24,608
Other Credit and Classic Distressed ⁽²⁾	4,769		8,006
Total	$	15,102	$	32,614

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Fund VI



	Total Invested Capital		Total Value
	(in millions)
Buyout Equity and Portfolio Company Debt	$	10,312	$	17,824
Other Credit and Classic Distressed ⁽²⁾	2,145		3,716
Total	$	12,457	$	21,540

Fund V



	Total Invested Capital		Total Value
	(in millions)
Buyout Equity	$	4,412	$	11,993
Classic Distressed ⁽²⁾	780		974
Total	$	5,192	$	12,967


(1)	Committed capital less unfunded capital commitments for Fund VIII and Fund VII is $781 million and $12,973 million, respectively, which represents capital commitments from limited partners to invest in a particular fund less capital that is available for investment or reinvestment subject to the provisions of the applicable limited partnership agreement or other governing agreements.


(2)	Classic Distressed is defined as investments in debt securities of issuers other than portfolio companies that are considered to be distressed.

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 current recessionary and post recessionary periods (second half of 2007 through June 30, 2014 ), our private equity funds have invested $30.4 billion, of which $16.6 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 VII, VI and V was 6.1 x, 7.7 x and 6.6 x, respectively, as of June 30, 2014 . The average entry multiple for a private equity fund is the average of the total enterprise value over an applicable earnings before interest, taxes, depreciation and amortization ("EBITDA") which we believe captures the true economics of our funds' purchases of portfolio companies.

Credit

The following table summarizes the investment record for certain funds and SIAs within Apollo's credit segment with no maturity date. All amounts are as of June 30, 2014 , unless otherwise noted:



					Net Return
	Strategy	Vintage Year	Net Asset Value as of June 30, 2014		Since Inception to June 30, 2014			For the Six Months Ended June 30, 2014			For the Six Months Ended June 30, 2013			Since Inception to December 31, 2013			For the Year Ended December 31, 2013
(in millions)
ACSF ⁽¹⁾	Opportunistic Credit	2011	$	379	27	%	⁽¹⁾	5	%	⁽¹⁾	NM		⁽¹⁾	NM		⁽¹⁾	NM		⁽¹⁾
SOMA ⁽²⁾	Opportunistic Credit	2007	745		68			6			3	%		58	%		9	%
ACF ⁽¹⁾	U.S. Performing Credit	2005	2,299		33		⁽¹⁾	5		⁽¹⁾	NM		⁽¹⁾	NM		⁽¹⁾	NM		⁽¹⁾
Value Funds ⁽³⁾	Opportunistic Credit	2003/2006	252		74			—			6			74			5
Totals			$	3,675


(1)	As part of the Stone Tower acquisition, Apollo acquired the manager of Apollo Credit Strategies Master Fund Ltd. (“ACSF”) and ACF. The net returns are presented in the investment record table above since acquisition on April 2, 2012. As of June 30, 2014, the net returns from inception for ACSF and ACF were 44% and 8%, respectively. These

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returns were primarily achieved during a period in which Apollo did not make the initial investment decisions. Apollo became the manager of these funds upon completing the acquisition on April 2, 2012.


(2)	Net asset value and returns are for the primary mandate and excludes Apollo Special Opportunities Managed Account, L.P.’s (“SOMA”) investments in other Apollo funds.


(3)	Value Funds consist of Apollo Strategic Value Master Fund, L.P., together with its feeder funds, and Apollo Value Investment Master Fund, L.P., together with its feeder funds.

The following table summarizes the investment record for the publicly traded vehicles that Apollo manages by segment as of June 30, 2014 :



									Total Returns ⁽¹⁾
	Strategy	IPO Year ⁽²⁾	Raised Capital ⁽³⁾		Gross Assets		Current Net Asset Value		Since Inception to June 30, 2014				For the Six Months Ended June 30, 2014				For the Six Months Ended June 30, 2013				Since Inception to December 31, 2013				For the Year Ended December 31, 2013
		(in millions)
Private Equity:
AAA ⁽⁴⁾	Other	2006	$	1,823	$	2,148	$	2,145	60	%			13	%			42	%			41	%			91	%
Credit:
AIF ⁽⁵⁾	U.S. Performing Credit	2013	276		426		288		NM		⁽⁶	⁾	NM		⁽⁶	⁾	NM		⁽⁶	⁾	NM		⁽⁶	⁾	NM		⁽⁶	⁾
AFT ⁽⁵⁾	U.S. Performing Credit	2011	295		448		299		13				3				—				—				—
AMTG	Structured Credit	2011	791		3,895		797		29				19				(12	)			8				(17	)
AINV	Opportunistic Credit	2004	3,080		3,812		2,069		65				6				(3	)			55				—
Real Estate:
ARI	Debt	2009	879		1,466		850		28				6				3				20				10
Totals			7,144		12,195		6,448


(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 commissions.

(2)

An initial public offering ("IPO") year represents the year in which the vehicle commenced trading on a national securities exchange. Apollo Tactical Income Fund Inc. ("AIF"), Apollo Senior Floating Rate Fund Inc. ("AFT"), Apollo Residential Mortgage, Inc. ("AMTG") and ARI are publicly traded vehicles traded on the New York Stock Exchange ("NYSE"). Apollo Investment Corporation ("AINV") is a public company traded on the National Association of Securities Dealers Automated Quotation. AAA is a publicly traded vehicle traded on Euronext Amsterdam.


(3)	Amounts represent raised capital net of offering and issuance costs.

(4)

AAA is the sole limited partner in AAA Investments, L.P. (“AAA Investments”). Athene was AAA Investments’ only investment as of June 30, 2014. During the second quarter of 2014, Athene Holding raised $1.218 billion of net equity commitments (the “Athene Private Placement”) primarily from third-party institutional investors, certain existing investors in Athene, and employees of Athene and its affiliates (the “Athene Private Placement”). As of June 30, 2014, AAA Investments' ownership stake in Athene was reduced as a result of the Athene Private Placement and the issuance of 3.7 million unrestricted common shares of Athene Holding Ltd. under Athene’s management equity plan resulting in an approximate 47.8% economic ownership stake (calculated as if the commitments in the Athene Private Placement closed through June 30, 2014 were fully drawn down but without giving effect to (i) restricted common shares issued under Athene’s management equity plan, (ii) the conversion to common shares of AAA Investments’ note receivable from Athene, or (iii) common shares to be issued under the amended AAA services agreement or the amended Athene services agreement) and effectively 45% of the voting power of Athene.


(5)	Gross Assets presented for AFT and AIF represents total managed assets of these closed-end funds.


(6)	Returns have not been presented as the publicly traded vehicle commenced investing capital less than 24 months prior to the period indicated and therefore such return information was deemed not meaningful.

Athene and SIAs

As of June 30, 2014 , Athene Asset Management, L.P. ("Athene Asset Management") had $61.0 billion of total AUM in accounts owned by or related to Athene, of which approximately $10.4 billion, was either sub-advised by Apollo or invested in Apollo funds and investment vehicles. Of the approximately $10.4 billion of assets, the vast majority were in sub-advisory managed accounts that manage high grade credit asset classes, such as collateralized loan obligation ("CLO") debt, commercial mortgage backed securities, and insurance-linked securities.

Apollo also manages CLOs within Apollo's credit segment, with such CLOs representing a total AUM of approximately $10.6 billion as of June 30, 2014 . Such CLO performance information is not included in the above investment record tables.

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As of June 30, 2014 , Apollo managed approximately $15 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 private equity, credit and real estate funds. The above investment record tables exclude certain funds with an aggregate AUM of approximately $6.2 billion as of June 30, 2014 because management deemed them to be immaterial.

The following table provides a summary of the cost and fair value of Apollo's funds’ investments by segment for the funds and SIAs listed in the investment record tables:



	As of June 30,					As of December 31,
	2014		2013			2013
	(in millions)
Private Equity:
Cost	$	14,300	$	15,807		$	14,213
Fair Value	22,575		24,019			23,432
Credit:
Cost	$	17,446	$	14,651	⁽¹⁾	$	15,262	⁽¹⁾
Fair Value	17,838		15,264		⁽¹⁾	16,177		⁽¹⁾
Real Estate:
Cost	$	3,456	$	3,100	⁽¹⁾	$	3,073	⁽¹⁾
Fair Value	3,351		2,915		⁽¹⁾	2,966		⁽¹⁾


(1)	Prior periods have been restated to conform to the current presentation.

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Overview of Results of Operations

Revenues

Advisory and Transaction Fees from Affiliates, Net. As a result of providing advisory services with respect to actual and potential private equity, credit, and real estate 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 an advisory fee 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 affiliates, net, in the condensed consolidated statements of operations. See note 2 to our condensed consolidated financial statements for more detail.

The Management Fee Offsets are calculated for each fund as follows:


•	65%-100% for private equity funds, gross advisory, transaction and other special fees;


•	65%-100% for certain credit funds, gross advisory, transaction and other special fees; and


•	100% for certain real estate funds, gross advisory, transaction and other special fees.

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 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 presented net on the Company’s condensed consolidated statements of operations, and any receivable from the respective funds is presented in Due from Affiliates on the condensed consolidated statements of financial condition.

Management Fees from Affiliates. 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 from Affiliates. The general partners of our funds, in general, are entitled to an incentive return that can amount to as much as 20% of the total returns on fund capital, depending upon performance of the underlying funds and subject to preferred returns and high water marks, as applicable. The carried interest income from affiliates is recognized in accordance with U.S. GAAP guidance applicable to accounting for arrangement fees based on a formula. In applying the U.S. GAAP guidance, the carried interest from affiliates 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.

As of June 30, 2014 , approximately 70% of the value of our funds' investments on a gross basis were determined using market-based valuation methods (i.e., reliance on broker or listed exchange quotes) and the remaining 30% were determined primarily by comparable company and industry multiples or discounted cash flow models. For our private equity, credit and real estate segments, the percentage determined using market-based valuation methods as of June 30, 2014 were 50%, 82% and 51%, respectively. See “Item 1A. Risk Factors—Risks Related to Our Businesses—Our private equity funds’ performance, and our performance, may be adversely affected by the financial performance of our portfolio companies and the industries in which our funds invest” in the 2013 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 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 funds have various carried interest rates and hurdle rates. Certain credit funds allocate carried interest to the general

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partner in a similar manner as the private equity funds. In our private equity, certain credit and real estate 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 to its incentive fee rate for that fund; thereafter, the Company participates in returns from the fund at the carried interest income rate. Carried interest income is subject to reversal to the extent that the carried interest income distributed exceeds 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 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. This actual general partner obligation, however, would not become payable or realized until the end of a fund’s life.

The table below presents an analysis of Apollo's (i) carried interest receivable on an unconsolidated basis and (ii) realized and unrealized carried interest income (loss) for Apollo's combined segments' Incentive Business as of and for the three and six months ended June 30, 2014 :



	As of June 30, 2014			For the Three Months Ended June 30, 2014								For the Six Months Ended June 30, 2014
	Carried Interest Receivable on an Unconsolidated Basis			Unrealized Carried Interest Income(Loss)			Realized Carried Interest Income		Total Carried Interest Income (Loss)			Unrealized Carried Interest Income (Loss)			Realized Carried Interest Income		Total Carried Interest Income (Loss)
	(in millions)
Private Equity Funds:
Fund VII	$	999.0		$	216.2		$	30.5	$	246.7		$	98.9		$	289.6	$	388.5
Fund VI	342.2			(184.2		)	136.1		(48.1		)	(359.8		)	247.8		(112.0		)
Fund V	41.4			(12.9		)	13.3		0.4			(1.7		)	23.8		22.1
Fund IV	5.3			(0.2		)	—		(0.2		)	(2.5		)	—		(2.5		)
AAA/Other ⁽¹⁾⁽²⁾	189.7			(29.3		)	18.1		(11.2		)	(38.9		)	33.7		(5.2		)
Total Private Equity Funds	1,577.6			(10.4		)	198.0		187.6			(304.0		)	594.9		290.9
Credit Funds:
U.S. Performing Credit	149.0			(9.6		)	25.0		15.4			(8.5		)	42.5		34.0
Opportunistic Credit	53.9			5.7			3.6		9.3			20.8			4.6		25.4
Structured Credit	58.5			(3.3		)	4.0		0.7			3.7			4.0		7.7
European Credit	14.4			(3.7		)	5.4		1.7			(0.5		)	8.7		8.2
Non-Performing Loans	177.9			58.1			1.7		59.8			23.8			45.7		69.5
Total Credit Funds	453.7			47.2			39.7		86.9			39.3			105.5		144.8
Real Estate Funds:
CPI Funds	6.6			2.6			0.6		3.2			1.3			0.6		1.9
AGRE U.S. Real Estate Fund, L.P.	8.7			(0.9		)	2.7		1.8			0.3			2.7		3.0
Other	3.2			(0.8		)	0.7		(0.1		)	(1.0		)	0.7		(0.3		)
Total Real Estate Funds	18.5			0.9			4.0		4.9			0.6			4.0		4.6
Total	$	2,049.8	⁽³⁾	$	37.7		$	241.7	$	279.4		$	(264.1	)	$	704.4	$	440.3


(1)	Includes certain SIAs.

(2)

Includes $121.3 million of carried interest receivable from AAA Investments which will be paid in common shares of Athene Holding (valued at the then fair market value) if there is a distribution in kind of shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended), or paid in cash if AAA sells the shares of Athene Holding.


(3)	There was a corresponding profit sharing payable of $963.9 million as of June 30, 2014 that resulted in a net carried interest receivable on an unconsolidated basis of $1,085.9 million as of June 30, 2014 . Included within profit sharing payable are contingent consideration obligations of $115.2 million.

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The general partners of the private equity, credit and real estate funds listed in the table above were accruing carried interest income as of June 30, 2014 . The investment manager of AINV accrues carried interest in the management company business as it is earned. The general partners of certain of our credit funds accrue carried interest 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. These high water marks are applied on an individual investor basis. Certain of our credit funds have investors with various high water marks and are subject to market conditions and investment performance.

Carried interest income from our private equity funds and certain credit and real estate funds is subject to contingent repayment by the general partner in the event of future losses to the extent that the cumulative carried interest 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 affiliates on the condensed consolidated statements of financial condition. As of June 30, 2014 , there were no such general partner obligations related to our funds. Carried interest receivable is reported on a separate line item within the condensed consolidated statements of financial condition.

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The following table summarizes our carried interest income since inception for our combined segments through June 30, 2014 :



	Carried Interest Income Since Inception
	Undistributed by Fund and Recognized		Distributed by Fund and Recognized ⁽¹⁾		Total Undistributed and Distributed by Fund and Recognized ⁽²⁾		General Partner Obligation as of June 30, 2014 ⁽²⁾		Maximum Carried Interest Income Subject to Potential Reversal ⁽³⁾
	(in millions)
Private Equity Funds:
Fund VII	$	999.0	$	2,239.9	$	3,238.9	$	—	$	1,824.2
Fund VI	342.2		1,422.0		1,764.2		—		1,302.6
Fund V	41.4		1,434.0		1,475.4		—		74.9
Fund IV	5.3		597.2		602.5		—		5.2
AAA/Other	189.7		100.4		290.1		—		188.4
Total Private Equity Funds	1,577.6		5,793.5		7,371.1		—		3,395.3
Credit Funds:
U.S. Performing Credit	149.0		682.8		831.8		—		308.3
Opportunistic Credit ⁽⁴⁾	44.2		183.7		227.9				65.7
Structured Credit	58.5		16.4		74.9				60.3
European Credit	14.4		72.8		87.2		—		79.0
Non-Performing Loans	177.9		80.3		258.2		—		222.0
Total Credit Funds	444.0		1,036.0		1,480.0		—		735.3
Real Estate Funds:
CPI Funds	6.6		5.8		12.4		—		7.2
AGRE U.S. Real Estate Fund	8.7		—		8.7		—		5.9
Other	3.2		0.7		3.9		—		3.9
Total Real Estate Funds	18.5		6.5		25.0		—		17.0
Total	$	2,040.1	$	6,836.0	$	8,876.1	$	—	$	4,147.6


(1)	Amounts in “Distributed by Fund and Recognized” for the CPI, Gulf Stream and Stone Tower funds and SIAs are presented for activity subsequent to the respective acquisition dates.

(2)

Amounts were computed based on the fair value of fund investments on June 30, 2014 . Carried interest income has 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 fees at June 30, 2014 . 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.

(3)

Represents the amount of carried interest income that would be reversed if remaining fund investments became worthless on June 30, 2014 . Amounts subject to potential reversal of carried interest income include amounts undistributed by a fund (i.e., the carried interest 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, except for those funds that are gross of taxes as defined in the respective funds' management agreement.


(4)	Amounts exclude AINV, as carried interest income from this entity is not subject to contingent repayment.

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 earned from private equity, credit and real estate 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. All payments for services rendered by our Managing Partners prior to the 2007 Reorganization have been accounted

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for as partnership distributions rather than compensation and benefits expense. See note 1 to our condensed consolidated financial statements for further discussion of the 2007 Reorganization. Subsequent to the 2007 Reorganization, our Managing Partners are considered employees of Apollo. As such, payments for services made to these individuals, including the expense associated with the AOG Units described below, have been recorded as compensation expense. The AOG Units were granted to the Managing Partners and Contributing Partners at the time of the 2007 Reorganization, as discussed in note 1 to our condensed consolidated financial statements.

In addition, certain professionals and selected other individuals have a profit sharing interest in the carried interest income earned in relation to our private equity, certain credit and real estate 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 private equity, credit and real estate carried interest income on a pre-tax and a pre-consolidated basis. Profit sharing expense can reverse during periods when there is a decline in carried interest income that was 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 have the same effect on our profit sharing expense. Profit sharing expense increases when unrealized gains increase. 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 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, 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 12 to our condensed consolidated financial statements for further discussion of indemnification.

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 with a vesting period of five to six years (all of which have fully vested) and certain employees were granted RSUs with a vesting period of typically six years (all of which have also fully vested). Managing Partners, Contributing Partners and certain employees have also been granted AAA restricted depositary units ("RDUs") , or incentive units that provide the right to receive AAA RDUs, which both represent common units of AAA and generally vest over three years for employees and are fully-vested for Managing Partners and Contributing Partners on the grant date. In addition, ARI RSUs, ARI restricted stock and AMTG RSUs have been granted to the Company and certain employees in the real estate and credit segments, which generally vest over three years. In addition, the Company grants equity awards to certain employees, including RSUs 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, professional fees, placement fees, occupancy, depreciation and amortization and other general operating expenses. Interest expense consists primarily of interest related to the 2007 AMH Credit Agreement, the 2013 AMH Credit Facilities and the 2024 Senior Notes as discussed in note 9 to our condensed consolidated financial statements. Placement fees are incurred in connection with our capital raising activities. 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 general operating expenses normally include costs related to travel, information technology and administration.

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. For results of AAA, a portion of the net gains (losses) from investment activities are attributable to Non-Controlling Interests in the condensed consolidated statements of operations. 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.

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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.

Interest Income. The Company recognizes security transactions on the trade date. Interest income is recognized as earned on an accrual basis. Discounts and premiums on securities purchased are accreted or amortized over the life of the respective securities using the effective interest method. Interest income also includes payment-in-kind interest (or "PIK" interest) on a convertible note and from one of our credit funds.

Other Income (Loss), Net. Other income (loss), net includes the recognition of bargain purchase gains as a result of Apollo acquisitions, gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities of foreign subsidiaries, reversal of a portion of the tax receivable agreement liability (see note 12 to our condensed consolidated financial statements), gains (losses) arising from the remeasurement of derivative instruments associated with fees from certain of the Company’s affiliates 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 entities in some cases are subject to NYC UBT, and non-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition, APO Corp., a wholly-owned subsidiary of the Company, is subject to U.S. federal, state and local corporate income tax, and the Company’s provision for income taxes is accounted for in accordance with U.S. GAAP.

As significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties, we recognize the 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. 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 tax positions are reviewed and evaluated quarterly to determine whether or not we have uncertain tax positions that require financial statement recognition.

Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assets and liabilities and their respective tax basis using currently enacted tax rates. 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 58.8% and 62.0% ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partners through their limited partner interests in Holdings as of June 30, 2014 and 2013 , respectively, and other ownership interests in consolidated entities, which primarily consist of the approximate 97.5% , and 97.3% ownership interests held by limited partners in AAA as of June 30, 2014 and 2013 , respectively. Non-Controlling Interests also include limited partner interests of Apollo managed funds in certain consolidated 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.

On January 1, 2010, the Company adopted amended consolidation guidance issued by the Financial Accounting Standards Board ("FASB") on issues related to VIEs. The amended guidance significantly affects the overall consolidation analysis, changing the approach taken by companies in identifying which entities are VIEs and in determining which party is the primary beneficiary. The amended guidance requires continuous assessment of the reporting entity’s involvement with such VIEs. The

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amended guidance also enhances the disclosure requirements for a reporting entity’s involvement with VIEs, including presentation on the condensed consolidated statements of financial condition of assets and liabilities of consolidated VIEs that meet the separate presentation criteria and disclosure of assets and liabilities recognized in the condensed consolidated statements of financial condition and the maximum exposure to loss for those VIEs in which a reporting entity is determined to not be the primary beneficiary but in which it has a variable interest. The guidance provides a limited scope deferral for a reporting entity’s interest in an entity that meets all of the following conditions: (a) the entity has all the attributes of an investment company as defined under the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide, Investment Companies , or does not have all the attributes of an investment company but is an entity for which it is acceptable based on industry practice to apply measurement principles that are consistent with the AICPA Audit and Accounting Guide, Investment Companies , (b) the reporting entity does not have explicit or implicit obligations to fund any losses of the entity that could potentially be significant to the entity and (c) the entity is not a securitization entity, asset-backed financing entity or an entity that was formerly considered a qualifying special-purpose entity. The reporting entity is required to perform a consolidation analysis for entities that qualify for the deferral in accordance with previously issued guidance on variable interest entities. Apollo’s involvement with the funds it manages is such that all three of the above conditions are met with the exception of certain vehicles which fail condition (c) above. As previously discussed, the incremental impact of adopting the amended consolidation guidance has resulted in the consolidation of certain VIEs managed by the Company. Additional disclosures related to Apollo’s involvement with VIEs are presented in note 4 to our condensed consolidated financial statements.

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Results of Operations

Below is a discussion of our condensed consolidated results of operations for the three and six months ended June 30, 2014 and 2013 . For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:



	Three Months Ended June 30,						Amount Change			Percentage Change		Six Months Ended June 30,						Amount Change			Percentage Change
	2014			2013			Amount Change			Percentage Change		2014			2013			Amount Change			Percentage Change
												(dollars in thousands)
Revenues:
Advisory and transaction fees from affiliates, net	$	60,786		$	65,085		$	(4,299	)	(6.6	)%	$	176,851		$	112,504		$	64,347		57.2	%
Management fees from affiliates	226,420			155,070			71,350			46.0		436,211			305,517			130,694			42.8
Carried interest income from affiliates	284,946			277,106			7,840			2.8		450,490			1,388,313			(937,823		)	(67.6	)
Total Revenues	572,152			497,261			74,891			15.1		1,063,552			1,806,334			(742,782		)	(41.1	)
Expenses:
Compensation and benefits:
Equity-based compensation	28,711			43,501			(14,790		)	(34.0	)	87,689			88,787			(1,098		)	(1.2	)
Salary, bonus and benefits	89,832			69,282			20,550			29.7		170,362			142,678			27,684			19.4
Profit sharing expense	160,778			127,244			33,534			26.4		264,737			550,864			(286,127		)	(51.9	)
Total Compensation and Benefits	279,321			240,027			39,294			16.4		522,788			782,329			(259,541		)	(33.2	)
Interest expense	4,524			7,594			(3,070		)	(40.4	)	7,638			15,112			(7,474		)	(49.5	)
Professional fees	20,211			21,665			(1,454		)	(6.7	)	39,663			37,725			1,938			5.1
General, administrative and other	25,291			26,037			(746		)	(2.9	)	49,969			48,978			991			2.0
Placement fees	3,489			3,120			369			11.8		5,275			12,478			(7,203		)	(57.7	)
Occupancy	10,418			10,149			269			2.7		20,321			19,954			367			1.8
Depreciation and amortization	11,115			14,195			(3,080		)	(21.7	)	22,834			28,813			(5,979		)	(20.8	)
Total Expenses	354,369			322,787			31,582			9.8		668,488			945,389			(276,901		)	(29.3	)
Other Income (Loss):
Net (losses) gains from investment activities	(9,534		)	1,116			(10,650		)	NM		213,874			53,249			160,625			301.6
Net gains (losses) from investment activities of consolidated variable interest entities	43,425			(35,198		)	78,623			NM		91,160			12,663			78,497			NM
Income from equity method investments	30,701			20,090			10,611			52.8		53,611			47,880			5,731			12.0
Interest income	2,726			3,049			(323		)	(10.6	)	6,054			6,140			(86		)	(1.4	)
Other income, net	2,238			2,778			(540		)	(19.4	)	19,769			4,076			15,693			385.0
Total Other Income (Loss)	69,556			(8,165		)	77,721			NM		384,468			124,008			260,460			210.0
Income before income tax provision	287,339			166,309			121,030			72.8		779,532			984,953			(205,421		)	(20.9	)
Income tax provision	(35,037		)	(18,139		)	(16,898		)	93.2		(67,586		)	(36,718		)	(30,868		)	84.1
Net Income	252,302			148,170			104,132			70.3		711,946			948,235			(236,289		)	(24.9	)
Net income attributable to Non-controlling Interests	(180,634		)	(89,433		)	(91,201		)	102.0		(568,109		)	(640,520		)	72,411			(11.3	)
Net Income Attributable to Apollo Global Management, LLC	$	71,668		$	58,737		$	12,931		22.0	%	$	143,837		$	307,715		$	(163,878	)	(53.3	)%

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

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

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.

Advisory and transaction fees from affiliates, net, decreased by $4.3 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was attributable to a decrease in advisory and transaction fees, net in the private equity segment of $36.5 million , offset by an increase in the credit segment of $33.5 million . The decrease in the private equity segment was primarily attributable to a decrease in net transaction fees from the portfolio investments of Fund VII of $25.4 million and a decrease in advisory fees earned from the portfolio investments of Fund V. The increase in the credit segment was primarily driven by an increase in monitoring fees from Athene of $30.2 million.

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Management fees from affiliates increased by $71.4 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to an increase in management fees earned by our credit and private equity segments of $44.2 million and $16.4 million , respectively, as a result of an increase in fee-generating AUM with respect to these segments during the period. The primary driver of the increase in management fees earned from the credit funds was an increase in management fees earned from Athene of $43.9 million during the three months ended June 30, 2014 compared to the same period in 2013. The increase was also due to Fund VIII, which generated an additional $48.2 million of management fees for the three months ended June 30, 2014 as compared to the same period in 2013. The increase in management fees from affiliates was partially offset by a $33.5 million reduction in management fees with respect to Fund VII due to a change in the basis on which such management fees are earned. The change in management fees from affiliates was partially attributable to a decrease in management fees of $11.1 million earned from consolidated VIEs which are included in the credit segment results but were eliminated in consolidation during the three months ended June 30, 2014 as compared to the same period in 2013.

Carried interest income from affiliates increased by $7.8 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to increased carried interest income from the Apollo European Principal Finance Fund II, L.P. ("EPF II"), Fund VII, ANRP, CPI Capital Partners Europe, L.P., and Apollo Credit Opportunity Fund II, L.P. ("COF II") of $34.8 million, $24.2 million, $11.7 million, $9.7 million, and $4.7 million, respectively. These increases were partially offset by decreases in the fair value of portfolio investments held by Fund VI and AAA Investments (Co-Invest VI) L.P. ("AAA Co-Invest VI") of $60.9 million and $17.3 million, respectively during the three months ended June 30, 2014 as compared to the same period in 2013.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Advisory and transaction fees from affiliates, net, increased by $64.3 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was attributable to an increase in advisory and transaction fees, net in the credit segment of $89.3 million offset by a decrease in the private equity segment of $23.5 million . The increase in the credit segment was primarily driven by an increase in monitoring fees from Athene of $69.4 million. There were also increases in net transaction fees earned from EPF II and FCI II of $16.9 million and $6.5 million, respectively. The decrease in the private equity segment was primarily attributable to a decrease in net transaction fees earned from Fund VII of $11.1 million during the six months ended June 30, 2014 as compared to the same period in 2013.

Management fees from affiliates increased by $130.7 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 This change was primarily attributable to an increase in management fees earned by our credit and private equity segments of $91.5 million and $29.5 million , respectively, as a result of an increase in fee-generating AUM with respect to these segments during the period. The primary driver of the increase in management fees earned from the credit funds was an increase in management fees earned from Athene of $87.1 million during the six months ended June 30, 2014 compared to the same period in 2013. The increase was also due to Fund VIII, which generated an additional $96.5 million of management fees for the six months ended June 30, 2014 as compared to the same period in 2013. The increase in management fees from affiliates was partially offset by a $67.1 million reduction in management fees wit h respect to Fund VII due to a change in the basis on which such management fees are earned. The change in management fees from affiliates was partially attributable to a decrease in management fees of $9.1 million earned from consolidated VIEs which are included in the credit segment results but were eliminated in consolidation during the six months ended June 30, 2014 as compared to the same period in 2013.

Carried interest income from affiliates decreased by $937.8 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to decreased carried interest income earned from Fund VI, Fund VII, AAA Co-Invest VI, SOMA and COF I of $769.3 million, $147.0 million, $44.4 million, $25.3 million and $24.2 million, respectively. These decreases were partially offset by increases in carried interest income from EPF II, AAA, ANRP and Fund V of $34.8 million, $16.8 million, $11.7 million and $9.5 million, respectively, during the six months ended June 30, 2014 as compared to the same period in 2013.

Expenses

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Compensation and benefits increased by $39.3 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily attributable to an increase in profit sharing expense of $33.5 million, due to a higher blended profit sharing percentage during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. In any quarter the blended profit sharing percentage is impacted by the respective profit share ratios of the funds generating carry in the period. During the three months ended June 30, 2014, the fair value of Fund VII’s underlying fund investments appreciated while Fund VI’s underlying investments depreciated during the quarter, which contributed to the elevated profit sharing percentage. Included within profit sharing expense was a $12.0 million and $20.2 million expense related to the

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Incentive Pool (as defined below) for the three months ended June 30, 2014 and 2013, respectively. The Incentive Pool is separate from the fund level profit sharing expense and seeks to more directly tie compensation of its professionals to realized performance of the Company’s business, which will likely result in greater variability in compensation and can have a variable impact on the blended profit share percentage during a particular quarter. Additionally, salary, bonus and benefits increased by $20.6 million during the three months ended June 30, 2014 as a result of an increase in headcount during the period as compared to the same period in 2013, offset by lower amortization of AOG Units of $15.0 million due to the end of their vesting period as of June 30, 2013.

The Company intends to, over time, seek to more directly tie compensation of its professionals to realized performance of the Company’s business, which will likely result in greater variability in compensation. In June 2011, the Company adopted a performance based incentive arrangement (the “Incentive Pool”) whereby certain partners and employees earned discretionary compensation based on carried interest realizations earned by the Company during the year, which amounts are reflected as profit sharing expense in the Company’s 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 are not sufficient to compensate individuals, which may result in an increase in salary, bonus and benefits.

Interest expense decreased by $3.1 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to a lower margin rate incurred from the 2013 AMH Credit Facilities as compared to the 2007 AMH Credit Agreement during the three months ended June 30, 2014 as compared to the same period in 2013 (see note 9 to our condensed consolidated financial statements).

Professional fees decreased by $1.5 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was attributable to lower legal and technology fees offset by higher consulting fees incurred during the three months ended June 30, 2014 as compared to the same period in 2013 .

Depreciation and amortization expense decreased by $3.1 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to lower amortization of intangible assets during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 as certain assets were fully amortized to the end of their useful life.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Compensation and benefits decreased by $259.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily due to a decrease in profit sharing expense of $286.1 million, primarily attributable to a corresponding decrease in carried interest income. During this period, the blended profit sharing percentage was impacted by the respective profit share ratios of the funds generating carry in the period. The fair value of Fund VII’s underlying fund investments appreciated while Fund VI’s underlying investments depreciated, which contributed to a elevated profit sharing percentage. Included within profit sharing expense was a $23.7 million and $32.0 million expense related to the Incentive Pool for the six months ended June 30, 2014 and 2013, respectively. The Incentive Pool is separate from the fund level profit sharing expense and seeks to more directly tie compensation of its professionals to realized performance of the Company’s business, which will likely result in greater variability in compensation and can have a variable impact on the blended profit share percentage during a particular quarter. Additionally, salary, bonus and benefits increased by $27.7 million during the six months ended June 30, 2014 as a result of an increase in headcount during the period as compared to the same period in 2013.

This is offset by lower equity-based compensation of $1.1 million due to lower amortization of AOG Units due to the end of their vesting period as of June 30, 2013 and lower amortization of RSU awards granted in connection with the 2007 private placement and other equity-based awards which decreased in aggregate of $46.7 million. This decrease in equity-based compensation was offset primarily by a non-cash expense of $45.6 million related to equity-based compensation in connection with the departure of an executive officer during the six months ended June 30, 2014.

Interest expense decreased by $7.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to a lower margin rate incurred from the 2013 AMH Credit Facilities as compared to the 2007 AMH Credit Agreement during the three months ended June 30, 2014 as compared to the same period in 2013 (see note 9 to our condensed consolidated financial statements).

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Professional fees increased by $1.9 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to higher consulting fees and was partially offset by lower legal fees during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013.

Placement fees decreased by $7.2 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was driven by a decrease in placement fees in AIF due to the closing of its investment period during the six months ended June 30, 2013.

Depreciation and amortization expense decreased by $6.0 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to lower amortization of intangible assets during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013, as certain assets were fully amortized to the end of their useful life.

Other Income (Loss)

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Net gains from investment activities decreased by $10.7 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to a $9.2 million unrealized loss in the Company's investment in HFA during the three months ended June 30, 2014. See note 3 to the condensed consolidated financial statements for additional disclosure regarding the HFA investment.

Net gains (losses) from investment activities of consolidated VIEs increased by $78.6 million during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This increase was primarily attributable to an increase in net gains from investment activities of the consolidated VIEs of $115.4 million, offset by an increase in other expenses of $16.0 million, a decrease in interest and other income of $5.4 million and a decrease in net gains from debt of the consolidated VIEs of $15.4 million during the three months ended June 30, 2014 as compared to the same period in 2013.

Income from equity method investments increased by $10.6 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily driven by changes in the fair values of certain Apollo funds and other entities in which the Company has a direct interest. ARI, Fund VII and EPF II had the most significant impact and together generated $17.3 million of income from equity method investments during the three months ended June 30, 2014 as compared to $10.1 million during the three months ended June 30, 2013 , resulting in a year-over-year net increase of $7.2 million. See note 3 to our condensed consolidated financial statements for a complete summary of income from equity method investments by fund for the three months ended June 30, 2014 and 2013 .

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Net gains from investment activities increased by $160.6 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to a $150.1 million and $10.6 million increase in net unrealized gains related to changes in the fair value of AAA and the investment in HFA, respectively, for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013.

Net gains (losses) from investment activities of consolidated VIEs increased by $78.5 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to a decrease in net losses from debt of $66.7 million and an increase in net gains from investment activities of $55.5 million. These changes were offset by an increase in other expenses of $32.1 million and a decrease in interest and other income of $11.5 million during the six months ended June 30, 2014 as compared to the same period in 2013.

Other income, net increased by $15.7 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to a $14.0 million unrealized gain on Athene related derivative contracts for the six months ended June 30, 2014. See note 12 to our condensed consolidated financial statements for additional disclosure regarding Athene.

Income Tax Provision

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Income tax expense increased by $16.9 million primarily due to an increase in management business income as well as increases in incentive company income subject to corporate level taxation. The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. Due to our legal structure, only a portion of

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the income we earn is subject to corporate-level tax rates 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 at an effective tax rate of 12.19% and 10.90% for the three months ended June 30, 2014 and 2013, respectively. The reconciling items between our statutory tax rate and our effective tax rate were due to the following: (i) income passed through to Non-Controlling Interests; (ii) income passed through to Class A shareholders; (iii) amortization of AOG Units that are non-deductible for income tax purposes which were fully amortized as of June 30, 2013; and (iv) state and local income taxes including NYC UBT.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Income tax expense increased by $30.9 million primarily due to an increase in management business income as well as increases in incentive company income subject to corporate level taxation. The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. Due to our legal structure, only a portion of the income we earn is subject to corporate-level tax rates 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 at an effective tax rate of 8.67% and 3.73% for the six months ended June 30, 2014 and 2013, respectively. The reconciling items between our statutory tax rate and our effective tax rate were due to the following: (i) income passed through to Non-Controlling Interests; (ii) income passed through to Class A shareholders; (iii) amortization of AOG Units that are non-deductible for income tax purposes which were fully amortized as of June 30, 2013; and (iv) state and local income taxes including NYC UBT.

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Non-Controlling Interests

The table below presents equity interests in Apollo’s consolidated, but not wholly-owned, subsidiaries and funds.

Net income attributable to Non-Controlling Interests consisted of the following:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
AAA ⁽¹⁾	$	932		$	(6,531	)	$	(198,337	)	$	(52,213	)
Interest in management companies and a co-investment vehicle ⁽²⁾	(4,909		)	(4,309		)	(8,494		)	(8,145		)
Other consolidated entities	9,806			7,647			5,108			29,566
Net loss (income) attributable to Non-Controlling Interests in consolidated entities	5,829			(3,193		)	(201,723		)	(30,792		)
Net loss (income) attributable to Appropriated Partners’ Capital ⁽³⁾	(34,468		)	40,243			(59,291		)	2,001
Net income attributable to Non-Controlling Interests in the Apollo Operating Group	(151,995		)	(126,483		)	(307,095		)	(611,729		)
Net Income attributable to Non-Controlling Interests	$	(180,634	)	$	(89,433	)	$	(568,109	)	$	(640,520	)
Net loss (income) attributable to Appropriated Partners’ Capital ⁽⁴⁾	34,468			(40,243		)	59,291			(2,001		)
Comprehensive Income Attributable to Non-Controlling Interests	$	(146,166	)	$	(129,676	)	$	(508,818	)	$	(642,521	)


(1)	Reflects the Non-Controlling Interests in the net (income) loss of AAA and is calculated based on the Non-Controlling Interests' ownership percentage in AAA, which was approximately 97.5% and 97.3% as of June 30, 2014 and 2013, respectively. As of June 30, 2014 and 2013 , Apollo owned approximately 2.5% and 2.7% of AAA, respectively.


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


(3)	Reflects net (income) loss of the consolidated CLOs classified as VIEs.


(4)	Appropriated Partners’ Capital is included in total Apollo Global Management, LLC shareholders’ equity and is therefore not a component of comprehensive income attributable to Non-Controlling Interests on the condensed consolidated statements of comprehensive income.

Net income attributable to Non-Controlling Interests in the Apollo Operating Group consisted of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Net income	$	252,302		$	148,170		$	711,946		$	948,235
Net income attributable to Non-Controlling Interests in consolidated entities	(28,639		)	37,050			(261,014		)	(28,791		)
Net income after Non-Controlling Interests in consolidated entities	223,663			185,220			450,932			919,444
Adjustments:
Income tax provision ⁽¹⁾	35,037			18,139			67,586			36,718
NYC UBT and foreign tax provision ⁽²⁾	(4,051		)	(3,083		)	(6,793		)	(3,799		)
Net loss (income) in non-Apollo Operating Group entities	266			295			(1,625		)	626
Total adjustments	31,252			15,351			59,168			33,545
Net income after adjustments	254,915			200,571			510,100			952,989
Approximate ownership percentage of Apollo Operating Group	58.8		%	62.0		%	58.8		%	62.0		%
Net income attributable to Non-Controlling Interests in Apollo Operating Group ⁽³⁾	$	151,995		$	126,483		$	307,095		$	611,729

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(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.

(3)

This amount is calculated by applying the weighted average ownership percentage range of approximately 59.6% and 60.2% during the three and six months ended June 30, 2014, respectively, and approximately 63.1% and 63.9% for the three and six months ended June 30, 2013, respectively, to the consolidated net income of the Apollo Operating Group before a corporate income tax provision and after allocations to the Non-Controlling Interests in consolidated entities.

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: private equity, credit and real estate. These segments were established based on the nature of investment activities in each underlying fund, including the specific type of investment made, the frequency of trading, and the level of control over the investment. Segment results do not consider consolidation of funds, equity-based compensation expense comprised of AOG Units, income taxes, amortization of intangibles associated with the 2007 Reorganization and acquisitions, and Non-Controlling Interests with the exception of allocations of income to certain individuals.

In addition to providing the financial results of our three reportable business segments, we further evaluate our individual reportable segments based on what we refer to as our management and incentive businesses. Our management business is generally characterized by the predictability of its financial metrics, including revenues and expenses. The management business includes management fee revenues, advisory and transaction fee revenues, carried interest income from one of our opportunistic credit funds and expenses, each of which we believe are more stable in nature. The financial performance of our incentive business is partially dependent upon quarterly mark-to-market unrealized valuations in accordance with U.S. GAAP guidance applicable to fair value measurements. The incentive business includes carried interest income, income from equity method investments and profit sharing expense that are associated with our general partner interests in the Apollo funds, which are generally less predictable and more volatile in nature.

Our financial results vary, since carried interest, which generally constitutes 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.

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Private Equity

The following tables set forth our segment statement of operations information and our supplemental performance measure, ENI, for our private equity segment, further broken out by our "management" and "incentive" businesses, for the three and six months ended June 30, 2014 and 2013 , respectively. ENI represents segment income, excluding the impact of non-cash charges related to RSUs granted in connection with the 2007 private placement, equity-based compensation expense comprised of amortization of AOG Units, income taxes, amortization of intangibles associated with the 2007 Reorganization and acquisitions and Non-Controlling Interests with the exception of allocations of income to certain individuals. In addition, segment data excludes the assets, liabilities and operating results of the Apollo funds and consolidated VIEs that are included in the condensed consolidated financial statements. ENI is not a U.S. GAAP measure.



	For the Three Months Ended June 30, 2014								For the Three Months Ended June 30, 2013
	Management		Incentive			Total			Management		Incentive			Total
	(in thousands)
Private Equity ⁽¹⁾ :
Revenues:
Advisory and transaction fees from affiliates, net	$	5,178	$	—		$	5,178		$	41,663	$	—		$	41,663
Management fees from affiliates	82,045		—			82,045			65,684		—			65,684
Carried interest income from affiliates:
Unrealized (losses) gains	—		(10,394		)	(10,394		)	—		(509,667		)	(509,667		)
Realized gains	—		198,103			198,103			—		738,257			738,257
Total Revenues	87,223		187,709			274,932			107,347		228,590			335,937
Expenses:
Compensation and Benefits:
Equity-based compensation	6,957		—			6,957			7,485		—			7,485
Salary, bonus and benefits	26,713		—			26,713			25,731		—			25,731
Profit sharing expense	—		115,894			115,894			—		113,322			113,322
Total compensation and benefits	33,670		115,894			149,564			33,216		113,322			146,538
Other expenses	20,543		—			20,543			26,773		—			26,773
Total Expenses	54,213		115,894			170,107			59,989		113,322			173,311
Other Income:
Income from equity method investments	—		13,419			13,419			—		12,170			12,170
Other income, net	927		—			927			872		—			872
Total Other Income	927		13,419			14,346			872		12,170			13,042
Economic Net Income	$	33,937	$	85,234		$	119,171		$	48,230	$	127,438		$	175,668


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

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	For the Six Months Ended June 30, 2014								For the Six Months Ended June 30, 2013
	Management		Incentive			Total			Management		Incentive		Total
	(in thousands)
Private Equity ⁽¹⁾ :
Revenues:
Advisory and transaction fees from affiliates, net	$	42,814	$	—		$	42,814		$	66,280	$	—	$	66,280
Management fees from affiliates	161,466		—			161,466			131,956		—		131,956
Carried interest income from affiliates:
Unrealized (losses) gains	—		(303,983		)	(303,983		)	—		187,947		187,947
Realized gains	—		594,943			594,943			—		1,031,636		1,031,636
Total Revenues	204,280		290,960			495,240			198,236		1,219,583		1,417,819
Expenses:
Compensation and Benefits:
Equity-based compensation	31,406		—			31,406			15,858		—		15,858
Salary, bonus and benefits	48,982		—			48,982			53,105		—		53,105
Profit sharing expense	—		181,989			181,989			—		501,143		501,143
Total compensation and benefits	80,388		181,989			262,377			68,963		501,143		570,106
Other expenses	39,214		—			39,214			48,740		—		48,740
Total Expenses	119,602		181,989			301,591			117,703		501,143		618,846
Other Income:
Income from equity method investments	—		32,219			32,219			—		34,721		34,721
Other income, net	2,621		1,599			4,220			2,504		—		2,504
Total Other Income	2,621		33,818			36,439			2,504		34,721		37,225
Economic Net Income	$	87,299	$	142,789		$	230,088		$	83,037	$	753,161	$	836,198


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

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	For the Three Months Ended June 30,											For the Six Months Ended June 30,
	2014			2013			Amount Change			Percentage Change		2014			2013		Amount Change			Percentage Change
	(dollars in thousands)											(dollars in thousands)
Private Equity ⁽¹⁾ :
Revenues:
Advisory and transaction fees from affiliates, net	$	5,178		$	41,663		$	(36,485	)	(87.6	)%	$	42,814		$	66,280	$	(23,466	)	(35.4	)%
Management fees from affiliates	82,045			65,684			16,361			24.9		161,466			131,956		29,510			22.4
Carried interest income from affiliates:
Unrealized losses	(10,394		)	(509,667		)	499,273			(98.0	)	(303,983		)	187,947		(491,930		)	NM
Realized gains	198,103			738,257			(540,154		)	(73.2	)	594,943			1,031,636		(436,693		)	(42.3	)
Total carried interest income from affiliates	187,709			228,590			(40,881		)	(17.9	)	290,960			1,219,583		(928,623		)	(76.1	)
Total Revenues	274,932			335,937			(61,005		)	(18.2	)	495,240			1,417,819		(922,579		)	(65.1	)
Expenses:
Compensation and benefits:
Equity-based compensation	6,957			7,485			(528		)	(7.1	)	31,406			15,858		15,548			98.0
Salary, bonus and benefits	26,713			25,731			982			3.8		48,982			53,105		(4,123		)	(7.8	)
Profit sharing expense	115,894			113,322			2,572			2.3		181,989			501,143		(319,154		)	(63.7	)
Total compensation and benefits expense	149,564			146,538			3,026			2.1		262,377			570,106		(307,729		)	(54.0	)
Other expenses	20,543			26,773			(6,230		)	(23.3	)	39,214			48,740		(9,526		)	(19.5	)
Total Expenses	170,107			173,311			(3,204		)	(1.8	)	301,591			618,846		(317,255		)	(51.3	)
Other Income:
Income from equity method investments	13,419			12,170			1,249			10.3		32,219			34,721		(2,502		)	(7.2	)
Other income, net	927			872			55			6.3		4,220			2,504		1,716			68.5
Total Other Income	14,346			13,042			1,304			10.0		36,439			37,225		(786		)	(2.1	)
Economic Net Income	$	119,171		$	175,668		$	(56,497	)	(32.2	)%	$	230,088		$	836,198	$	(606,110	)	(72.5	)%


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

Revenues

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Advisory and transaction fees from affiliates, net, decreased by $36.5 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was attributable to a decrease in net transaction fees of $25.6 million and a decrease in net advisory fees of $10.8 million. The decrease in net transaction fees was primarily attributable to a one-time termination fee in connection with the initial public offering of Taminco Corporation and other portfolio company transaction fees that did not recur in the current period. The decrease in net advisory fees was primarily attributable to decreases in net advisory fees earned from Fund V's investments.

Management fees from affiliates increased by $16.4 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This increase was primarily attributable to Fund VIII, which generated $48.2 million in management fees during the three months ended June 30, 2014. This increase was partially offset by decreased management fees earned from Fund VII of $33.5 million as a result of a change in the management fee rate and basis upon which management fees are earned from capital commitments to invested capital, due to the fund coming to the end of the fund's investment period.

Carried interest income from affiliates decreased by $40.9 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily attributable to decreases in carried interest income earned from Fund VI and AAA Co-Invest VI of $60.9 million and $17.3 million, respectively, partially offset by increases in carried interest income earned from Fund VII and ANRP of $24.2 million and $11.7 million, respectively. Realized carried interest

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income decreased $540.2 million, driven by decreased dispositions of underlying portfolio investments held during the period by Fund VII, Fund VI, and Fund V of $330.5 million, $161.7 million, and $66.1 million, respectively. These decreases were offset by an increase in realizations from AAA Co-Invest VI of $18.2 million. The decrease in realized carried interest income was also offset by an increase of $449.3 million in unrealized carried interest income. The increase in unrealized carried interest income was mainly driven by increases in the fair value of portfolio investments held by Fund VII, Fund VI and Fund V of $354.7 million, $100.8 million $69.1 million, respectively. These increases were partially offset by a decrease in unrealized carried interest income of $35.5 million resulting from decreases in the fair value of portfolio investments and reversals of unrealized carried interest income to realized carried interest income from AAA Co-Invest VI during the three months ended June 30, 2014 compared to the same period in 2013.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Advisory and transaction fees from affiliates, including directors' fees, termination fees and reimbursed broken deal costs, decreased by $23.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was attributable to a decrease of $10.5 million in net transaction fees and a decrease of $13.0 million in net advisory fees earned during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . The decrease in net transaction fees was primarily due to fees earned with respect to Taminco Corporation of $14.2 million, McGraw-Hill Education of $13.4 million, Alcan Energy of $6.5 million and Evertec of $2.8 million during the six months ended June 30, 2013 offset by net transaction fees earned with respect to EP Energy of $28.0 million during the six months ended June 30, 2014. The decrease in net advisory fees was primarily attributable to decreases in net advisory fees earned from Fund V's investments.

Management fees from affiliates increased by $29.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This increase was primarily attributable to Fund VIII, which generated $96.5 million in management fees during the six months ended June 30, 2014. This increase was partially offset by decreased management fees earned from Fund VII of $67.1 million as a result of a change in the management fee rate and basis upon which management fees are earned from capital commitments to invested capital, due to the fund coming to the end of the fund's investment period.

Carried interest income from affiliates decreased by $928.6 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to decreases in carried interest income earned with respect to Fund VI, Fund VII and AAA Co-Invest VI of $769.4 million, $147.0 million and $44.4 million, respectively, partially offset by increases in carried interest income with respect to AAA and ANRP of $16.8 million and $11.7 million, respectively. Realized carried interest income decreased $436.7 million, driven by decreased dispositions of underlying portfolio investments held during the period by Fund VII, Fund VI and Fund V of $295.7 million, $119.2 million and $55.6 million. This decrease was offset by increased realizations from AAA Co-Invest VI of $33.3 million during the six months ended June 30, 2014 as compared to the same period in 2013. Unrealized carried interest income decreased $491.9 million, driven by decreases in the fair value of portfolio investments and reversals of unrealized carried interest income to realized carried interest income relating to portfolio investments held by Fund VI and AAA Co-Invest VI of $650.2 million and $77.7 million, respectively. These decreases were partially offset by increases in the fair value of portfolio investments held by Fund VII, Fund V and AAA Investments of $148.7 million, $65.1 million and $16.8 million, respectively.

Expenses

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Compensation and benefits expense increased by $3.0 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily attributable to an increase in profit sharing expense of $2.6 million, due to a higher blended profit sharing percentage during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. In any quarter the blended profit sharing percentage is impacted by the respective profit share ratios of the funds generating carry in the period. During the three months ended June 30, 2014, the fair value of Fund VII’s underlying fund investments appreciated while Fund VI’s underlying investments depreciated during the quarter, which contributed to the elevated profit sharing percentage. Included in profit sharing expense is $10.4 million and $15.0 million related to the Incentive Pool for the three months ended June 30, 2014 and 2013, respectively. The Incentive Pool is separate from the fund level profit sharing expense and seeks to more directly tie compensation of its professionals to realized performance of the Company’s business, which will likely result in greater variability in compensation and can have a variable impact on the blended profit share percentage during a particular quarter.

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Other expenses decreased by $6.2 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to decreased general and administrative expenses as a result of decreased organization costs, decreased interest expense due to a lower margin rate incurred from the 2013 AMH Credit Facilities as compared to the 2007 AMH Credit Agreement (see note 9 to our condensed consolidated financial statements) and a reduction in professional fees attributable to decreased consulting and legal fees.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Compensation and benefits expense decreased by $307.7 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to a decrease in profit sharing expense of $319.2 million, primarily attributable to a corresponding decrease in carried interest income. During this period, the blended profit sharing percentage was impacted by the respective profit share ratios of the funds generating carry in the period. The fair value of Fund VII’s underlying fund investments appreciated while Fund VI’s underlying investments depreciated, which contributed to a elevated profit sharing percentage. Included in profit sharing expense is $21.4 million and $23.6 million related to the Incentive Pool for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013, respectively. The Incentive Pool is separate from the fund level profit sharing expense and seeks to more directly tie compensation of its professionals to realized performance of the Company’s business, which will likely result in greater variability in compensation and can have a variable impact on the blended profit share percentage during a particular quarter. Salary, bonus and benefits also decreased by $4.1 million from the comparable period due to higher expenses in 2013 in connection with the launch of Fund VIII. These decreases were offset by an increase in equity-based compensation of $15.5 million, primarily driven by non-cash expense of $17.9 million related to equity-based compensation in connection with the deparature of an executive officer during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 .

Other expenses decreased by $9.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to decreased general and administrative expenses as a result of lower organization costs in connection with the launch of Fund VIII in 2013.

Other Income

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Income from equity method investments increased by $1.2 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was driven by increases in the fair values of our private equity investments held, primarily from Apollo's ownership interests in Fund VII of $2.3 million and increases in certain other private equity funds of $1.9 million. These increases were partially offset by decreases in equity method investments held in Vantium of $2.0 million and decreases in certain other private equity funds of $0.8 million, respectively, for the three months ended June 30, 2014 as compared to the same period in 2013.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Income from equity method investments decreased by $2.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was driven by decreases in the fair values of our private equity investments held, primarily from Apollo's ownership interest in Fund VII and Fund VI, which resulted in decreased income from equity method investments of $8.9 million and $1.9 million, respectively, during the six months ended June 30, 2014 as compared to the same period in 2013. These decreases were partially offset by an increase of $4.0 from the equity method investment held in AAA and decreases in certain other private equity funds of $4.8 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 .

Other income, net increased by $1.7 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to gains resulting from fluctuations in exchange rates of foreign denominated assets and liabilities of subsidiaries and a reduction of the tax receivable agreement liability due to a change in estimated tax rates during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . See note 12 to our condensed consolidated financial statements for more information on the tax receivable agreement.

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Credit

The following tables set forth segment statement of operations information and ENI for our credit segment, further broken out by our "management" and "incentive" businesses, for the three and six months ended June 30, 2014 and 2013 , respectively. ENI represents segment income (loss), excluding the impact of non-cash charges related to RSUs granted in connection with the 2007 private placement and equity-based compensation expense comprising amortization of AOG Units, income taxes, amortization of intangibles associated with the 2007 Reorganization and acquisitions, Non-Controlling Interests with the exception of allocations of income to certain individuals, and non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the Apollo funds and consolidated VIEs that are included in the condensed consolidated financial statements. ENI is not a U.S. GAAP measure.



	For the Three Months Ended June 30, 2014									For the Three Months Ended June 30, 2013
	Management			Incentive			Total			Management			Incentive			Total
	(in thousands)
Credit: ⁽¹⁾
Revenues:
Advisory and transaction fees from affiliates, net	$	55,609		$	—		$	55,609		$	22,148		$	—		$	22,148
Management fees from affiliates	134,605			—			134,605			90,387			—			90,387
Carried interest income from affiliates:
Unrealized gains (losses)	—			47,174			47,174			—			(58,843		)	(58,843		)
Realized gains	10,009			39,726			49,735			10,029			102,128			112,157
Total Revenues	200,223			86,900			287,123			122,564			43,285			165,849
Expenses:
Compensation and Benefits:
Equity-based compensation	5,533			—			5,533			7,024			—			7,024
Salary, bonus and benefits	55,770			—			55,770			36,401			—			36,401
Profit sharing expense	—			42,069			42,069			—			18,385			18,385
Total compensation and benefits	61,303			42,069			103,372			43,425			18,385			61,810
Other expenses	39,684			—			39,684			38,253			—			38,253
Total Expenses	100,987			42,069			143,056			81,678			18,385			100,063
Other Income:
Net losses from investment activities	—			(9,180		)	(9,180		)	—			(5,752		)	(5,752		)
Income from equity method investments	—			9,371			9,371			—			6,358			6,358
Other income, net	3,164			—			3,164			4,072			207			4,279
Total Other Income	3,164			191			3,355			4,072			813			4,885
Non-Controlling Interests	(3,124		)	—			(3,124		)	(3,254		)	—			(3,254		)
Economic Net Income	$	99,276		$	45,022		$	144,298		$	41,704		$	25,713		$	67,417


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

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	For the Six Months Ended June 30, 2014								For the Six Months Ended June 30, 2013
	Management			Incentive		Total			Management			Incentive			Total
	(in thousands)
Credit: ⁽¹⁾
Revenues:
Advisory and transaction fees from affiliates, net	$	133,089		$	—	$	133,089		$	43,825		$	—		$	43,825
Management fees from affiliates	266,234			—		266,234			174,751			—			174,751
Carried interest income from affiliates:
Unrealized gains ⁽²⁾	—			39,276		39,276			—			14,404			14,404
Realized gains	18,473			105,512		123,985			19,080			153,605			172,685
Total Revenues	417,796			144,788		562,584			237,656			168,009			405,665
Expenses:
Compensation and Benefits:
Equity-based compensation	33,784			—		33,784			13,550			—			13,550
Salary, bonus and benefits	106,514			—		106,514			75,231			—			75,231
Profit sharing expense	—			80,535		80,535			—			53,728			53,728
Total compensation and benefits	140,298			80,535		220,833			88,781			53,728			142,509
Other expenses	76,099			—		76,099			76,576			—			76,576
Total Expenses	216,397			80,535		296,932			165,357			53,728			219,085
Other Income:
Net gains (losses) from investment activities	—			8,833		8,833			—			(1,722		)	(1,722		)
Income from equity method investments	—			18,119		18,119			—			13,290			13,290
Other income, net	7,499			12,441		19,940			8,527			207			8,734
Total Other Income	7,499			39,393		46,892			8,527			11,775			20,302
Non-Controlling Interests	(6,380		)	—		(6,380		)	(6,718		)	—			(6,718		)
Economic Net Income	$	202,518		$	103,646	$	306,164		$	74,108		$	126,056		$	200,164


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

(2)

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	For the Three Months Ended June 30,											For the Six Months Ended June 30,
	2014			2013			Amount Change			Percentage Change		2014			2013			Amount Change			Percentage Change
	(dollars in thousands)											(dollars in thousands)
Credit ⁽¹⁾ :
Revenues:
Advisory and transaction fees from affiliates, net	$	55,609		$	22,148		$	33,461		151.1	%	$	133,089		$	43,825		$	89,264		203.7	%
Management fees from affiliates	134,605			90,387			44,218			48.9		266,234			174,751			91,483			52.4
Carried interest income from affiliates:
Unrealized gains (losses) ⁽²⁾	47,174			(58,843		)	106,017			NM		39,276			14,404			24,872			172.7
Realized gains	49,735			112,157			(62,422		)	(55.7	)	123,985			172,685			(48,700		)	(28.2	)
Total carried interest income from affiliates	96,909			53,314			43,595			81.8		163,261			187,089			(23,828		)	(12.7	)
Total Revenues	287,123			165,849			121,274			73.1		562,584			405,665			156,919			38.7
Expenses:
Compensation and benefits
Equity-based compensation	5,533			7,024			(1,491		)	(21.2	)	33,784			13,550			20,234			149.3
Salary, bonus and benefits	55,770			36,401			19,369			53.2		106,514			75,231			31,283			41.6
Profit sharing expense	42,069			18,385			23,684			128.8		80,535			53,728			26,807			49.9
Total compensation and benefits	103,372			61,810			41,562			67.2		220,833			142,509			78,324			55.0
Other expenses	39,684			38,253			1,431			3.7		76,099			76,576			(477		)	(0.6	)
Total Expenses	143,056			100,063			42,993			43.0		296,932			219,085			77,847			35.5
Other Income:
Net (losses) gains from investment activities	(9,180		)	(5,752		)	(3,428		)	59.6		8,833			(1,722		)	10,555			NM
Income from equity method investments	9,371			6,358			3,013			47.4		18,119			13,290			4,829			36.3
Other income, net	3,164			4,279			(1,115		)	(26.1	)	19,940			8,734			11,206			128.3
Total Other Income	3,355			4,885			(1,530		)	(31.3	)	46,892			20,302			26,590			131.0
Non-Controlling Interests	(3,124		)	(3,254		)	130			(4.0	)	(6,380		)	(6,718		)	338			(5.0	)
Economic Net Income	$	144,298		$	67,417		$	76,881		114.0	%	$	306,164		$	200,164		$	106,000		53.0	%


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

(2)

Revenues

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Advisory and transaction fees from affiliates, net, increased by $33.5 million during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . The increase was primarily driven by an increase in monitoring fees from Athene of $30.2 million during the three months ended June 30, 2014 compared to the same period in 2013.

Management fees from affiliates increased by $44.2 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to increases in management fees earned from Athene of $43.9 million during the three months ended June 30, 2014 compared to the same period in 2013.

Carried interest income from affiliates increased by $43.6 million during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily attributable to increased carried interest income related to EPF II of $34.8 million, COF II of $4.7 million, COF III of $3.9 million and ACLF of $3.4 million, offset by decreased carried interest income related to FCI I of $2.7 million and EPF I of $2.7 million during the three months ended June 30, 2014 compared to the same period in 2013. Realized carried interest income decreased $62.4 million during the three months ended

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June 30, 2014 primarily resulting from lower realizations from EPF I of $31.3 million, COF I of $29.5 million, COF II of $12.6 million, and the Value Funds of $7.4 million, offset by increased realized carried interest income primarily from the CLOs managed by the Company of $7.5 million and also ACLF of $4.2 million as compared to the same period in 2013. The decrease in realized carried interest income was offset by an increase of $106.0 million in unrealized carried interest income. The increase in unrealized carried interest income was mainly driven by EPF II of $34.8 million, COF I of $30.8 million, EPF I of $28.6 million and COF II of $17.3 million during the three months ended June 30, 2014 as compared to the same period in 2013.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Advisory and transaction fees from affiliates increased by $89.3 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . The increase was primarily driven by an increase in monitoring fees from Athene of $69.4 million and an increase in net transaction fees with respect to EPF II of $16.9 million during the six months ended June 30, 2014 compared to the same period in 2013.

Management fees from affiliates increased by $91.5 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to increases in management fees earned from Athene , FCI II, and AINV of $87.1 million, $5.0 million and $2.7 million, respectively, during the six months ended June 30, 2014 compared to the same period in 2013. The increase in management fees was partially offset by $4.9 million, $4.0 million and $3.5 million decreases in management fees from COF II, the CLOs managed by the Company and EPF I, respectively, compared to the same period in 2013.

Carried interest income from affiliates decreased by $23.8 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was primarily attributable to decreased carried interest income related to SOMA of $25.3 million, COF I of $24.2 million, certain sub-advisory arrangements of $7.0 million, FCI I of $4.5 million and the Value funds of $7.6 million offset by carried interest income related to EPF II of $34.8 million and COF III of $8.5 million during the six months ended June 30, 2014 compared to the same period in 2013. Included in carried interest income from affiliates was realized carried interest income which decreased by $48.7 million , driven by lower realizations from COF I and COF II of $63.4 million and $19.6 million, respectively, offset by increases in realizations from the CLOs managed by the Company and EPF I of $18.0 million and $12.7 million, respectively, during the six months ended June 30, 2014 as compared to the same period in 2013. The decrease in realized carried interest income was offset by increases in unrealized carried interest income of $24.9 million , driven by increases in the fair value of portfolio investments held by COF I, EPF II, COF II, and COF III of $39.2 million, $34.8 million, $15.8 million, and $8.5 million, respectively. This was offset by decreases in unrealized carried interest income from SOMA, the CLOs managed by the Company, a sub-advisory arrangement, ACLF, EPF I, and FCI I of $26.7 million, $22.2 million, $7.0 million, $6.9 million, $5.4 million and $4.5 million, respectively, during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013.

Expenses

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Compensation and benefits expense increased by $41.6 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. The change was primarily due to increase in profit sharing expense of $23.7 million during the three months ended June 30, 2014 as compared to the same period in 2013, primarily attributable to a corresponding increase in carried interest income. Within our credit segment, the Company is aligning total compensation for investment professionals with the profitability of the credit business as a whole rather than on a fund-by-fund basis. As a result, the Company incurred approximately $6.0 million of additional profit sharing expense which was recorded for the three months ended June 30, 2014. Additionally, included within profit sharing expense is the Incentive Pool, which resulted in additional profit sharing expense of $1.3 million and $5.3 million for the three months ended June 30, 2014 and 2013, respectively. There also was an increase in salary, bonus, and benefits of $19.4 million during the period, due to increased headcount primarily due to acquisition of Aviva USA, offset by decreased equity-based compensation of $1.5 million.

Other expenses increased by $1.4 million during the three months ended June 30, 2014 , as compared to the three months ended June 30, 2013. The change was primarily driven by a $3.5 million increase in general and administrative expenses as a result of higher technology expenses during the three months ended June 30, 2014 compared to the same period in 2013. This increase was partially offset by a decrease in interest expense of $1.4 million due to a lower margin rate incurred from the 2013 AMH Credit Facilities as compared to the 2007 AMH Credit Agreement (see note 9 to our condensed consolidated financial statements) and a $0.7 million decrease in placement fees relating to EPF II due to the closing of its investment period in 2013.

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Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Compensation and benefits expense increased by $78.3 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. The change was primarily due to increase in profit sharing expense of $26.8 million during the six months ended June 30, 2014 as compared to the same period in 2013. Within our credit segment, the Company is aligning total compensation for investment professionals with the profitability of the credit business as a whole rather than on a fund-by-fund basis. As a result, the Company incurred approximately $22.0 million of additional profit sharing expense which was recorded for the six months ended June 30, 2014. Additionally, included within profit sharing expense is the Incentive Pool, which resulted in additional profit sharing expense of $2.0 million and $8.4 million for the six months ended June 30, 2014 and 2013, respectively. There also was an increase in salary, bonus, and benefits of $31.3 million during the period, due to increased headcount and an increase in equity-based compensation of $20.2 million , driven by non-cash expense of $23.2 million related to equity-based compensation in connection with the departure of an executive officer during the six months ended June 30, 2014 as compared to the same period in 2013.

Other Income

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Net (losses) gains from investment activities decreased by $3.4 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was primarily related to the loss on the investment in HFA (see note 3 to the condensed consolidated financial statements.)

Income from equity method investments increased by $3.0 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was driven by increases in the fair values of investments held by certain of our credit funds, primarily EPF II, ACLF, COF III and COF II which resulted in increases in income from equity method investments of $2.3 million, $0.5 million, $0.5 million and $0.4 million, respectively. These increases were offset by a decrease in income from equity method investments in certain of our credit funds, primarily EPF I of $1.7 million, during the three months ended June 30, 2014 as compared to the same period in 2013 .

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Net (losses) gains from investment activities increased by $10.6 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 as a result of appreciation in the Company's investment in HFA during the six months ended June 30, 2014, prior to the sale of the investment in HFA (see Note 3 to the condensed consolidated financial statements).

Income from equity method investments increased by $4.8 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013 . This change was driven by increases in the fair values of investments held by certain of our credit funds, primarily AINV, EPF II, and COF III which resulted in increases in income from equity method investments of $3.8 million, $2.1 million, and $1.2 million, respectively. These increases were offset by a decrease in income from equity method investments in certain of our credit funds, primarily COF I of $3.2 million, during the six months ended June 30, 2014 as compared to the same period in 2013 .

Other income increased by $11.2 million during the six months ended June 30, 2014 , as compared to the six months ended June 30, 2013 , mainly due to gains on Athene-related derivative contracts (see note 12 to our condensed consolidated financial statements).

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Real Estate

The following tables set forth our segment statement of operations information and our supplemental performance measure, ENI, for our real estate segment, further broken out by our "management" and "incentive" businesses, for the three and six months ended June 30, 2014 and 2013 , respectively. ENI represents segment income (loss), excluding the impact of non-cash charges related to RSUs granted in connection with the 2007 private placement and equity-based compensation expense comprising amortization of AOG Units, income taxes, amortization of intangibles associated with the 2007 Reorganization and acquisitions, Non-Controlling Interests with the exception of allocations of income to certain individuals and non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the Apollo funds and consolidated VIEs that are included in the condensed consolidated financial statements. ENI is not a U.S. GAAP measure.



	For the Three Months Ended June 30, 2014							For the Three Months Ended June 30, 2013
	Management			Incentive		Total		Management			Incentive			Total
	(in thousands)
Real Estate: ⁽¹⁾
Revenues:
Advisory and transaction fees from affiliates, net	$	—		$	—	$	—	$	1,273		$	—		$	1,273
Management fees from affiliates	12,208			—		12,208		13,206			—			13,206
Carried interest income (loss) from affiliates:
Unrealized gains (losses)	—			988		988		—			(6,439		)	(6,439		)
Realized gains	—			3,998		3,998		—			158			158
Total Revenues	12,208			4,986		17,194		14,479			(6,281		)	8,198
Expenses:
Compensation and Benefits:
Equity-based compensation	1,093			—		1,093		2,243			—			2,243
Salary, bonus and benefits	7,348			—		7,348		7,151			—			7,151
Profit sharing expense	—			2,817		2,817		—			(4,464		)	(4,464		)
Total compensation and benefits	8,441			2,817		11,258		9,394			(4,464		)	4,930
Other expenses	5,554			—		5,554		6,030			—			6,030
Total Expenses	13,995			2,817		16,812		15,424			(4,464		)	10,960
Other Income:
Income from equity method investments	—			3,076		3,076		—			819			819
Other income, net	135			—		135		255			—			255
Total Other Income	135			3,076		3,211		255			819			1,074
Economic Net (Loss) Income	$	(1,652	)	$	5,245	$	3,593	$	(690	)	$	(998	)	$	(1,688	)


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

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	For the Six Months Ended June 30, 2014							For the Six Months Ended June 30, 2013
	Management			Incentive		Total		Management			Incentive			Total
	(in thousands)
Real Estate: ⁽¹⁾
Revenues:
Advisory and transaction fees from affiliates, net	$	949		$	—	$	949	$	2,398		$	—		$	2,398
Management fees from affiliates	24,988			—		24,988		26,797			—			26,797
Carried interest income (loss) from affiliates:
Unrealized gains (losses)	—			644		644		—			(5,841		)	(5,841		)
Realized gains	—			3,998		3,998		—			512			512
Total Revenues	25,937			4,642		30,579		29,195			(5,329		)	23,866
Expenses:
Compensation and Benefits:
Equity-based compensation	6,530			—		6,530		4,700			—			4,700
Salary, bonus and benefits	14,866			—		14,866		14,343			—			14,343
Profit sharing expense	—			2,215		2,215		—			(4,008		)	(4,008		)
Total compensation and benefits	21,396			2,215		23,611		19,043			(4,008		)	15,035
Other expenses	11,282			—		11,282		13,406			—			13,406
Total Expenses	32,678			2,215		34,893		32,449			(4,008		)	28,441
Other Income:
Income from equity method investments	—			3,823		3,823		—			695			695
Other income, net	552			—		552		1,393			—			1,393
Total Other Income	552			3,823		4,375		1,393			695			2,088
Economic Net (Loss) Income	$	(6,189	)	$	6,250	$	61	$	(1,861	)	$	(626	)	$	(2,487	)


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

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	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2014		2013			Amount Change			Percentage Change		2014		2013			Amount Change			Percentage Change
	(dollars in thousands)										(dollars in thousands)
Real Estate: ⁽¹⁾
Revenues:
Advisory and transaction fees from affiliates, net	$	—	$	1,273		$	(1,273	)	(100.0	)%	$	949	$	2,398		$	(1,449	)	(60.4	)%
Management fees from affiliates	12,208		13,206			(998		)	(7.6	)	24,988		26,797			(1,809		)	(6.8	)
Carried interest income (loss) from affiliates:
Unrealized gains (losses)	988		(6,439		)	7,427			NM		644		(5,841		)	6,485			NM
Realized gains	3,998		158			3,840			NM		3,998		512			3,486			NM
Total carried interest income (loss) from affiliates	4,986		(6,281		)	11,267			NM		4,642		(5,329		)	9,971			NM
Total Revenues	17,194		8,198			8,996			109.7		30,579		23,866			6,713			28.1
Expenses:
Compensation and Benefits:
Equity-based compensation	1,093		2,243			(1,150		)	(51.3	)	6,530		4,700			1,830			38.9
Salary, bonus and benefits	7,348		7,151			197			2.8		14,866		14,343			523			3.6
Profit sharing expense	2,817		(4,464		)	7,281			NM		2,215		(4,008		)	6,223			NM
Total compensation and benefits	11,258		4,930			6,328			128.4		23,611		15,035			8,576			57.0
Other expenses	5,554		6,030			(476		)	(7.9	)	11,282		13,406			(2,124		)	(15.8	)
Total Expenses	16,812		10,960			5,852			53.4		34,893		28,441			6,452			22.7
Other (Loss) Income:
Income from equity method investments	3,076		819			2,257			275.6		3,823		695			3,128			450.1
Other income, net	135		255			(120		)	(47.1	)	552		1,393			(841		)	(60.4	)
Total Other Income	3,211		1,074			2,137			199.0		4,375		2,088			2,287			109.5
Economic Net Income (Loss)	$	3,593	$	(1,688	)	$	5,281		NM		$	61	$	(2,487	)	$	2,548		(102.5	)%


(1)	Reclassified to conform to the current presentation. See note 15 to our condensed consolidated financial statements for more detail on the reclassifications within our three segments.

Revenues

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Advisory and transaction fees from affiliates, net, decreased by $1.3 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 . This change was attributable to a decrease in capital raised and invested and the realization of underlying investments for which transaction fees and termination fees are earned.

Management fees decreased by $1.0 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. The decrease in management fees was primarily due to decreased management fees from CPI Capital Partners North America L.P., CPI Capital Partners Europe L.P., CPI Capital Partners Asia Pacific, L.P. (collectively, the "CPI Funds") of $1.6 million offset by increased management fees of $0.6 million earned from certain sub-advisory arrangements for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013.

Carried interest income from affiliates increased by $11.3 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily attributable to an increase in carried interest income relating to the CPI Funds of $9.8 million for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013.

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Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Advisory and transaction fees from affiliates, net, decreased by $1.4 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was attributable to a decrease in capital raised and invested and the realization of underlying investments for which transaction fees and termination fees, respectively, were earned during the year.

Management fees decreased by $1.8 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. The decrease in management fees was primarily due to decreased management fees from the CPI funds of $2.9 million offset by increased management fees of $1.3 million earned from certain sub-advisory agreements for the six months ended June 30, 2014 as compared to the same period in 2013.

Carried interest income from affiliates increased by $10.0 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to a $7.1 million increase in net unrealized carried interest income driven by an increase in the fair values of the underlying portfolio investments for certain of the CPI Funds. Also driving the change was an increase in realized carried interest income of $2.7 million relating to AGRE U.S. Real Estate Fund, L.P. for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013.

Expenses

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Compensation and benefits increased by $6.3 million during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily attributable to an increase of $7.3 million in profit sharing expense driven by the increased carried interest income earned from our real estate funds during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013, offset by a decrease of $1.2 million in equity-based compensation.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Compensation and benefits increased by $8.6 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to an increase of $6.2 million in profit sharing expense driven by the increased carried interest income earned from our real estate funds. Additionally, there was a $1.8 million increase in equity-based compensation during the six months ended June 30, 2014 as compared to the same period in 2013.

Other expenses decreased by $2.1 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013, primarily attributable to decreased organizational expenses.

Other Income

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Income from equity method investments increased by $2.3 million during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013. This change was primarily driven by an increase in income from equity method investments in ARI.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Income from equity method investments increased by $3.1 million during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily driven by an increase in income from equity method investments relating to ARI.

Other income, net decreased by $0.8 million for the six months ended June 30, 2014 as compared to the six months ended June 30, 2013. This change was primarily attributable to gains resulting from the settlement of a contingent consideration obligation during the six months ended June 30, 2013 relating to the 2010 acquisition of CPI.

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Table of Contents

Summary Combined Segment Results for Management Business and Incentive Business

The following tables combine our reportable segments’ statements of operations information and supplemental performance measure, ENI, for our management and incentive businesses for the three and six months ended June 30, 2014 and 2013 , respectively. ENI represents segment income (loss), excluding the impact of (i) non-cash charges related to RSUs granted in connection with the 2007 private placement and amortization of AOG Units, (ii) income tax expense, (iii) amortization of intangibles associated with the 2007 Reorganization as well as acquisitions (iv) Non-Controlling Interests excluding the remaining interest held by certain individuals who receive an allocation of income from certain of our credit management companies and (v) non-cash revenue and expense related to equity awards granted by unconsolidated affiliates to employees of the Company. In addition, segment data excludes the assets, liabilities and operating results of the funds and VIEs that are included in the condensed consolidated financial statements. In addition, segment data excludes the assets, liabilities and operating results of the Apollo funds and consolidated VIEs that are included in the condensed consolidated financial statements. ENI is not a U.S. GAAP measure.

In addition to providing the financial results of our three reportable business segments, we evaluate our reportable segments based on what we refer to as our management and incentive businesses. Our management business is generally characterized by the predictability of its financial metrics, including revenues and expenses. This business includes management fee revenues, advisory and transaction fee revenues, carried interest income from one of our opportunistic credit funds and expenses, each of which we believe are more stable in nature.



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Management Business
Revenues:
Advisory and transaction fees from affiliates, net	$	60,787		$	65,084		$	176,852		$	112,503
Management fees from affiliates	228,858			169,277			452,688			333,504
Carried interest income from affiliates	10,009			10,029			18,473			19,080
Total Revenues	299,654			244,390			648,013			465,087
Expenses:
Equity-based compensation	13,583			16,752			71,720			34,108
Salary, bonus and benefits	89,831			69,282			170,362			142,678
Interest expense	4,524			7,594			7,638			15,112
Professional fees ⁽¹⁾	19,882			21,486			38,924			36,953
General, administrative and other ⁽²⁾	24,947			25,815			49,308			48,459
Placement fees	3,489			3,120			5,275			12,478
Occupancy	10,419			10,149			20,321			19,954
Depreciation and amortization	2,520			2,892			5,129			5,766
Total Expenses	169,195			157,090			368,677			315,508
Other Income:
Interest income	2,380			2,703			5,334			5,357
Other income, net	1,846			2,496			5,338			7,067
Total Other Income	4,226			5,199			10,672			12,424
Non-Controlling Interests	(3,124		)	(3,254		)	(6,380		)	(6,718		)
Economic Net Income	$	131,561		$	89,245		$	283,628		$	155,285


(1)	Excludes professional fees related to the consolidated funds.


(2)	Excludes general and administrative expenses and interest income related to the consolidated funds.

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Table of Contents

The financial performance of our incentive business, which is dependent upon quarterly mark-to-market unrealized valuations in accordance with U.S. GAAP guidance applicable to fair value measurements, includes carried interest income, income from equity method investments, other income, net and profit sharing expenses that are associated with our general partner interests in the Apollo funds, which are generally less predictable and more volatile in nature.



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Incentive Business
Revenues:
Carried interest income from affiliates:
Unrealized gains (losses) ⁽¹⁾	$	37,768		$	(574,949	)	$	(264,063	)	$	196,510
Realized gains	241,827			840,543			704,453			1,185,753
Total Revenues	279,595			265,594			440,390			1,382,263
Expenses:
Compensation and Benefits:
Profit sharing expense:
Unrealized profit sharing expense	65,951			(219,569		)	(33,178		)	53,206
Realized profit sharing expense	94,829			346,813			297,917			497,658
Total Profit Sharing Expense	160,780			127,244			264,739			550,864
Other Income:
Other income, net	—			284			14,040			284
Net (losses) gains from investment activities ⁽²⁾	(9,180		)	(5,752		)	8,833			(1,722		)
Income from equity method investments	25,866			19,270			54,161			48,629
Total Other Income	16,686			13,802			77,034			47,191
Economic Net Income	$	135,501		$	152,152		$	252,685		$	878,590

(1)

Included in unrealized carried interest income from affiliates for the six months ended June 30, 2013 was a reversal of $19.3 million of the entire general partner obligation to return previously distributed carried interest income with respect to SOMA. The general partner obligation is recognized based upon a hypothetical liquidation of the funds' 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.


(2)	Excludes investment income and net gains from investment activities related to consolidated funds and the consolidated VIEs.

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Table of Contents

Summary

Below is the summary of our total reportable segments, including management and incentive businesses, and a reconciliation of ENI to Net Income Attributable to Apollo Global Management, LLC reported in our condensed consolidated statements of operations:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Revenues	$	579,249		$	509,984		$	1,088,403		$	1,847,350
Expenses	329,975			284,334			633,416			866,372
Other income	20,912			19,001			87,706			59,615
Non-Controlling Interests	(3,124		)	(3,254		)	(6,380		)	(6,718		)
Economic Net Income	267,062			241,397			536,313			1,033,875
Non-cash charges related to equity-based compensation	233			(26,736		)	(90		)	(54,666		)
Income tax provision	(35,037		)	(18,139		)	(67,586		)	(36,718		)
Net income attributable to Non-Controlling Interests in Apollo Operating Group	(151,995		)	(126,483		)	(307,095		)	(611,729		)
Amortization of intangible assets	(8,595		)	(11,302		)	(17,705		)	(23,047		)
Net Income Attributable to Apollo Global Management, LLC	$	71,668		$	58,737		$	143,837		$	307,715

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Summary of Distributable Earnings and Economic Net Income

Distributable Earnings, or DE, as well as DE After Taxes and Related Payables are derived from our segment reported results, and are supplemental measures to assess performance and amounts 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 affiliated funds. DE, which is a component of ENI, 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) realized carried interest income, and (iii) realized investment income, less (i) compensation expense, excluding the expense related to equity-based awards, (ii) realized profit sharing expense, and (iii) 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.

The following table is a summary of Distributable earnings ("DE") for the three and six months ended June 30, 2014 and 2013 .



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands)
Management Business Economic Net Income	$	131,561		$	89,245		$	283,628		$	155,285
Net realized carried interest income	146,998			493,730			406,536			688,095
Realized investment income ⁽¹⁾	5,729			29,096			30,513			48,786
Athene capital and surplus fees ⁽²⁾	(51,793		)	(21,816		)	(110,885		)	(41,899		)
Equity-based compensation	13,583			16,752			71,720			34,108
Depreciation and amortization	2,520			2,892			5,129			5,766
Distributable Earnings	248,598			609,899			686,641			890,141
Taxes and related payables ⁽³⁾	(21,444		)	(5,954		)	(47,345		)	(10,894		)
Distributable Earnings After Taxes and Related Payables	227,154			$	603,945		$	639,296		$	879,247
Net unrealized carried interest (loss) income	(28,183		)	(355,380		)	(230,885		)	143,304
Unrealized investment and other income (loss)	10,957			(15,294		)	46,521			(1,595		)
Add back: Athene capital and surplus fees ⁽²⁾	51,793			21,816			110,885			41,899
Add back: Taxes and related payables ⁽³⁾	21,444			5,954			47,345			10,894
Less: Equity-based compensation	(13,583		)	(16,752		)	(71,720		)	(34,108		)
Less: Depreciation and amortization	(2,520		)	(2,892		)	(5,129		)	(5,766		)
Total Economic Net Income	267,062			241,397			536,313			1,033,875
Income Tax Provision on Economic Net Income ⁽⁴⁾	(59,452		)	(21,169		)	(110,204		)	(49,938		)
Total Economic Net Income After Taxes	$	207,610		$	220,228		$	426,109		$	983,937


(1)	Represents realized gains from our general partner investments in our funds and other balance sheet investments.


(2)	Represents monitoring fees paid by Athene to Apollo by delivery of common shares of Athene Holding, calculated based on Athene's capital and surplus, as defined in our transaction and advisory services agreement with Athene.


(3)	Represents the estimated current corporate, local and Non-U.S. taxes as well as the payable under Apollo's tax receivable agreement.

(4)

Represents income tax provision on ENI that has been calculated assuming that all income is allocated to Apollo Global Management, LLC, which would occur following an exchange of all Apollo Operating Group units for shares of Apollo Global Management, LLC. The assumptions and methodology impact the implied income tax provision for our condensed consolidated statements of operations under U.S. GAAP, with the exception of including the benefit of tax deductions in excess of U.S. GAAP deductions from share-based arrangements. We believe this measure is more consistent with how it assesses the performance of its segments which is described in our definition of ENI.

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The following table is a reconciliation of distributable earnings per share of common and equivalents ⁽¹⁾ to net distribution per share of common and equivalents for the three and six months ended June 30, 2014 and 2013 .



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(in thousands, except per share data)
Distributable Earnings After Taxes and Related Payables	$	227,154		$	603,945		$	639,296		$	879,247
Add back: Tax related payables attributable to common and equivalents	18,692			3,714			41,270			6,414
Distributable earnings before certain payables ⁽²⁾	245,846			607,659			680,566			885,661
Percent to common and equivalents	45		%	42		%	44		%	42		%
Distributable earnings before other payables attributable to common and equivalents	111,071			257,815			297,891			368,820
Less: Tax related payables attributable to common and equivalents	(18,692		)	(3,714		)	(41,270		)	(6,414		)
Distributable earnings attributable to common and equivalents	92,379			254,101			256,621			362,406
Distributable earnings per share of common and equivalent ⁽³⁾	$	0.51		$	1.51		$	1.45		$	2.20
Retained capital per share of common and equivalent ⁽³⁾	(0.05		)	(0.19		)	(0.15		)	(0.31		)
Net distribution per share of common and equivalent ⁽³⁾	$	0.46		$	1.32		$	1.30		$	1.89


(1)	Common and equivalents refers to Class A shares and RSUs that participate in distributions.


(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.


(3)	Per share calculations are based on total Class A shares outstanding and RSUs that participate in distributions.

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Summary of Fee-Related EBITDA and Fee-Related EBITDA + 100% of Net Realized Carried Interest

Fee-related EBITDA is a performance measure used to understand the performance of our operations and represents management business ENI (Pre-tax), with amounts for equity–based compensation, interest expense and depreciation and amortization added to management business ENI. Fee-related EBITDA plus realized carried interest less realized profit sharing (referred to as “fee-related EBITDA +100% of net realized carried interest”) is a performance measure that combines operating results of the management business and incentive business. These performance measures are used to compare our current and potential debt service. See note 10 to our condensed consolidated financial statements for more detail on our our outstanding debt.

The table below sets forth fee-related EBITDA and fee-related EBITDA + 100% of net realized carried interest for the three and six months ended June 30, 2014 and 2013, and a reconciliation of net income attributable to Apollo Global Management, LLC to ENI, fee-related EBITDA and fee-related EBITDA + 100% of net realized carried interest.



	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Management Business Economic Net Income	$	131,561		$	89,245		$	283,628		$	155,285
Equity-based compensation ⁽¹⁾	13,583			16,752			71,720			34,108
Interest expense	4,524			7,594			7,638			15,112
Depreciation and amortization ⁽²⁾	2,520			2,892			5,129			5,766
Fee-Related EBITDA	152,188			116,483			368,115			210,271
Total realized carried interest	241,827			840,543			704,453			1,185,753
Total realized profit sharing expense	(94,829		)	(346,813		)	(297,917		)	(497,658		)
Net realized carried interest	146,998			493,730			406,536			688,095
Fee-Related EBITDA + 100% of Net Realized Carried Interest	299,186			610,213			774,651			898,366
Net unrealized carried interest (loss) income	(28,183		)	(355,380		)	(230,885		)	143,304
Net investment income (loss)	16,686			13,802			77,034			47,191
Net interest expense	(4,524		)	(7,594		)	(7,638		)	(15,112		)
Depreciation and amortization ⁽²⁾	(2,520		)	(2,892		)	(5,129		)	(5,766		)
Equity-based compensation ⁽¹⁾	(13,583		)	(16,752		)	(71,720		)	(34,108		)
ENI tax provision ⁽³⁾	(59,452		)	(21,169		)	(110,204		)	(49,938		)
Economic Net Income After Taxes	207,610			220,228			426,109			983,937
ENI tax provision ⁽³⁾	59,452			21,169			110,204			49,938
Income tax provision	(35,037		)	(18,139		)	(67,586		)	(36,718		)
Net (income) attributable to non-controlling interests in Apollo Operating Group	(151,995		)	(126,483		)	(307,095		)	(611,729		)
Charges related to equity-based compensation ⁽⁴⁾	233			(26,736		)	(90		)	(54,666		)
Amortization of intangible assets	(8,595		)	(11,302		)	(17,705		)	(23,047		)
Net income attributable to Apollo Global Management, LLC	$	71,668		$	58,737		$	143,837		$	307,715


(1)	Includes restricted share units ("RSUs") (excluding RSUs granted in connection with the 2007 private placement) and share options. Excludes equity-based compensation expense comprising amortization of AOG Units.


(2)	Includes amortization of leasehold improvements.

(3)


(4)	Includes amortization amounts related to AOG Units.

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Liquidity and Capital Resources

Historical

Although we have managed our historical liquidity needs by looking at deconsolidated cash flows, our historical condensed consolidated statements of cash flows reflects the cash flows of Apollo, as well as those of the consolidated Apollo funds.

The primary 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 consolidated Apollo funds are:


•	Raising capital from their investors, which have been reflected historically as Non-Controlling Interests of the consolidated subsidiaries in our financial statements;


•	Using capital to make investments;


•	Generating cash flow from operations through distributions, interest and the realization of investments; and


•	Distributing cash flow to investors.

While primarily met by cash flows generated through fee income and carried interest income received, working capital needs have also been met (to a limited extent) through borrowings as follows:



	As of June 30, 2014				As of December 31, 2013
	Outstanding Balance		Annualized Weighted Average Interest Rate ⁽¹⁾		Outstanding Balance		Annualized Weighted Average Interest Rate
2013 AMH Credit Facilities - Term Facility	$	500,000	1.37	%	$	750,000	1.37	%
2024 Senior Notes	499,008		4.00		—		—
Total Debt	$	999,008	1.66	%	$	750,000	1.37	%

(1) Includes impact of any amortization of note discount and interest rate hedge.

Additionally the 2013 AMH Credit Facilities provide for a $500 million revolving credit facility, which was undrawn as of June 30, 2014 . See note 9 of our condensed consolidated financial statements for information regarding the Company's debt arrangements.

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.

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Cash Flows

Significant amounts from our condensed consolidated statements of cash flows for the six months ended June 30, 2014 and 2013 are summarized and discussed within the table and corresponding commentary below:



	Six Months Ended June 30,
	2014			2013
	(in thousands)
Operating Activities	$	937,312		$	1,865,888
Investing Activities	(45,147		)	(9,100		)
Financing Activities	(876,056		)	(1,600,739		)
Net Increase in Cash and Cash Equivalents	$	16,109		$	256,049

Operating Activities

Net cash provided by operating activities was $937.3 million during the six months ended June 30, 2014 .

During this period, there was $711.9 million in net income, to which $87.7 million of equity-based compensation and a $4.8 million change in fair value of contingent obligations were added to reconcile net income to net cash provided by operating activities. Additional adjustments to reconcile cash provided by operating activities during the six months ended June 30, 2014 included $4,796.4 million in proceeds from sales of investments held by the consolidated VIEs, a $299.0 million decrease in carried interest receivable, $29.9 million distributions of earnings from equity method investments, a $37.0 million increase in other liabilities of Apollo funds, and a $30.3 million increase in accounts payable and accrued expenses. These favorable cash adjustments were offset by $4,348.4 million of purchases of investments held by the consolidated VIEs, a $94.2 million increase in cash held at consolidated VIEs, a $14.7 million increase in others assets, a $119.8 million increase in due from affiliates, a $165.0 million increase in other assets of Apollo funds, $214.0 million in net unrealized gains from investments held by the consolidated funds and VIEs, a $8.0 million decrease in profit sharing payable, and $53.6 million of income from equity method investments.

Net cash provided by operating activities was $1,865.9 million during the six months ended June 30, 2013 . During this period, there was $948.2 million in net income. Additional adjustments to reconcile cash provided by operating activities during the six months ended June 30, 2013 included $4,967.4 million in proceeds from sales of investments primarily held by the consolidated VIEs, $254.6 million change in other liabilities of Apollo funds, $49.6 million distributions of earnings from equity method investments and a $40.6 million increase in profit sharing payable. These favorable cash adjustments were offset by $4,512.4 million of net purchases of investments held by consolidated VIEs and a $136.5 million increase in carried interest receivable. The increase in our carried interest receivable balance during the six months ended June 30, 2013 was driven primarily by a $1,369.0 million increase of carried interest income from the change in fair value of funds for which we act as general partner, offset by fund cash distributions of $1,232.5 million.

The operating cash flow amounts from the Apollo funds and consolidated VIEs represent the significant variances between net income (loss) and cash flow from operations and were classified as operating activities pursuant to the American Institute of Certified Public Accountants, or “AICPA,” Audit and Accounting Guide, Investment Companies. The increasing capital needs reflect the growth of our business while the fund-related requirements vary based upon the specific investment activities being conducted at a point in time. These movements do not adversely affect our liquidity or earnings trends because we currently have sufficient cash reserves compared to planned expenditures.

Investing Activities

Net cash used in investing activities was $45.1 million for the six months ended June 30, 2014 , which was primarily comprised of $27.6 million of cash distributions received from equity method investments primarily offset by $71.6 million of cash contributions to equity method investments. Additional adjustments to reconcile cash provided by investing activities were $2.7 million of purchases of fixed assets. Cash contributions to equity method investments were primarily related to Fund VIII, COF III, EPF II, AESI, Zeus and AION. Cash distributions from equity method investments were primarily related to Fund VII, AESI, COF II, COF III and Palmetto.

Net cash used in investing activities was $9.1 million for the six months ended June 30, 2013 , which was primarily comprised of $1.4 million proceeds from disposal of fixed assets and $46.2 million of cash distributions received from equity method investments primarily offset by $52.0 million of cash contributions to equity method investments. Additional adjustments to reconcile cash provided by investing activities were $4.7 million of purchases of fixed assets. Cash contributions

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to equity method investments were primarily related to ACSP, AESI, Apollo SPN Investments I, L.P., EPF I, EPF II, Franklin Fund, Fund VII and AGRE U.S. Real Estate Fund, L.P.. Cash distributions from equity method investments were primarily related to AESI, COF I, COF II, EPF I, EPF II, Vantium C, Fund VI and Fund VII.

Financing Activities

Net cash used in financing activities was $876.1 million for the six months ended June 30, 2014 , which was primarily comprised of $1,169.0 million related to issuance of debt by consolidated VIEs, $499 million of issuance of debt by AMH, and $386.0 million in contributions from Non-Controlling Interests in consolidated VIEs. This amount was offset by $1,419.0 million in repayment of debt held by consolidated VIEs, $32.0 million related to satisfaction of tax receivable agreements, $250 million principal repayments of debt, $513.7 million of distributions paid to Non-Controlling Interests in the Apollo Operating Group, $303.6 million in distributions, $25.1 million in satisfaction of contingent obligations, $360.9 million in distributions paid to consolidated VIEs and $19.4 million of distributions paid to Non-Controlling Interests in consolidated VIEs.

Net cash used in financing activities was $1,600.7 million for the six months ended June 30, 2013, which was primarily comprised of $332.3 million issuance of debt and $444.4 million of contributions from Non-Controlling Interests in consolidated VIEs offset by $1,420.2 million in repayment of debt held by consolidated VIEs, $439.0 million of distributions paid to Non-Controlling Interests in the Apollo Operating Group, $72.5 million of distributions paid to Non-Controlling Interests in consolidated VIEs, $325.9 million in distributions, $62.3 million related to the purchase of AAA units, $6.4 million of distributions to Non-Controlling Interests in consolidated entities, $9.5 principal repayments and repurchases of debt and $41.8 million related to employee tax withholding payments in connection with deliveries of Class A shares in settlement of RSUs.

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 Company's manager during 2013 and 2014 (in millions, except per share amounts):



Distribution Declaration Date	Distribution per Class A Share Amount		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 8, 2013	$	1.05	February 28, 2013	$	138.7	$	252.0		$	390.7	$	25.0
April 12, 2013	—		April 12, 2013	—		55.2		⁽¹⁾	55.2		—
May 6, 2013	0.57		May 30, 2013	80.8		131.8			212.6		14.3
August 8, 2013	1.32		August 30, 2013	189.7		305.2			494.9		30.8
November 7, 2013	1.01		November 29, 2013	147.7		231.2			378.9		24.1
For the year ended December 31, 2013	$	3.95		$	556.9	$	975.4		$	1,532.3	$	94.2
February 7, 2014	$	1.08	February 26, 2014	$	160.9	$	247.3		$	408.2	$	25.5
April 3, 2014	—		April 3, 2014	—		$	49.5	⁽¹⁾	$	49.5	—
May 8, 2014	0.84		May 30, 2014	130.0		$	188.4		$	318.4	20.9
June 16, 2014	—		June 16, 2014	—		$	28.5	⁽¹⁾	$	28.5	—
For the six months ended June 30, 2014	$	1.92		$	290.9	$	513.7		$	804.6	$	46.4


(1)	On April 12, 2013, April 3, 2014 and June 16, 2014, the Company made a $0.23 , $0.22 and $0.13 distribution, respectively, to the non-controlling interest holders in the Apollo Operating Group.

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, having access to credit facilities, 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

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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 adjusted assets. Additionally, higher carried interest income 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.

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 ov er 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 June 30, 2014 , the Company had reduced fees charged to CalPERS on the funds it manages by approximately $90.6 million.

The Company granted approximately 3.1 million RS Us during the six months ended June 30, 2014 . The average estimated fair value per share on the grant date was $22.49 , per RSU with a total fair value of the grants of $69.9 million at June 30, 2014 . This will impact the Company’s compensation expense as these grants are amortized over their vesting term of three to six years. The Company expects to incur annual compensation expenses on all grants, net of forfeitures, of approximately $28.1 million, $41.4 million, $29.1 million, $12.8 million, $11.0 million and $8.3 million during the years ended December 31, 2014, 2015, 2016, 2017, 2018, 2019 and thereafter, respectively.

Although we expect 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.

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 general partner of such 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, to the extent of their ownership interest, subject to certain limitations, the 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 the Shareholders Agreement dated July 13, 2007 (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.

On August 5, 2014, the Company declared a cash distribution of $0.46 per Class A share, which will be paid on August 29, 2014 to holders of record on August 22, 2014.

Athene

As of June 30, 2014 , AAA's portfolio, through its investment in AAA Investments consisted of a single opportunistic investment in the economic equity of Athene Holding. See the discussion of the AAA Transaction in note 3 .

Apollo, through its consolidated subsidiary, Athene Asset Management, provides asset management services to Athene, including asset allocation and portfolio management strategies, and receives fees from Athene for providing such services. As of

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June 30, 2014 , all of Athene’s assets were managed by Athene Asset Management. Athene Asset Management had $61.0 billion of total AUM as of June 30, 2014 in accounts owned by or related to Athene (the “Athene Accounts”), of which approximately $10.4 billion, or approximately 17.0%, was either sub-advised by Apollo or invested in Apollo funds and investment vehicles. The vast majority of such assets are in sub-advisory managed accounts that manage high grade credit asset classes, such as CLO debt, commercial mortgage backed securities and insurance-linked securities. We expect this percentage to increase over time provided that Athene Asset Management continues to perform successfully in providing asset management services to Athene.

Apollo, through its consolidated subsidiary, Athene Asset Management, L.P. ("Athene Asset Management"), provides asset management services to Athene, including asset allocation and portfolio management strategies, and receives fees from Athene for providing such services. As of June 30, 2014 , all of Athene’s assets were managed by Athene Asset Management.

Athene Asset Management receives a management fee equal to 0.40% per annum on all assets under management in the Athene Accounts with certain limited exceptions. In addition, the Company receives sub-advisory management fees and carried interest income with respect to a portion of the assets in the Athene Accounts. Athene Asset Management and other Apollo subsidiaries incur all expenses associated with their provision of services to Athene, including but not limited to, asset allocation services, direct asset management services, risk management, asset and liability matching management, mergers and acquisitions asset diligence, hedging and other services.

Under a transaction advisory services agreement with Athene (the "Athene Services Agreement"), effective February 5, 2013, Apollo earns a quarterly monitoring fee of 0.50% of Athene’s capital and surplus as of the end of the applicable quarter multiplied by 2.5 , excluding the shares of Athene Holding that were newly acquired (and not in satisfaction of prior commitments to buy such shares) by AAA Investments in the AAA Transaction (the “Excluded Athene Shares”), at the end of each quarter through December 31, 2014, the termination date. This quarterly monitoring fee is not applicable to the amount of invested capital attributable to the Excluded Athene Shares. The Athene Services Agreement was amended in connection with the Athene Private Placement described below (the “Amended Athene Services Agreement”). The Amended Athene Services Agreement adjusts the calculation of Athene Holding’s capital and surplus (on which the fees payable thereunder are based) downward by an amount equal to (x) the equity capital raised in the Athene Private Placement and (y) certain disproportionate increases to the statutory capital and surplus of Athene, as compared to the stockholders’ equity of Athene calculated on a GAAP basis, as a result of certain future acquisitions by Athene. Prior to the consummation of the Athene Private Placement, all such monitoring fees were paid pursuant to a derivative contract between Athene and Apollo (the "Athene Services Derivative"). In connection with the Athene Private Placement, the Athene Services Derivative was settled on April 29, 2014 by delivery to Apollo of shares of Athene Holding, and as a result, such derivative was terminated. Following settlement of the Athene Services Derivative, future monitoring fees paid to Apollo pursuant to the Amended Athene Services Agreement, will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended). Unsettled monitoring fees pursuant to the Amended Athene Services Agreement are recorded as due from affiliates in the condensed consolidated statement of financial condition. For the three and six months ended June 30, 2014 , Apollo earned $51.4 million and $110.1 million , respectively, related to this monitoring fee. For the three and six months ended June 30, 2013 , Apollo earned $21.2 million and $40.7 million , respectively, related to this monitoring fee. The monitoring fee is recorded in advisory and transaction fees from affiliates, net, in the condensed consolidated statements of operations. As of June 30, 2014, Apollo had a receivable of $52.8 million recorded in due from affiliates on the condensed consolidated statements of financial condition. As of December 31, 2013 , Apollo had a $116.4 million receivable, which was accounted for as a derivative recorded in due from affiliates on the condensed consolidated statements of financial condition.

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that the obligation to pay the existing management fee shall terminate on December 31, 2014 (although services will continue through December 31, 2020). Pursuant to the Amended AAA Services Agreement, in the event that AAA (1) makes a tender offer to all of its qualified unitholders in which AAA offers to purchase all of their equity interests in AAA, pay the consideration for such purchase with equivalent equity interests in a new vehicle, of which Apollo will serve as general partner, and transfer to such new investment vehicle a pro rata portion of the common shares of Athene Holding held by AAA Investments, unburdened by the Unwind Fee described below (the “Wind-Up Tender Offer”), and (2) thereafter distributes all or any portion of the common shares of Athene Holding held by AAA (or disposes of such shares and distributes the proceeds thereof) to its unitholders, then AAA shall pay Apollo an unwind fee (the “Unwind Fee”). The Unwind Fee will be payable in pro rata increments to Apollo only when, as and if AAA distributes common shares of Athene Holding (or the proceeds thereof) to its unitholders and shall be equal to (1) $25 million multiplied by the percentage of “net common shares” of Athene Holding held by AAA which are so distributed (or disposed of with the proceeds distributed) by AAA in 2014, plus (2) $20 million multiplied by the percentage of “net common shares” of Athene Holding held by AAA which are so distributed (or disposed of with the proceeds distributed) by AAA in 2015. For purposes of the preceding sentence, “net common shares” shall mean the number of common shares of Athene Holding held by AAA, excluding a number of common shares of Athene Holding with a value equal to an amount sufficient to enable AAA, taking into account any cash or other assets of AAA, to satisfy all of its remaining liabilities and obligations, including without limitation, the costs and expenses of the Wind-Up Tender Offer, the repayment of its indebtedness in accordance with its terms, including any interim interest expense, the costs and expenses of normal operations (including the eventual winding up and liquidating) of AAA and the carried interest and/or management fees required to be paid by AAA to Apollo under contractual arrangements until AAA’s winding up and liquidation. There will be no payment of any portion of the Unwind Fee earned in 2016 or thereafter or with respect to any “net common shares” of Athene Holding transferred by AAA to the new investment vehicle in connection with the Wind-Up Tender Offer. Prior to the consummation of the Athene Private Placement, all such management fees were accrued pursuant to a derivative contract between AAA Investments and Apollo (the "AAA Services Derivative"). In connection with the Athene Private Placement, the AAA Services Derivative was settled on April 29, 2014 by delivery to Apollo of common shares of Athene Holding, and as a result, such derivative was terminated. Following settlement of the AAA Services Derivative, future management fees paid to Apollo pursuant to the Amended AAA Services Agreement will be paid on a quarterly basis in arrears by delivery to Apollo of common shares of Athene Holding (unless such payment in shares would violate Section 16(b) of the Exchange Act of 1934. Unsettled management fees pursuant to the Amended AAA Services Agreement will be recorded as due from affiliates in the condensed consolidated statement of financial condition. As of June 30, 2014, Apollo had a receivable of $3.1 million recorded in due from affiliates on the condensed consolidated statements of financial condition. As of December 31, 2013 , Apollo had a $14.3 million receivable, which was accounted for as a derivative recorded in due from affiliates on the condensed consolidated statements of financial condition. The total management fees earned by Apollo related to the Amended AAA Services Agreement and the Contributed Partnerships for the three and six months ended June 30, 2014 were $2.6 million (of which $0.4 million related to the Amended AAA Services Agreements, as described above) and $5.5 million (of which $0.8 million related to the Amended AAA Services Agreement, as described above) respectively, which is recorded in management fees from affiliates in the condensed consolidated statements of operations. The total management fees earned by Apollo related to the Amended AAA Services Agreement and the Contributed Partnerships for the three and six months ended June 30, 2013 were $2.5 million (of which $0.6 million related to the Amended AAA Services Agreement, as described above) and $5.6 million (of which $1.2 million related to the Amended AAA Services Agreement, as described above) respectively, which is recorded in management fees from affiliates in the condensed consolidated statements of operations.

In addition, Apollo, as general partner of AAA Investments, is generally entitled to a carried interest that allocates to it 20% of the realized returns (net of related expenses, including borrowing costs) on the investments of AAA Investments, except that Apollo will not be entitled to receive any carried interest in respect of the Excluded Athene Shares. Carried interest receivable from AAA Investments will be paid in common shares of Athene Holding (valued at the then fair market value) if there is a distribution in kind of shares of Athene Holding, (unless such payment in shares would violate Section 16(b) of the Exchange Act, or paid in cash if AAA sells the shares of Athene Holding. For the three and six months ended June 30, 2014 , the Company recorded carried interest income less the related profit sharing expense of $0.0 million and $14.6 million , from AAA Investments, which is recorded in the condensed consolidated statements of operations. For the three and six months ended June 30, 2013, the Company recorded carried interest income less the related profit sharing expense of $5.9 million and $7.3 million , respectively, from AAA Investments, which is recorded in the condensed consolidated statements of operations. As of June 30, 2014 and December 31, 2013 , the Company had a $121.3 million and a $100.9 million carried interest receivable, respectively, related to AAA Investments. As of June 30, 2014 and December 31, 2013 , the Company had a related profit sharing payable of $34.7 million and $28.8 million , respectively, recorded in profit sharing payable in the condensed consolidated statements of financial condition.

For the three and six months ended June 30, 2014 , Apollo earned revenues in the aggregate totaling $112.5 million and $267.1 million , consisting of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering the related profit sharing expense and changes in the market value of the Athene Services Derivative and the AAA Services Derivative discussed above, which is recorded in the condensed consolidated statement of operations. For the three and six months ended June 30, 2013 , Apollo earned revenues in the aggregate totaling $59.2 million and $122.3 million , consisting

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of management fees, sub-advisory and monitoring fees and carried interest income from Athene after considering the related profit sharing expense and changes in the market value of the Athene Services Derivative and the AAA Services Derivative discussed above, which is recorded in the condensed consolidated statement of operations.

Prior to the settlement of the Athene Services Derivative and the AAA Services Derivatives, the Amended Athene Services Agreement and the Amended AAA Services Agreement together with the Athene Services Derivative and the AAA Services Derivative, met the definition of a derivative under U.S. GAAP. The Company had classified these derivatives as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. After the settlement of the Athene Services Derivative and the AAA Services Derivatives the unsettled shares receivable recorded in due from affiliates related to the Amended Athene Services Agreement and the Amended AAA Services Agreement are valued at fair value based on the price of Athene. The Company had classified the derivative and the shares receivable as Level III assets in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. See note 5 for further discussion regarding fair value measurements.

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 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.

As of June 30, 2014 , the Company's investment in Athene Holding is recorded as an investment on the condensed consolidated statements of financial condition. The Company has classified this investment as a Level III asset in the fair value hierarchy, as the pricing inputs into the determination of fair value require significant judgment and estimation. See note 5 for further discussion regarding fair value measurements and note 3 for further discussion of the investment in Athene.

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Distributions to Managing Partners and Contributing Partners

The three Managing Partners who became employees of Apollo on July 13, 2007 are each entitled to a $100,000 base salary. Additionally, our Managing Partners can receive other forms of compensation. Any additional consideration will be paid to them in their proportional ownership interest in Holdings. Additionally, 85% of any tax savings APO Corp. recognizes as a result of the tax receivable agreement will be paid to the Managing Partners.

Subsequent to the 2007 Reorganization, the Contributing Partners retained ownership interests in subsidiaries of 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 after the 2007 Reorganization.

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’s profit sharing payable;


•	Additional consideration based on their proportional ownership interest in Holdings; and


•	Additionally, 85% of any tax savings APO Corp. recognizes as a result of the tax receivable agreement will be paid to the Contributing Partners.

Potential Future Costs

We may make grants of RSUs or other equity-based awards to employees and independent directors that we appoint in the future.

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 types of entities with which Apollo is involved generally include subsidiaries (i.e., general partners and management companies related to the funds we manage), entities that have all the attributes of an investment company (e.g., funds) and securitization vehicles (e.g., collateralized loan obligations). 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 our consolidation policy, we first consider the appropriate consolidation guidance to apply including consideration of whether the entity qualifies for certain scope exceptions and whether the entity should be evaluated under either the previous rules on consolidation of variable interest entities (“VIEs”) or the amended consolidation rules depending on whether or not the entity qualifies for the deferral as further described below. We then perform an assessment to determine whether that entity qualifies as a VIE. An entity in which Apollo holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk (as a group) lack either the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity’s activities that have a significant effect on the success of the legal entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both and substantially all of the legal entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities (“VOEs”) under the voting interest model.

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As previously indicated, the consolidation assessment, including the determination as to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity and therefore certain of our funds may qualify as VIEs whereas others may qualify as VOEs. The granting of substantive kick-out rights is a key consideration in determining whether an entity is a VIE and whether or not that entity should be consolidated. For example, when the unaffiliated holders of equity investment at risk of a fund with sufficient equity to permit the fund to finance its activities without additional subordinated financial support are not granted substantive kick-out rights and the Company is not part of the group of holders of equity investment at risk, the fund is generally determined to be a VIE, as the holders of equity investment at risk as a group lack the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity. Alternatively, when the unaffiliated holders of equity investment at risk are granted substantive kick-out rights, the fund is generally determined to be a VOE. However, in certain cases where the Company holds a substantive equity investment at risk in the fund, the fund may be determined to be a VOE even though substantive kick-out rights were not granted to the unaffiliated holders of equity investment at risk. In these cases, the Company is part of the group of holders of equity investment at risk and therefore the holders of equity investment at risk as a group do not lack the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the legal entity.

If the entity is determined to be a VIE under the conditions above, we then assess whether the entity should be consolidated by applying either the previous consolidation rules or the amended consolidation rules depending on whether the entity qualifies for the deferral of the amended consolidation rules as further described below.

With respect to VIEs such as our funds that qualify for the deferral of the amended consolidation rules and therefore apply the previous consolidation rules, Apollo is determined to be the primary beneficiary if its involvement, through holding interests directly or indirectly in the VIE or contractually through other variable interests (e.g., carried interest and management fees), would be expected to absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both. In cases where two or more Apollo related parties hold a variable interest in a VIE, and the aggregate variable interest held by those parties would, if held by a single party, identify that party as the primary beneficiary, then the Company is determined to be the primary beneficiary to the extent it is the party within the related party group that is most closely associated with the VIE.

For VIEs such as our CLOs that apply the amended consolidation rules, Apollo is determined to be the primary beneficiary if it holds a controlling financial interest defined as possessing both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) 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. CLOs are generally determined to be VIEs if they are formed solely to issue collateralized notes in the legal form of debt and therefore do not have sufficient total equity investment at risk to permit the entity to finance its activities without additional subordinated financial support. With respect to such CLOs, we generally possess a controlling financial interest in, and therefore consolidate, such CLOs in accordance with the amended consolidation rules when our role as collateral manager provides us with the power to direct the activities that most significantly impact the CLO’s economic performance and we have the right to receive certain benefits from the CLO (e.g., incentive fees) that could potentially be significant to the CLO.

Under the previous and the amended consolidation rules, 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, affiliates 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.

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the success of the entity, (iii) determining whether two or more parties’ equity interests should be aggregated, (iv) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive the expected residual returns of an entity, and (v) evaluating the nature of the relationship and activities of the parties involved in determining which party within a related-party group is most closely associated with the VIE. Where the VIEs have qualified for the deferral, judgments are also made in estimating cash flows to evaluate which member within the equity group absorbs a majority of the expected losses or residual returns of the VIE. Where the VIEs have not qualified for the deferral, 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.

Certain of the consolidated VIEs were formed to issue collateralized notes in the legal form of debt backed by financial assets. The difference between the fair value of the assets and liabilities of these VIEs is presented within appropriated partners’ capital in the condensed consolidated statements of financial condition as these VIEs are funded solely with debt. Changes in the fair value of the assets and liabilities of these VIEs and the related interest and other income is presented within net gains from investment activities of consolidated variable interest entities and net (income) loss attributable to Non-Controlling Interests in the condensed consolidated statements of operations. Such amounts are recorded within appropriated partners’ capital as, in each case, the VIE’s note holders, not Apollo, will ultimately receive the benefits or absorb the losses associated with the VIE’s assets and liabilities.

Assets and liability amounts of the consolidated VIEs are shown in separate sections within the condensed consolidated statements of financial condition as of June 30, 2014 and December 31, 2013 .

Revenue Recognition

Carried Interest Income from Affiliates. We earn carried interest income from our funds as a result of such funds achieving specified performance criteria. Such carried interest income generally is 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 from certain of the funds that we manage is 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 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 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, and under this method, we accrue carried interest income quarterly based on fair value of the underlying investments and separately assess if contingent repayment is necessary. The determination of carried interest income 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 private equity, credit and real estate funds.

Management Fees from Affiliates. 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 real estate 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 private equity, credit and real estate funds.

Investments, at Fair Value

The Company follows U.S. GAAP attributable to fair value measurements, which among other things, requires enhanced disclosures about investments that are measured and reported at fair value. Investments at fair value represent investments

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of the consolidated funds, investments of the consolidated VIEs and certain financial instruments for which the fair value option was elected. The unrealized gains and losses resulting from changes in the fair value are reflected as net gains (losses) from investment activities and net gains (losses) from investment activities of the consolidated variable interest entities, respectively, in the condensed consolidated statements of operations. In accordance with U.S. GAAP, investments measured and reported at fair value are classified and disclosed in one of the following categories:

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’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 investment where the fair value is based on unobservable inputs.

In cases where an investment or financial instrument measured and reported at fair value is transferred into or out of Level III of the fair value hierarchy, the Company accounts for the transfer as of the end of the reporting period.

Equity Method Investments . For investments in entities over which the Company exercises significant influence but which do not meet the requirements for consolidation, the Company uses the equity method of accounting, whereby the Company records its share of the underlying income or loss of such entities. Income (loss) from equity method investments is recognized as part of other income (loss) in the condensed consolidated statements of operations and income (loss) on available-for-sale securities (from equity method investments) is recognized as part of other comprehensive income (loss), net of tax in the condensed consolidated statements of comprehensive income (loss). The carrying amounts of equity method investments are reflected 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.

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

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relevant. Market approach valuation models typically employ a multiple that is based on one or more of the factors described above. 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 value investments or 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 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.

On a quarterly basis, Apollo utilizes a valuation committee consisting of members from senior management, to review and approve the valuation results related to our funds' private equity investments. Management 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 analysis. 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.

Credit Investments. The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value utilizing recognized pricing services, market participants or other sources. When market quotations are not available, a model based approach is used to determine fair value. The credit funds 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. 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. When determining fair value pricing when no observable market value exists, the value attributed to an investment is based on the enterprise value at 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. 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.

On a quarterly basis, Apollo also utilizes a valuation committee, consisting of members from senior management, to review and approve the valuation results related to our credit investments. 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 valuation

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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 analysis.

Real Estate 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 Company evaluates its loans for possible impairment on a quarterly basis. For Apollo’s opportunistic and value added real estate 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.

On a quarterly basis, Apollo also utilizes a valuation committee, consisting of members from senior management, to review and approve the valuation results related to our real estate investments. 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 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 analysis.

The fair values of the investments in our private equity, credit and real estate 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 Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 3, 2014. There have been no material changes to the underlying valuation models during the periods that our financial results are presented.

Fair Value of Financial Instruments

U.S. GAAP guidance requires the disclosure of the estimated fair value of financial instruments. 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.

Except for the Company’s debt obligations related to the 2013 AMH Credit Facilities and 2024 Senior Notes (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.

Valuation of Financial Instruments Held by Consolidated VIEs

The consolidated VIEs hold investments that are 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 for 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.

The consolidated VIEs also have debt obligations that are recorded at fair value. The primary valuation methodology used to determine fair value for debt obligation is market quotation. Prices are based on the average of the “bid” and “ask” prices. In the event that market quotations are not available, a model based approach is used. The valuation approach used to estimate

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the fair values of debt obligations for which market quotations are not available is the discounted cash flow method, which includes consideration of the cash flows of the debt obligation based on projected quarterly interest payments and quarterly amortization. Debt obligations are discounted based on the appropriate yield curve given the loan’s respective maturity and credit rating. Management uses its discretion and judgment in considering and appraising relevant factors for determining the valuations of its debt obligations.

Fair Value Option. Apollo elected the fair value option for the Company's investment in Athene Holding, the convertible notes issued by HFA Holdings Limited ("HFA") and for the assets and liabilities of the consolidated VIEs. Such election is irrevocable and is applied to financial instruments on an individual basis at initial recognition. Apollo applied the fair value option for certain corporate loans, other investments and debt obligations held by these entities that otherwise would not have been carried at fair value. For the convertible notes issued by HFA, Apollo elected to separately present interest income from other changes in the fair value of the convertible notes in the condensed consolidated statements of operations. See notes 3 , 4 and 5 to our condensed consolidated financial statements for further disclosure on the investments in Athene Holding, HFA and financial instruments of the consolidated VIEs for which the fair value option has been elected.

Goodwill and Intangible Assets — Goodwill and indefinite-life intangible assets must be reviewed annually for impairment or more frequently if circumstances indicate impairment may have occurred. Identifiable finite-life intangible assets, by contrast, are amortized over their estimated useful lives, which are periodically re-evaluated for impairment or when circumstances indicate an impairment may have occurred. Apollo amortizes its identifiable finite-life intangible assets using a method of amortization reflecting the pattern in which the economic benefits of the finite-life intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, Apollo uses the straight-line method of amortization. At June 30, 2013, the Company performed its annual impairment testing and determined there was no impairment of goodwill or indefinite life intangible assets at such time.

Compensation and Benefits

Compensation and benefits include salaries, bonuses and benefits, profit sharing expense and equity-based compensation.

Salaries, Bonus and Benefits. Salaries, bonus and benefits include base salaries, discretionary and non-discretionary bonuses, severance and employee benefits. Bonuses are accrued over the related service period.

Also included within salaries, bonus and benefits is the expense related to profits interests issued to certain employees whereby they are entitled to a share in earnings of and any appreciation of the value in a subsidiary of the Company during their term of employment. The expense related to these profits interests is recognized ratably over the requisite service period and thereafter will be recognized at the time the distributions are determined.

The Company sponsors a 401(k) Savings Plan whereby U.S.-based employees are entitled to participate in the plan based upon satisfying certain eligibility requirements. The Company may provide discretionary contributions from time to time. No contributions relating to this plan were made by the Company for the six months ended June 30, 2014 and 2013 .

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. As of June 30, 2014 , our total private equity investments were approximately $22.6 billion . The Contributing Partners and employees are allocated approximately 30% to 50% of the total carried interest income 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.

In June 2011, the Company adopted 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, which we refer to herein as the Incentive Pool, 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. 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

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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 are not sufficient to compensate individuals, which may result in an increase in salary, bonus and benefits.

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. Further, as required under U.S. GAAP, the Company estimates forfeitures using industry comparables or historical trends for equity-based awards that are not expected to vest. Apollo’s equity-based awards consist of, or provide rights with respect to AOG Units, RSUs, share options, AAA RDUs, ARI restricted stock awards, ARI RSUs and AMTG RSUs. 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 and the estimated forfeiture rate are embodied in the calculations of compensation expense.

Additionally, the value of the AOG Units have been reduced to reflect the transfer restrictions imposed on units issued to the Managing Partners and Contributing Partners as well as the lack of rights to participate in future Apollo Global Management, LLC equity offerings. These awards have the following characteristics:


•	Awards granted to the Managing Partners (i) are not permitted to be sold to any parties outside of the Apollo Global Management, LLC control group and transfer restrictions lapse pro rata during the forfeiture period over 60 or 72 months, and (ii) allow the Managing Partners to initiate a change in control; and


•	Awards granted to the Contributing Partners (i) are not permitted to be sold or transferred to any parties except to the Apollo Global Management, LLC control group and (ii) the transfer restriction period lapses over six years (which is longer than the forfeiture period which lapses ratably over 60 months).

As noted above, the AOG Units issued to the Managing Partners and Contributing Partners have different restrictions which affect the liquidity of and the discounts applied to each grant.

We utilized the Finnerty Model to calculate a discount on the AOG Units granted to the Contributing Partners. 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. Along with the Finnerty Model we applied adjustments to account for the existence of liquidity clauses specific to the AOG Units granted to the Contributing Partners and a minority interest consideration as compared to the units sold in the Strategic Investors Transaction in 2007. The combination of these adjustments yielded a fair value estimate of the AOG Units granted to the Contributing Partners.

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 assumptions utilized in the model were (i) length of holding period, (ii) volatility, (iii) dividend yield and (iv) risk free rate. Our assumptions were as follows:


(i)	We assumed a maximum two year holding period.


(ii)	We concluded based on industry peers, that our volatility annualized would be approximately 40%.


(iii)	We assumed no distributions.


(iv)	We assumed a 4.88% risk free rate based on U.S. Treasuries with a two year maturity.

For the Contributing Partners’ grants, the Finnerty Model calculation, as detailed above, yielded a marketability discount of 25%. This marketability discount, along with adjustments to account for the existence of liquidity clauses and consideration of non-controlling interests as compared to units sold in the Strategic Investors Transaction in 2007, resulted in an overall discount for these grants of 29%.

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We determined a 14% discount for the grants to the Managing Partners based on the equity value per share of $24. We determined that the value of the grants to the Managing Partners was supported by the 2007 sale of an identical security to Credit Suisse Management, LLC at $24 per share. Based on an equity value per share of $24, the implied discount for the grants to the Managing Partners was 14%. The Contributing Partners yielded a larger overall discount of 29%, as they are unable to cause a change in control of Apollo. This results in a lower fair value estimate, as their units have fewer beneficial features than those of the Managing Partners.

Another 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 utilized the present value of a growing annuity formula to calculate a discount for the lack of pre-vesting distributions on Plan Grant RSUs. The weighted average for the inputs utilized for the shares granted during the three and six months ended June 30, 2014 and 2013 are presented in the table below for Plan Grants:



	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2014	2013	2014	2013
Distribution Yield ⁽¹⁾	16.9%	9.0%	15.5%	7.9%
Cost of Equity Capital Rate ⁽²⁾	12.3%	18.0%	12.5%	18.0%


(1)	Calculated based on the last twelve months historical distributions paid and the Company' share price as of the measurement date of the grant on a weighted average basis.


(2)	We assumed a discount rate that was equivalent to a cost of equity capital rate as of the valuation date, based on the Capital Asset Pricing Model ("CAPM"). CAPM is a commonly used mathematical model for developing expected returns.

For Plan Grants that are not eligible for distributions on unvested shares, the discount for the lack of distributions until vested based on the present value of a growing annuity calculation had a weighted average of 42.9% and 26.0% for the three months ended June 30, 2014 and 2013, respectively, and 40.0% and 22.0% for the six months ended June 30, 2014 and 2013 , respectively.

We utilized the Finnerty Model, as previously described above, 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.

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The inputs utilized in the Finnerty Model were (i) length of holding period, (ii) volatility, (iii) risk-free rate and (iv) dividend yield. The weighted average for the inputs utilized for the shares granted during the three and six months ended June 30, 2014 and 2013 are presented in the table below for Plan Grants and Bonus Grants:



	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2014	2013	2014	2013
Plan Grants
Holding Period Restriction (in years)	0.6	0.6	0.6	0.6
Volatility ⁽¹⁾	31.7%	31.0%	31.8%	31.0%
Distribution Yield ⁽²⁾	16.9%	9.0%	15.5%	9.0%
Bonus Grants
Holding Period Restriction (in years)	0.2	0.2	0.2	0.2
Volatility ⁽¹⁾	31.3%	30.9%	31.0%	30.4%
Distribution Yield ⁽²⁾	15.3%	8.9%	15.1%	7.3%


(1)	The Company determined the expected volatility based on the volatility of the Company’s share price with consideration to comparable companies.


(2)	Calculated based on the last twelve months historical distributions paid and the Company's share price as of the measurement date of the grant on a weighted average basis.

For Plan Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation, after considering the discount for lack of pre-vesting distributions, had a weighted average of 5.0% and 5.2% for the three months ended June 30, 2014, and 2013, respectively, and 5.0% and 5.2% for the six months ended June 30, 2014 and 2013 , respectively. For Bonus Grants, the marketability discount for transfer restrictions based on the Finnerty Model calculation had a weighted average of 3.0% and 4.8% for the three months ended June 30, 2014 and 2013, respectively, and 3.0% and 4.9% for the six months ended June 30, 2014 and 2013 , respectively.

After the grant date fair value is determined we apply an estimated forfeiture rate. The estimated fair value was determined and recognized over the vesting period on a straight-line basis. We have estimated a 6% forfeiture rate for RSUs, based on the Company’s historical attrition rate as well as industry comparable rates. If employees are no longer associated with Apollo or if there is no turnover, we will revise our estimated compensation expense to the actual amount of expense based on the units vested at the reporting date in accordance with U.S. GAAP.

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 entities in some cases are subject to NYC UBT and non-U.S. entities, in some cases, are subject to non-U.S. corporate income taxes. In addition, APO Corp., a wholly-owned subsidiary of the Company, is subject to U.S. federal, state and local corporate income tax, and the Company’s provision for income taxes is accounted for in accordance with U.S. GAAP.

As significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties, we recognize the 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 processes, based on the technical merits of the position. 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 tax positions are reviewed and evaluated quarterly to determine whether or not we have uncertain tax positions that require financial statement recognition.

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Fair Value Measurements

See note 5 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 13 to our condensed consolidated financial statements for a discussion of guarantees and contingent obligations.

Contractual Obligations, Commitments and Contingencies

As of June 30, 2014 , 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 2014		2015		2016		2017		2018		Thereafter		Total
	(in thousands)
Operating lease obligations ⁽¹⁾	$	19,531	$	38,323	$	37,001	$	35,041	$	31,668	$	53,586	$	215,150
Other long-term obligations ⁽²⁾	3,409		2,057		104		—		—		—		5,570
2013 AMH Credit Facilities - Term Facility ⁽³⁾	3,389		6,778		6,778		6,778		6,778		500,339		530,840
2013 AMH Credit Facilities - Revolver Facility ⁽⁴⁾	313		625		625		625		625		8		2,821
2024 Senior Notes ⁽⁵⁾	10,000		20,000		20,000		20,000		20,000		608,333		698,333
Obligations as of June 30, 2014	$	36,642	$	67,783	$	64,508	$	62,444	$	59,071	$	1,162,266	$	1,452,714


(1)	The Company has entered into sublease agreements and is expected to contractually receive approximately $8.8 million over the remaining periods of 2014 and thereafter.


(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)	$500 million of the outstanding Term Facility matures in January 2019. The interest rate on the $500 million Term Facility as of June 30, 2014 was 1.36% . See note 9 of the condensed consolidated financial statements for further discussion of the 2013 AMH Credit Facilities.


(4)	The commitment fee as of June 30, 2014 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)	$500 million of the 2024 Senior Notes matures in May 2024. The interest rate on the 2024 Senior Notes as of June 30, 2014 was 4.00%. See note 9 of the condensed consolidated financial statements for further discussion of the 2024 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.

Commitments

Certain of our management companies and general partners are committed to contribute to the funds and affiliates. While a small percentage of these amounts are funded by us, the majority of these amounts have historically been funded by our affiliates, including certain of our employees and certain Apollo funds. The table below presents the commitment and remaining commitment amounts of Apollo and its affiliates, the percentage of total fund commitments of Apollo and its affiliates, the commitment and remaining

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commitment amounts of Apollo only (excluding affiliates), and the percentage of total fund commitments of Apollo only (excluding affiliates) for each private equity, credit and real estate fund as of June 30, 2014 as follows ($ in millions):



Fund	Apollo and Affiliates Commitments			% of Total Fund Commitments	Apollo Only (Excluding Affiliates) Commitments		Apollo Only (Excluding Affiliates) % of Total Fund Commitments	Apollo and Affiliates Remaining Commitments			Apollo Only (Excluding Affiliates) Remaining Commitments
Private Equity:
Fund VIII	$	1,543.5		8.40	$	612.5	3.33	$	1,483.1		$	591.5
Fund VII	467.2			3.18	177.8		1.21	108.6			39.9
Fund VI	246.2			2.43	6.1		0.06	9.7			0.2
Fund V	100.0			2.67	0.5		0.01	6.3			—
Fund IV	100.0			2.78	0.2		0.01	0.5			—
ANRP	426.1			32.21	10.1		0.76	263.1			6.4
AION	150.0			18.19	50.0		6.06	120.2			39.7
APC	158.5			69.06	0.1		0.04	104.4			0.1
Apollo Rose, L.P.	215.7			100.00	—		—	88.3			—
A.A Mortgage Opportunities, L.P.	200.0			98.43	—		—	145.0			—
Apollo Royalties Management, LLC	100.0			100.00	—		—	84.8			—
Credit:
EPF I ⁽²⁾	367.8			20.74	24.2		1.37	65.0			5.8
EPF II ⁽²⁾	416.6			11.38	63.4		1.73	188.2			30.1
COF I	451.1			30.38	29.7		2.00	237.4			4.2
COF II	30.5			1.93	23.4		1.48	0.8			0.6
COF III	309.6			21.80	34.6		2.44	178.4			20.0
ACLF	23.9			2.43	23.9		2.43	19.4			19.4
Palmetto	18.0			1.19	18.0		1.19	10.9			10.9
AIE II ⁽²⁾	8.9			3.15	5.5		1.94	0.9			0.5
ESDF	50.0			100.00	—		—	—			—
FCI	193.5			34.62	—		—	96.1			—
FCI II	244.6			15.72	—		—	146.5			—
Franklin Fund	9.9			9.09	9.9		9.09	—			—
Apollo Lincoln Fixed Income Fund	2.5			0.99	2.5		0.99	1.9			1.9
Apollo/Palmetto Loan Portfolio, L.P.	300.0			100.00	—		—	85.0			—
Apollo/Palmetto Short-Maturity Loan Portfolio, L.P.	200.0			100.00	—		—	—			—
AESI ⁽²⁾	4.8			0.99	4.8		0.99	1.9			1.9
AEC	7.3			2.50	3.2		1.08	2.5			1.1
ACSP	15.0			2.44	15.0		2.44	6.4			6.4
Apollo SK Strategic Investments, L.P.	2.0			0.99	2.0		0.99	0.5			0.5
Stone Tower Structured Credit Recovery Master Fund II, Ltd.	8.1			7.75	—		—	—			—
Apollo Structured Credit Recovery Master Fund III, Ltd.	65.0			31.72	5.0		2.44	40.9			3.1
Stone Tower Credit Strategies Master Fund, Ltd.	12.9			12.28	—		—	—			—
Apollo Zeus Strategic Investments, L.P.	14.0			3.38	14.0		3.38	8.6			8.6
Apollo Lincoln Private Credit Fund, L.P.	2.5			0.99	2.5		0.99	2.5			2.5
AIE III ⁽²⁾	12.3			2.91	12.3		2.91	12.3			12.3
Real Estate:
AGRE U.S. Real Estate Fund, L.P.	632.5		⁽¹⁾	72.78	16.6		1.91	357.6		⁽¹⁾	6.2
BEA/ AGRE China Real Estate Fund, L.P.	0.1			1.03	0.1		1.03	—			—
AGRE Asia Co-Invest I Limited	50.0			100.00	—		—	35.7			—
CAI Strategic European Real Estate Ltd.	21.5			100.00	—		—	4.1			—
CPI Capital Partners North America	7.6			1.27	2.1		0.35	0.6			0.2
CPI Capital Partners Europe ⁽²⁾	7.5			0.47	—		—	0.6			—
CPI Capital Partners Asia Pacific	6.9			0.53	0.5		0.04	0.4			—
London Prime Apartments Guernsey Holdings Limited (Guernsey) ⁽³⁾	30.3			7.80	0.9		0.23	8.8			0.3
2012 CMBS I Fund, L.P.	88.2			100.00	—		—	—			—
2012 CMBS II Fund, L.P.	93.5			100.00	—		—	—			—
2011 A4 Fund, L.P.	234.7			100.00	—		—	—			—
AGRE CMBS Fund, L.P.	418.8			100.00	—		—	—			—
Other:
Apollo SPN Investments I, L.P.	25.4			0.84	25.4		0.84	21.4			21.4
Total	$	8,095.0			$	1,196.8		$	3,949.3		$	835.7


(1)	Figures for AGRE U.S. Real Estate Fund, L.P. include base, additional, and co-investment commitments. A co-investment vehicle within AGRE U.S. Real Estate Fund, L.P. is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.71 as of June 30, 2014 .

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(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 $1.37 as of June 30, 2014 .


(3)	Apollo’s commitment in these investments is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.71 as of June 30, 2014 .

As a limited partner, the general partner and manager of the Apollo private equity, credit and real estate funds, Apollo has unfunded capital commitments at June 30, 2014 and December 31, 2013 of $835.7 million and $843.7 million, respectively.

In September 2013, an indirect subsidiary of Apollo Global Management, LLC agreed to invest up to approximately €18.2 million ( $23.9 million ) in a limited partnership (the "KBCD Partnership"), a wholly-owned subsidiary of which has agreed to acquire a minority stake in KBC Bank Deutschland AG, the German subsidiary of Belgian KBC Group NV (and certain third party purchasers agreed to acquire, in aggregate, all of the other shares in KBC Bank Deutschland AG). The aforementioned indirect subsidiary of Apollo Global Management, LLC is the general partner of the KBCD Partnership. The limited partners in the KBCD Partnership are managed by subsidiaries of Apollo Global Management, LLC. The acquisition is subject to antitrust and regulatory approval, which is expected to conclude during the second half of 2014. Consequently, there is no assurance that the acquisition date will close.

On October 2, 2013, Athene Holding Ltd. completed the acquisition of Aviva USA, which markets and sells a variety of fixed annuity and life insurance products in the U.S. through its wholly owned subsidiaries Aviva Life and Annuity Company, an Iowa-domiciled stock life insurance company. Athene also announced that it had completed the sale of Aviva USA's life insurance operations to PLIC USA.

The 2013 AMH Credit Facilities and 2024 Senior Notes (as defined below) will have future impacts on our cash uses. 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 a final maturity date of January 18, 2019.

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recorded in other income, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2014. Debt issuance cost amortization expense related to the 2013 AMH Credit Facilities was $0.3 million and $0.6 million for the three and six months ended June 30, 2014 , respectively.

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% . 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 amortized into interest expense on the condensed consolidated statements of operations over the term of the 2024 Senior Notes. Interest expense incurred by the Company related to the 2024 Senior Notes was $1.7 million for the three and six months ended June 30, 2014 .

The estimated fair value of the Company's long-term debt obligation related to the 2024 Senior Notes is believed to be approximately $502.3 million based on obtained broker quotes as of June 30, 2014 . The $500.0 million carrying value of debt that is recorded on the condensed consolidated statements of financial condition at June 30, 2014 is the amount for which the Company expects to settle the 2024 Senior Notes. The Company has determined that the long-term debt obligation related to the 2024 Senior Notes would be categorized as a Level II liability in the fair value hierarchy based on the number of broker quotes obtained, the quality of the broker quotes, the standard deviations of the observed broker quotes and the corroboration of the broker quotes to independent pricing services.

In accordance with the Shareholders Agreement, we have indemnified the Managing Partners and certain Contributing Partners (at varying percentages) for any carried interest income distributed from Fund IV, Fund V and Fund VI that is subject to contingent repayment by the general partner. As of June 30, 2014 and December 31, 2013 , the Company had not recorded an obligation for any previously made distributions.

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Contingent Obligations —Carried interest income in private equity and certain credit and real estate funds is subject to reversal in the event of future losses to the extent of the cumulative carried interest recognized in income to date. If all of the existing investments became worthless, the amount of cumulative revenues that has been recognized by Apollo through June 30, 2014 and that would be reversed approximates $4.1 billion . Management views the possibility of all of the investments becoming worthless as remote. Carried interest income is 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. The table below indicates the potential future reversal of carried interest income:



	As of June 30, 2014
	(in thousands)
Private Equity Funds:
Fund VII	$	1,824,225
Fund VI	1,302,604
Fund V	74,943
Fund IV	5,150
AAA/Other	188,445
Total Private Equity Funds	3,395,367
Credit Funds:
U.S. Performing Credit	308,265
Structured Credit	60,255
European Credit Funds	79,038
Non-Performing Loans	221,996
Opportunistic Credit	65,673
Total Credit Funds	735,227
Real Estate Funds:
CPI Funds	7,210
AGRE U.S. Real Estate Fund, L.P.	5,836
Other	3,904
Total Real Estate Funds	16,950
Total	$	4,147,544

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 than was ultimately earned. This general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of each fund.

Certain funds may not generate carried interest income as a result of unrealized and realized losses that are recognized in the current and prior reporting period. In certain cases, carried interest income 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.

AGS, one of the Company’s subsidiaries, provides underwriting commitments in connection with security offerings to the portfolio companies of the funds we manage. As of June 30, 2014 , there were no underwriting commitments outstanding related to such offerings.

Contingent Consideration

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The Company has determined that the contingent consideration obligations are categorized as a Level III liability in the fair value hierarchy as the pricing inputs used to determine fair value require significant management judgment and estimation. See note 5 of the condensed consolidated financial statements for further disclosure regarding fair value of the contingent consideration obligation.

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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 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 approximately 1,000 limited partner investors in Apollo’s active private equity, credit and real estate 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 global head of risk. 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 bi-weekly basis and reports to the executive committee 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 global head of risk 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 global head of risk determines such discussions are warranted. On an annual basis, the Company’s global head of risk provides the executive committee 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.

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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 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 private equity, credit and real estate 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 are reflected as a reduction to advisory and transaction fees from affiliates, net. Advisory and transaction fees will be impacted by changes in market risk factors to the extent that they limit our opportunities to engage in private equity, credit and real estate 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 —We earn carried interest income from our funds as a result of such funds achieving specified performance criteria. Our carried interest income 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 income is subject to contingent repayment.

As a result, the impact of changes in market risk factors on carried interest income 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. For example, subsequent to the second quarter of 2007, debt capital markets around the world began to experience significant dislocation, severely limiting the availability of new credit to facilitate new traditional buyouts, and the markets remain volatile. 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 investments and our 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 our 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 have to instruments whose values vary with the change in interest rates. These instruments include, but are not limited to, loans, borrowings and derivative instruments. We may seek to mitigate risks associated with the exposures by taking 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.

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Certain of our entities 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 we enter into contracts to banks and investment banks who meet established credit and capital guidelines. 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 we have to changes in the values of current 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 us against losses that may arise due to volatile movements in foreign exchange rates and/or interest rates.

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, Luxembourg, Mumbai, Hong Kong and Singapore, 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 Securities 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.

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PART II—OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

In March 2012, plaintiffs filed two putative class actions, captioned Kelm v. Chase Bank (No. 12-cv-332) and Miller v. 1-800-Flowers.com, Inc. (No. 12-cv-396), in the District of Connecticut on behalf of a class of consumers alleging online fraud. The defendants included, among others, Trilegiant Corporation, Inc. (“Trilegiant”), its parent company, Affinion Group, LLC (“Affinion”), and Apollo Global Management, LLC (“AGM”), which is affiliated with funds that are the beneficial owners of 68% of Affinion’s common stock. In both cases, plaintiffs allege that Trilegiant, aided by its business partners, who include e-merchants and credit card companies, developed a set of business practices intended to create consumer confusion and ultimately defraud consumers into unknowingly paying fees to clubs for unwanted services. Plaintiffs allege that AGM is a proper defendant because of its indirect stock ownership and ability to appoint the majority of Affinion’s board. The complaints assert claims under the Racketeer Influenced Corrupt Organizations Act; the Electronic Communications Privacy Act; the Connecticut Unfair Trade Practices Act; and the California Business and Professional Code, and seek, among other things, restitution or disgorgement, injunctive relief, compensatory, treble and punitive damages, and attorneys’ fees. The allegations in Kelm and Miller are substantially similar to those in Schnabel v. Trilegiant Corp. (No. 3:10-cv-957), a putative class action filed in the District of Connecticut in 2010 that names only Trilegiant and Affinion as defendants. The court has consolidated the Kelm, Miller, and Schnabel cases under the caption In re: Trilegiant Corporation, Inc. and ordered that they proceed on the same schedule. On June 18, 2012, the court appointed lead plaintiffs’ counsel, and on September 7, 2012, plaintiffs filed their consolidated amended complaint (“CAC”), which alleges the same causes of action against AGM as did the complaints in the Kelm and Miller cases. Defendants filed motions to dismiss on December 7, 2012, plaintiffs filed opposition papers on February 7, 2013, and defendants filed replies on April 5, 2013. On December 5, 2012, plaintiffs filed another putative class action, captioned Frank v. Trilegiant Corp. (No. 12-cv-1721), in the District of Connecticut, naming the same defendants and containing allegations substantially similar to those in the CAC. On January 23, 2013, plaintiffs moved to transfer and consolidate Frank into In re: Trilegiant. On June 13, 2013, the Court extended all defendants’ deadlines to respond to the Frank complaint until 21 days after a ruling on the motion to transfer and consolidate. On July 24, 2013 the Frank court transferred the case to Judge Bryant, who is presiding over In re: Trilegiant, and on March 28, 2014, Judge Bryant granted the motion to consolidate. On September 25, 2013, the Court held oral argument on Defendants’ motions to dismiss. On March 28, 2014, the Court granted in part and denied in part motions to dismiss filed by Affinion and Trilegiant on behalf of all defendants, and also granted separate motions to dismiss filed by certain defendants, including AGM. On that same day, the Court directed the Clerk to terminate AGM as a defendant in the consolidated action. On April 28, 2014, plaintiffs moved for interlocutory review of certain of the Court’s motion-to-dismiss rulings, not including its order granting AGM’s separate dismissal motion. Defendants filed a response on May 23, 2014, and plaintiffs replied on June 5, 2014.

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aware that Mr. Buenrostro had signed the letters with a corrupt motive. On August 7, 2014, the government filed a superseding indictment against Mr. Villalobos asserting additional charges. Trial is now scheduled for February 23, 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 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 seek to recover purported fees they 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 has stayed this action pending the result in the criminal case against Mr. Villalobos. For these reasons, no estimate of possible loss, if any, can be made at this time.

Although the ultimate outcome of these matters cannot be ascertained at this time, we are of the opinion, after consultation with counsel, that the resolution of any such matters to which we are a party at this time will not have a material adverse effect on our condensed consolidated financial statements. Legal actions material to us could, however, arise in the future.

ITEM 1A. RISK FACTORS

For a discussion of our potential risks and uncertainties, see the information under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 3, 2014, 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 June 30, 2014 .

The risks described in our Form 10-K are not the only risks facing us. Additio nal 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

Unregistered Sale of Equity Securities

On April 8, 2014, May 12, 2014 and May 15, 2014, we issued 150,000, 850,866 and 125,108 Class A shares, net of taxes, to Apollo Management Holdings, L.P., respectively, for an aggregate purchase price of $4,414,500, $21,317,767 and $3,214,025, respectively. The issuances were 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.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.

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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		Amended and Restated Limited Liability Company Agreement of Apollo Global Management, LLC (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

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).

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		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings I, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.3		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings II, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.4		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings III, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.5		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IV, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

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10.6		Registration Rights Agreement, dated as of August 8, 2007, by and among Apollo Global Management, LLC, Goldman Sachs & Co., J.P. Morgan Securities Inc. and Credit Suisse Securities (USA) LLC (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.7		Investor Rights Agreement, dated as of August 8, 2007, by and among Apollo Global Management, LLC, AGM Management, LLC and Credit Suisse Securities (USA) LLC (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.8		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)).

10.9		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)).

10.10		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)).

10.11		Second Amended and Restated Exchange Agreement, dated as of March 5, 2014, 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., AMH Holdings (Cayman), L.P. and the Apollo Principal Holders (as defined therein) from time to time party thereto (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)).

10.12		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 10.12 to the Registrant's Form 8-K filed with the Securities and Exchange Commission on May 7, 2013 (File No. 001-35107)).

10.13		Credit Agreement dated as of April 20, 2007 among Apollo Management Holdings, L.P., as borrower, Apollo Management, L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings IV, L.P. and AAA Holdings, L.P., as guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.14		Employment Agreement with Leon D. Black (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

+10.15		Employment Agreement with Marc J. Rowan (incorporated by reference to Exhibit 10.44 to the Registrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

+10.16		Employment Agreement with Joshua J. Harris (incorporated by reference to Exhibit 10.45 to the Registrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

+10.17		Employment Agreement with Barry Giarraputo (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

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+10.18		Amended and Restated Employment Agreement with Joseph F. Azrack (incorporated by reference to Exhibit 10.40 to the Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

10.19		Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings V, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.20		Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VI, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.21		Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings VII, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.22		Second Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VIII, L.P. dated as of April 14, 2010 (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.23		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 Registration Statement on Form S-1 (File No. 333-150141)).

10.24		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)).

10.25		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)).

10.26		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)).

*+10.27		Amended and Restated Employment Agreement with James Zelter dated as of June 20, 2014.

+10.28		Roll-Up Agreement with James Zelter (incorporated by reference to Exhibit 10.30 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 Plan Grants) (incorporated by reference to Exhibit 10.31 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 Bonus Grants) (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

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*+10.31		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for new independent directors).

*+10.32		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for continuing independent directors).

*+10.33		Form of Restricted Share Award Grant Notice and Restricted Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan.

*+10.34		Form of Share Award Grant Notice and Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Retired Partners).

10.35		Form of Lock-up Agreement (incorporated by reference to Exhibit 10.33 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.36		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)).

+10.37		Employment Agreement with Marc Spilker (incorporated by reference to Exhibit 10.35 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.38		First Amendment and Joinder, dated as of April 14, 2010, to the Tax Receivable Agreement (incorporated by reference to Exhibit 10.36 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.39		First Amendment, dated as of May 16, 2007, to the Credit Agreement, dated as of April 20, 2007, among Apollo Management Holdings, L.P., as borrower, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties party thereto (incorporated by reference to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.40		Second Amendment, dated as of December 20, 2010, to the Credit Agreement, dated as of April 20, 2007, as amended by the First Amendment thereto dated as of May 16, 2007, among Apollo Management Holdings, L.P., as borrower, the lenders party thereto from time to time JPMorgan Chase Bank as administrative agent and the other parties party thereto (incorporated by reference to Exhibit 10.39 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.41		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)).

10.42		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)).

+10.43		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)).

10.44		Amended and Restated Exempted Limited Partnership Agreement of AMH Holdings, L.P., dated October 30, 2012 (incorporated by reference to Exhibit 10.46 to the Registrant’s Form 10-Q for the period ended September 30, 2012 (File No. 001-35107)).

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+10.45		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)).

+10.46		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)).

+10.47		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)).

+10.48		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)).

+10.49		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)).

+10.50		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)).

+10.51		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)).

+10.52		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)).

+10.53		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)).

+10.54		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)).

10.55		Transition Agreement, dated as of March 19, 2014, by and among Marc A. Spilker, Apollo Management Holdings, L.P. and Apollo Global Management, LLC (incorporated by reference to Exhibit 10.51 to the Registrant's Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)).

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*+10.56		Form of Letter Agreement under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014.

*+10.57		Form of Award Letter under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014.

*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

*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.

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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: August 11, 2014	By:	/s/ Martin Kelly
		Name:	Martin Kelly
		Title:	Chief Financial Officer (principal financial officer and authorized signatory)

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Apollo Global Management, LLC

9 West 57th Street

New York, NY 10019

June 20, 2014

Personal and Confidential

Mr. James C. Zelter

[Address on file with the Company]

Dear Jim:

This letter agreement (this “ Agreement ”) amends and restates the terms of your employment with Apollo Global Management, LLC (“ Apollo ” or “ AGM ”) and its subsidiaries (collectively, the “ Company ”), effective immediately. Your employer shall continue to be Apollo Management Holdings, L.P. or one of its subsidiaries.

Position and Reporting. You shall continue to serve as the Managing Director-Credit (and as the Managing Partner and Chief Investment Officer of Apollo’s credit business) of Apollo and shall report exclusively to the voting members of the Executive Committee of the Company. As the Managing Director-Credit, you will be the most senior executive of Apollo’s credit business, and all investment professionals devoted to the credit business will report to you or your designee. The Company’s breach of its obligations under this paragraph shall constitute a material breach of this Agreement.


2.	Annual Base Pay. During your employment with the Company, you will be entitled to receive, under the Credit Incentive Plan to be adopted by the Company (the “ CIP ”), cash payments at the rate of $1,200,000 per year (the “ Base Pay ”) , which amounts shall be paid in monthly installments. All amounts payable hereunder are subject to withholding, if applicable, in accordance with law.

Annual Bonus. You shall be entitled to receive a non-discretionary annual bonus (the “ Annual Bonus ”) from the Company under the CIP for each calendar year equal to the amount by which $1,800,000 exceeds the sum of any distributions received by you under the CIP for such year (in addition to the Base Pay). The cash portion (“ Annual Cash Bonus ”) of any Annual Bonus shall be paid at the same time cash bonuses are paid to Apollo employees generally, but in any event not later than March 15 of the year following the year to which it relates. A portion of any Annual Bonus shall be paid in the form of Apollo restricted share units (“ RSUs ”) or restricted shares in accordance with Apollo’s broad-based incentive program, which awards shall vest in equal annual installments on December 31 of each of the first three years following the year to which the award relates (with shares underlying RSUs issued by March 15 of the following year), provided your service with Apollo and its affiliates has not terminated prior to the vesting date. Notwithstanding the foregoing, upon your death or your termination of employment and service with the Company by reason of Disability (as defined in the Apollo 2007 Omnibus Equity Incentive Plan (the “ Plan ”)), 50% of any such outstanding and unvested Annual Bonus RSUs previously granted to you shall immediately vest. Each calendar year, the schedule used to calculate the portion of the Annual Bonus (based on your aggregate annual compensation) that will be subject to payment in the form of RSUs or restricted shares under the incentive program for services provided in that year shall be the same schedule as in effect under Apollo’s broad-based incentive program for services provided in such calendar year.

If you cease to perform services on a full-time basis for the Company or its affiliates as of a date other than December 31 by reason of death or Disability, a No Fault Termination (as defined for purposes of the CIP), a termination without Cause (and other than in connection with a Bad Act (as defined in Annex A)) or your resignation with or without Good Reason (as defined for purposes of the CIP), provided you have provided proper notice in accordance with Section 9, your Base Pay and Annual Cash Bonus shall be prorated through the last day of your full-time association with the Company. For purposes of clarity, the prorated Base Pay and Annual Cash Bonus shall be additional to any amounts payable to you as a result of (i) a termination without Cause and other than by reason of a Bad Act, (ii) a Good Reason resignation, or (iii) a No Fault Termination, in each case as provided in Section 5(f).

If your service is terminated by the Company or its affiliates as of a date other than December 31 in connection with a Bad Act or for Cause (as defined in the Plan), you shall receive your Base Pay through the last day of your full-time association with the Company but you shall not receive an Annual Cash Bonus, prorated or otherwise.


4.	Incentive Awards and AOG Unit Ownership.

(a)

You and the Company hereby acknowledge and agree that, as of the date hereof, you presently hold the number of RSUs previously communicated to you in the applicable Restricted Share Unit Award Agreements, which shall subsist in accordance with terms and conditions set forth in the Plan and the applicable Restricted Share Unit Award Agreements. You acknowledge that all vested RSUs were previously settled by issuance to you of the underlying Class A Shares.

(b)

You and the Company hereby acknowledge and agree that you, in your individual capacity, and the GST-Exempt Family Trust, under the James and Vivian Zelter Descendants Trust Agreement (the “ Trust ”), each presently hold a limited partner interest in AP Professional Holdings, L.P., which interests, as of the date hereof, are represented by the number of vested Apollo Operating Group Units (“ AOG Units ”) previously communicated to you. Your and the Trust’s rights and obligations with respect to the AOG Units shall continue to be governed by and subject to the terms and conditions of the Roll-up Agreement entered into by and among James C. Zelter, BRH Holdings, L.P., AP Professional Holdings, L.P., APO Asset Co., LLC, APO Corp. and Apollo, dated July 13, 2007, as well as the Second Amended and Restated Exempted Partnership Agreement of AP Professional Holdings, L.P., dated July 13, 2007 (as the same may be amended, modified or supplemented from time to time) (the “ Roll-up Agreement ”) and other applicable agreements governing AOG Units.


(c)	Subject to approval by the committee that administers the Plan (it being understood that failure of the committee to approve the following grants, if due, shall constitute a material breach of this Agreement) and, subject to the terms below, your continued employment through the applicable grant dates:


•	If the 2016 DP Margin dollar target is attained for the year ended December 31, 2016, you shall receive a grant of the number of RSUs previously communicated to you (the “ First Performance Award ”).


•	If the 2018 DP Margin dollar target is attained for the year ended December 31, 2018, you shall receive a grant of the number of RSUs previously communicated to you (the “ Second Performance Award ,” together with the First Performance Award, the “ Performance Awards ”).

Any grant of RSUs made pursuant to a Performance Award will be made within 60 days following the close of the applicable calendar year, and, except as otherwise specified herein, shall be subject to the same terms as apply to grants made to participants in Apollo’s broad-based incentive program. Each grant of RSUs pursuant to a Performance Award shall be subject to vesting in equal annual installments on December 31 of each of the three years succeeding the calendar year with respect to which the grant was made, and shall accrue distribution equivalents from and after the grant date of the RSUs (which shall occur in 2017 or 2019, as applicable), whether or not vested. Notwithstanding the foregoing, upon your death or your termination of employment and service for Good Reason or by the Company without Cause (and other than by reason of a Bad Act) or by reason of Disability (as defined in the Plan), subject to your continued compliance with the restrictive covenants referenced in Section 8 and your execution and non-revocation of a general written release in favor of the Company and its affiliates (containing customary carveouts for indemnity and vested compensatory payments), (i) you shall vest in 50% of the then outstanding and unvested RSUs under any Performance Award previously granted to you, (ii) if such termination of employment and service occurs in the last six months of 2016, or if you terminate your employment and service for Good Reason due to the committee’s failure to grant (if due) the First Performance Award, then, subject to attainment of the 2016 DP Margin dollar target, you shall receive, on a fully vested basis, 50% of the RSUs covered by the 2016 Performance Award, and (iii) if such termination of employment and service occurs in the last six months of 2018, or if you terminate your employment and service for Good Reason due to the committee’s failure to grant (if due) the Second Performance Award, then, subject to attainment of the 2018 DP Margin dollar target, you shall receive, on a fully vested basis, 50% of the RSUs covered by the 2018 Performance Award.


5.	Carry Points and Profits Interest.

(a) You hereby acknowledge and agree that you previously have been allocated that number of carried interests points previously communicated to you in the applicable fund documents, which points and any distributions thereon shall continue to be governed by and subject to the terms and conditions of the applicable fund documents.

(b) You hereby acknowledge and agree that you have been previously granted a profits interest in AIF VI Management Pool Investors, L.P., as evidenced by an award letter dated June 15, 2006, which profits interest is represented by a deemed capital commitment in the amount indicated in the applicable award letter. The profits interest referenced in this paragraph and any distributions made thereon shall continue to be governed by and subject to the terms and conditions of the award letter and the documents referenced therein.

(c) You shall be awarded that number of points of carried interest in Apollo European Principal Finance Fund II, L.P. previously communicated to you (“ EPF II Points ”). The EPF II Points shall vest in accordance with the terms of the limited partnership agreement of Apollo EPF Advisors II, L.P. Your rights and obligations with respect to the carried interest points referenced in this paragraph, including without limitation, vesting and any distributions thereon, shall be governed by and subject to the terms and conditions of the applicable fund documents and to satisfaction of your associated capital commitment obligations; provided, however, that vesting and distributions will be calculated as if your carried interest points had been issued to you on July 1, 2013.

(d) You shall be awarded that number of points of carried interest in Apollo Credit Opportunity Fund III, L.P. previously communicated to you (“ COF III Points ”), which allocation shall occur at the same time as COF III Points are allocated to other investment professionals generally, subject to your continued employment through such date. The COF III Points shall vest in accordance with the terms of the limited partnership agreement of Apollo Credit Opportunity Advisors III LP. Your rights and obligations with respect to the carried interest points referenced in this paragraph, including without limitation, vesting and any distributions thereon, shall be governed by and subject to the terms and conditions of the applicable fund documents to be provided in connection therewith and to satisfaction of your associated capital commitment obligations.

(e) You shall receive that percentage of the points set forth in your CIP commitment letter (as the same may be adjusted in accordance with the CIP from time to time, the “ CIP Points ”) attributable to that portion of the incentive pool established pursuant to the CIP that is allocated to the senior business leaders of Apollo’s credit business (the “ Partner Pool ”). Furthermore, subject to the satisfaction of applicable conditions set forth in the CIP or any agreement you enter into in connection therewith (the “ Tail Rate Requirements ”), if your employment and service are terminated after the date hereof without Cause and other than by reason of a Bad Act, or you resign for Good Reason, you shall retain the portion of your allocation of (i) the Partner Pool (based on your CIP Points) and (ii) any share of Direct Fund Allocations from funds that do not vest, in each case as of the termination date (the greater (as determined each year) of (i) the distributions payable with respect to such points allocations or (ii) the sum of the Annual Cash Bonus and the annual Base Pay, the “ Tail Rate ”), for the period of time and in the percentages previously communicated to you. In the event of a No Fault Termination, you may resign from employment with the Company by delivering notice within ten (10) days of an event giving rise to a No Fault Termination. If the Company fails to remedy such basis for a No Fault Termination within 30 days, subject to your continued service for 90 days after the expiration, without remedy, of the 30-day remediation period, and to the satisfaction of the Tail Rate Requirements and the applicable conditions set forth in the CIP or your CIP commitment letter or other CIP agreement, you shall receive, for twelve months after your employment termination date, the percentage of the Tail Rate previously communicated to you, determined by reference to your points allocations at the time you provided notice of the No Fault Termination, and your non-compete period shall be twelve months from your employment termination date.

The CIP Points and any distributions thereon will be governed by and subject to the terms and conditions set forth in the CIP, as modified by your CIP commitment letter and any separate written agreement(s) entered into by and between you and the Company. For purposes of clarity, in the event of a direct conflict between the CIP and this Agreement, the conflicting provisions of the CIP are superseded by those contained in this Agreement.

Other than as specifically set forth above, you and the Company acknowledge and agree that, as of the date hereof, you have no right, contractual, contingent, or otherwise, to receive any incentive fees, management fees or carried interest points, payments or distributions from the Company or any of its affiliates; provided, however, that if any such entitlement previously documented in writing has been omitted from this Agreement by mutual mistake, such omission shall not defease you of such entitlement.

Fund Investments. You hereby acknowledge and agree that you have made investments in various funds or co-investment vehicles of the Company and its affiliates as reflected in the applicable fund documents. You hereby acknowledge and agree that any unpaid capital commitments arising in connection with the foregoing investments, as reflected on the books and records of the Company and its affiliates, shall remain in full force and effect, governed by and subject to the terms and conditions of the applicable fund documents.

Benefit Plans . You will continue to be eligible to participate in the various group health, disability and life insurance plans and other employee programs, including sick and vacation time, as generally are offered by the Company to other senior executives from time to time. Specifically, with respect to vacation, you will be entitled to 4 weeks of vacation per year subject to applicable Company policies. No more than five days of accrued but unused vacation shall be carried forward past the end of any calendar year. You will continue to be provided with a full time executive assistant and a suitable office.


8.	Restrictive Covenants. You acknowledge and agree to abide by and comply with the restrictive covenants set forth on Annex A.

Notice Entitlement . The Company may terminate your employment with or without Cause. The period of notice that we will give you to terminate your employment without Cause and other than by reason of a Bad Act is 90 days. The Company may terminate your employment for Cause or a Bad Act without notice. You agree to give the Company 90 days’ notice (which the Company may waive in its sole discretion) should you decide to leave the Company for any reason. We reserve the right to require you not to be in the Company’s offices and/or not to undertake all or any of your duties and/or not to contact Company clients, colleagues or advisors (unless otherwise instructed) during all or part of any period of notice of your termination of service. During any such period, you remain a service provider to the Company with all duties of fidelity and confidentiality to the Company and subject to all terms and conditions of your employment and should not be employed or engaged in any other business.


10.	Payment in lieu of Notice . Subject to the “Employment in Good Standing; Compliance” section below, we reserve the right to pay you in lieu of notice on a termination without Cause.

11.

Indemnification. Your rights to be indemnified pursuant to any indemnification provision in any limited liability company agreement, limited partnership agreement, by-laws, or insurance policies covering the directors and officers of the Company against any losses, claims, damages, liabilities, judgments and reasonable expenses, incurred by, or imposed upon, you, shall subsist in accordance with the terms of the applicable provision. You and the Company acknowledge and agree that the indemnification agreement by and between you and Apollo dated March 19, 2010, remains in effect in accordance with its terms.

12.

Governing Law; Consent to Arbitration; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without regard to any conflicts of laws principles thereof that would give effect to the laws of another jurisdiction), and any dispute or controversy arising out of or relating to this Agreement or your employment, other than injunctive relief, will be settled exclusively by arbitration, conducted before a single arbitrator in New York, New York (applying New York law) pursuant to the commercial arbitration rules of JAMS (“ JAMS ”) then in effect. The parties agree that the Expedited Procedures set forth in JAMS’ Comprehensive Rules 16.1 and 16.2 (or any successor thereto) shall apply. The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Issues of arbitrability shall be determined in accordance with the United States federal substantive and procedural laws relating to arbitration. The arbitration shall be conducted on a strictly confidential basis, and neither you nor the Company shall disclose the existence of a claim, the nature of a claim, any documents, exhibits, or information exchanged or presented in connection with such a claim, or the result of any action (collectively, “ Arbitration Materials ”), to any third party, except as required by law, with the sole exception of such party’s legal counsel and parties engaged by that counsel to assist in the arbitration process, who also shall be bound by these confidentiality terms. The parties agree to take all steps necessary to protect the confidentiality of the Arbitration Materials in connection with any such proceeding, agree to file all confidential information (and documents containing confidential information) under seal, and agree to the entry of an appropriate protective order encompassing the confidentiality terms of this Agreement. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the Federal Arbitration Act or the New York Arbitration Act. The Company and you will share the JAMS administrative fees and the arbitrator’s fee and expenses, and each party will pay its own attorneys’ fees except as otherwise provided by law. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, YOU AND THE COMPANY HEREBY WAIVE AND COVENANT THAT YOU AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR YOU MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND YOU, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.


1.	Modifications to the Agreement. This Agreement may not be modified, amended or waived except pursuant to a writing signed by the undersigned parties.


2.	Counterparts. This Agreement may be executed through the use of separate signature pages or in any number of counterparts, including via facsimile or pdf, with the same effect as if the parties executing such counterparts had executed one counterpart.

Section 409A. This Agreement is intended to be exempt from, or comply with, Section 409A and to be interpreted in a manner consistent therewith. To the extent necessary to avoid the imposition of tax or penalty under Section 409A, any payment by the Company or affiliate to you (if you are then a “specified employee” as defined in Code Section 409A(a)(2)(B)(i) and Treasury Regulation §1.409A-1(i)(1)) of “deferred compensation,” whether pursuant to this Agreement or otherwise, arising solely due to a “separation from service” (and not by reason of the lapse of a “substantial risk of forfeiture”), as such terms are used in Section 409A, shall be delayed (to the extent otherwise payable prior to such date) and paid on the first day following the six-month period beginning on the date of your separation from service under Section 409A (or, if earlier, upon your death). Each payment or installment due under this Agreement is intended to constitute a “separate payment” for purposes of Section 409A. In no event shall the Company or any affiliate (or any agent thereof) have any liability to you or any other person due to the failure of this Agreement to satisfy the requirements of Section 409A. Subject to the requirements of Section 409A of the Code, the Company may offset any amounts otherwise due to you from the Company or an affiliate (whether pursuant to this Agreement or otherwise) by any amounts that are due and owing from you to any such entities or for which any such entities would otherwise be liable absent your satisfaction thereof.


4.	Political Contributions. Except as otherwise disclosed to the Company in writing, in the past two years neither you nor your spouse (i) has donated to a state or local political campaign in any of the fifty states or Washington D.C.; or (ii) has donated to a candidate for any federal office where such candidate held any state or local political office at the time of the contribution.

Employment in Good Standing; Compliance. As you are aware, the firm is subject to and has various compliance procedures in place. Accordingly, you understand that your continued association with the Company will be subject to your continued employment in good standing, which will include, among other things, your adherence to the Company’s policies and procedures and applicable compliance manuals (including, without limitation, obligations with regard to confidential information), as in effect from time to time. You agree to execute any customary forms and agreements in connection therewith. Provided your employment is terminated by the Company other than for Cause or a Bad Act, the Company shall cooperate with you, following the expiration of your obligations regarding noncompetition, to provide a prospective employer with limited, aggregated and deidentified information regarding investments overseen by you.

Entire Agreement. This Agreement and other governing documents referenced herein constitute the entire agreement between the parties in relation to their subject matter and supersede any previous agreement or understanding between the parties relating thereto, including, without limitation, that certain letter agreement entered into by and between you and Apollo Investment Management, L.P., dated May 15, 2006, all of which are hereby cancelled, and you confirm that in signing this Agreement you have not relied on any warranty, representation, assurance or promise of any kind whatsoever other than as are expressly set out in this Agreement or in the documents referenced herein. All other governing documents referenced herein will remain in effect in accordance with their terms; provided, however, that notwithstanding the foregoing, to the extent that any such governing documents impose restrictions on you with respect to non-competition, non-interference with business relations, or non-solicitation of investors, financing sources or capital market intermediaries) that are longer in duration or more comprehensive in scope than such restrictions referenced in Section 8 of this Agreement, those referenced in Section 8 of this Agreement shall govern.

Miscellaneous. Any notice required hereunder shall be made in writing, as applicable, to Apollo in care of the Global Head of Human Resources, at her principal office location (with a copy to the Company’s Chief Legal Officer at his principal office location) or to you at your home address most recently on file with the Company. Except for an assignment by Apollo of this Agreement to an affiliate, this Agreement may not be assigned by the parties other than as expressly provided herein. This Agreement shall not be construed against the party preparing it, but shall be construed as if the parties jointly prepared this Agreement, and any uncertainty or ambiguity shall not on that ground be interpreted against any one party.

Sincerely,

/s/ Lisa Barse Bernstein

Lisa Barse Bernstein

Global Head of Human Resources

Read, Accepted and Agreed to:

/s/ James C. Zelter

James C. Zelter

Dated: June 20, 2014

Annex A

Restrictive Covenants

Capitalized terms used in this Annex A and not elsewhere defined shall have the meanings set forth in paragraph (g) of this Annex A.

(a) Prior to resigning from the Participant’s employment (or other full-time service association) with AGM, the Participant shall provide 90 days’ prior written notice to AGM.

(a) The Participant agrees that during the Protected Period, the Participant shall not, directly or indirectly, either as a principal, agent, employee, employer, consultant, partner, member, shareholder of a closely or privately held corporation or shareholder in excess of five (5) percent of a publicly traded corporation, corporate officer or director, engage or otherwise participate in any business that is a Competitive Business, in the Restricted Territory; provided that the Participant shall not be deemed to be engaging or participating in a Competitive Business if the Participant provides services to a subsidiary, division or Affiliate of a Competitive Business if such subsidiary, division or Affiliate is not itself engaged in a Competitive Business and the Participant does not provide services to, or have any responsibilities regarding, any Competitive Business.

(b) The Participant agrees that during the Protected Period, the Participant shall not, directly or indirectly, (i) solicit or induce any investors, financing sources or capital market intermediaries of AGM or its successors, assigns or Affiliates to terminate (or diminish in any material respect) his, her or its relationship with AGM or its successors, assigns or Affiliates, or (ii) otherwise interfere with or damage (or attempt to impede or otherwise interfere with or damage) in any material respect any business relationship and/or agreement to which AGM or any Affiliate thereof is a party, including without limitation any such relationship with any of AGM’s or an Affiliate’s respective clients, Prospective Investors or investors, customers, suppliers or partners. Nothing in this paragraph applies to those financing sources, capital market intermediaries or business relations (excluding Prospective Investors) who did not conduct business with AGM, or its successors, assigns or Affiliates during either the Participant’s employment or service with, or the period in which the Participant held (directly or indirectly) an ownership interest in, AGM or any of its Affiliates.

(c) The Participant agrees that during the Participant’s employment or service with AGM or any of its Affiliates and the period ending 12 months after the Participant’s Termination for any reason (such that the Participant is no longer employed by or providing services to AGM or any of its Affiliates), the Participant shall not, directly or indirectly, (i) solicit or induce any officer, director, employee, agent or consultant of AGM or any of its successors, assigns or Affiliates to terminate his, her or its employment or other relationship with AGM or its successors, assigns or Affiliates for the purpose of associating with any Competitive Business, or otherwise encourage any such Person to leave or sever his, her or its employment or other relationship with AGM or its successors, assigns or Affiliates, for any other reason, or (ii) hire any such individual who left the employ or service of AGM or any of its Affiliates during the immediately preceding 12 months. This provision shall not prohibit the Participant from soliciting or hiring his personal assistant or assistants at the time of his departure.

(d) The Participant will not disclose or use at any time, either prior to the Participant’s Termination or thereafter, any Confidential Information (as defined below) of which the Participant is or becomes aware, whether or not such information is authored or developed by the Participant, except to the extent that (i) such disclosure or use is directly related to and required by the Participant’s good faith performance of duties to AGM or any of its Affiliates, (ii) such disclosure is required to be made by law or any court or legislative body with apparent jurisdiction over the Participant; provided, that the Participant shall provide ten (10) days’ prior written notice, if practicable, to AGM of such disclosure so that AGM may, at its sole cost and expense, seek a protective order or similar remedy; and provided, further, that in either such case set forth above, the Participant informs the recipients that such information or communication is confidential in nature, or (iii) such disclosure is necessary to (A) the Participant’s defense of a claim in a legal proceeding by a third party against the Participant, or (B) a legal proceeding by Participant to enforce Participant’s rights under this Agreement or any other agreement with AGM or its Affiliates, and the Participant uses reasonable best efforts to preserve the confidentiality of such information, including by seeking a protective order or similar remedy. Except to the extent publicly disclosed, the Participant acknowledges and agrees that this Agreement and the provisions hereof constitute Confidential Information of AGM and its Affiliates and that any documents, information or reports received by the Participant from AGM and its Affiliates shall be treated as confidential and proprietary information of AGM and its Affiliates. The obligations set forth in paragraphs (b), (c) and (d) of this Annex A provide further protection of Confidential Information. Nothing contained herein shall preclude the Participant from disclosing Confidential Information to the Participant’s immediate family and personal legal and financial advisor(s); provided that the Participant informs such family member(s) and/or advisor(s) that the information is confidential in nature and receives assurances that the family member(s) and/or advisor(s) shall not disclose such information except as required by law or by any court or legislative body with apparent jurisdiction over such Person. To the fullest extent permitted by applicable law, each Limited Partner waives, and covenants not to assert, any claim or entitlement whatsoever to gain access to any Confidential Information concerning the Points of any other Partner.

(e) The Participant agrees that the Participant shall not, either prior to the Participant’s Termination or thereafter, directly or indirectly, make or ratify any statement, public or private, oral or written, to any Person that disparages, either professionally or personally, AGM or any of its Affiliates, past and present, as well as its and their trustees, directors, officers, members, managers, partners, agents, attorneys, insurers, employees, stockholders, representatives, assigns, and successors, past and present, whether collectively or individually. The obligations under this Section shall not apply to statements (i) provided in truthful response to an inquiry from a government or regulatory body or made in order to comply with a requirement of law or of any court or legislative body or (ii) prior to the Participant’s Termination, in the performance of the Participant’s duties in the good faith belief that such statement is consistent with the Participant’s fiduciary duties to AGM, its Affiliates, and investors in any investment funds and other alternative asset investment vehicles managed thereby.

(f) For purposes of this Annex A, the following definitions are applicable:

(i) “Affiliate” means with respect to any Person any other Person directly or indirectly controlling, controlled by or under common control with such Person.

(ii) “Bad Act” shall mean the Participant’s: (i) commission of an intentional violation of a material law or regulation in connection with any transaction involving the purchase, sale, loan, pledge or other disposition of, or the rendering of investment advice with respect to, any security, asset, futures or forward contract, insurance contract, debt instrument or currency, in each case, that has a significant adverse effect on the Participant’s ability to perform the Participant’s services to AGM or any of its affiliates; (ii) commission of an intentional and material breach of a material provision of a written Apollo Code of Conduct (other than any Apollo Code of Conduct adopted after the date of the Participant’s admission to the CIP with the primary purpose of creating or finding “Bad Acts”); (iii) commission of intentional misconduct in connection with the performance by the Participant of the Participant’s services for AGM or any of its affiliates; (iv) commission of any misconduct that, individually or in the aggregate, has caused or substantially contributed to, or is reasonably likely to cause or substantially contribute to, material economic or reputational harm to AGM or any of its affiliates (excluding any mistake of judgment made in good faith with respect to a portfolio investment or account managed by AGM or its affiliates, or a communication made to the principals or other partners, in a professional manner, of a good faith disagreement with a proposed action by AGM or any of its affiliates); (v) conviction of a felony or plea of no contest to a felony charge, in each case if such felony relates to AGM or any of its affiliates; (vi) fraud in connection with the performance by the Participant of the Participant’s services for AGM or any of its affiliates; or (vii) embezzlement from AGM or any of its affiliates or interest holders; provided, however, that (a) the Participant has failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure, the items set forth in clauses (ii) and (iv), and (b) during the pendency of any felony charge under clause (v), AGM and its affiliates may suspend payment of any distributions in respect of the Participant’s Points, and if (I) the Participant is later acquitted or otherwise exonerated from such charge, or (II) the Participant’s employment or service with AGM or its applicable affiliate does not terminate, then (A) AGM or its applicable affiliate shall pay to the Participant all such accrued but unpaid distributions with respect to Points, with interest calculated from the date such distributions were suspended at the prime lending rate in effect on the date of such suspension, and (B) throughout the period of suspension (or until the date of termination of employment or service, if earlier), distributions with respect to unvested Points shall continue to accrue, and Points shall continue to vest, in accordance with the terms and conditions set forth herein.

(iii) “Competitive Business” means (i) any alternative asset management business (other than the business of AGM, its successors or Affiliates), or distinct portion thereof, in which more than 25% of the total capital committed is third party capital from passive limited partners (which term shall exclude natural persons who are partners or employees of the business and are actively engaged in the management of the business, but not more than two such persons who are former partners or employees of AGM or any of its Affiliates), that advises, manages or invests the assets of and/or makes investments in private equity funds, hedge funds, collateralized debt obligation funds, commercial mortgages, commercial real estate-related investments, residential mortgages, residential real estate-related investments, business development corporations, special purpose acquisition companies, life settlement investments, life insurance company asset investment vehicles, credit-based asset management vehicles, leveraged loans, distressed situation vehicles, or other alternative asset investment vehicles, funds or accounts, or (ii) Persons who manage, advise or own any business described in clause (i).

(iv) “Confidential Information” means information that is not generally known to the public and that is or was used, developed or obtained by AGM and its Affiliates, including but not limited to, (A) information, observations, procedures and data obtained by the Participant while employed by or providing services to AGM or any of its Affiliates, (B) products or services, (C) costs and pricing structures, (D) analyses, (E) performance data, (F) computer software, including operating systems, applications and program listings, (G) flow charts, manuals and documentation, (H) data bases, (I) accounting and business methods, (J) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (K) investors, customers, vendors, suppliers and investor, customer, vendor and supplier lists, (L) other copyrightable works, (M) all production methods, processes, technology and trade secrets, (N) this Agreement and the governing agreements of AGM and its Affiliates, (O) investment memoranda and investment documentation concerning any potential, actual or aborted investments, (P) compensation terms, levels, and arrangements of employees and other service providers of AGM and its Affiliates, and (Q) all similar and related information in whatever form. Confidential Information will not include any information that is generally available to the public prior to the date the Participant proposes to disclose or use such information. Confidential Information also includes the information contained in the books and records of the Partnership concerning the Points assigned with respect to any other Limited Partner (including any Retired Partner). For the avoidance of doubt, “Confidential Information” does not include information concerning non-proprietary business or investment practices, methods or relationships customarily employed or entered into by comparable business enterprises.

(v) “Participant” means James C. Zelter.

(vi) “Person” means any individual, partnership, corporation, limited liability company, joint venture, joint stock company, unincorporated organization or association, trust (including the trustees thereof, in their capacity as such), government, governmental agency, political subdivision of any government, or other entity.

(vii) “Prospective Investor” means any prospective investor with which or with whom the Participant knows or reasonably should have known that AGM or any of its Affiliates has had substantive discussions in the immediately preceding 12 months.

(viii) “Protected Period” means the combined period of the Participant’s employment or service with AGM or any of its Affiliates and the period ending twelve (12) months after the Participant is no longer employed by or providing services to AGM or any of its Affiliates for any reason. For purposes of clarity, the portion of the Protected Period and period under paragraph (d) of this Annex A that applies after the Participant’s resignation commences only after the expiration of the notice period set forth in paragraph (a) of this Annex A.

(ix) “Restricted Territory” means, during the Participant’s employment by or service to AGM or any of its Affiliates, the United States, Canada, the United Kingdom, and any other country in the world where AGM or any of its Affiliates, successors or assigns engages in business, and any state, province or territory thereof, and, following the Participant’s Termination, the United States, Canada, the United Kingdom, and any other country in the world where at the date of such Termination AGM or any of its Affiliates, successors or assigns engages in business, and any state, province or territory thereof

(x) “ Termination ” means the termination of the Participant’s service, such that the Participant is no longer employed by, or a service provider to, AGM or any of its Affiliates.

(xi) “ Termination Date ” means the date of Termination.

The Participant agrees and acknowledges that each covenant contained in this Annex A is reasonable as to duration, terms and geographical area and that the same protects the legitimate interests of AGM and its Affiliates, imposes no undue hardship on the Participant or his related parties, is not injurious to the public, and that any violation of any of the restrictive covenants contained in this Annex A shall be specifically enforceable in any court with jurisdiction upon short notice. If any provision of this Annex A as applied to the Participant or to any circumstance is adjudged by a court or arbitral tribunal to be invalid or unenforceable, the same shall in no way affect any other circumstance or the validity or enforceability of any other provision of this Annex A. If the scope of any such provision, or any part thereof, is too broad to permit enforcement of such provision to its full extent, the Participant agrees that the court or arbitral tribunal making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, to the extent necessary to permit enforcement, and, in its reduced form, such provision shall then be enforceable and shall be enforced. The Participant agrees and acknowledges that any such breach of any provision of this Annex A will cause irreparable injury to AGM and its Affiliates, and upon breach of any provision of this Annex A, AGM and/or its Affiliates, as applicable, shall be entitled to injunctive relief, specific performance or other equitable relief; provided, however, that this shall in no way limit any other remedies available to AGM or its Affiliates. Notwithstanding the foregoing, to the extent that an arbitral tribunal or court of competent jurisdiction makes a final determination that any of the restrictive covenants contained in section (b) or (c) of this Annex A is unenforceable as a matter of law as applied to the Participant, upon such determination AGM shall not seek to enjoin the Participant from engaging in an activity precluded by such provision (or to otherwise pursue proceedings to enforce such provision) but if AGM or its designee determines in good faith that the Participant has breached any such provision contained in section (b) of this Annex A or materially breached any such provision contained in section (c) of this Annex A, AGM or its designee shall provide the Participant with written notice thereof, and the Participant shall have fifteen business days to cure such breach. If such breach is not cured within such period, the Participant shall forfeit all rights to any Points and any unvested Restricted Shares without payment of any consideration in respect thereof. The restrictive covenants contained in this Annex A shall specifically survive the Participant’s Termination and the termination of the CIP.

CONFIDENTIAL

RESTRICTED SHARE UNIT AWARD AGREEMENT
UNDER THE APOLLO GLOBAL MANAGEMENT, LLC
2007 OMNIBUS EQUITY INCENTIVE PLAN

This Award Agreement (this “ RSU Award Agreement ”), dated as of [ ], 20[ ] (the “ Date of Grant ”), is made by and between Apollo Global Management, LLC, a Delaware limited liability company (the “ Company ”), and [ ] (the “ Participant ”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “ Plan ”). Where the context permits, references to the Company shall include any successor to the Company. If this RSU Award Agreement is not executed and returned to the Company by [ ], [ ] [ ], 20[ ], this Award will be null and void ab initio and the Participant will have no rights hereunder.

1. Grant of Restricted Share Units . The Company hereby grants to the Participant [ ] restricted share units (the “ RSUs ”), subject to all of the terms and conditions of this RSU Award Agreement and the Plan.

2. Form, Manner and Timing of Payment . Except as otherwise provided in the Plan, each RSU granted hereunder shall represent the right to receive one (1) Share provided that the RSU becomes vested in accordance with Section 3(b) (Shares subject to RSUs covered by this Award, “ RSU Shares ”). Subject to the terms of the Plan, for each RSU that does not terminate prior to the vesting date shown on Exhibit A hereto pursuant to Section 3(c) , the Company, or its Subsidiaries or Affiliates, shall issue to the Participant, on the applicable issuance date set forth on Exhibit A (each, an “ Issuance Date ”), one (1) RSU Share (either by delivering one or more certificates for such shares or by entering such shares in book-entry form, as determined by the Company in its discretion). Such issuance shall constitute payment of the RSU. References herein to issuances to the Participant shall include issuances to any Beneficial Owner or other Person to whom (or to which) the RSU Shares are issued. The Company’s obligation to issue RSU Shares or otherwise make any payment with respect to vested RSUs is subject to the condition precedent that the Participant or other Person entitled under the Plan to receive any RSU Shares with respect to the vested RSUs deliver to the Company any representations or other documents or assurances required pursuant to Section 13 and the Company may meet any obligation to issue RSU Shares by having one or more of its Subsidiaries or Affiliates issue the RSU Shares. The Participant shall have no further rights with respect to any RSUs that are paid or that terminate pursuant to Section 3(c) .

3. Restrictions .

(a) The RSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered. The transfer restrictions contained in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers of vested RSUs by will or the laws of descent and distribution, or (c) if approved by the Administrator in its sole discretion, transfers of RSUs in accordance with the requirements of Instruction A.1.(a)(5) of Form S-8 under the Securities Act or other applicable law. The RSUs shall be subject to a risk of forfeiture as described in Section 3(c) until the lapse of the Restricted Period (as defined below) and any additional requirements or restrictions contained in this RSU Award Agreement or in the Plan have been otherwise satisfied, terminated or expressly waived by the Company in writing.

(b) Subject to Section 3(c) , the RSU Shares subject to the RSUs shall become vested hereunder in accordance with the vesting schedule set forth on Exhibit A hereto (the “ Restricted Period ”).

(c) Except as otherwise provided under the terms of the Plan, or in the vesting schedule set forth on Exhibit A hereto, if the Participant’s employment or service terminates for any reason, such that the Participant has experienced a “separation from service” (as such term is defined in Treasury Regulation §1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder) (a “ Termination ”), then all rights of the Participant with respect to RSUs that have not vested shall immediately be forfeited without payment of any consideration, and neither the Participant nor any of his or her successors, heirs, assigns, or personal representatives shall thereafter have any further rights or interests in such RSUs. Employment or service for only a portion of a vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon a Termination.

4. Voting and Other Rights; Distribution Equivalents . The Participant shall have no rights of a shareholder (including voting rights and the right to distributions or dividends), and will not be treated as an owner of Shares for tax purposes, except with respect to RSU Shares that have been issued. Notwithstanding the foregoing, from the date an RSU vests until the date the RSU Share is issued with respect to it (such period, the “ Vested but Unissued Period ”), the Participant shall be entitled to receive distribution equivalents on the vested RSUs from the Company or its Subsidiaries or Affiliates. The distribution equivalents payable in respect of a vested RSU shall have the same value as the ordinary cash distribution on an outstanding Share that gave rise to the distribution equivalent during the Vested but Unissued Period. All distribution equivalents (if any) payable on a vested RSU during the Company’s fiscal year shall be paid not later than 30 days after such ordinary cash distribution is paid to the holders of Shares. Rights to distribution equivalents on an RSU shall terminate upon the issuance or forfeiture of the underlying RSU Share. Under no circumstances shall the Participant be entitled to receive (a) both a distribution and a distribution equivalent with respect to a vested RSU (or its associated RSU Share) or (b) any distribution or distribution equivalent with respect to an unvested, forfeited or fractional RSU.

5. RSU Award Agreement Subject to Plan . This RSU Award Agreement is made pursuant to all of the provisions of the Plan, which is incorporated herein by this reference, and is intended, and shall be interpreted in a manner, to comply therewith. In the event of any conflict between the provisions of this RSU Award Agreement and the provisions of the Plan, the provisions of the Plan shall govern.

6. No Rights to Continuation of Employment or Service . Nothing in the Plan or this RSU Award Agreement shall confer upon the Participant any right to continue in the employ or service of the Company or any Subsidiary thereof or shall interfere with or restrict the right of the Company (or a Subsidiary or Affiliate or its shareholders, as the case may be) to terminate the Participant’s employment or service any time for any reason whatsoever, with or without Cause. The Plan and this RSU Award Agreement shall not (a) form any part of any contract of employment or contract for services between the Company or any past or present Subsidiary thereof and any directors, officers or employees of those companies, (b) confer any legal or equitable rights (other than those constituting the Awards themselves) against the Company or any past or present Subsidiary thereof, directly or indirectly, or (c) give rise to any cause of action in law or in equity against the Company or any past or present Subsidiary thereof.

7. Restrictive Covenants . The Participant agrees that the restrictive covenants regarding confidential information set forth in [the Participant’s engagement letter with the Company dated [ ], 20[ ]] (as amended, modified or supplemented from time to time, the “ Engagement Letter ”) are incorporated herein by reference as if contained herein and the Participant understands, acknowledges and agrees that such restrictive covenants apply to the Participant.

8. Taxes . The Participant is responsible for all taxes and any tax-related penalties the Participant incurs in connection with the Award. To the extent any withholding requirements apply to the Participant in connection with the Award, the Company or its Subsidiaries or Affiliates shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct, from other compensation payable to the Participant, any sums required by U.S. federal, state or local law (or by any tax authority outside of the United States) to be withheld or accounted for by the Company or its Subsidiaries or Affiliates with respect to any RSU. The Company in its discretion may alternatively reduce the number of shares to be issued by the appropriate number of whole Shares, valued at their then Fair Market Value, or require any other applicable method, to satisfy any withholding or tax obligations of the Company or its Subsidiaries or Affiliates with respect to the RSUs at the minimum applicable rates.

9. Section 409A Compliance . This Award is intended to be exempt from, or comply with, Section 409A and to be interpreted in a manner consistent therewith. Notwithstanding anything to the contrary contained in this RSU Award Agreement, to the extent that the Administrator determines that the Plan or an RSU is subject to Section 409A and fails to comply with the requirements of Section 409A, the Administrator reserves the right (without any obligation to do so or to indemnify the Participant for failure to do so), without the consent of the Participant, to amend or terminate the Plan and RSU Award Agreement and/or to amend, restructure, terminate or replace the RSU in order to cause the RSU to either not be subject to Section 409A or to comply with the applicable provisions of such section. To the extent necessary to avoid the imposition of tax or penalty under Section 409A, any payment by the Company or any Subsidiary or Affiliate to the Participant (if the Participant is then a “specified employee” as defined in Code Section 409A(a)(2)(B)(i) and Treasury Regulation §1.409A-1(i)(1)) of “deferred compensation,” whether pursuant to the Plan or otherwise, arising solely due to a “separation from service” (and not by reason of the lapse of a “substantial risk of forfeiture”), as such terms are used in Section 409A, shall be delayed (to the extent otherwise payable prior to such date) and paid on the first day following the six-month period beginning on the date of the Participant’s separation from service under Section 409A (or, if earlier, upon the Participant’s death). Each payment or installment due to the Participant from the Company and its Affiliates, whether under this RSU Award Agreement or otherwise, is intended to constitute a “separate payment” for purposes of Section 409A. In no event shall the Company or any Subsidiary or Affiliate (or any agent thereof) have any liability to the Participant or any other Person due to the failure of the Award to satisfy the requirements of Section 409A.

10. Governing Law; Arbitration; Waiver of Jury Trial . This RSU Award Agreement shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of Delaware (without regard to any conflicts of laws principles thereof that would give effect to the laws of another jurisdiction), and any dispute, controversy, suit, action or proceeding (“ Proceeding ”) arising out of or relating to this Award or any other Award, other than injunctive relief, will, notwithstanding anything to the contrary contained in Section 14(e) of the Plan, be settled exclusively by arbitration, conducted before a single arbitrator in New York County, New York (applying Delaware law) in accordance with, and pursuant to, the Commercial Arbitration Rules and Procedures of JAMS (“ JAMS ”). The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The Company and the Participant will share the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTICIPANT AND THE COMPANY WAIVE AND COVENANT THAT THE PARTICIPANT AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH AN AWARD UNDER THE PLAN OR ANY MATTERS CONTEMPLATED THEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR THE PARTICIPANT MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTICIPANT, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO AN AWARD UNDER THE PLAN AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER AN AWARD AGREEMENT UNDER THE PLAN WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY .

11. RSU Award Agreement Binding on Successors . The terms of this RSU Award Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest and upon the Company and its successors and assignees, subject to the terms of the Plan.

12. No Assignment . Subject to the second sentence of Section 3(a), neither this RSU Award Agreement nor any rights granted herein shall be assignable by the Participant other than (with respect to any rights that survive the Participant’s death) by will or the laws of descent and distribution. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any RSUs or RSU Shares by any holder thereof in violation of the provisions of this RSU Award Agreement or the Plan will be valid, and the Company will not transfer any of said RSUs or RSU Shares on its books nor will any RSU Shares be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.

13. Necessary Acts . The Participant hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this RSU Award Agreement, including but not limited to all acts and documents related to compliance with securities, tax and other applicable laws and regulations.

14. Limitation on the Participant’s Rights; Not a Trust . Participation in the Plan confers no rights or interests other than as herein provided. This RSU Award Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets, and the RSUs shall not be treated as property or as a trust fund of any kind. The RSUs shall be used solely as a device for the determination of the payments to eventually be made to the Participant if the RSUs vest pursuant to Section 3 . The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs, and rights no greater than the right to receive the RSU Shares as a general unsecured creditor with respect to RSUs, as and when payable hereunder.

15. Severability . Should any provision of this RSU Award Agreement be held by an arbitrator or court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this RSU Award Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original RSU Award Agreement. Moreover, if one or more of the provisions contained in this RSU Award Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, then in lieu of severing such unenforceable provision or provisions, it or they shall be construed by the appropriate judicial body or arbitral tribunal by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by a judicial body or arbitral tribunal shall not affect the enforceability of such provisions or provisions in any other jurisdiction.

16. Failure to Enforce Not a Waiver . The failure of the Company to enforce at any time any provision of this RSU Award Agreement shall in no way be construed to be a waiver of that provision or of any other provision hereof.

17. Entire Agreement . This RSU Award Agreement and the Plan contain the entire agreement and understanding among the parties as to the subject matter hereof and supersede all prior writings or understandings with respect to the grant of RSUs covered by this Award. The Participant acknowledges that any summary of the Plan or this RSU Award Agreement provided by the Company is subject in its entirety to the terms of the Plan and this RSU Award Agreement. References herein or in the Plan to this RSU Award Agreement include references to its Exhibits.

18. Headings . Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or description of the contents of any Section.

19. Counterparts . This RSU Award Agreement may be executed in any number of counterparts, including via facsimile or PDF, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

20. Amendment . Except as otherwise provided in the Plan or Section 9 , no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties hereto.

21. Disposition of Shares Issued . RSU Shares received following the vesting of RSUs may be sold by the Participant only on a date or dates, and in such amounts and manner, specified by the Administrator. Subject to the foregoing, and subject to the terms of Section 8 and the Plan, each calendar quarter that the Participant is issued RSU Shares, the Participant shall have the ability to sell that number of RSU Shares sufficient to cover taxes thereon at the applicable tax rate (or a rate provided by the Administrator). The Administrator will monitor demand, market conditions and other factors in determining whether the Participant may dispose of an additional number of RSU Shares in a given quarter. All dispositions of RSU Shares are subject to compliance with the terms of the Engagement Letter and Company policies as in effect from time to time.

22. Acknowledgements and Representations . The Participant is acquiring the RSUs and, if and when the RSUs vest, will acquire the RSU Shares covered thereby solely for the Participant’s own account, for investment purposes only, and not with a view to or an intent to sell or distribute, or to offer for resale in connection with any unregistered distribution, all or any portion of the RSUs or RSU Shares within the meaning of the Securities Act and/or any applicable state securities laws. The Participant has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Award and the restrictions imposed on the RSUs and the RSU Shares. The Participant has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to accept the Award. However, in evaluating the merits and risks of an investment in the Company, the Participant has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors. The Participant is aware that RSU Shares may be of no practical value. The Participant has read and understands the restrictions and limitations set forth in the Plan and this RSU Award Agreement, which are imposed on the RSUs and the RSU Shares. The Participant confirms that the Participant has not relied on any warranty, representation, assurance or promise of any kind whatsoever in entering into this RSU Award Agreement other than as expressly set out in this RSU Award Agreement or in the Plan.

23. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to the Award (or future Awards that may be granted under the Plan) and participation in the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

24. Recoupment . The Participant, by accepting the Award, hereby acknowledges and agrees that the Participant will be subject to any policy adopted by the Company pursuant to an applicable law or rule that provides for the repayment or forfeiture of incentive compensation (including but not limited to Awards), including, without limitation, as a result of a required accounting restatement due to material noncompliance with a financial reporting requirement.

[ Signature page follows ]

IN WITNESS WHEREOF, the parties hereto have executed this RSU Award Agreement as of the date set forth above.

APOLLO GLOBAL MANAGEMENT, LLC

Print Name: John J. Suydam

Title: Vice President

The undersigned hereby accepts and agrees to all of the terms and provisions of this RSU Award Agreement, including its Exhibits.

PARTICIPANT

Print Name:

EXHIBIT A

Vesting Schedule

Subject to the terms of the Plan and this RSU Award Agreement, the Restricted Period will lapse as follows: the RSUs shall vest (and the Restricted Period will lapse) with respect to one third (1/3) of the Award on June 30 of each of 20[ ], 20[ ] and 20[ ], provided the Participant remains in continuous employment or service with the Company and its Affiliates through each such vesting date. Notwithstanding the foregoing, upon the Participant’s Termination (i) due to death or (ii) by the Company and its Affiliates by reason of Disability, the Participant shall also vest in 50% of the unvested RSUs that remain subject to the Award as of such Termination date. For purposes of the Award, the Participant shall be deemed to be in continuous employment or service until such time as the Participant dies or otherwise experiences a Termination. Notwithstanding the foregoing, fractional RSUs shall not be deemed vested until they accumulate to equal one whole Share.

Issuance Dates

One (1) RSU Share shall be issued in payment of each vested RSU not later than the 15th day of the third month after the later of the last day of the Participant’s or the Company’s fiscal year in which the RSU vests, consistent with Treasury Regulation §1.409A-1(b)(4). Fractional RSU Shares shall not be issued (or any consideration provided therefor) but shall accumulate.

CONFIDENTIAL

RESTRICTED SHARE UNIT AWARD AGREEMENT
UNDER THE APOLLO GLOBAL MANAGEMENT, LLC
2007 OMNIBUS EQUITY INCENTIVE PLAN

3. Restrictions .

(b) Subject to Section 3(c) , the RSU Shares subject to the RSUs shall become vested hereunder in accordance with the vesting schedule set forth on Exhibit A hereto (the “ Restricted Period ”).

7. Restrictive Covenants . The Participant agrees that the restrictive covenants regarding confidential information set forth in the Participant’s engagement letter with the Company dated [ ], 20[ ] (as amended, modified or supplemented from time to time, the “ Engagement Letter ”), are incorporated herein by reference as if contained herein and the Participant understands, acknowledges and agrees that such restrictive covenants apply to the Participant.

18. Headings . Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or description of the contents of any Section.

20. Amendment . Except as otherwise provided in the Plan or Section 9 , no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties hereto.

[ Signature page follows ]

IN WITNESS WHEREOF, the parties hereto have executed this RSU Award Agreement as of the date set forth above.

APOLLO GLOBAL MANAGEMENT, LLC

Print Name: John J. Suydam

Title: Vice President

The undersigned hereby accepts and agrees to all of the terms and provisions of this RSU Award Agreement, including its Exhibits.

PARTICIPANT

Print Name:

EXHIBIT A

Vesting Schedule

Subject to the terms of the Plan and this RSU Award Agreement, the Restricted Period will lapse as follows: the RSUs shall vest (and the Restricted Period will lapse) with respect to 100% of the Award on June 30, 20[ ], provided the Participant remains in continuous employment or service with the Company and its Affiliates through such vesting date. Notwithstanding the foregoing, upon the Participant’s Termination (i) due to death or (ii) by the Company or any of its Affiliates by reason of Disability, the Participant shall also vest in 50% of the unvested RSUs that remain subject to the Award as of such Termination date. For purposes of the Award, the Participant shall be deemed to be in continuous employment or service until such time as the Participant dies or otherwise experiences a Termination. Notwithstanding the foregoing, fractional RSUs shall not be deemed vested until they accumulate to equal one whole Share.

Issuance Dates

CONFIDENTIAL

APOLLO GLOBAL MANAGEMENT, LLC
2007 OMNIBUS EQUITY INCENTIVE PLAN

RESTRICTED SHARE AWARD GRANT NOTICE

Apollo Global Management, LLC, a Delaware limited liability company (the “ Company ” or “ AGM ”), pursuant to its 2007 Omnibus Equity Incentive Plan (the “ Plan ”), hereby grants to the individual listed below (the “ Participant ”), the number of Class A Shares of the Company (“ Shares ”) set forth below (the “ Restricted Shares ”). This Award of Restricted Shares is subject to all of the terms and conditions set forth in this Restricted Share Award Grant Notice (“ Grant Notice ”) and in the Amended and Restated Limited Partnership Agreement of [ ] (the “ Carry Plan ”), including, without limitation, Exhibit [ ] attached thereto, which includes the Restricted Share Award Agreement (as the same may be amended, modified or supplemented from time to time in accordance with the terms of the Carry Plan, the “ Restricted Share Award Agreement ”) (including, without limitation, the restrictions on the Shares set forth in the Carry Plan and the Restricted Share Award Agreement) and the Plan, all of which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Share Award Agreement.



Participant:	[ ]
Date of Grant:	[ ]
Total Number of Restricted Shares:	[ ] Shares
Purchase Price per Share:	$[ ]
Total Purchase Price:	$[ ]
Vesting Commencement Date:	[[February 15] OR [May 15] OR [August 15] OR [November 15]], 20[ ]
Vesting Schedule:	Subject to the terms of the Restricted Share Award Agreement, one third (1/3) of the Restricted Shares will vest on each of the first three anniversaries of the Vesting Commencement Date. See also Exhibit A to the Restricted Share Award Agreement, including with regard to additional vesting as a result of the Participant’s death or Disability.

By his or her signature, the Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Share Award Agreement and this Grant Notice, and to file timely a Section 83(b) election with respect to the Participant’s grant of the Restricted Shares substantially in the form attached hereto as Notice Annex A . The Participant has reviewed the Carry Plan, the Restricted Share Award Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Share Award Agreement, the Plan and the Carry Plan. If this Grant Notice is not executed and returned to the Company on or before [ ] , and such failure continues for five business days after notice thereof, this Award will be null and void ab initio and the Participant will have no rights with respect to it, and will forfeit any amounts that would have been distributed to the Participant under the Carry Plan to fund the purchase of Shares contemplated hereunder. No amendment or modification of this Grant Notice shall be valid unless it shall be in writing and signed by all parties hereto.



APOLLO GLOBAL MANAGEMENT, LLC	PARTICIPANT
By:	By:
Print Name:	Print Name:
Title:
Address: 9 West 57th Street New York, NY 10019

Notice Annex A

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treasury Regulation Section 1.83‑2.

(1) The taxpayer who performed the services is:

Name:    ____________________________________________
Address:    ____________________________________________
    ____________________________________________
Taxpayer ID No.:    ___________________________________

(2) The property with respect to which the election is being made is [________] Class A Shares of Apollo Global Management, LLC (the “ Company ”).

(3) The property was transferred on [___________, 20____] (Date of Grant).

(4) The taxable year for which the election is being made is the calendar year [________].

(5) Subject to the taxpayer’s continuous service with the Company or its Affiliates, one third (1/3) of the shares will vest on each of the first three anniversaries of the vesting commencement date. In addition, upon the Participant’s termination of employment or service (i) due to death or (ii) by the Company and its Affiliates by reason of disability (as defined in the Restricted Share Award Agreement), the Participant shall also vest in 50% of the unvested Restricted Shares that remain subject to the Award as of such termination date.

(6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $______ per share.

(7) The taxpayer paid $______ per share for the property described above.

(8) A copy of this statement was furnished to the entity for which the taxpayer rendered the services underlying the transfer of property.

(9) This statement is executed on the ______ day of ____________, 20 _____.

By: _________________________________________, Taxpayer


(1)	THE TAXPAYER MUST FILE THIS COMPLETED FORM WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH TAXPAYER FILES HIS/HER U.S. FEDERAL INCOME TAX RETURNS WITHIN 30 DAYS OF THE TRANSFER OF THE ABOVE-DESCRIBED PROPERTY.


(2)	THE TAXPAYER MUST ALSO FILE A COPY OF THIS COMPLETED FORM WITH THE TAXPAYER’S ANNUAL FEDERAL INCOME TAX RETURN.


(3)	THE TAXPAYER MUST ALSO FILE A COPY OF THIS COMPLETED FORM WITH THE SECRETARY OF THE COMPANY.

RESTRICTED SHARE AWARD AGREEMENT
UNDER THE APOLLO GLOBAL MANAGEMENT, LLC
2007 OMNIBUS EQUITY INCENTIVE PLAN

This Award Agreement (this “ Restricted Share Award Agreement ”), dated as of the date (the “ Date of Grant ”) set forth on of the Grant Notice associated with this Restricted Share Award Agreement (the “ Grant Notice ”), is made by and between Apollo Global Management, LLC, a Delaware limited liability company (the “ Company ”), [ ] Advisors [ ], L.P. (“ Advisors ”) and the person named in the Grant Notice (the “ Participant ”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “ Plan ”). Where the context permits, references to the Company shall include any successor to the Company. If the Grant Notice is not executed and returned to the Company in accordance with its terms , this Award will be null and void ab initio and the Participant will have no rights hereunder and will forfeit any amounts that would have been distributed to the Participant under the Amended and Restated Limited Partnership Agreement of [ ], as the same may be amended, modified or supplemented from time to time (the “ Carry Plan ”) to fund the purchase of Shares contemplated under the Grant Notice.

1. Grant of Restricted Shares . The Company hereby grants to the Participant that number of restricted Shares (the “ Restricted Shares ”) set forth in the Grant Notice, subject to all of the terms and conditions of this Restricted Share Award Agreement, the Plan and the Carry Plan.

2. Purchase Price . The purchase price per Share of the Restricted Shares is set forth on the Grant Notice.

3. Book Entry; Certificates . At the sole discretion of the Administrator, the Shares will be issued in either (i) uncertificated form, with the Shares recorded in the name of the Participant in the books and records of the Company’s transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Restricted Share Award Agreement, and following vesting the Company shall cause certificates representing the Shares to be issued; or (ii) certificate form pursuant to the terms of Section 6 . Physical possession or custody of any Share certificates that are issued shall be retained by the Company until such time as the Restricted Shares vest. The Participant may be required to execute and deliver to the Company a customary stock power with respect to the Shares and to deliver to the Company any representations or other documents or assurances required pursuant to Section 14 .

4. Lapse of Restrictions .

(a) Subject to Section 4(b) , the Restricted Shares shall become vested hereunder in accordance with the vesting schedule set forth on Exhibit A hereto (the period during which the Restricted Shares are subject to forfeiture, the “ Restricted Period ”).

(b) Except as otherwise provided under the terms of the Plan, or in the vesting schedule set forth on Exhibit A hereto, if the Participant’s employment or service terminates for any reason, such that the Participant has experienced a “separation from service” (as such term is defined in Treasury Regulation §1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder) (a “ Termination ”), then all rights of the Participant with respect to Restricted Shares that have not vested shall be immediately repurchased by the Company or its designee for a price per Share equal to the Purchase Price (the aggregate amount to be paid to be referred to as the “ Purchase Consideration ”). Following such repurchase, neither the Participant nor any of his or her successors, heirs, assigns or personal representatives shall thereafter have any further rights or interests in such Restricted Shares. The Purchase Consideration will not be paid to the Participant, but rather, the Company or its designee, as agent for the Participant, will pay directly to Advisors the Purchase Consideration. The Participant will be deemed to have made a capital contribution to Advisors in an amount equal to the Purchase Consideration, but such Participant shall forfeit any right to receive any distributions with respect to such increased capital. The proceeds of such capital contribution shall be distributed to APH (as defined in the Carry Plan), and the Participant shall have no rights or claim with respect to such capital contribution; provided that the Participant’s capital account shall be adjusted to reflect the contribution made (including on the Participant’s behalf) by such Participant to Advisors. Each of the Carry Plan and APH shall be third party beneficiaries with respect to this provision with the right to enforce their rights hereunder. Employment or service for only a portion of a vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon a Termination.

(c) Subject to the terms of this Agreement, the Restricted Shares may not, directly or indirectly, be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered during the Restricted Period. The transfer restrictions contained in the preceding sentence shall not apply to (i) transfers to the Company, or (ii) transfers of vested Shares granted under this Award by will or the laws of descent and distribution, or (iii) if approved by the Administrator in its sole discretion, transfers of Restricted Shares in accordance with the requirements of Instruction A.1.(a)(5) of Form S-8 under the Securities Act or other applicable law. The approval contemplated by clause (iii) of the immediately preceding sentence shall not be unreasonably withheld by the Administrator with respect to a transfer of Shares by the Participant to a Related Party (as defined in the Carry Plan) (which transfer may occur only with the prior written approval of the Administrator), it being understood that the Related Party shall be required to agree to be bound by the transfer restrictions contained in the Plan, the Carry Plan and this Agreement that apply to the Participant. The Restricted Shares shall be subject to repurchase as described in Section 4(b) until the lapse of the Restricted Period (as defined above).

5. Rights as a Shareholder; Distributions .

(a) The Participant shall be the record owner of the Restricted Shares until the Shares are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company, including the right to vote such Shares and receive distributions paid with respect to such Shares. Notwithstanding the foregoing, any non-cash distributions shall be subject to the same restrictions on transferability and encumbrance as the Restricted Shares with respect to which they were paid.

(b) If the Participant forfeits any rights he has under this Restricted Share Award Agreement in accordance with Section 4 , the Participant shall, on the date of such forfeiture, no longer have any rights as a shareholder with respect to any such forfeited Restricted Shares and shall no longer be entitled to vote or receive distributions on such Shares.

6. Legend on Certificates . The Participant agrees that any certificate issued for Restricted Shares (or, if applicable, any book entry statement issued for Restricted Shares) prior to the end of the Restricted Period shall bear the following legend (in addition to any other legend or legends required under applicable securities laws, which legend or legends shall not be limited to the Restricted Period), subject to updating or modification by the Company from time to time:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE “ RESTRICTIONS ”) AS SET FORTH IN THE APOLLO GLOBAL MANAGEMENT, LLC 2007 OMNIBUS EQUITY INCENTIVE PLAN AND A RESTRICTED SHARE AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND APOLLO GLOBAL MANAGEMENT, LLC, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT AND SHALL RESULT IN THE FORFEITURE OF SUCH SHARES AS PROVIDED BY SUCH PLAN AND AGREEMENT.

7. Restricted Share Award Agreement Subject to Plan . This Restricted Share Award Agreement is made pursuant to all of the provisions of the Plan and the Carry Plan, both of which are incorporated herein by this reference, and is intended, and shall be interpreted in a manner, to comply therewith.

8. No Rights to Continuation of Employment or Service . Nothing in the Plan, the Carry Plan or this Restricted Share Award Agreement shall confer upon the Participant any right to continue in the employ or service of the Company or any Subsidiary or Affiliate thereof or shall interfere with or restrict the right of the Company (or a Subsidiary or Affiliate or its shareholders, as the case may be) to terminate the Participant’s employment or service at any time for any reason whatsoever, with or without Cause (subject to compliance with all terms and conditions required in connection therewith). The Plan and this Restricted Share Award Agreement shall not (a) form any part of any contract of employment or contract for services between the Company or any past or present Subsidiary or Affiliate thereof and any directors, officers or employees of those companies, (b) confer any legal or equitable rights (other than those constituting the Awards themselves) against the Company or any past or present Subsidiary or Affiliate thereof, directly or indirectly, or (c) give rise to any cause of action in law or in equity against the Company or any past or present Subsidiary or Affiliate thereof.

9. Restrictive Covenants . The Participant agrees that the restrictive covenants set forth in the [award letter provided to the Participant under the] Carry Plan are incorporated herein by reference as if contained herein. The Participant understands, acknowledges and agrees that such restrictive covenants apply to the Participant for the periods provided in such documents and that the Company would not have granted this Award had the Participant not agreed to be bound by such restrictive covenants.

10. Taxes .

(a) Withholding . The Participant is responsible for all taxes and any tax-related penalties the Participant incurs in connection with the Award. The Company or its Subsidiaries or Affiliates shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct, from other compensation payable to the Participant, any sums required by U.S. federal, state or local law (or by any tax authority outside the United States) to be withheld or accounted for by the Company or its Subsidiaries or Affiliates with respect to any Restricted Share. The Company in its discretion may require any other available method to satisfy any withholding or tax obligations of the Company or its Subsidiaries or Affiliates with respect to the Shares at the minimum applicable rates.

(b) Section 83(b) Election . The Participant acknowledges that the Company has not advised the Participant regarding the Participant’s income tax liability in connection with the grant or vesting of the Restricted Shares or with an election under Section 83(b) of the Code with respect to the grant of the Restricted Shares. The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and non-U.S. tax consequences of the transactions contemplated by this Restricted Share Award Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of the transactions contemplated by this Restricted Share Award Agreement. As a condition to the effectiveness of this Award, the Participant is required to file timely an election under Section 83(b) of the Code with respect to the grant of the Restricted Shares. A form of Section 83(b) election is provided for this purpose as Notice Annex A to the Grant Notice.

(c) Section 409A Compliance . This Award is intended to be exempt from, or comply with, Section 409A, and to be interpreted in a manner consistent therewith. Notwithstanding anything to the contrary contained in this Restricted Share Award Agreement, to the extent that the Administrator determines that the Plan or a Restricted Share is subject to Section 409A and fails to comply with the requirements of Section 409A, the Administrator reserves the right (without any obligation to do so or to indemnify the Participant for failure to do so), without the consent of the Participant, to amend or terminate the Plan and Restricted Share Award Agreement and/or to amend, restructure, terminate or replace the Restricted Share in order to cause the Restricted Share to either not be subject to Section 409A or to comply with the applicable provisions of such section. To the extent necessary to avoid the imposition of tax or penalty under Section 409A, any payment by the Company or any Subsidiary or Affiliate to the Participant (if the Participant is then a “specified employee” as defined in Code Section 409A(a)(2)(B)(i) and Treasury Regulation §1.409A-1(i)(1)) of “deferred compensation,” whether pursuant to the Plan or otherwise, arising solely due to a “separation from service” (and not by reason of the lapse of a “substantial risk of forfeiture”), as such terms are used in Section 409A, shall be delayed (to the extent otherwise payable prior to such date) and paid on the first day following the six-month period beginning on the date of the Participant’s separation from service under Section 409A (or, if earlier, upon the Participant’s death). Each payment or installment due under this Restricted Share Award Agreement is intended to constitute a “separate payment” for purposes of Section 409A. In no event shall the Company or any Subsidiary or Affiliate (or any agent thereof) have any liability to the Participant or any other Person due to the failure of the Award to satisfy the requirements of Section 409A.

11. Governing Law; Arbitration; Waiver of Jury Trial . This Restricted Share Award Agreement shall be governed by, interpreted under and construed and enforced in accordance with, the laws of the State of Delaware (without regard to any conflicts of laws principles thereof that would give effect to the laws of another jurisdiction), and any dispute, controversy, suit, action or proceeding arising out of or relating to this Award or any other Award, other than injunctive relief, will, notwithstanding anything to the contrary contained in Section 14(e) of the Plan, be settled exclusively by arbitration, conducted before a single arbitrator in New York County, New York (applying Delaware law) in accordance with, and pursuant to, the Employment Arbitration Rules and Procedures of JAMS (“ JAMS ”). The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The Company and the Participant will share the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTICIPANT AND THE COMPANY WAIVE AND COVENANT THAT THE PARTICIPANT AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH AN AWARD UNDER THE PLAN OR ANY MATTERS CONTEMPLATED THEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR THE PARTICIPANT MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTICIPANT, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AWARD AGREEMENT OR ANOTHER AWARD UNDER THE PLAN AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY .

12. Restricted Share Award Agreement Binding on Successors . The terms of this Restricted Share Award Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest and upon the Company, its Affiliates and its and their successors and assignees, subject to the terms of the Plan.

13. No Assignment . Subject to the second sentence of Section 4(c) , neither this Restricted Share Award Agreement nor any rights granted herein shall be assignable by the Participant other than (with respect to any rights that survive the Participant’s death) by will or the laws of descent and distribution. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Restricted Shares or Restricted Shares by any holder thereof in violation of the provisions of this Restricted Share Award Agreement or the Plan will be valid, and the Company will not transfer any of said Restricted Shares or Restricted Shares on its books nor will any Restricted Shares be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions. The Company may meet any of its obligations with respect to the Award by causing such obligation to be satisfied by one or more of its Subsidiaries or Affiliates.

14. Compliance with Law; Necessary Acts . The Participant hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this Restricted Share Award Agreement, including but not limited to all acts and documents related to compliance with securities, tax and other applicable laws and regulations. The Company shall not be obligated to transfer any Shares to the Participant free of a restrictive legend or notation if such transfer, in the reasonable view of the Administrator, could violate the Securities Act or any other applicable law.

15. Severability . Should any provision of this Restricted Share Award Agreement be held by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Restricted Share Award Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original Restricted Share Award Agreement. Moreover, if one or more of the provisions contained in this Restricted Share Award Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, then in lieu of severing such unenforceable provision or provisions, it or they shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by a judicial body shall not affect the enforceability of such provisions or provisions in any other jurisdiction.

16. Failure to Enforce Not a Waiver . The failure of the Company to enforce at any time any provision of this Restricted Share Award Agreement shall in no way be construed to be a waiver of that provision or of any other provision hereof.

17. Entire Agreement . This Restricted Share Award Agreement, the Grant Notice, the Carry Plan and the Plan (collectively, the “ Grant Documents ”) contain the entire agreement and understanding among the parties as to the subject matter hereof and supersede all prior writings or understandings with respect to the grant of Restricted Shares covered by this Award. The Participant acknowledges that any summary of the Grant Documents provided by the Company or any of its Affiliates is subject in its entirety to the terms of the Grant Documents. References herein or in the Plan to this Restricted Share Award Agreement include references to its Exhibits, the Grant Notice and its Annexes, and the Carry Plan and the attachments thereto that pertain to this Award.

18. Headings . Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or description of the contents of any Section.

19. Counterparts . This Restricted Share Award Agreement may be executed in any number of counterparts, including via facsimile or PDF, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

20. Amendment . Except as otherwise provided in the Plan or Section 10(c) , no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties to the Grant Notice.

21. Disposition of Vested Shares . Subject to applicable law, the Participant may dispose of his or her vested Shares granted under this Award during any “window period” in which sales by Company personnel are permitted, or otherwise pursuant to the terms of a 10b5-1 plan on the same terms as apply to the use of such plans by other Company personnel, subject to approval by the Company’s compliance department. The Restricted Shares and vested Shares granted under this Award are not subject to the Company’s Share Ownership Policy.

22. Acknowledgements and Representations . The Participant is acquiring the Restricted Shares solely for the Participant’s own account, for investment purposes only, and not with a view to or an intent to sell or distribute, or to offer for resale in connection with any unregistered distribution, all or any portion of the Restricted Shares within the meaning of the Securities Act and/or any other applicable securities laws. The Participant has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Award and the restrictions imposed on the Restricted Shares. The Participant has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to accept the Award. However, in evaluating the merits and risks of an investment in the Company, the Participant has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors. The Participant is aware that Restricted Shares may be of no practical value. The Participant has read and understands the restrictions and limitations set forth in the Plan and this Restricted Share Award Agreement, which are imposed on the Restricted Shares. The Participant confirms that the Participant has not relied on any warranty, representation, assurance or promise of any kind whatsoever in entering into this Restricted Share Award Agreement other than as expressly set out in this Restricted Share Award Agreement or in the Plan. The Participant hereby accepts and agrees to all of the terms and provisions of this Restricted Share Award Agreement, including its Exhibits.

24. Recoupment . The Participant, by accepting the Award, hereby acknowledges and agrees that the Participant will be subject to any policy of general applicability adopted by the Company pursuant to an applicable law or rule that provides for the repayment or forfeiture of incentive compensation (including but not limited to Awards), including, without limitation, as a result of a required accounting restatement due to material noncompliance with a financial reporting requirement.

Exhibit A

Vesting Schedule

The Restricted Period will lapse as follows: the Restricted Shares shall vest (and the Restricted Period will lapse) with respect to one third (1/3) of the Award on each of the first three anniversaries of the Vesting Commencement Date set forth in the Grant Notice, provided the Participant remains in continuous employment or service with the Company or its Affiliates through each such vesting date. Notwithstanding the foregoing, upon the Participant’s Termination (i) due to death or (ii) by the Company and its Affiliates by reason of Disability. For purposes of the Award, the Participant shall be deemed to be in continuous employment or service until such time as the Participant dies or otherwise experiences a Termination, or, if earlier, upon providing or receiving notice that his or her employment or service will terminate. Notwithstanding the foregoing, fractional Restricted Shares shall not be deemed vested until they accumulate to equal one whole Share.

CONFIDENTIAL

[RETIRED PARTNER FORM]

APOLLO GLOBAL MANAGEMENT, LLC

2007 OMNIBUS EQUITY INCENTIVE PLAN

SHARE AWARD GRANT NOTICE

Apollo Global Management, LLC, a Delaware limited liability company (the “ Company ” or “ AGM ”), pursuant to its 2007 Omnibus Equity Incentive Plan (the “ Plan ”), hereby grants to the individual listed below (the “ Participant ”), the number of Class A Shares of the Company set forth below (the “ Shares ”). This Award of Shares is subject to all of the terms and conditions set forth in this Share Award Grant Notice (“ Grant Notice ”) and in the Amended and Restated [ ] Limited Partnership Agreement of [ ] (the “Carry Plan”), including, without limitation, Exhibit [ ] attached thereto which includes the Share Award Agreement (as the same may be amended, modified or supplemented from time to time in accordance with the Carry Plan, the “ Share Award Agreement ”) (including, without limitation, the transfer restrictions on the Shares set forth in the Carry Plan and Share Award Agreement) and the Plan, all of which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Share Award Agreement.



Participant:	[ ]
Date of Grant:	[ ]
Total Number of Shares:	[ ] Shares
Purchase Price per Share:	$[ ]
Total Purchase Price:	$[ ]
Transfer Commencement Date:	[[February 15] OR [May 15] OR [August 15] OR [November 15]], 20[ ]
Vesting Schedule:	All Shares are fully vested upon grant, but no Shares are transferable by the Participant until such time as provided in the Carry Plan and the Share Award Agreement. See also Exhibit A to the Share Award Agreement.

By his or her signature, the Participant agrees to be bound by the terms and conditions of the Plan, the Share Award Agreement and this Grant Notice, and to file timely a Section 83(b) election with respect to the Participant’s grant of the Shares substantially in the form attached hereto as Notice Annex A . The Participant has reviewed the Carry Plan, the Share Award Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Share Award Agreement, the Plan and the Carry Plan. If this Grant Notice is not executed and returned to the Company on or before [ ] , and such failure continues for five business days after notice thereof, this Award will be null and void ab initio and the Participant will have no rights with respect to it and will forfeit any amounts that would have been distributed to the Participant under the Carry Plan to fund the purchase of Shares contemplated hereunder. No amendment or modification of this Grant Notice shall be valid unless it shall be in writing and signed by all parties hereto.



APOLLO GLOBAL MANAGEMENT, LLC	PARTICIPANT
By:	By:
Print Name:	Print Name:
Title:
Address: 9 West 57th Street New York, NY 10019

Notice Annex A

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treasury Regulation Section 1.83‑2.

(1) The taxpayer who performed the services is:

(2) The property with respect to which the election is being made is [________] Class A Shares of Apollo Global Management, LLC (the “ Company ”).

(3) The property was transferred on [___________, 20____] (Date of Grant).

(4) The taxable year for which the election is being made is the calendar year [________].

(5) One third (1/3) of the shares may be transferred by the taxpayer on each of the first three anniversaries of the transfer commencement date.

(6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $______ per share.

(7) The taxpayer paid $______ per share for the property described above.

(8) A copy of this statement was furnished to the entity for which the taxpayer rendered the services underlying the transfer of property.

(9) This statement is executed on the ______ day of ____________, 20 _____.

By: _________________________________________, Taxpayer


(1)	THE TAXPAYER MUST FILE THIS COMPLETED FORM WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH TAXPAYER FILES HIS/HER U.S. FEDERAL INCOME TAX RETURNS WITHIN 30 DAYS OF THE TRANSFER OF THE ABOVE-DESCRIBED PROPERTY.


(2)	THE TAXPAYER MUST ALSO FILE A COPY OF THIS COMPLETED FORM WITH THE TAXPAYER’S ANNUAL FEDERAL INCOME TAX RETURN.


(3)	THE TAXPAYER MUST ALSO FILE A COPY OF THIS COMPLETED FORM WITH THE SECRETARY OF THE COMPANY.

SHARE AWARD AGREEMENT
UNDER THE APOLLO GLOBAL MANAGEMENT, LLC
2007 OMNIBUS EQUITY INCENTIVE PLAN

This Award Agreement (this “ Share Award Agreement ”), dated as of the date (the “ Date of Grant ”) set forth on of the Grant Notice associated with this Share Award Agreement (the “ Grant Notice ”), is made by and between Apollo Global Management, LLC, a Delaware limited liability company (the “ Company ”), [ ] Advisors [ ], L.P. (“ Advisors ”) and the person named in the Grant Notice (the “ Participant ”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “ Plan ”). Where the context permits, references to the Company shall include any successor to the Company. If the Grant Notice is not executed and returned to the Company in accordance with its terms , this Award will be null and void ab initio and the Participant will have no rights hereunder and will forfeit any amounts that would have been distributed to the Participant under the Amended and Restated Limited Partnership Agreement of [ ], as the same may be amended, modified or supplemented from time to time (the “ Carry Plan ”) to fund the purchase of Shares contemplated under the Grant Notice.

1. Grant of Shares . The Company hereby grants to the Participant that number of Shares (the “ Shares ”) set forth in the Grant Notice, subject to all of the terms and conditions of this Share Award Agreement and the Plan.

2. Purchase Price . The purchase price per Share is set forth on the Grant Notice.

3. Book Entry; Certificates . At the sole discretion of the Administrator, the Shares will be issued in either (i) uncertificated form, with the Shares recorded in the name of the Participant in the books and records of the Company’s transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Share Award Agreement, and following the date such Shares become transferable the Company shall cause certificates representing the Shares to be issued; or (ii) certificate form pursuant to the terms of Section 6 . Physical possession or custody of any Share certificates that are issued shall be retained by the Company until such time as the Shares are transferable. The Participant may be required to execute and deliver to the Company a stock power with respect to the Shares and to deliver to the Company any representations or other documents or assurances required pursuant to Section 13 .

4. Lapse of Transfer Restrictions .

(a) The Shares are fully vested on the Date of Grant. The Shares shall become transferable by the Participant in accordance with the schedule set forth on Exhibit A hereto (the period during which the restrictions on transferability (other than such restrictions contained in Section 4(b)) are in effect, the “ Restricted Period ”).

(b) During the Restricted Period, the Shares may not, directly or indirectly, be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered. The transfer restrictions contained in the preceding sentence shall not apply to (i) transfers to the Company, or (ii) transfers of Shares by will or the laws of descent and distribution, or (iii) if approved by the Administrator in its sole discretion, transfers of Shares in accordance with the requirements of Instruction A.1.(a)(5) of Form S-8 under the Securities Act or other applicable law. The approval contemplated by clause (iii) of the immediately preceding sentence shall not be unreasonably withheld by the Administrator with respect to a transfer of Shares by the Participant to a Related Party (as defined in the Carry Plan) (which transfer may occur only with the prior written approval of the Administrator), it being understood that the Related Party shall be required to agree to be bound by the transfer restrictions contained in the Plan, the Carry Plan and this Agreement that apply to the Participant. The Participant hereby acknowledges that any attempt by the Participant directly or indirectly to sell, assign, transfer, pledge, hypothecate or otherwise dispose of or encumber the Shares in violation of this Share Purchase Agreement shall be void ab initio. The Participant agrees and acknowledges that (i) the provisions contained in this Section 4(b) are reasonable as to terms, duration and remedy, (ii) the same protects the legitimate interests of the Company and its Affiliates, imposes no undue hardship on the Participant, and is not injurious to the public, (iii) the void ab initio remedy provided for a violation of this Section 4(b) shall be specifically enforceable in any court or arbitral tribunal with jurisdiction upon short notice, and the Participant shall not pursue any action to have such void ab initio remedy deemed unenforceable. Each of the Carry Plan and APH (as defined in the Carry Plan) shall be third party beneficiaries with respect to this Section 4(b).

5. Rights as a Shareholder; Distributions . The Participant shall be the record owner of the Shares until the Shares are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company, including the right to vote such Shares and receive distributions paid with respect to such Shares. Notwithstanding the foregoing, any non-cash distributions shall be subject to the same restrictions on transferability and encumbrance as the Shares with respect to which they were paid.

6. Legend on Certificates . The Participant agrees that any certificate issued for Shares (or, if applicable, any book entry statement issued for Shares) prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend (in addition to any other legend or legends required under applicable securities laws), subject to updating or modification by the Company from time to time:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE “ RESTRICTIONS ”) AS SET FORTH IN THE APOLLO GLOBAL MANAGEMENT, LLC 2007 OMNIBUS EQUITY INCENTIVE PLAN AND A SHARE AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND APOLLO GLOBAL MANAGEMENT, LLC, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT AS PROVIDED BY SUCH PLAN AND AGREEMENT.

7. Share Award Agreement Subject to Plan . This Share Award Agreement is made pursuant to all of the provisions of the Plan and the Carry Plan, both of which are incorporated herein by this reference, and is intended, and shall be interpreted in a manner, to comply therewith.

8. Restrictive Covenants . The Participant agrees that the restrictive covenants set forth in the [award letter provided to the Participant under the] Carry Plan, are incorporated herein by reference as if contained herein. The Participant understands, acknowledges and agrees that such restrictive covenants apply to the Participant for the periods provided in such documents.

9. Taxes .

(a) Withholding . The Participant is responsible for all taxes and any tax-related penalties the Participant incurs in connection with the Award. The Company or its Subsidiaries or Affiliates shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct, from other compensation payable to the Participant, any sums required by U.S. federal, state or local law (or by any tax authority outside the United States) to be withheld or accounted for by the Company or its Subsidiaries or Affiliates with respect to any Share. The Company in its discretion may require any other available method to satisfy any withholding or tax obligations of the Company or its Subsidiaries or Affiliates with respect to the Shares at the minimum applicable rates.

(b) Section 83(b) Election . The Participant acknowledges that the Company has not advised the Participant regarding the Participant’s income tax liability in connection with the grant of the Shares or with an election under Section 83(b) of the Code with respect to the grant of the Shares. The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and non-U.S. tax consequences of the transactions contemplated by this Share Award Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of the transactions contemplated by this Share Award Agreement. As a condition to the effectiveness of this Award, the Participant is required to file timely an election under Section 83(b) of the Code with respect to the grant of the Shares. A form of Section 83(b) election is provided for this purpose as Notice Annex A to the Grant Notice.

(c) Section 409A Compliance . This Award is intended to be exempt from, or comply with, Section 409A, and to be interpreted in a manner consistent therewith. Notwithstanding anything to the contrary contained in this Share Award Agreement, to the extent that the Administrator determines that the Plan or a Share is subject to Section 409A and fails to comply with the requirements of Section 409A, the Administrator reserves the right (without any obligation to do so or to indemnify the Participant for failure to do so), without the consent of the Participant, to amend or terminate the Plan and Share Award Agreement and/or to amend, restructure, terminate or replace the Share in order to cause the Share to either not be subject to Section 409A or to comply with the applicable provisions of such section. To the extent necessary to avoid the imposition of tax or penalty under Section 409A, any payment by the Company or any Subsidiary or Affiliate to the Participant (if the Participant is then a “specified employee” as defined in Code Section 409A(a)(2)(B)(i) and Treasury Regulation §1.409A-1(i)(1)) of “deferred compensation,” whether pursuant to the Plan or otherwise, arising solely due to a “separation from service” (and not by reason of the lapse of a “substantial risk of forfeiture”), as such terms are used in Section 409A, shall be delayed (to the extent otherwise payable prior to such date) and paid on the first day following the six-month period beginning on the date of the Participant’s separation from service under Section 409A (or, if earlier, upon the Participant’s death). Each payment or installment due under this Share Award Agreement is intended to constitute a “separate payment” for purposes of Section 409A. In no event shall the Company or any Subsidiary or Affiliate (or any agent thereof) have any liability to the Participant or any other Person due to the failure of the Award to satisfy the requirements of Section 409A.

10. Governing Law; Arbitration; Waiver of Jury Trial . This Share Award Agreement shall be governed by, interpreted under and construed and enforced in accordance with, the laws of the State of Delaware (without regard to any conflicts of laws principles thereof that would give effect to the laws of another jurisdiction), and any dispute, controversy, suit, action or proceeding arising out of or relating to this Award or any other Award, other than injunctive relief, will, notwithstanding anything to the contrary contained in Section 14(e) of the Plan, be settled exclusively by arbitration, conducted before a single arbitrator in New York County, New York (applying Delaware law) in accordance with, and pursuant to, the Employment Arbitration Rules and Procedures of JAMS (“ JAMS ”). The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The Company and the Participant will share the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTICIPANT AND THE COMPANY WAIVE AND COVENANT THAT THE PARTICIPANT AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH AN AWARD UNDER THE PLAN OR ANY MATTERS CONTEMPLATED THEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR THE PARTICIPANT MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTICIPANT, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AWARD AGREEMENT OR ANOTHER AWARD UNDER THE PLAN AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY .

11. Share Award Agreement Binding on Successors . The terms of this Share Award Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest and upon the Company, its Affiliates and its and their successors and assignees, subject to the terms of the Plan.

12. No Assignment . Subject to the second sentence of Section 4(b) , neither this Share Award Agreement nor any rights granted herein shall be assignable by the Participant other than (with respect to any rights that survive the Participant’s death) by will or the laws of descent and distribution. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Shares or Shares by any holder thereof in violation of the provisions of this Share Award Agreement or the Plan will be valid, and the Company will not transfer any of said Shares or Shares on its books nor will any Shares be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions. The Company may meet any of its obligations with respect to the Award by causing such obligation to be satisfied by one or more of its Subsidiaries or Affiliates.

13. Compliance with Law; Necessary Acts . The Participant hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this Share Award Agreement, including but not limited to all acts and documents related to compliance with securities, tax and other applicable laws and regulations. The Company shall not be obligated to transfer any Shares to the Participant free of a restrictive legend if such transfer, in the view of the Administrator, could violate the Securities Act or any other applicable law.

14. Severability . Should any provision of this Share Award Agreement be held by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Share Award Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original Share Award Agreement. Moreover, if one or more of the provisions contained in this Share Award Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, then in lieu of severing such unenforceable provision or provisions, it or they shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by a judicial body shall not affect the enforceability of such provisions or provisions in any other jurisdiction.

15. Failure to Enforce Not a Waiver . The failure of the Company to enforce at any time any provision of this Share Award Agreement shall in no way be construed to be a waiver of that provision or of any other provision hereof.

16. Entire Agreement . This Share Award Agreement, the Grant Notice, the Carry Plan and the Plan (collectively, the “ Grant Documents ”) contain the entire agreement and understanding among the parties as to the subject matter hereof and supersede all prior writings or understandings with respect to the grant of Shares covered by this Award. The Participant acknowledges that any summary of the Grant Documents provided by the Company or any of its Affiliates is subject in its entirety to the terms of the Grant Documents. References herein or in the Plan to this Share Award Agreement include references to its Exhibits, the Grant Notice and its Annexes, and the Carry Plan and the attachments thereto that pertain to this Award.

17. Headings . Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or description of the contents of any Section.

18. Counterparts . This Share Award Agreement may be executed in any number of counterparts, including via facsimile or PDF, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

19. Amendment . Except as otherwise provided in the Plan or Section 9(c) , no amendment or modification hereof shall be valid unless it shall be in writing and signed by all parties to the Grant Notice.

20. Disposition of Shares . Subject to applicable law, the Participant may dispose of his or her vested Shares during any “window period” in which sales by Company personnel are permitted, or otherwise pursuant to the terms of a 10b5-1 plan on the same terms as apply to the use of such plans by Company personnel, subject to approval by the Company’s compliance department. The Shares are not subject to the Company’s Share Ownership Policy.

21. Acknowledgements and Representations . The Participant is acquiring the Shares solely for the Participant’s own account, for investment purposes only, and not with a view to or an intent to sell or distribute, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares within the meaning of the Securities Act and/or any other applicable securities laws. The Participant has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Award and the restrictions imposed on the Shares. The Participant has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to accept the Award. However, in evaluating the merits and risks of an investment in the Company, the Participant has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors. The Participant is aware that Shares may be of no practical value. The Participant has read and understands the restrictions and limitations set forth in the Plan and this Share Award Agreement, which are imposed on the Shares. The Participant confirms that the Participant has not relied on any warranty, representation, assurance or promise of any kind whatsoever in entering into this Share Award Agreement other than as expressly set out in this Share Award Agreement or in the Plan. The Participant hereby accepts and agrees to all of the terms and provisions of this Share Award Agreement, including its Exhibits.

22. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to the Award (or future Awards that may be granted under the Plan) and participation in the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

23. Recoupment . The Participant, by accepting the Award, hereby acknowledges and agrees that the Participant will be subject to any policy of general applicability adopted by the Company pursuant to an applicable law or rule that provides for the repayment or forfeiture of incentive compensation (including but not limited to Awards), including, without limitation, as a result of a required accounting restatement due to material noncompliance with a financial reporting requirement.

Exhibit A

Transfer Schedule

The Restricted Period will lapse as follows: the Shares shall become transferable (and the Restricted Period will lapse) with respect to one third (1/3) of the Award on each of the first three anniversaries of the Transfer Commencement Date set forth in the Grant Notice. Notwithstanding the foregoing, fractional Shares shall not be deemed transferable until they accumulate to equal one whole Share.

Apollo Advisors VIII, L.P.

One Manhattanville Road

Purchase, NY 10577

United States of America

[_____ __, 2014]

[Name of Limited Partner]

[Apollo Management, L.P.]

9 West 57th Street

New York, NY 10019

United States of America

Ladies and Gentlemen:

This letter agreement is being entered into in connection with the admission of [Name of Limited Partner] (the “LP”) to Apollo Advisors VIII, L.P., a Delaware limited partnership (the “Partnership”). The Amended and Restated Agreement of Limited Partnership of the Partnership, effective as of January 1, 2014 (the “Agreement”), authorizes the general partner of the Partnership (the “General Partner”) to enter into a side letter or similar agreement with a limited partner that has the effect of establishing rights under, altering or supplementing the terms of the Agreement with respect to the limited partner. This letter agreement constitutes such a side letter or similar agreement.

The General Partner and the LP hereby agree that Annex A to this letter agreement sets forth the terms of the partnership agreement of the Partnership that apply with respect to the LP, and none of the terms of the Agreement shall apply with respect to the LP.

The LP hereby agrees to join in and be bound as a limited partner of the Partnership, with the understanding that the terms and conditions set forth in Annex A shall apply to the LP in such capacity in lieu of the terms and conditions of the Agreement.

This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of laws that would cause the laws of another jurisdiction to apply. This letter agreement is binding on and enforceable against the General Partner, the Partnership and the LP. This letter agreement may be amended only with the consent of each party hereto. The Partnership or the General Partner may provide copies of this letter agreement to other persons. This letter agreement may be executed by facsimile and in one or more counterparts, all of which shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

If the above correctly reflects our understanding and agreement with respect to the foregoing matters, please so confirm by signing the enclosed copy of this letter agreement.

Very truly yours,

APOLLO ADVISORS VIII, L.P.

By: Apollo Capital Management VIII, LLC,

its general partner

By:

Name:

Title: Vice President

APOLLO CAPITAL MANAGEMENT VIII, LLC

By:

Name:

Title: Vice President

Accepted and agreed as of the date first written above

[NAME OF LIMITED PARTNER]

This Annex A sets forth the terms and conditions of the limited partnership agreement of Apollo Advisors VIII, L.P. applicable to the Limited Partner named in the preceding letter agreement in lieu of the terms and conditions of the limited partnership agreement of Apollo Advisors VIII, L.P.

This limited partnership is the general partner of Apollo Investment Fund VIII, L.P. and its parallel funds and earns the “carried interest” on Fund VIII profits.

Apollo Advisors VIII, L.P.

Amended and Restated

Limited Partnership Agreement

Effective as of January 1, 2014

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS 1

ARTICLE 2 FORMATION AND ORGANIZATION 6

Section 2.1 Formation 6

Section 2.2 Name 6

Section 2.3 Offices 7

Section 2.4 Term of Partnership 7

Section 2.5 Purpose of the Partnership 7

Section 2.6 Actions by Partnership 8

Section 2.7 Admission of Limited Partners 8

ARTICLE 3 CAPITAL 8

Section 3.1 Contributions to Capital 8

Section 3.2 Rights of Partners in Capital 9

Section 3.3 Capital Accounts 9

Section 3.4 Allocation of Profit and Loss 10

Section 3.5 Tax Allocations 11

Section 3.6 Reserves; Adjustments for Certain Future Events 11

Section 3.7 Finality and Binding Effect of General Partner’s Determinations 12

Section 3.8 Alternative GP Vehicles 12

ARTICLE 4 DISTRIBUTIONS 13

Section 4.1 Distributions 13

Section 4.2 Withholding of Certain Amounts 14

Section 4.3 Limitation on Distributions 14

Section 4.4 Distributions in Excess of Basis 14

ARTICLE 5 MANAGEMENT 15

Section 5.1 Rights and Powers of the General Partner 15

Section 5.2 Delegation of Duties 16

Section 5.3 Transactions with Affiliates 17

Section 5.4 Expenses 17

Section 5.5 Rights of Limited Partners 17

Section 5.6 Other Activities of General Partner 18

Section 5.7 Duty of Care; Indemnification 18

ARTICLE 6 ADMISSIONS, TRANSFERS AND WITHDRAWALS 19

Section 6.1 Admission of Additional Limited Partners; Effect on Points 19

Section 6.2 Admission of Additional General Partner 20

Section 6.3 Transfer of Interests of Limited Partners 20

Section 6.4 Withdrawal of Partners 21

Section 6.5 Pledges 22

ARTICLE 7 ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS AND RETIREMENT OF PARTNERS 23

Section 7.1 Allocation of Points 23

Section 7.2 Retirement of Partner 24

Section 7.3 Additional Points 24

ARTICLE 8 DISSOLUTION AND LIQUIDATION 25

Section 8.1 Dissolution and Liquidation of Partnership 25

ARTICLE 9 GENERAL PROVISIONS 25

Section 9.1 Amendment of Partnership Agreement and Co-Investors (A) Partnership Agreement 25

Section 9.2 Special Power-of-Attorney 26

Section 9.3 Notices 28

Section 9.4 Agreement Binding Upon Successors and Assigns 29

Section 9.5 Merger, Consolidation, etc. 29

Section 9.6 Governing Law; Dispute Resolution 29

Section 9.7 Termination of Right of Action 31

Section 9.8 Not for Benefit of Creditors 31

Section 9.9 Reports 31

Section 9.10 Filings 31

Section 9.11 Headings, Gender, Etc. 31

Exhibit A…………………………………………………………………………………Ex. A-1

APOLLO ADVISORS VIII, L.P.

A Delaware Limited Partnership

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of APOLLO ADVISORS VIII, L.P. effective as of January 1, 2014, by and among Apollo Capital Management VIII, LLC, a Delaware limited liability company, as the sole general partner, and the persons whose names and addresses are set forth in the Schedule of Partners under the caption “Limited Partners” as the limited partners.

W I T N E S S E T H :

WHEREAS, on October 23, 2012, Apollo Capital Management VIII, LLC filed with the Secretary of State of the State of Delaware a Certificate of Limited Partnership to form Apollo Advisors VIII, L.P. as a limited partnership under the Delaware Revised Uniform Limited Partnership Act, pursuant to an agreement among Apollo Capital Management VIII, LLC, as sole general partner, and APH Holdings, L.P. as initial limited partner (the “Original Agreement”); and

WHEREAS, the parties wish to amend and restate the Original Agreement in its entirety.

NOW, THEREFORE, the parties hereby agree as follows:

Article 1
DEFINITIONS

Capitalized terms used but not otherwise defined herein have the following meanings:

“Act” means the Delaware Revised Uniform Limited Partnership Act, as in effect on the date hereof and as amended from time to time, or any successor law.

“Affiliate” means with respect to any Person any other Person directly or indirectly controlling, controlled by or under common control with such Person. Except as the context otherwise requires, the term “Affiliate” in relation to AGM includes each collective investment fund and other client account sponsored or managed by AGM or its affiliated asset management entities, but, in each case, does not include Portfolio Companies.

“AGM” means Apollo Global Management, LLC, a Delaware limited liability company.

“Agreement” means this Amended and Restated Limited Partnership Agreement, as amended or supplemented from time to time.

“AIF VIII” means Apollo Investment Fund VIII, L.P., a limited partnership formed under the Act.

“Alternative GP Vehicle ” has the meaning ascribed to that term in Section 3.8.

“APH” means APH Holdings, L.P., a Cayman Islands exempted limited partnership, and any of the following entities that hold Points: (i) AP Professional Holdings, L.P., (ii) any direct or indirect subsidiary of APH or AP Professional Holdings, L.P. or (iii) any other entity that holds Points for the benefit (directly or indirectly) of AGM or AP Professional Holdings, L.P.

“Award Letter” means, with respect to any Limited Partner, the letter agreement between the Partnership and such Limited Partner setting forth (i) such Limited Partner’s Points, (ii) such Limited Partner’s Vesting Percentage, (iii) the formula applied to calculate the Holdback Amount with respect to the such Limited Partner, (iv) any restrictive covenants with respect to such Limited Partner, (v) the definition of “Bad Act”, (vi) the definition of “Designated Act” and (vii) any other terms applicable to such Partner.

“Bad Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.

“Capital Account” means with respect to each Partner the capital account established and maintained on behalf of such Partner as described in Section 3.3.

“Capital Loss” means, for each Fund with respect to any Fiscal Year, the portion of any Net Loss and any Portfolio Investment Loss allocable to the Partnership, but only to the extent such allocation is made by such Fund to the Partnership in proportion to the Partnership’s capital contribution to such Fund, as determined pursuant to the Fund LP Agreement.

“Capital Profit” means, for each Fund with respect to any Fiscal Year, the portion of any Net Income and any Portfolio Investment Gain allocable to the Partnership, but only to the extent such allocation is made by such Fund to the Partnership in proportion to the Partnership’s capital contribution to such Fund, as determined pursuant to the Fund LP Agreement.

“Certificate” means the Certificate of Limited Partnership of the Partnership and any amendments thereto as filed with the office of the Secretary of State of the State of Delaware.

“Clawback Payment” means any payment required to be made by the Partnership to any Fund pursuant to section 10.3 of the Fund LP Agreement of such Fund.

“Clawback Share” means, as of the time of determination, with respect to any Limited Partner and any Clawback Payment, a portion of such Clawback Payment equal to (a) the cumulative amount of Operating Profit attributable to the Fund to which the Clawback Payment is required to be made distributed to such Limited Partner, divided by (b) the cumulative amount so distributed to all Partners with respect to such Operating Profit attributable to such Fund.

“Co-Investors (A)” means Apollo Co-Investors VIII (A), L.P., a Delaware limited partnership.

“ Co-Investors (A) Partnership Agreement ” means the amended and restated limited partnership agreement of Co-Investors (A), dated as of the date hereof.

“Code” means the United States Internal Revenue Code of 1986, as amended and as hereafter amended, or any successor law.

“Covered Person” has the meaning ascribed to that term in Section 5.7.

“Designated Act” has the meaning ascribed to that term in a Limited Partner’s Award Letter.

“DEUCC” has the meaning ascribed to that term in Section 6.5(c).

“Disability” has the meaning ascribed to that term in the Apollo Global Management LLC 2007 Omnibus Equity Incentive Plan.

“Final Adjudication” has the meaning ascribed to that term in Section 5.7.

“Fiscal Year” means, with respect to a year, the period commencing on January 1 of such year and ending on December 31 of such year (or on the date of a final distribution pursuant to Section 8.1(a)), unless the General Partner shall elect another fiscal year for the Partnership which is a permissible taxable year under the Code.

“Fund” means each of AIF VIII and each “Parallel Fund” within the meaning of the Fund LP Agreement of AIF VIII. Such term also includes each alternative investment vehicle created by AIF VIII and/or any such Parallel Fund, to the extent the context so requires. As of the date hereof, the Funds are AIF VIII, Apollo Overseas Partners VIII, L.P., Apollo Overseas Partners (Delaware) VIII, L.P. and Apollo Overseas Partners (Delaware 892) VIII, L.P.

“Fund General Partner” means the Partnership in its capacity as a general partner of any of the Funds pursuant to the Fund LP Agreements.

“Fund LP Agreement” means the limited partnership agreement of any of the Funds, as amended from time to time, and, to the extent the context so requires, the corresponding constituent agreement, certificate or other document governing each such Fund.

“General Partner” means Apollo Capital Management VIII, LLC, a Delaware limited liability company, in its capacity as general partner of the Partnership or any successor to the business of the General Partner in its capacity as general partner of the Partnership.

“Holdback Amount” has the meaning ascribed to that term in a Limited Partner’s Award Letter.

“JAMS” has the meaning ascribed to that term in Section 9.6(b).

“Limited Partner” means any Person admitted as a limited partner to the Partnership in accordance with this Agreement, including any Retired Partner, until such Person withdraws entirely as a limited partner of the Partnership, in his capacity as a limited partner of the Partnership. All references herein to a Limited Partner shall be construed as referring collectively to such Limited Partner and to each Related Party of such Limited Partner (and to each Person of which such Limited Partner is a Related Party) that also is or that previously was a Limited Partner, except to the extent that the General Partner determines that the context does not require such interpretation as between such Limited Partner and his Related Parties.

“Management Company” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Net Income” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Net Loss” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Operating Loss” means, with respect to any Fiscal Year, any net loss of the Partnership, adjusted to exclude (a) any Capital Profit or Capital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by the Partnership. To the extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with the same accounting policies, principles and procedures applicable to the determination by the relevant Fund, and any items not derived from a Fund shall be determined in accordance with the accounting policies, principles and procedures used by the Partnership for federal income tax purposes.

“Operating Profit” means, with respect to any Fiscal Year, any net income of the Partnership, adjusted to exclude (a) any Capital Profit or Capital Loss and (b) the effect of any reorganization, restructuring or other capital transaction proceeds derived by the Partnership. To the extent derived from any Fund, any items of income, gain, loss, deduction and credit shall be determined in accordance with the same accounting policies, principles and procedures applicable to the determination by the relevant Fund, and any items not derived from a Fund shall be determined in accordance with the accounting policies, principles and procedures used by the Partnership for federal income tax purposes.

“Partner” means the General Partner or any of the Limited Partners, and “Partners” means the General Partner and all of the Limited Partners.

“Partnership” means the limited partnership continued pursuant to this Agreement.

“Person” means any individual, partnership, corporation, limited liability company, joint venture, joint stock company, unincorporated organization or association, trust (including the trustees thereof, in their capacity as such), government, governmental agency, political subdivision of any government, or other entity.

“Point” means a share of Operating Profit or Operating Loss. The aggregate number of Points available for assignment to all Partners shall be set forth in the books and records of the Partnership.

“Portfolio Company” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Portfolio Investment” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Portfolio Investment Gain” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Portfolio Investment Loss” has the meaning ascribed to that term in each of the Fund LP Agreements.

“Reference Rate” means the interest rate announced publicly from time to time by JPMorgan Chase Bank in New York, New York as such bank’s prime rate.

“Related Party” means, with respect to any Limited Partner:

(a) any spouse, child, parent or other lineal descendant of such Limited Partner or such Limited Partner’s parent, or any natural Person who occupies the same principal residence as the Limited Partner;

(b) any trust or estate in which the Limited Partner and any Related Party or Related Parties (other than such trust or estate) collectively have more than 80 percent of the beneficial interests (excluding contingent and charitable interests);

(c) any entity of which the Limited Partner and any Related Party or Related Parties (other than such entity) collectively are beneficial owners of more than 80 percent of the equity interest; and

(d) any Person with respect to whom such Limited Partner is a Related Party.

“Required Voting Partners” means, at any time, at least two-thirds by number of Limited Partners who are Voting Partners at such time.

“Retired Partner” means any Limited Partner who has become a retired partner in accordance with or pursuant to Section 7.2.

“Retirement Date” means, with respect to any Limited Partner, the date as of which such Person becomes a Retired Partner.

“Schedule of Partners” means a schedule to be maintained by the General Partner showing the following information with respect to each Partner: name, address, date of admission and retirement and required capital contribution.

“Third Party Priority Distribution” has the meaning ascribed to that term in Section 7.1(d).

“Transfer” means any direct or indirect sale, exchange, transfer, assignment or other disposition by a Partner of any or all of his interest in the Partnership (whether respecting, for example, economic rights only or all the rights associated with the interest) to another Person, whether voluntary or involuntary.

“Vested Points” means, with respect to any Retired Partner, the product of such Retired Partner’s Points as of such Retired Partner’s Retirement Date multiplied by such Retired Partner’s Vesting Percentage at such time.

“Vesting Commencement Date” means, with respect to each Limited Partner other than APH, the commencement date of the vesting period with respect to such Limited Partner, as specified by the General Partner at the time of such Limited Partner’s admission (which, for the avoidance of doubt, may be a date preceding the applicable admission date).

“Vesting Percentage” has the meaning ascribed to that term in a Limited Partner’s Award Letter.

“Voting Affiliated Feeder Fund ” has the meaning ascribed to such term in each of the Fund LP Agreements.

“Voting Partner” means each Partner set forth on Exhibit A, so long as he has not become a Retired Partner. All references herein to a Voting Partner (except in the definition of Required Voting Partners) shall be construed as referring collectively to such Voting Partner and to each Related Party of such Voting Partner that also is or that previously was a Limited Partner (unless such Limited Partner is a Retired Partner), except to the extent that the General Partner determines in good faith that the context does not require such interpretation as between such Voting Partner and his Related Parties.

ARTICLE 2
FORMATION AND ORGANIZATION

Section 2.1 Formation

The Partnership was formed and is hereby continued as a limited partnership under and pursuant to the Act. The Certificate was filed on October 23, 2012. The General Partner shall execute, acknowledge and file any amendments to the Certificate as may be required by the Act and any other instruments, documents and certificates which, in the opinion of the Partnership’s legal counsel, may from time to time be required by the laws of the United States of America, the State of Delaware or any other jurisdiction in which the Partnership shall determine to do business, or any political subdivision or agency thereof, or which such legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid and subsisting existence and business of the Partnership.

Section 2.2 Name

The name of the Partnership shall be “Apollo Advisors VIII, L.P.” or such other name as the General Partner hereafter may adopt upon causing an appropriate amendment to be made to this Agreement and to the Certificate to be filed in accordance with the Act. Promptly thereafter, the General Partner shall send notice thereof to each Limited Partner.

Section 2.3 Offices

(a) The Partnership shall maintain its principal office, and may maintain one or more additional offices, at such place or places as the General Partner may from time to time determine.

(b) The General Partner shall arrange for the Partnership to have and maintain in the State of Delaware, at the expense of the Partnership, a registered office and registered agent for service of process on the Partnership as required by the Act.

Section 2.4 Term of Partnership

(a) The term of the Partnership shall continue until the dissolution (without continuation) of all of the Funds or the earlier of:

(i) at any time there are no Limited Partners, unless the business of the Partnership is continued in accordance with the Act;

(ii) any event that results in the General Partner ceasing to be a general partner of the Partnership under the Act, provided that the Partnership shall not be dissolved and required to be wound up in connection with any such event if (A) at the time of the occurrence of such event there is at least one remaining general partner of the Partnership who is hereby authorized to and does carry on the business of the Partnership, or (B) within 90 days after the occurrence of such event, a majority of the Limited Partners agree in writing or vote to continue the business of the Partnership and to the appointment, effective as of the date of such event, if required, of one or more additional general partners of the Partnership; and

(iii) the entry of a decree of judicial dissolution under Section 17-802 of the Act.

(b) The parties agree that irreparable damage would be done to the goodwill and reputation of the Partners if any Limited Partner should bring an action to dissolve the Partnership. Care has been taken in this Agreement to provide for fair and just payment in liquidation of the interests of all Partners. Accordingly, to the fullest extent permitted by law, each Limited Partner hereby waives and renounces his right to such a decree of dissolution or to seek the appointment of a liquidator for the Partnership, except as provided herein.

Section 2.5 Purpose of the Partnership

The principal purpose of the Partnership is to act as the sole general partner or as the managing general partner (as the case may be) of each of the Funds and certain Voting Affiliated Feeder Funds pursuant to their respective Fund LP Agreements or governing documents and to undertake such related and incidental activities and execute and deliver such related documents necessary or incidental thereto. The purpose of the Partnership shall be limited to serving as a general partner of direct investment funds, including any of their Affiliates, and the provision of investment management and advisory services.

Section 2.6 Actions by Partnership

The Partnership may execute, deliver and perform, and the General Partner may execute and deliver, all contracts, agreements and other undertakings, and engage in all activities and transactions as may in the opinion of the General Partner be necessary or advisable to carry out the objects and purposes of the Partnership, without the approval or vote of any Limited Partner.

Section 2.7 Admission of Limited Partners

On the date hereof, the Persons whose names are set forth in the Schedule of Partners under the caption “Limited Partners” shall be admitted to the Partnership or shall continue, as the case may be, as limited partners of the Partnership upon their execution of a counterpart of this Agreement or such other instrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partner. Additional Limited Partners may be admitted to the Partnership in accordance with Section 6.1.

ARTICLE 3
CAPITAL

Section 3.1 Contributions to Capital

(a) Subject to the remaining provisions of this Section 3.1, (i) any required contribution of a Limited Partner to the capital of the Partnership shall be as set forth in the Schedule of Partners, and (ii) any such contributions to the capital of the Partnership shall be made as of the date of admission of such Limited Partner as a limited partner of the Partnership and as of each such other date as may be specified by the General Partner. Except as otherwise permitted by the General Partner, all contributions to the capital of the Partnership by each Limited Partner shall be payable exclusively in cash.

(b) APH shall make capital contributions from time to time to the extent necessary to ensure that the Partnership meets its obligations to make contributions of capital to each of the Funds.

(c) No Partner shall be obligated, nor shall any Partner have any right, to make any contribution to the capital of the Partnership other than as specified in this Section 3.1. No Limited Partner shall be obligated to restore any deficit balance in his Capital Account.

(d) To the extent, if any, that at the time of the Final Distribution (as defined in each of the Fund LP Agreements), it is determined that the Partnership, as a general partner of each of the Funds, is required to make any Clawback Payment with respect to any of the Funds, each Limited Partner shall be required to participate in such payment and contribute to the Partnership for ultimate distribution to the limited partners of the relevant Fund an amount equal to such Limited Partner’s Clawback Share of any Clawback Payment, but not in any event in excess of the cumulative amount theretofore distributed to such Limited Partner with respect to the Operating Profit attributable to such Fund. For purposes of determining each Limited Partner’s required contribution, each Limited Partner’s allocable share of any Escrow Account (as defined in the Fund LP Agreements), to the extent applied to satisfy any portion of a Clawback Payment, shall be treated as if it had been distributed to such Limited Partner and re-contributed by such Limited Partner pursuant to this Section 3.1(d) at the time of such application.

Section 3.2 Rights of Partners in Capital

(d) No Partner shall have the right to distributions or the return of any contribution to the capital of the Partnership except (i) for distributions in accordance with Section 4.1 or (ii) upon dissolution of the Partnership. The entitlement to any such return at such time shall be limited to the value of the Capital Account of the Partner. The General Partner shall not be liable for the return of any such amounts.

Section 3.3 Capital Accounts

(d) Each Partner’s Capital Account shall have an initial balance equal to the amount of cash and the net value of any securities or other property constituting such Partner’s initial contribution to the capital of the Partnership.

(e) Each Partner’s Capital Account shall be increased by the sum of:

(i) the amount of cash and the net value of any securities or other property constituting additional contributions by such Partner to the capital of the Partnership permitted pursuant to Section 3.1, plus

(ii) in the case of APH, any Capital Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus

(iii) the portion of any Operating Profit allocated to such Partner’s Capital Account pursuant to Section 3.4, plus

(iv) such Partner’s allocable share of any decreases in any reserves recorded by the Partnership pursuant to Section 3.6 and any receipts determined to be applicable to a prior period pursuant to Section 3.6(b), to the extent the General Partner determines that, pursuant to any provision of this Agreement, such item is to be credited to such Partner’s Capital Account on a basis which is not in accordance with the current respective Points of all Partners.

(f) Each Partner’s Capital Account shall be reduced by the sum of (without duplication):

(i) in the case of APH, any Capital Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus

(ii) the portion of any Operating Loss allocated to such Partner’s Capital Account pursuant to Section 3.4, plus

(iii) the amount of any cash and the net value of any property distributed to such Partner pursuant to Section 4.1 or Section 8.1 including any amount deducted pursuant to Section 4.2 or Section 5.4 from any such amount distributed, plus

(iv) any withholding taxes or other items payable by the Partnership and allocated to such Partner pursuant to Section 5.4(b), any increases in any reserves recorded by the Partnership pursuant to Section 3.6 and any payments determined to be applicable to a prior period pursuant to Section 3.6(b), to the extent the General Partner determines that, pursuant to any provision of this Agreement, such item is to be charged to such Partner’s Capital Account on a basis which is not in accordance with the current respective Points of all Partners.

(g) If securities and/or other property are to be distributed in kind to the Partners or Retired Partners, including in connection with a liquidation pursuant to Section 8.1, they shall first be written up or down to their fair market value as of the date of such distribution, thus creating gain or loss for the Partnership, and the value of the securities and/or other property received by each Partner and each Retired Partner as so determined shall be debited against such Person’s Capital Account at the time of distribution.

Section 3.4 Allocation of Profit and Loss

(a) Capital Profit and Operating Profit or Capital Loss and Operating Loss for any Fiscal Year shall be allocated to the Partners so as to produce Capital Accounts (computed after taking into account any other Capital Profit and Operating Profit or Capital Loss and Operating Loss for the Fiscal Year in which such event occurred and all distributions pursuant to Article 4 with respect to such Fiscal Year and after adding back each Partner’s share, if any, of Partner Nonrecourse Debt Minimum Gain, as defined in Treasury Regulations Sections 1.704 - 2(b)(2) and 1.704 - 2(i), or Partnership Minimum Gain, as defined in Treasury Regulations Sections 1.704 - 2(b)(2) and 1.704 - 2(d)) for the Partners such that a distribution of an amount of cash equal to such Capital Account balances in accordance with such Capital Account balances would be in the amounts, sequence and priority set forth in Article 4.

(b) To the extent that the allocations of Capital Loss or Operating Loss contemplated by Section 3.4(a) would cause the Capital Account of any Limited Partner to be less than zero, such Capital Loss or Operating Loss shall to that extent instead be allocated to and debited against the Capital Account of the General Partner (or, at the direction of the General Partner, to those Limited Partners who are members of the General Partner in proportion to their limited liability company interests in the General Partner). Following any such adjustment pursuant to Section 3.4(b) with respect to any Limited Partner, any Capital Profit or Operating Profit for any subsequent Fiscal Year which would otherwise be credited to the Capital Account of such Limited Partner pursuant to Section 3.4(a) shall instead be credited to the Capital Account of the General Partner (or relevant Limited Partners) until the cumulative amounts so credited to the Capital Account of the General Partner (or relevant Limited Partners) with respect to such Limited Partner pursuant to Section 3.4(b) is equal to the cumulative amount debited against the Capital Account of the General Partner (or relevant Limited Partners) with respect to such Limited Partner pursuant to Section 3.4(b).

(c) Each Limited Partner’s rights and entitlements as a Limited Partner are limited to the rights to receive allocations and distributions of Capital Profit and Operating Profit expressly conferred by this Agreement and any side letter or similar agreement entered into pursuant to Section 9.1(b) and the other rights expressly conferred by this Agreement and any such side letter or similar agreement or required by the Act, and a Limited Partner shall not be entitled to any other allocations, distributions or payments in respect of his interest, or to have or exercise any other rights, privileges or powers.

Section 3.5 Tax Allocations

(a) For United States federal, state and local income tax purposes, Partnership income, gain, loss, deduction or credit (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations of Capital Profit, Capital Loss, Operating Profit and Operating Loss pursuant to the provisions of Section 3.4 for such Fiscal Year, taking into account any variation between the adjusted tax basis and book value of Partnership property in accordance with the principles of Section 704(c) of the Code.

(b) If any Partner or Partners are treated for United States federal income tax purposes as realizing ordinary income because of receiving interests in the Partnership (whether under Section 83 of the Code or under any similar provision of any law, rule or regulation) and the Partnership is entitled to any offsetting deduction (net of any income realized by the Partnership as a result of such receipt), the Partnership’s net deduction shall be allocated to and among the Partners in such manner as to offset, as nearly as possible, the ordinary income realized by such Partner or Partners.

Section 3.6 Reserves; Adjustments for Certain Future Events

(a) Appropriate reserves may be created, accrued and charged against the Operating Profit or Operating Loss for contingent liabilities, if any, as of the date any such contingent liability becomes known to the General Partner or as of each other date as the General Partner deems appropriate, such reserves to be in the amounts which the General Partner deems necessary or appropriate. The General Partner may increase or reduce any such reserve from time to time by such amounts as the General Partner deems necessary or appropriate. The amount of any such reserve, or any increase or decrease therein, shall be proportionately charged or credited, as appropriate, to the Capital Accounts of those parties who are Partners at the time when such reserve is created, increased or decreased, as the case may be, in proportion to their respective Points at such time; provided that, if any individual reserve item, as adjusted by any increase therein, exceeds the lesser of $500,000 or one percent of the aggregate value of the Capital Accounts of all such Partners, the amount of such reserve, increase or decrease shall instead be charged or credited to those parties who were Partners at the time, as determined by the General Partner, of the act or omission giving rise to the contingent liability for which the reserve item was established in proportion to their respective Points at that time. The amount of any such reserve charged against the Capital Account of a Partner shall reduce the distributions such Partner would otherwise be entitled to under Section 4.1 or Section 8.1 hereof; and the amount of any such reserve credited to the Capital Account of a Partner shall increase the distributions such Partner would otherwise be entitled to under Section 4.1 or Section 8.1 hereof

(b) If at any time an amount is paid or received by the Partnership and such amount exceeds the lesser of $500,000 or one percent of the aggregate Capital Accounts of all Partners at the time of payment or receipt, and such amount was not accrued or reserved for but would nevertheless, in accordance with the Partnership’s accounting practices, be treated as applicable to one or more prior periods, then such amount may be proportionately charged or credited by the General Partner, as appropriate, to those parties who were Partners during such prior period or periods, based on each such Partner’s Points for such applicable period.

(c) If any amount is required by Section 3.6(a) or (b) to be credited to a Person who is no longer a Partner, such amount shall be paid to such Person in cash, with interest from the date on which the General Partner determines that such credit is required at the Reference Rate in effect on that date. Any amount required to be charged pursuant to Section 3.6(a) or (b) shall be debited against the current balance in the Capital Account of the affected Partners. To the extent that the aggregate current Capital Account balances of such affected Partners are insufficient to cover the full amount of the required charge, the deficiency shall be debited against the Capital Accounts of the other Partners in proportion to their respective Capital Account balances at such time; provided that each such other Partner shall be entitled to a preferential allocation, in proportion to and to the extent of such other Partner’s share of any such deficiency, together with a carrying charge at a rate equal to the Reference Rate, of any Operating Profit that would otherwise have been allocable after the date of such charge to the Capital Accounts of the affected Partners whose Capital Accounts were insufficient to cover the full amount of the required charge. In no event shall a current or former Partner be obligated to satisfy any amount required to be charged pursuant to Section 3.6(a) or (b) other than by means of a debit against such Partner’s Capital Account.

Section 3.7 Finality and Binding Effect of General Partner’s Determinations

All matters concerning the determination, valuation and allocation among the Partners with respect to any profit or loss of the Partnership and any associated items of income, gain, deduction, loss and credit, pursuant to any provision of this Article 3, including any accounting procedures applicable thereto, shall be determined by the General Partner unless specifically and expressly otherwise provided for by the provisions of this Agreement, and such determinations and allocations shall be final and binding on all the Partners.

Section 3.8 Alternative GP Vehicles

If the General Partner determines that for legal, tax, regulatory or other reasons (a) any investment or other activities of the Fund should be conducted through one or more parallel funds or other alternative investment vehicles as contemplated by the Fund LP Agreement, (b) any of such separate entities comprising the Fund should be managed or controlled by one or more separate entities serving as a general partner or in a similar capacity (each, an “Alternative GP Vehicle”), and (c) some or all of the Partners should participate through any such Alternative GP Vehicle, the General Partner may require any or all of the Partners, as determined by the General Partner, to participate directly or indirectly through any such Alternative GP Vehicle and to undertake such related and incidental activities and execute and deliver such related documents necessary or incidental thereto with and/or in lieu of the Partnership, and the General Partner shall have all necessary authority to implement such Alternative GP Vehicle; provided that to the maximum extent practicable and subject to applicable legal, tax, regulatory or similar technical reasons, each Partner shall have the same economic interest in all material respects in an Alternative GP Vehicle formed pursuant to this Section 3.8 as such Partner would have had if it had participated in all Portfolio Investments through the Partnership, and the terms of such Alternative GP Vehicle shall be substantially the same in all material respects to those of the Partnership and this Agreement. Each Partner shall take such actions and execute such documents as the General Partner determines are reasonably needed to accomplish the foregoing.

ARTICLE 4
DISTRIBUTIONS

Section 4.1 Distributions

(e) Any amount of cash or property received as a distribution from any of the Funds by the Partnership in its capacity as a partner, to the extent such amount is determined by reference to the capital commitment of the Partnership in, or the capital contributions of the Partnership to, any of the Funds, shall be promptly distributed by the Partnership to APH.

(f) The General Partner shall use reasonable efforts to cause the Partnership to distribute, as promptly as practicable after receipt by the Partnership, any available cash or property attributable to items included in the determination of Operating Profit, subject to the provisions of section 10.3 of the Fund LP Agreements and subject to the retention of such reserves as the General Partner considers appropriate for purposes of the prudent and efficient financial operation of the Partnership’s business including in accordance with Section 3.6. Any such distributions (before adjustment for Holdback Amounts) shall be made to Partners in proportion to their respective Points, determined:

(v) in the case of any amount of cash or property received from any of the Funds that is attributable to the disposition of a Portfolio Investment by such Fund, as of the date of such disposition by such Fund; and

(vi) in any other case, as of the date of receipt of such cash or property by the Partnership.

Notwithstanding the foregoing, the General Partner shall retain from the distribution amount apportioned to each Limited Partner other than APH any Holdback Amount with respect to such Limited Partner, determined in accordance with such Limited Partner’s Award Letter.

(g) Distributions of amounts attributable to Operating Profit shall be made in cash; provided, however, that if the Partnership receives a distribution from the Fund in the form of property other than cash, the General Partner may distribute such property in kind to Partners in proportion to their respective Points.

(h) Any distributions or payments in respect of the interests of Limited Partners unrelated to Capital Profit or Operating Profit shall be made at such time, in such manner and to such Limited Partners as the General Partner shall determine.

Section 4.2 Withholding of Certain Amounts

(h) If the Partnership incurs a withholding tax or other tax obligation with respect to the share of Partnership income allocable to any Partner, then the General Partner, without limitation of any other rights of the Partnership, may cause the amount of such obligation to be debited against the Capital Account of such Partner when the Partnership pays such obligation, and any amounts then or thereafter distributable to such Partner shall be reduced by the amount of such taxes. If the amount of such taxes is greater than any such then distributable amounts, then such Partner and any successor to such Partner’s interest shall indemnify and hold harmless the Partnership and the General Partner against, and shall pay to the Partnership as a contribution to the capital of the Partnership, upon demand of the General Partner, the amount of such excess.

(i) The General Partner may withhold from any distribution to any Limited Partner pursuant to this Agreement any other amounts due from such Limited Partner or a Related Party (without duplication) to the Partnership or to any other Affiliate of AGM pursuant to any binding agreement or published policy to the extent not otherwise paid. Any amounts so withheld shall be applied by the General Partner to discharge the obligation in respect of which such amounts were withheld.

Section 4.3 Limitation on Distributions

Notwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner on behalf of the Partnership, shall not make a distribution to any Partner on account of his interest in the Partnership if such distribution would violate the Act or other applicable law.

Section 4.4 Distributions in Excess of Basis

Notwithstanding anything in this Agreement to the contrary, the General Partner may refrain from making, at any time prior to the dissolution of the Partnership, all or any portion of any cash distribution that otherwise would be made to a Partner or Retired Partner, if such distribution would exceed such Person’s U.S. federal income tax basis in the Partnership. Any amount that is not distributed to a Partner or Retired Partner due to the preceding sentence, as determined by the General Partner, either shall be retained by the Partnership on such Person’s behalf or loaned to such Person. Subject to the first sentence of this Section 4.4, 100% of any or all subsequent cash distributions shall be distributed to such Person (or, if there is more than one such Person, pro rata to all such Persons based on the aggregate amount of distributions each such Person has not yet received) until each such Person has received the same aggregate amount of distributions such Person would have received had distributions to such Person not been deferred pursuant to this Section 4.4. If any amount is loaned to a Partner or Retired Partner pursuant to this Section 4.4, (i) any amount thereafter distributed to such Person shall be applied to repay the principal amount of such loan and (ii) interest, if any, accrued or received by the Partnership on such loan shall be allocated and distributed to such Person. Any such loan shall be repaid no later than immediately prior to the liquidation of the Partnership. Until such repayment, for purposes of any determination hereunder based on amounts distributed to a Person, the principal amount of such loan shall be treated as having been distributed to such Person.

ARTICLE 5
MANAGEMENT

Section 5.1 Rights and Powers of the General Partner

(j) Subject to the terms and conditions of this Agreement, the General Partner shall have complete and exclusive responsibility (i) for all management decisions to be made on behalf of the Partnership and (ii) for the conduct of the business and affairs of the Partnership, including all such decisions and all such business and affairs to be made or conducted by the Partnership in its capacity as Fund General Partner of any of the Funds and certain Voting Affiliated Feeder Funds.

(k) Without limiting the generality of the foregoing, the General Partner shall have full power and authority to execute, deliver and perform such contracts, agreements and other undertakings, and to engage in all activities and transactions, as it may deem necessary or advisable for, or as may be incidental to, the conduct of the business contemplated by this Section 5.1, including, without in any manner limiting the generality of the foregoing, contracts, agreements, undertakings and transactions with any Partner or with any other Person having any business, financial or other relationship with any Partner or Partners; provided that the General Partner shall not have authority to cause the Partnership to borrow any funds for its own account on a secured basis without the consent of the Required Voting Partners. The Partnership, and the General Partner on behalf of the Partnership, may enter into and perform the Fund LP Agreements, any governing documents of the Voting Affiliated Feeder Funds and any documents contemplated thereby or related thereto and (subject to any vote requirement in Section 5.2(d)(iv)) any amendments thereto, without any further act, vote or approval of any Person, including any Partner, notwithstanding any other provision of this Agreement. The General Partner is hereby authorized to enter into the documents described in the preceding sentence on behalf of the Partnership, but such authorization shall not be deemed a restriction on the power of the General Partner to enter into other documents on behalf of the Partnership. Except as otherwise expressly provided herein or as required by law, all powers and authority vested in the General Partner by or pursuant to this Agreement or the Act shall be construed as being exercisable by the General Partner in its sole and absolute discretion.

(l) The General Partner shall be the tax matters partner for purposes of Section 6231(a)(7) of the Code. Each Partner agrees not to treat, on his United States federal income tax return or in any claim for a refund, any item of income, gain, loss, deduction or credit in a manner inconsistent with the treatment of such item by the Partnership. The General Partner shall have the exclusive authority to make any elections required or permitted to be made by the Partnership under any provisions of the Code or any other revenue laws.

Section 5.2 Delegation of Duties

(d) Subject to Section 5.1, the General Partner may delegate to any Person or Persons any of the duties, powers and authority vested in it hereunder on such terms and conditions as it may consider appropriate.

(e) Without limiting the generality of Section 5.2(a), the General Partner shall have the power and authority to appoint any Person, including any Person who is a Limited Partner, to provide services to and act as an employee or agent of the Partnership and/or General Partner, with such titles and duties as may be specified by the General Partner. Any Person appointed by the General Partner to serve as an employee or agent of the Partnership shall be subject to removal at any time by the General Partner; and shall report to and consult with the General Partner at such times and in such manner as the General Partner may direct.

(f) Any Person who is a Limited Partner and to whom the General Partner delegates any of its duties pursuant to this Section 5.2 or any other provision of this Agreement shall be subject to the same standard of care, and shall be entitled to the same rights of indemnification and exoneration, applicable to the General Partner under and pursuant to Section 5.7, unless such Person and the General Partner mutually agree to a different standard of care or right to indemnification and exoneration to which such Person shall be subject.

(g) Except as otherwise expressly provided herein, action by the General Partner with respect to any of the following matters shall be taken only in accordance with the directions of the Required Voting Partners:

(i) the exercise of the Partnership’s authority to borrow any funds on a secured basis for the account of the Partnership;

(ii) the determination of whether to conduct a business other than serving as a general partner of private equity funds;

(iii) the amendment of this Agreement, and the exercise of the authority of the Partnership with respect to the approval of any amendment to the Fund LP Agreement, in each case, that adversely affects, obligations, rights or economic interests of Limited Partners whose services to AGM or its Affiliates are substantially dedicated to AGM’s or its Affiliates’ private equity business; and

(iv) to the fullest extent permitted by law, the voluntary dissolution of the Partnership, and the exercise of the authority of the Partnership to cause a voluntary dissolution of any of the Funds other than in connection with an Event of Dissolution (as defined in the applicable Fund LP Agreement) of the Funds.

The foregoing shall not restrict the General Partner from delegating authority to execute or implement any such determinations made by the General Partner.

(h) The General Partner shall be permitted to designate one or more committees of the Partnership which committees may include Limited Partners as members. Any such committees shall have such powers and authority granted by the General Partner. Any Limited Partner who has agreed to serve on a committee shall not be deemed to have the power to bind or act for or on behalf of the Partnership in any manner and in no event shall a member of a committee be considered a general partner of the Partnership by agreement, estoppel or otherwise or be deemed to participate in the control of the business of the Partnership as a result of the performance of his duties hereunder or otherwise.

(i) The General Partner shall cause the Partnership to enter into an arrangement with the Management Company which arrangement shall require the Management Company to pay all costs and expenses of the Partnership.

Section 5.3 Transactions with Affiliates

To the fullest extent permitted by applicable law, the General Partner (or any Affiliate of the General Partner), when acting on behalf of the Partnership, is hereby authorized to (a) purchase property from, sell property to, lend money to or otherwise deal with any Affiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of any of the foregoing Persons, and (b) obtain services from any Affiliates, any Limited Partner, the Partnership, any of the Funds or any Affiliate of the foregoing Persons.

Section 5.4 Expenses

(d) Subject to the arrangement contemplated by Section 5.2(f), the Partnership will pay, or will reimburse the General Partner for, all costs and expenses arising in connection with the organization and operations of the Partnership.

(e) Any withholding taxes payable by the Partnership, to the extent determined by the General Partner to have been paid or withheld on behalf of, or by reason of particular circumstances applicable to, one or more but fewer than all of the Partners, shall be allocated among and debited against the Capital Accounts of only those Partners on whose behalf such payments are made or whose particular circumstances gave rise to such payments in accordance with Section 4.2.

Section 5.5 Rights of Limited Partners

(a) Limited Partners shall have no right to take part in the management or control of the Partnership’s business, nor shall they have any right or authority to act for the Partnership or to vote on matters other than as set forth in this Agreement or as required by applicable law.

(b) Without limiting the generality of the foregoing, the General Partner shall have the full and exclusive authority, without the consent of any Limited Partner, to compromise the obligation of any Limited Partner to make a capital contribution or to return money or other property paid or distributed to such Limited Partner in violation of the Act.

(c) Nothing in this Agreement shall entitle any Partner to any compensation for services rendered to or on behalf of the Partnership as an agent or in any other capacity, except for any amounts payable in accordance with this Agreement.

(d) Subject to the Fund LP Agreements and to full compliance with AGM’s code of ethics and other written policies relating to personal investment transactions, membership in the Partnership shall not prohibit a Limited Partner from purchasing or selling as a passive investor any interest in any asset.

Section 5.6 Other Activities of General Partner

Nothing in this Agreement shall prohibit the General Partner from engaging in any activity other than acting as General Partner hereunder.

Section 5.7 Duty of Care; Indemnification

(a) The General Partner (including, without limitation, for this purpose each former and present director, officer, manager, member, employee and stockholder of the General Partner) and each Limited Partner (including any former Limited Partner) in his capacity as such, and to the extent such Limited Partner participates, directly or indirectly, in the Partnership’s activities, whether or not a Retired Partner (each, a “Covered Person” and collectively, the “Covered Persons”), shall not be liable to the Partnership or to any of the other Partners for any loss, claim, damage or liability occasioned by any acts or omissions in the performance of his services hereunder, unless it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such loss, claim, damage or liability is due to an act or omission of a Covered Person (i) made in bad faith or with criminal intent or (ii) that adversely affected any Fund and that failed to satisfy the duty of care owed pursuant to the applicable Fund LP Agreement or as otherwise required by law.

(b) A Covered Person shall be indemnified to the fullest extent permitted by law by the Partnership against any losses, claims, damages, liabilities and expenses (including attorneys’ fees, judgments, fines, penalties and amounts paid in settlement) incurred by or imposed upon him by reason of or in connection with any action taken or omitted by such Covered Person arising out of the Covered Person’s status as a Partner or his activities on behalf of the Partnership, including in connection with any action, suit, investigation or proceeding before any judicial, administrative, regulatory or legislative body or agency to which it may be made a party or otherwise involved or with which it shall be threatened by reason of being or having been the General Partner or a Limited Partner or by reason of serving or having served, at the request of the Partnership in its capacity as Fund General Partner of the Funds, as a director, officer, consultant, advisor, manager, member or partner of any enterprise in which any of the Funds has or had a financial interest, including issuers of Portfolio Investments; provided that the Partnership may, but shall not be required to, indemnify a Covered Person with respect to any matter as to which there has been a Final Adjudication that his acts or his failure to act (i) were in bad faith or with criminal intent or (ii) were of a nature that makes indemnification by the Funds unavailable. The right to indemnification granted by this Section 5.7 shall be in addition to any rights to which a Covered Person may otherwise be entitled and shall inure to the benefit of the successors by operation of law or valid assigns of such Covered Person. The Partnership shall pay the expenses incurred by a Covered Person in defending a civil or criminal action, suit, investigation or proceeding in advance of the final disposition of such action, suit, investigation or proceeding, upon receipt of an undertaking by the Covered Person to repay such payment if there shall be a Final Adjudication that he is not entitled to indemnification as provided herein. In any suit brought by the Covered Person to enforce a right to indemnification hereunder it shall be a defense that the Covered Person has not met the applicable standard of conduct set forth in this Section 5.7, and in any suit in the name of the Partnership to recover expenses advanced pursuant to the terms of an undertaking the Partnership shall be entitled to recover such expenses upon Final Adjudication that the Covered Person has not met the applicable standard of conduct set forth in this Section 5.7. In any such suit brought to enforce a right to indemnification or to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled to be indemnified, or to an advancement of expenses, shall be on the Partnership (or any Limited Partner acting derivatively or otherwise on behalf of the Partnership or the Limited Partners). The General Partner may not satisfy any right of indemnity or reimbursement granted in this Section 5.7 or to which it may be otherwise entitled except out of the assets of the Partnership (including, without limitation, insurance proceeds and rights pursuant to indemnification agreements), and no Partner shall be personally liable with respect to any such claim for indemnity or reimbursement. The General Partner may enter into appropriate indemnification agreements and/or arrangements reflective of the provisions of this Article 5 and obtain appropriate insurance coverage on behalf and at the expense of the Partnership to secure the Partnership’s indemnification obligations hereunder and may enter into appropriate indemnification agreements and/or arrangements reflective of the provisions of this Article 5. Each Covered Person shall be deemed a third party beneficiary (to the extent not a direct party hereto) to this Agreement and, in particular, the provisions of this Article 5, and shall be entitled to the benefit of the indemnity granted to the Partnership by each of the Funds pursuant to the terms of the Fund LP Agreements.

(c) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Partners, the Covered Person shall not be liable to the Partnership or to any Partner for his good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Covered Person otherwise existing at law or in equity to the Partnership or the Partners, are agreed by the Partners to replace such other duties and liabilities of each such Covered Person.

(d) Notwithstanding any of the foregoing provisions of this Section 5.7, the Partnership may but shall not be required to indemnify (i) a Retired Partner (or any other former Limited Partner) with respect to any claim for indemnification or advancement of expenses arising from any conduct occurring more than six months after the date of such Person’s retirement (or other withdrawal or departure), or (ii) a Limited Partner with respect to any claim for indemnification or advancement of expenses as a director, officer or agent of the issuer of any Portfolio Investment to the extent arising from conduct in such capacity occurring more than six months after the complete disposition of such Portfolio Investment by the Fund.

ARTICLE 6
ADMISSIONS, TRANSFERS AND WITHDRAWALS

Section 6.1 Admission of Additional Limited Partners; Effect on Points

(j) The General Partner may at any time admit as an additional Limited Partner any Person who has agreed to be bound by this Agreement and may assign Points to such Person and/or increase the Points of any existing Limited Partner, in each case, subject to and in accordance with Section 7.1.

(k) Each additional Limited Partner shall execute (i) either a counterpart to this Agreement or a separate instrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partner and (ii) the documents contemplated by Section 7.1(b), and shall be admitted as a Limited Partner upon such execution.

Section 6.2 Admission of Additional General Partner

The General Partner may admit one or more additional general partners at any time without the consent of any Limited Partner, other than the Required Voting Partners if such additional general partner is not an Affiliate of AGM. No reduction in the Points of any Limited Partner shall be made as a result of the admission of an additional general partner or the increase in the Points of any general partner without the consent of such Limited Partner. Any additional general partner shall be admitted as a general partner upon its execution of a counterpart signature page to this Agreement.

Section 6.3 Transfer of Interests of Limited Partners

(f) No Transfer of any Limited Partner’s interest in the Partnership, whether voluntary or involuntary, shall be valid or effective, and no transferee shall become a substituted Limited Partner, unless the prior written consent of the General Partner has been obtained, which consent may be given or withheld by the General Partner. Notwithstanding the foregoing, any Limited Partner may Transfer to any Related Party of such Limited Partner all or part of such Limited Partner’s interest in the Partnership (including, without limitation, his or its right to receive distributions of Operating Profit); provided that the Transfer has been previously approved in writing by the General Partner, such approval not to be unreasonably withheld. In the event of any Transfer, all of the conditions of the remainder of this Section 6.3 must also be satisfied.

(g) A Limited Partner or his legal representative shall give the General Partner notice before the proposed effective date of any voluntary Transfer and within 30 days after any involuntary Transfer, and shall provide sufficient information to allow legal counsel acting for the Partnership to make the determination that the proposed Transfer will not result in any of the following consequences:

(i) require registration of the Partnership or any interest therein under any securities or commodities laws of any jurisdiction;

(ii) result in a termination of the Partnership under Section 708(b)(1)(B) of the Code or jeopardize the status of the Partnership as a partnership for United States federal income tax purposes; or

(iii) violate, or cause the Partnership, the General Partner or any Limited Partner to violate, any applicable law, rule or regulation of any jurisdiction.

Such notice must be supported by proof of legal authority and a valid instrument of assignment acceptable to the General Partner.

(h) In the event any Transfer permitted by this Section 6.3 shall result in multiple ownership of any Limited Partner’s interest in the Partnership, the General Partner may require one or more trustees or nominees to be designated to represent a portion of the interest transferred or the entire interest transferred for the purpose of receiving all notices which may be given and all payments which may be made under this Agreement, and for the purpose of exercising the rights which the transferees have pursuant to the provisions of this Agreement.

(i) A permitted transferee shall be entitled to the allocations and distributions attributable to the interest in the Partnership transferred to such transferee and to Transfer such interest in accordance with the terms of this Agreement; provided that such transferee shall not be entitled to the other rights of a Limited Partner as a result of such transfer until he becomes a substituted Limited Partner. No transferee may become a substituted Limited Partner except with the prior written consent of the General Partner (which consent may be given or withheld by the General Partner). Such transferee shall be admitted to the Partnership as a substituted Limited Partner upon execution of a counterpart of this Agreement or such other instrument evidencing, to the satisfaction of the General Partner, such Limited Partner’s intent to become a Limited Partner. Notwithstanding the above, the Partnership and the General Partner shall incur no liability for allocations and distributions made in good faith to the transferring Limited Partner until a written instrument of Transfer has been received and accepted by the Partnership and recorded on its books and the effective date of the Transfer has passed.

(j) Any other provision of this Agreement to the contrary notwithstanding, to the fullest extent permitted by law, any successor or transferee of any Limited Partner’s interest in the Partnership shall be bound by the provisions hereof. Prior to recognizing any Transfer in accordance with this Section 6.3, the General Partner may require the transferee to make certain representations and warranties to the Partnership and Partners and to accept, adopt and approve in writing all of the terms and provisions of this Agreement.

(k) In the event of a Transfer or in the event of a distribution of assets of the Partnership to any Partner, the Partnership, at the direction of the General Partner, may, but shall not be required to, file an election under Section 754 of the Code and in accordance with the applicable Treasury Regulations, to cause the basis of the Partnership’s assets to be adjusted as provided by Section 734 or 743 of the Code.

(l) The Partnership shall maintain books for the purpose of registering the transfer of partnership interests in the Partnership. No transfer of a partnership interest shall be effective until the transfer of the partnership interest is registered upon books maintained for that purpose by or on behalf of the Partnership.

Section 6.4 Withdrawal of Partners

A Partner in the Partnership may not withdraw from the Partnership prior to its dissolution. For the avoidance of doubt, any Limited Partner who transfers to a Related Party such Limited Partner’s entire remaining entitlement to allocations and distributions shall remain a Limited Partner, notwithstanding the admission of the transferee Related Party as a Limited Partner, for as long as the transferee Related Party remains a Limited Partner.

Section 6.5 Pledges

(a) A Limited Partner shall not pledge or grant a security interest in such Limited Partner’s interest in the Partnership unless the prior written consent of the General Partner has been obtained (which consent may be given or withheld by the General Partner).

(b) Notwithstanding Section 6.5(a), any Limited Partner may grant to a bank or other financial institution a security interest in such part of such Limited Partner’s interest in the Partnership as relates solely to the right to receive distributions of Operating Profit in the ordinary course of obtaining bona fide loan financing to fund his contributions to the capital of the Partnership or Co-Investors (A). If the interest of the Limited Partner in the Partnership or Co-Investors (A) or any portion thereof in respect of which a Limited Partner has granted a security interest ceases to be owned by such Limited Partner in connection with the exercise by the secured party of remedies resulting from a default by such Limited Partner or upon the occurrence of such similar events with respect to such Limited Partner’s interest in Co-Investors (A), such interest of the Limited Partner in the Partnership or portion thereof shall thereupon become a non-voting interest and the holder thereof shall not be entitled to vote on any matter pursuant to this Agreement and, if applicable, shall no longer be considered a Voting Partner for purposes of this Agreement.

(c) For purposes of the grant, pledge, attachment or perfection of a security interest in a partnership interest in the Partnership or otherwise, each such partnership interest shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8‑102(a)(15) thereof) as in effect from time to time in the State of Delaware (the “DEUCC”), and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.

(d) Any partnership interest in the Partnership may be evidenced by a certificate issued by the Partnership in such form as the General Partner may approve. Every certificate representing an interest in the Partnership shall bear a legend substantially in the following form:

Each partnership interest constitutes a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8‑102(a)(15) thereof) as in effect from time to time in the State of Delaware (the “UCC”), and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.

THE TRANSFER OF THIS CERTIFICATE AND THE PARTNERSHIP INTERESTS REPRESENTED HEREBY IS RESTRICTED AS DESCRIBED IN THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF THE PARTNERSHIP, EFFECTIVE AS OF JANUARY 1, 2014, AS THE SAME MAY BE AMENDED OR RESTATED FROM TIME TO TIME.

(e) Each certificate representing a partnership interest in the Partnership shall be executed by manual or facsimile signature of the General Partner on behalf of the Partnership.

(f) Notwithstanding any provision of this Agreement to the contrary, to the extent that any provision of this Agreement is inconsistent with any non-waivable provision of Article 8 of the DEUCC, such provision of Article 8 of the DEUCC shall control.

ARTICLE 7
ALLOCATION OF POINTS; ADJUSTMENTS OF POINTS
AND RETIREMENT OF PARTNERS

Section 7.1 Allocation of Points

(c) Except as otherwise provided herein, the General Partner shall be responsible for the allocation of Points from time to time to the Limited Partners. The General Partner may allocate Points to a new Limited Partner and/or increase the Points of any existing Limited Partner, in each case, solely in accordance with the terms and conditions set forth herein.

(d) Unless otherwise agreed by the General Partner, the allocation of Points to any Limited Partner shall not become effective until:

(v) the receipt of the following documents, in form and substance reasonably satisfactory to the General Partner, executed by such Limited Partner: (A) a customary and standard guarantee or guarantees, for the benefit of Fund investors, of the Limited Partner’s Clawback Share of the Partnership’s obligation to make Clawback Payments, and (B) a customary and standard undertaking to reimburse APH for any payment made by it (or by another AGM Affiliate) that is attributable to such Limited Partner’s Clawback Share of any Clawback Payment; and

(vi) the effective date of the acceptance by Co-Investors (A) of a capital commitment from such Limited Partner (or his Related Party, as applicable) in an amount equal to the percentage of total Fund commitments specified in the Points allocation notice delivered to such Limited Partner in writing by the General Partner. Upon the occurrence of a material default, after the expiration of the applicable cure period set forth in section 4.2 of the Co-Investors (A) Partnership Agreement, in the obligation to contribute capital to Co-Investors (A) in accordance with the Co-Investors (A) Partnership Agreement by a Limited Partner, the General Partner may reduce or eliminate the Points of any such Limited Partner (including the Vested Points of any Retired Partner).

(e) The General Partner shall maintain on the books and records of the Partnership a record of the number of Points allocated to each Partner and shall give notice to each Limited Partner of the number of such Limited Partner’s Points upon admission to the Partnership of such Limited Partner and promptly upon any change in such Limited Partner’s Points pursuant to this Article 7 and such notice shall include the calculations used by the General Partner to determine the amount of any such reduction.

(f) In the event that the General Partner in good faith enters into an agreement with respect to a specific transaction pursuant to which a Person other than AGM, a subsidiary of AGM or any of their respective personnel would receive a distribution of Operating Profit that would be made prior to any distribution of Operating Profit with respect to the same transaction for Limited Partners whose services to AGM or its Affiliates are substantially dedicated to AGM’s or its Affiliates’ private equity business (a “Third Party Priority Distribution”), distributions of Operating Profit with respect to such transaction to Partners must be commenced following the Third Party Priority Distribution at the same time to all Partners, in each case, in accordance with Section 4.1(b).

Section 7.2 Retirement of Partner

(m) A Limited Partner shall become a Retired Partner upon:

(i) delivery to such Limited Partner of a notice by the General Partner terminating such Limited Partner’s employment by AGM or an Affiliate thereof, unless otherwise determined by the General Partner;

(ii) delivery by such Limited Partner of a notice to the General Partner, AGM or an Affiliate thereof stating that such Limited Partner elects to resign from or otherwise terminate his or her employment by or service to AGM or an Affiliate thereof; or

(iii) the death of the Limited Partner, whereupon the estate of the deceased Limited Partner shall be treated as a Retired Partner in the place of the deceased Limited Partner, or the Disability of the Limited Partner.

(n) Nothing in this Agreement shall obligate the General Partner to treat Retired Partners alike, and the exercise of any power or discretion by the General Partner in the case of any one such Retired Partner shall not create any obligation on the part of the General Partner to take any similar action in the case of any other such Retired Partner, it being understood that any power or discretion conferred upon the General Partner shall be treated as having been so conferred as to each such Retired Partner separately.

Section 7.3 Additional Points

If one or more Partners or Retired Partners is assigned additional Points and such Partner or Retired Partner and the General Partner agree in connection with such assignment that such assignment may be, for purposes of Section 83 of the Code, a transfer in connection with the performance of services of an interest that would not qualify as a “profits interest” within the meaning of IRS Revenue Procedure 93-27, then to the extent mutually agreed by such Partner or Retired Partner and the General Partner, the Partnership may make such adjustments to the amounts allocated and distributed to such Partner or Retired Partner with respect to such interest (and corresponding adjustments to other allocations and distributions for Partners and Retired Partners as determined by the General Partner) so as to cause such interest to qualify as a “profits interest” within the meaning of IRS Revenue Procedure 93-27.

ARTICLE 8
DISSOLUTION AND LIQUIDATION

Section 8.1 Dissolution and Liquidation of Partnership

(o) Upon dissolution of the Partnership in accordance with the Act, the General Partner shall liquidate the business and administrative affairs of the Partnership, except that, if the General Partner is unable to perform this function, a liquidator may be elected by a majority in interest (determined by Points) of Limited Partners and upon such election such liquidator shall liquidate the Partnership. Capital Profit and Capital Loss, Operating Profit and Operating Loss during the Fiscal Years that include the period of liquidation shall be allocated pursuant to Section 3.4. The proceeds from liquidation shall be distributed in the following manner:

(i) first, the debts, liabilities and obligations of the Partnership including the expenses of liquidation (including legal and accounting expenses incurred in connection therewith), up to and including the date that distribution of the Partnership’s assets to the Partners has been completed, shall be satisfied (whether by payment or by making reasonable provision for payment thereof); and

(ii) thereafter, the Partners shall be paid amounts pro rata in accordance with and up to the positive balances of their respective Capital Accounts, as adjusted pursuant to Article 3 to give effect to the distribution principles of Article 4.

(p) Anything in this Section 8.1 to the contrary notwithstanding, the General Partner or liquidator may distribute ratably in kind rather than in cash, upon dissolution, any assets of the Partnership in accordance with the priorities set forth in Section 8.1(a), provided that if any in kind distribution is to be made the assets distributed in kind shall be valued as of the actual date of their distribution and charged as so valued and distributed against amounts to be paid under Section 8.1(a).

ARTICLE 9
GENERAL PROVISIONS

Section 9.1 Amendment of Partnership Agreement and Co-Investors (A) Partnership Agreement

(e) The General Partner may amend this Agreement at any time, in whole or in part, without the consent of any Limited Partner by giving notice of such amendment to any Limited Partner whose rights or obligations as a Limited Partner pursuant to this Agreement are changed thereby; provided that any amendment that would effect an adverse change in the contractual rights or obligations of a Partner (such rights or obligations determined without regard to the amendment power reserved herein) may only be made if the written consent of such Partner is obtained prior to the effectiveness thereof; provided that any amendment that increases a Partner’s obligation to contribute to the capital of the Partnership or increases such Partner’s Clawback Share shall not be effective with respect to such Partner, unless such Partner consents thereto in advance in writing. Notwithstanding the foregoing, the General Partner may amend this Agreement at any time, in whole or in part, without the consent of any Limited Partner to enable the Partnership to (i) comply with the requirements of the “Safe Harbor” Election within the meaning of the Proposed Revenue Procedure of Notice 2005-43, 2005-24 IRB 1, Proposed Treasury Regulation Section 1.83-3(e)(1) or Proposed Treasury Regulation Section 1.704-1(b)(4)(xii) at such time as such proposed Procedure and Regulations are effective and to make any such other related changes as may be required by pronouncements or Treasury Regulations issued by the Internal Revenue Service or Treasury Department after the date of this Agreement and (ii) comply with applicable law; provided that any amendment pursuant to clauses (i) or (ii) that would cause a Limited Partner’s rights to allocations and distributions to suffer a material adverse change only may be made if the written consent of such Limited Partner is obtained prior to the effectiveness thereof. An adjustment of Points shall not be considered an amendment to the extent effected in compliance with the provisions of Section 7.1 or Section 7.3 as in effect on the date hereof or as hereafter amended in compliance with the requirements of this Section 9.1(a). The General Partner’s approval of or consent to any transaction resulting in the substitution of another Person in place of the Partnership as the managing or general partner of any of the Funds or any change to the scheme of distribution under any of the Fund LP Agreements that would have the effect of reducing the Partnership’s allocable share of the Net Income of any Fund shall require the consent of any Limited Partner adversely affected thereby.

(f) Notwithstanding the provisions of this Agreement, including Section 9.1(a), it is hereby acknowledged and agreed that the General Partner on its own behalf or on behalf of the Partnership without the approval of any Limited Partner or any other Person may enter into one or more side letters or similar agreements with one or more Limited Partners which have the effect of establishing rights under, or altering or supplementing the terms of this Agreement. The parties hereto agree that any terms contained in a side letter or similar agreement with one or more Limited Partners shall govern with respect to such Limited Partner or Limited Partners notwithstanding the provisions of this Agreement. Any such side letters or similar agreements shall be binding upon the Partnership or the General Partner, as applicable, and the signatories thereto as if the terms were contained in this Agreement, but no such side letter or similar agreement between the General Partner and any Limited Partner or Limited Partners and the Partnership shall adversely amend the contractual rights or obligations of any other Limited Partner without such other Limited Partner’s prior consent.

(g) The provisions of this Agreement that affect the terms of the Co-Investors (A) Partnership Agreement applicable to Limited Partners constitute a “side letter or similar agreement” between each Limited Partner and the general partner of Co-Investors (A), which has executed this Agreement exclusively for purposes of confirming the foregoing.

Section 9.2 Special Power-of-Attorney

(g) Each Partner hereby irrevocably makes, constitutes and appoints the General Partner with full power of substitution, the true and lawful representative and attorney-in-fact, and in the name, place and stead of such Partner, with the power from time to time to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish:

(i) any amendment to this Agreement which complies with the provisions of this Agreement (including the provisions of Section 9.1);

(ii) all such other instruments, documents and certificates which, in the opinion of legal counsel to the Partnership, may from time to time be required by the laws of the United States of America, the State of Delaware or any other jurisdiction, or any political subdivision or agency thereof, or which such legal counsel may deem necessary or appropriate to effectuate, implement and continue the valid and subsisting existence and business of the Partnership as a limited partnership;

(iii) all such instruments, certificates, agreements and other documents relating to the conduct of the investment program of any of the Funds which, in the opinion of such attorney-in-fact and the legal counsel to the Funds, are reasonably necessary to accomplish the legal, regulatory and fiscal objectives of the Funds in connection with its or their acquisition, ownership and disposition of investments, including, without limitation:


(A)	the governing documents of any management entity formed as a part of the tax planning for any of the Funds and any amendments thereto; and


(B)	documents relating to any restructuring transaction with respect to any of the Funds’ investments,

provided that such documents referred to in clauses (A) and (B) above, viewed individually or in the aggregate, provide equivalent financial and economic rights and obligations with respect to such Limited Partner and otherwise do not:


(1)	increase the Limited Partner’s financial obligation to make capital contributions with respect to the relevant Fund (directly or through any associated vehicle in which the Limited Partner holds an interest);


(2)	diminish the Limited Partner’s entitlement to share in profits and distributions with respect to the relevant Fund (directly or through any associated vehicle in which the Limited Partner holds an interest);


(3)	cause the Limited Partner to become subject to increased personal liability for any debts or obligations of the Partnership or other Partners; or


(4)	otherwise result in an adverse change in the overall rights or obligations of the Limited Partner in relation to the conduct of the investment program of any of the Funds;

(iv) any instrument or document necessary or advisable to implement the provisions of Section 3.8 of this Agreement, including, but not limited to, the exempted limited partnership agreement of Apollo Advisors VIII (EH), L.P., a Cayman Islands limited partnership, or any joinder or deed of adherence in relation to such Partner’s admission as a partner of Apollo Advisors VIII (EH), L.P.;

(v) any written notice or letter of resignation from any board seat or office of any Person (other than a company that has a class of equity securities registered under the United States Securities Exchange Act of 1934, as amended, or that is registered under the United States Investment Company Act of 1940, as amended), which board seat or office was occupied or held at the request of the Partnership or any of its Affiliates; and

(vi) all such proxies, consents, assignments and other documents as the General Partner determines to be necessary or advisable in connection with any merger or other reorganization, restructuring or other similar transaction entered into in accordance with this Agreement (including the provisions of Section 9.5(c)).

(h) Each Limited Partner is aware that the terms of this Agreement permit certain amendments to this Agreement to be effected and certain other actions to be taken or omitted by or with respect to the Partnership without his consent. If an amendment of the Certificate or this Agreement or any action by or with respect to the Partnership is taken by the General Partner in the manner contemplated by this Agreement, each Limited Partner agrees that, notwithstanding any objection which such Limited Partner may assert with respect to such action, the General Partner is authorized and empowered, with full power of substitution, to exercise the authority granted above in any manner which may be necessary or appropriate to permit such amendment to be made or action lawfully taken or omitted. Each Partner is fully aware that each other Partner will rely on the effectiveness of this special power-of-attorney with a view to the orderly administration of the affairs of the Partnership. This power-of-attorney is a special power-of-attorney and is coupled with an interest in favor of the General Partner and as such:

(i) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death or incapacity of any party granting this power-of-attorney, regardless of whether the Partnership or the General Partner shall have had notice thereof; and

(ii) shall survive any Transfer by a Limited Partner of the whole or any portion of its interest in the Partnership, except that, where the transferee thereof has been approved by the General Partner for admission to the Partnership as a substituted Limited Partner, this power- of-attorney given by the transferor shall survive such Transfer for the sole purpose of enabling the General Partner to execute, acknowledge and file any instrument necessary to effect such substitution.


Section 9.3	Notices

Any notice required or permitted to be given under this Agreement shall be in writing. A notice to the General Partner shall be directed to the attention of Leon D. Black with a copy to the general counsel of the Partnership. A notice to a Limited Partner shall be directed to such Limited Partner’s last known residence as set forth in the books and records of the Partnership or its Affiliates (a Limited Partner’s “Home Address”). A notice shall be considered given when delivered to the addressee either by hand at his Partnership office or electronically to the primary e-mail account supplied by the Partnership for Partnership business communications, except that a notice to a Retired Partner or a notice demanding cure of a Bad Act shall be considered given only when delivered by hand or by a recognized overnight courier, together with mailing through the United States Postal System by regular mail to such Retired Partner’s Home Address.

Section 9.4 Agreement Binding Upon Successors and Assigns

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors by operation of law, but the rights and obligations of the Partners hereunder shall not be assignable, transferable or delegable except as expressly provided herein, and any attempted assignment, transfer or delegation thereof that is not made in accordance with such express provisions shall be void and unenforceable.

Section 9.5 Merger, Consolidation, etc.

(a) Subject to Section 9.5(b) and Section 9.5(c), the Partnership may merge or consolidate with or into one or more limited partnerships formed under the Act or other business entities (as defined in Section 17-211 of the Act) pursuant to an agreement of merger or consolidation which has been approved by the General Partner.

(b) Subject to Section 9.5(c) but notwithstanding any other provision to the contrary contained elsewhere in this Agreement, an agreement of merger or consolidation approved in accordance with Section 9.5(a) may, to the extent permitted by Section 17-211(g) of the Act and Section 9.5(a), (i) effect any amendment to this Agreement, (ii) effect the adoption of a new partnership agreement for the Partnership if it is the surviving or resulting limited partnership in the merger or consolidation, or (iii) provide that the partnership agreement of any other constituent limited partnership to the merger or consolidation (including a limited partnership formed for the purpose of consummating the merger or consolidation) shall be the partnership agreement of the surviving or resulting limited partnership.

(c) The General Partner shall have the power and authority to approve and implement any merger, consolidation or other reorganization, restructuring or similar transaction without the consent of any Limited Partner, other than any Limited Partner with respect to which such transaction will, or will reasonably be likely to, result in any change in the financial rights or obligations or material change in other rights or obligations of such Limited Partner conferred by this Agreement and any side letter or similar agreement entered into pursuant to Section 9.1(b) or the imposition of any new financial or other material obligation on such Limited Partner. Subject to the foregoing, the General Partner may require one or more of the Limited Partners to sell, exchange, transfer or otherwise dispose of their interests in the Partnership in connection with any such transaction, and each Limited Partner shall take such action as may be directed by the General Partner to effect any such transaction.

Section 9.6 Governing Law; Dispute Resolution

(a) This Agreement, and the rights and obligations of each and all of the Partners hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws rules thereof.

(b) Subject to Section 9.6(c), any dispute, controversy, suit, action or proceeding arising out of or relating to this Agreement, other than injunctive relief, will be settled exclusively by arbitration, conducted before a single arbitrator in New York County, New York (applying Delaware law) in accordance with, and pursuant to, the applicable rules of JAMS (“JAMS”). The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S. Federal Arbitration Act or the New York Arbitration Act. The party that is determined by the arbitrator not to be the prevailing party will pay all of the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees. If neither party is so determined, such fees shall be shared. Each party shall be responsible for such party’s attorneys’ fees. IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTNER AND THE PARTNERSHIP WAIVE AND COVENANT THAT THE PARTNER AND THE PARTNERSHIP WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE PARTNERSHIP OR ANY OF ITS AFFILIATES OR THE PARTNER MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTNERSHIP AND ITS AFFILIATES, ON THE ONE HAND, AND THE PARTNER, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

(c) Nothing in this Section 9.6(c) will prevent the General Partner or a Limited Partner from applying to a court for preliminary or interim relief or permanent injunction in a judicial proceeding (e.g., injunction or restraining order), in addition to and not in lieu of any other remedy to which it may be entitled at law or in equity, if such relief from a court is necessary to preserve the status quo pending resolution or to prevent serious and irreparable injury in connection with any breach or anticipated breach of covenants applicable pursuant to a Limited Partner’s Award Letter; provided, however, that all parties explicitly waive all rights to seek preliminary, interim, injunctive or other relief in a judicial proceeding and all parties submit to the exclusive jurisdiction of the forum described in Section 9.6(b) hereto for any dispute or claim concerning continuing entitlement to distributions or other payments, even if such dispute or claim involves or relates to any restrictive covenants set forth in a Limited Partner’s Award Letter. For the purposes of this Section 9.6(c), each party hereto consents to the exclusive jurisdiction and venue of the courts of the state and federal courts within the County of New York in the State of New York.

Section 9.7 Termination of Right of Action

Every right of action arising out of or in connection with this Agreement by or on behalf of any past, present or future Partner or the Partnership against any past, present or future Partner shall, to the fullest extent permitted by applicable law, irrespective of the place where the action may be brought and irrespective of the residence of any such Partner, cease and be barred by the expiration of three years from the date of the act or omission in respect of which such right of action arises.

Section 9.8 Not for Benefit of Creditors

The provisions of this Agreement are intended only for the regulation of relations among Partners and between Partners and former or prospective Partners and the Partnership. This Agreement is not intended for the benefit of any Person who is not a Partner, and no rights are intended to be granted to any other Person who is not a Partner under this Agreement.

Section 9.9 Reports

As soon as practicable after the end of each taxable year, the General Partner shall furnish to each Limited Partner (a) such information as may be required to enable each Limited Partner to properly report for United States federal and state income tax purposes his distributive share of each Partnership item of income, gain, loss, deduction or credit for such year, and (b) a statement of the total amount of Operating Profit or Operating Loss for such year, including a copy of the United States Internal Revenue Service Schedule “K-1” issued by the Partnership to such Limited Partner, and a reconciliation of any difference between (i) such Operating Profit or Operating Loss and (ii) the aggregate net profits or net losses allocated by the Funds to the Partnership for such year (other than any difference attributable to the aggregate Capital Profit or Capital Loss allocated by the Funds to the Partnership for such year).

Section 9.10 Filings

The Partners hereby agree to take any measures necessary (or, if applicable, refrain from any action) to ensure that the Partnership is treated as a partnership for federal, state and local income tax purposes.


Section 9.11	Headings, Gender, Etc.

The section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. As used herein, masculine pronouns shall include the feminine and neuter, and the singular shall be deemed to include the plural.

Signature Page Follows

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

General Partner:

APOLLO CAPITAL MANAGEMENT VIII, LLC

By:

Name:

Title:

Limited Partner:

APH HOLDINGS, L.P.

By: Apollo Principal Holdings III GP, Ltd.,

its general partner

By:

Name:

Title:

For purposes of Section 9.1(c):

APOLLO CO-INVESTORS MANAGER, LLC

By:

Name:

Title:

EXHIBIT A

Voting Partners

CONFIDENTIAL AND PROPRIETARY

Apollo Advisors VIII, L.P.

[Name]

[Address]

Dear [Name]:

Reference is made to the letter agreement dated as of [ ˜ ] by and among Apollo Advisors VIII, L.P., Apollo Capital Management VIII, L.P. and you (your “ Carry Plan ”). This Award Letter confirms the number of Points you are being awarded and certain terms in relation with your Carry Plan. Capitalized terms not defined herein shall have the meanings set forth in your Carry Plan.

Your Initial Point Award

You are being granted [ ˜ ] Points on the terms set forth in this Award Letter and your Carry Plan.

Vesting Percentage and Vesting Commencement Date

The term “Vesting Percentage” as applied to you shall have the meaning set forth below:

[ ˜ ]

Your “Vesting Commencement Date” is [ ˜ ].

Mandatory Purchases and Repurchases of AGM Shares

A portion of all distributions (the “Holdback Amount”) in a given quarter will be required to be used by you to purchase Class A shares of AGM (“AGM Shares”) in accordance with the terms and conditions set forth herein. The Holdback Amount will be based on the following formula, except to the extent reduced by the Executive Committee:

[ ˜ ]

Fund VIII Capital Commitment

You are required to make a capital commitment to Co-Investors (A) in an amount equal to [$ ˜ ].

Bad Act and Designated Act

Each of the terms “Bad Act” and “Designated Act” as applied to you shall have the meaning set forth in Annex A hereto.

Restrictive Covenants

In consideration of your participation in the Carry Plan, you will be subject to restrictions in favor of AGM regarding confidentiality, non-solicitation, non-interference, non-disparagement and non-compete set forth in Annex B hereto.

Retirement

Your Points shall be reduced automatically to (a) zero if your retirement is the consequence of a Bad Act and (b) otherwise, an amount equal to your Vested Points calculated as of the Retirement Date. Any such reduction shall be effective as of the Retirement Date or such subsequent date as may be determined by the General Partner; provided that the General Partner may agree to a lesser reduction (or to no reduction) of your Points.

Miscellaneous

This Award Letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of laws that would cause the laws of another jurisdiction to apply. This Award Letter is binding on and enforceable against the General Partner, the Partnership and you. This Award Letter may be amended only with the consent of each party hereto. The Partnership or the General Partner may provide copies of this Award Letter to other Persons. This Award Letter may be executed by facsimile and in one or more counterparts, all of which shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

If the above correctly reflects our understanding and agreement with respect to the foregoing matters, please so confirm by signing the enclosed copy of this Award Letter.

Very truly yours,

APOLLO ADVISORS VIII, L.P.

By: Apollo Capital Management VIII, LLC,

its general partner

By:

Name:

Title:

APOLLO CAPITAL MANAGEMENT VIII, LLC

By:

Name:

Title:

Accepted and agreed as of the date first written above

[NAME]

Annex A

Definitions

“Bad Act” means your:

(i) commission of an intentional violation of a material law or regulation in connection with any transaction involving the purchase, sale, loan, pledge or other disposition of, or the rendering of investment advice with respect to, any security, asset, futures or forward contract, insurance contract, debt instrument or currency, in each case, that has a significant adverse effect on your ability to perform your services to AGM or any of its Affiliates;

(ii) commission of an intentional and material breach of a material provision of a written AGM Code of Conduct (other than any AGM Code of Conduct adopted after the date of your admission to the Partnership with the primary purpose of creating or finding “Bad Acts”);

(iii) commission of intentional misconduct in connection with your performance of services for AGM or any of its Affiliates;

(iv) commission of misconduct that, individually or in the aggregate, has caused or substantially contributed to, or is reasonably likely to cause or substantially contribute to, material economic or reputational harm to AGM or any of its Affiliates (excluding any mistake of judgment made in good faith with respect to a portfolio investment or account managed by AGM or its Affiliates, or a communication made to the principals or other partners, in a professional manner, of a good faith disagreement with a proposed action by AGM or any of its Affiliates);

(v) conviction of a felony or plea of no contest to a felony charge, in each case if such felony relates to AGM or any of its Affiliates;

(vi) fraud in connection with your performance of services for AGM or any of its Affiliates; or

(vii) embezzlement from AGM or any of its Affiliates or interest holders;

provided, however, that

(a) you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure, the items set forth in clauses (ii) and (iv), and

(b) during the pendency of any felony charge under clause (v), AGM and its Affiliates may suspend payment of any distributions in respect of your Points, and if (I) you are later acquitted or otherwise exonerated from such charge, or (II) your employment or service with AGM or its applicable Affiliate does not terminate, then (A) AGM or its applicable Affiliate shall pay to you all such accrued but unpaid distributions with respect to vested Points, with interest calculated from the date such distributions were suspended at the prime lending rate in effect on the date of such suspension, and (B) throughout the period of suspension (or until the date of termination of employment or service, if earlier), distributions with respect to unvested Points shall continue to accrue, and Points shall continue to vest, in accordance with the terms and conditions set forth herein.

“Designated Act” means your:

(i) intentional breach of any material provision of an award agreement or any other agreement of AGM or any of its Affiliates;

(ii) failure to devote a significant portion of your time to performing services as an agent of AGM without the prior written consent of AGM, other than by reason of death or Disability; or

(iii) suspension or other disciplinary action against you by an applicable regulatory authority;

provided, however, that you have failed to cure within 15 days after notice thereof, to the extent such occurrence is susceptible to cure, the item set forth in clause (i).

For purposes of this Annex A, the term “ Affiliate” includes Portfolio Companies.

Annex B

Restrictive Covenants

[ ˜ ]

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Leon Black, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 of Apollo Global Management, LLC;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 11, 2014

/s/ Leon Black

Leon Black

Chief Executive Officer

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Martin Kelly, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 of Apollo Global Management, LLC


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 11, 2014

/s/ Martin Kelly

Martin Kelly

Chief Financial Officer

Exhibit 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

In connection with the Quarterly Report of Apollo Global Management, LLC (the “Company”) on Form 10-Q for the quarter ended June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leon Black, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2014

/s/ Leon Black

Leon Black

Chief Executive Officer



*	The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 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

In connection with the Quarterly Report of Apollo Global Management, LLC (the “Company”) on Form 10-Q for the quarter ended June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martin Kelly, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2014

/s/ Martin Kelly

Martin Kelly

Chief Financial Officer



*	The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.