Apollo Global Management LLC (Form: 10-Q, Received: 05/05/2017 16:29:26)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)



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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017 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.



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

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

As of May 4, 2017 there were 191,001,096 Class A shares and 1 Class B share outstanding.

Table of Contents



	TABLE OF CONTENTS
		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	8

	Unaudited Condensed Consolidated Financial Statements

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

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

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

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

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

	Notes to Condensed Consolidated Financial Statements (Unaudited)	13

ITEM 1A.	UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION	60

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	62

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	109

ITEM 4.	CONTROLS AND PROCEDURES	111

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	112

ITEM 1A.	RISK FACTORS	112

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

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	113

ITEM 4.	MINE SAFETY DISCLOSURES	113

ITEM 5.	OTHER INFORMATION	113

ITEM 6.	EXHIBITS	114

SIGNATURES

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

Terms Used in This Report

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

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

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

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

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


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

(ii)

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


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


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

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(v)

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

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

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


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


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


(iii)	unused credit facilities;


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


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


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

“Carry-Eligible 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”, which refers to invested capital of the funds, partnerships and accounts we manage or advise, that is currently above its hurdle rate or preferred return, and profit of such funds, partnerships and accounts is being allocated to the general partner in accordance with the applicable limited partnership agreements or other governing agreements;


(ii)	“AUM Not Currently Generating Carry”, which refers to invested capital of the funds, partnerships and accounts we manage or advise that is currently below its hurdle rate or preferred return; and

(iii)

“Uninvested Carry-Eligible AUM”, which refers to capital of the funds, partnerships and accounts we manage or advise that is available for investment or reinvestment subject to the provisions of applicable limited partnership agreements or other governing agreements, which capital is not currently part of the NAV or fair value of investments that may eventually produce carried interest income allocable 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;

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

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

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

“carried interest”, “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;

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

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

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

“gross IRR” of a real estate fund represents the cumulative investment-related cash flows in the fund itself (and not any one investor in the fund), on the basis of the actual timing of cash inflows and outflows (for unrealized investments assuming disposition on March 31, 2017 or other date specified) starting on the date that each investment closes, 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. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor;

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

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

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

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

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

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

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

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

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

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

“permanent capital vehicles” refers to (a) assets that are owned by or related to Athene (“ATH”), (b) assets that are owned by or related to MidCap FinCo Designated Activity Company (“MidCap”) and managed by Apollo, (c) assets of publicly traded vehicles managed by Apollo such as Apollo Investment Corporation (“AINV”), Apollo Commercial Real Estate Finance, Inc. (“ARI”), Apollo Tactical Income Fund Inc. (“AIF”), and Apollo Senior Floating Rate Fund Inc. (“AFT”), in each case that do not have redemption provisions or a requirement to return capital to investors upon exiting the investments made with such capital, except as required by applicable law and (d) a non-traded business development company sub-advised by Apollo. The investment management agreements of AINV, AIF and AFT have one year terms, are reviewed annually and remain in effect only if approved by the boards of directors of such companies or by the affirmative vote of the holders of a majority of the outstanding voting shares of such companies, including in either case, approval by a majority of the directors who are not “interested persons” as defined in the Investment Company Act of 1940. In addition, the investment management agreements of AINV, AIF and AFT may be terminated in certain circumstances upon 60 days’ written notice. The investment management agreement of ARI has a one year term and is reviewed annually by ARI’s board of directors and may be terminated under certain circumstances by an affirmative vote of at least two-thirds of ARI’s independent directors. The investment management or advisory arrangements between MidCap and Apollo and Athene and Apollo, may also be terminated under certain circumstances;

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

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

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

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

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

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

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

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

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

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

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

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PART I—FINANCIAL INFORMATION

ITEM 1 . FINANCIAL STATEMENTS

APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

AS OF MARCH 31, 2017 AND DECEMBER 31, 2016

(dollars in thousands, except share data)



	As of March 31, 2017			As of December 31, 2016
Assets:
Cash and cash equivalents	$	1,084,218		$	806,329
Cash and cash equivalents held at consolidated funds	7,880			7,335
Restricted cash	4,946			4,680
Investments	1,575,687			1,494,744
Assets of consolidated variable interest entities:
Cash and cash equivalents	60,086			41,318
Investments, at fair value	991,053			913,827
Other assets	55,268			46,666
Carried interest receivable	1,420,860			1,257,105
Due from related parties	249,881			254,853
Deferred tax assets	561,524			572,263
Other assets	140,302			118,860
Goodwill	88,852			88,852
Intangible assets, net	21,006			22,721
Total Assets	$	6,261,563		$	5,629,553
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	72,170		$	57,465
Accrued compensation and benefits	54,257			52,754
Deferred revenue	171,267			174,893
Due to related parties	598,975			638,126
Profit sharing payable	634,668			550,148
Debt	1,353,572			1,352,447
Liabilities of consolidated variable interest entities:
Debt, at fair value	797,328			786,545
Other liabilities	127,680			68,034
Other liabilities	103,855			81,613
Total Liabilities	3,913,772			3,762,025
Commitments and Contingencies (see note 14)
Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Preferred shares (11,000,000 shares issued and outstanding as of March 31, 2017)	264,683			—
Class A shares, no par value, unlimited shares authorized, 187,644,092 and 185,460,294 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	—			—
Class B shares, no par value, unlimited shares authorized, 1 share issued and outstanding at March 31, 2017 and December 31, 2016	—			—
Additional paid in capital	1,763,146			1,830,025
Accumulated deficit	(838,686		)	(986,186		)
Accumulated other comprehensive loss	(11,803		)	(8,723		)
Total Apollo Global Management, LLC shareholders’ equity	1,177,340			835,116
Non-Controlling Interests in consolidated entities	120,891			90,063
Non-Controlling Interests in Apollo Operating Group	1,049,560			942,349
Total Shareholders’ Equity	2,347,791			1,867,528
Total Liabilities and Shareholders’ Equity	$	6,261,563		$	5,629,553

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(dollars in thousands, except share data)



	For the Three Months Ended March 31,
	2017			2016
Revenues:
Management fees from related parties	$	269,543		$	233,795
Advisory and transaction fees from related parties, net	15,067			7,999
Carried interest income (loss) from related parties	358,941			(120,968		)
Total Revenues	643,551			120,826
Expenses:
Compensation and benefits:
Salary, bonus and benefits	101,613			97,234
Equity-based compensation	23,107			14,002
Profit sharing expense	144,324			(37,605		)
Total Compensation and Benefits	269,044			73,631
Interest expense	12,999			7,873
General, administrative and other	62,040			58,631
Placement fees	1,905			1,764
Total Expenses	345,988			141,899
Other Income (Loss):
Net gains (losses) from investment activities	34,517			(56,469		)
Net gains from investment activities of consolidated variable interest entities	4,108			1,319
Income (loss) from equity method investments	38,553			(3,817		)
Interest income	803			585
Other income (loss), net	18,647			(253		)
Total Other Income (Loss)	96,628			(58,635		)
Income (loss) before income tax (provision) benefit	394,191			(79,708		)
Income tax (provision) benefit	(39,161		)	5,147
Net Income (Loss)	355,030			(74,561		)
Net (income) loss attributable to Non-Controlling Interests	(209,834		)	41,733
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)
Distributions Declared per Class A Share	$	0.45		$	0.28
Net Income (Loss) Per Class A Share:
Net Income (Loss) Available to Class A Share – Basic	$	0.75		$	(0.19	)
Net Income (Loss) Available to Class A Share – Diluted	$	0.75		$	(0.19	)
Weighted Average Number of Class A Shares Outstanding – Basic	186,537,367			182,665,330
Weighted Average Number of Class A Shares Outstanding – Diluted	186,537,367			182,665,330

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(dollars in thousands, except share data)



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

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)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(dollars in thousands, except share data)



	Apollo Global Management, LLC Shareholders
	Class A Shares		Class B Shares	Preferred Shares		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Apollo Global Management, LLC Shareholders’ Equity			Non- Controlling Interests in Consolidated Entities			Non-Controlling Interests in Apollo Operating Group			Total Shareholders’ Equity
Balance at January 1, 2016	181,078,937		1	$	—	$	2,005,509		$	(1,348,384	)	$	(7,620	)	$	649,505		$	86,561		$	652,915		$	1,388,981
Dilution impact of issuance of Class A shares	—		—	—		190			—			—			190			—			—			190
Capital increase related to equity-based compensation	—		—	—		18,467			—			—			18,467			—			—			18,467
Capital contributions	—		—	—		—			—			—			—			33			—			33
Distributions	—		—	—		(53,555		)	—			—			(53,555		)	(2,249		)	(60,527		)	(116,331		)
Payments related to issuances of Class A shares for equity-based awards	3,276,701		—	—		—			(22,042		)	—			(22,042		)	—			—			(22,042		)
Repurchase of Class A Shares	(954,447	)	—	—		(12,919		)	—			—			(12,919		)	—			—			(12,919		)
Net income (loss)	—		—	—		—			(32,828		)	—			(32,828		)	2,035			(43,768		)	(74,561		)
Currency translation adjustments	—		—	—		—			—			3,481			3,481			2,620			—			6,101
Net gain from change in fair value of cash flow hedge instruments	—		—	—		—			—			12			12			—			14			26
Net loss on available-for-sale securities	—		—	—		—			—			(951		)	(951		)	—			—			(951		)
Balance at March 31, 2016	183,401,191		1	$	—	$	1,957,692		$	(1,403,254	)	$	(5,078	)	$	549,360		$	89,000		$	548,634		$	1,186,994
Balance at January 1, 2017	185,460,294		1	$	—	$	1,830,025		$	(986,186	)	$	(8,723	)	$	835,116		$	90,063		$	942,349		$	1,867,528
Dilution impact of issuance of Class A shares	—		—	—		(23		)	—			—			(23		)	—			—			(23		)
Equity issued in connection with Preferred shares offering	—		—	264,683		—			—			—			264,683			—			—			264,683
Adoption of new accounting guidance	—		—	—		—			22,901			—			22,901			—			—			22,901
Capital increase related to equity-based compensation	—		—	—		17,066			—			—			17,066			—			—			17,066
Capital contributions	—		—	—		—			—			—			—			28,701			—			28,701
Distributions	—		—	—		(87,074		)	—			—			(87,074		)	(2,124		)	(96,956		)	(186,154		)
Payments related to issuances of Class A shares for equity-based awards	1,683,798		—	—		—			(20,597		)	—			(20,597		)	—			—			(20,597		)
Exchange of AOG Units for Class A shares	500,000		—	—		3,152			—			—			3,152			—			(2,291		)	861
Net income	—		—	—		—			145,196			—			145,196			3,384			206,450			355,030
Currency translation adjustments	—		—	—		—			—			(3,140		)	(3,140		)	867			(6		)	(2,279		)
Net gain from change in fair value of cash flow hedge instruments	—		—	—		—			—			12			12			—			14			26
Net income on available-for-sale securities	—		—	—		—			—			48			48			—			—			48
Balance at March 31, 2017	187,644,092		1	$	264,683	$	1,763,146		$	(838,686	)	$	(11,803	)	$	1,177,340		$	120,891		$	1,049,560		$	2,347,791

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(dollars in thousands, except share data)



	For the Three Months Ended March 31,
	2017			2016
Cash Flows from Operating Activities:
Net income (loss)	$	355,030		$	(74,561	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity-based compensation	23,107			14,002
Depreciation and amortization	4,385			4,631
Unrealized (gains) losses from investment activities	(35,035		)	55,702
(Income) loss from equity method investments	(38,553		)	3,817
Change in fair value of contingent obligations	(3,663		)	(4,113		)
Deferred taxes, net	34,478			(4,296		)
Other non-cash amounts included in net income, net	621			6,686
Cash flows due to changes in operating assets and liabilities:
Carried interest receivable	(168,662		)	153,504
Due from related parties	(6,654		)	(12,243		)
Accounts payable and accrued expenses	14,705			6,649
Accrued compensation and benefits	1,503			(6,750		)
Deferred revenue	(2,784		)	(1,497		)
Due to related parties	(39,151		)	(282		)
Profit sharing payable	103,139			(32,650		)
Other assets and other liabilities, net	(6,470		)	(2,011		)
Cash distributions of earnings from equity method investments	16,555			4,641
Satisfaction of contingent obligation	(14,956		)	—
Apollo Fund and VIE related:
Net realized and unrealized gains from investing activities and debt	(1,241		)	(2,341		)
Change in cash held at consolidated variable interest entities	(14,746		)	23,569
Purchases of investments	(187,567		)	(118,974		)
Proceeds from sale of investments	120,882			117,664
Changes in other assets and other liabilities, net	49,911			(6,953		)
Net Cash Provided by Operating Activities	$	204,834		$	124,194
Cash Flows from Investing Activities:
Purchases of fixed assets	$	(1,002	)	$	(2,309	)
Purchase of investments	—			(24,597		)
Cash contributions to equity method investments	(43,529		)	(42,649		)
Cash distributions from equity method investments	19,758			10,447
Issuance of related party loans	(5,434		)	—
Repayment of related party loans	17,700			—
Other investing activities	(375		)	2,109
Net Cash Used in Investing Activities	$	(12,882	)	$	(56,999	)
Cash Flows from Financing Activities:
Issuance of Preferred shares (net of issuance costs)	$	264,683		$	—
Issuance of debt	—			18,446
Purchase of Class A shares	(151		)	(12,919		)
Payments related to issuances of Class A shares for RSUs	(20,597		)	(22,042		)
Distributions paid	(87,074		)	(53,555		)
Distributions paid to Non-Controlling Interests in Apollo Operating Group	(96,956		)	(60,527		)
Other financing activities	(1,939		)	(4,528		)
Apollo Fund and VIE related:
Distributions paid to Non-Controlling Interests in consolidated variable interest entities	(84		)	—
Contributions from Non-Controlling Interests in consolidated variable interest entities	28,600			11
Net Cash Provided by (Used in) Financing Activities	$	86,482		$	(135,114	)
Net Increase (Decrease) in Cash and Cash Equivalents	278,434			(67,919		)
Cash and Cash Equivalents, Beginning of Period	813,664			617,322
Cash and Cash Equivalents, End of Period	$	1,092,098		$	549,403
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	3,545		$	3,645
Interest paid by consolidated variable interest entities	1,776			6,168
Income taxes paid	2,733			1,327
Supplemental Disclosure of Non-Cash Investing Activities:
Non-cash distributions from equity method investments	$	(13,673	)	$	(1,114	)
Non-cash purchases of other investments, at fair value	13,304			—
Supplemental Disclosure of Non-Cash Financing Activities:
Capital increases related to equity-based compensation	$	17,066		$	18,467
Other non-cash financing activities	(33		)	223
Adjustments related to exchange of Apollo Operating Group units:
Deferred tax assets	$	861		$	—
Additional paid in capital	(861		)	—
Non-Controlling Interest in Apollo Operating Group	2,291			—

See accompanying notes to condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

1 . ORGANIZATION

Apollo Global Management, LLC (“AGM”, together with its consolidated subsidiaries, the “Company” or “Apollo”) is a global alternative investment manager whose predecessor was founded in 1990. Its primary business is to raise, invest and manage private equity, credit and real estate funds as well as strategic investment accounts, on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. For these investment management services, Apollo receives management fees generally related to the amount of assets managed, transaction and advisory fees 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 including performing, stressed and distressed investments across the capital structure; 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.

Organization of the Company

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

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

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

2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

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

Consolidation

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

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

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

Under the variable interest model, Apollo consolidates those entities where it is determined that the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it has a controlling financial interest in the VIE, which is defined as possessing both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Apollo determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, related parties of Apollo or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary.

Assets and liabilities of the consolidated VIEs are primarily shown in separate sections within the condensed consolidated statements of financial condition. Changes in the fair value of the consolidated VIEs’ assets and liabilities and related interest, dividend and other income and expenses are presented within net gains from investment activities of consolidated variable interest entities and are attributable to Non-Controlling Interests in the condensed consolidated statements of operations. For additional disclosures regarding VIEs, see note 4 .

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

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 under current market conditions.

Except for the Company’s debt obligations (as described 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” below. While Apollo’s valuations of portfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the actual realized

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

Fair Value Hierarchy

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

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

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

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

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

When a security is valued based on broker quotes, the Company subjects those quotes to various criteria in making the determination as to whether a particular financial instrument would qualify for classification as Level II or Level III. These criteria include, but are not limited to, the number and quality of the broker quotes, the standard deviations of the observed broker quotes, and the percentage deviation from independent pricing services.

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

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

Private Equity Investments

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

Valuation approaches used to estimate the fair value of investments in Apollo’s private equity funds that are less liquid include the market approach and the income approach. The market approach provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies and transactions in the industry. The market approach

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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, the determination of a terminal value and a calculated discount rate.

Credit Investments

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

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

Real Estate Investments

The estimated fair value of commercial mortgage-backed securities (“CMBS”) in Apollo’s real estate funds is determined by reference to market prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarily represent what the funds would receive in an actual trade for the applicable instrument. Additionally, the loans held-for-investment are stated at the principal amount outstanding, net of deferred loan fees and costs for certain investments. The loans in Apollo’s real estate funds are evaluated for possible impairment on a quarterly basis. For Apollo’s 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.

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

Valuation Process

On a quarterly basis, Apollo utilizes valuation committees consisting of members from senior management, to review and approve the valuation results related to the investments of the funds it manages. For certain publicly traded vehicles, a review is performed by an independent board of directors. The Company also retains independent valuation firms to provide third-party

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

Financial Instruments held by Consolidated VIEs

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

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

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

Investments, at Fair Value

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

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

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

Fair Value Option

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Equity Method Investments

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

Revenues

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

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

Advisory and Transaction Fees from Related Parties, Net —Advisory and transaction fees, including directors’ fees, are recognized when the underlying services rendered are substantially completed in accordance with the terms of the transaction and advisory agreements. Additionally, during the normal course of business, the Company incurs certain costs related to certain transactions that are not consummated (“broken deal costs”). These costs (e.g., research costs, due diligence costs, professional fees, legal fees and other related items) are 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 recorded net on the Company’s condensed consolidated statements of operations, and any receivable from the respective funds is recorded in due from related parties on the condensed consolidated statements of financial condition.

Advisory and transaction fees from related parties, net, also includes underwriting fees. Underwriting fees include gains, losses and fees, net of syndicate expenses, arising from securities offerings in which one of the Company’s subsidiaries participates in the underwriter syndicate. Underwriting fees are recognized at the time the underwriting is completed and the income is reasonably assured and are included in the condensed consolidated statements of operations. Underwriting fees recognized but not received are recorded in other assets 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 recorded in due from related parties, which is discussed further in note 13 . Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Advisory and transaction fees from related parties are presented net of the Management Fee Offset in the condensed consolidated statements of operations.

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

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

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

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

Compensation and Benefits

401(k) Savings Plan

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

Profit Sharing

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

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

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

General, Administrative and Other

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

Use of Estimates

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

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance to establish a comprehensive and converged standard on revenue recognition to enable financial statement users to better understand and consistently analyze an entity’s revenue across industries, transactions, and geographies. The new guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services (i.e., the transaction price). When determining the transaction price under the new guidance, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The new guidance also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The new guidance will apply to all entities. In August 2015, the FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. The amended guidance defers the effective date of the new guidance to interim reporting periods within annual reporting periods beginning after December 15, 2017.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

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

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

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

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

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

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

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

3 . INVESTMENTS

The following table represents Apollo’s investments:



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

Investments, at Fair Value

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

Net Gains from Investment Activities

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



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


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

Equity Method Investments

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

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



	Equity Held as of
	March 31, 2017		⁽⁵⁾	December 31, 2016		⁽⁵⁾
Private Equity ⁽¹⁾⁽²⁾	$	455,626		$	428,581
Credit ⁽¹⁾⁽³⁾	328,255			327,012
Real Estate	31,126			31,071
Total equity method investments ⁽⁴⁾	$	815,007		$	786,664

(1)

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


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


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


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


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

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



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


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

4 . VARIABLE INTEREST ENTITIES

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

Consolidated Variable Interest Entities

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Consolidated CLOs

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

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

Net Gains from Investment Activities of Consolidated Variable Interest Entities

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



	For the Three Months Ended March 31,
	2017			⁽¹⁾	2016			⁽¹⁾
Net gains (losses) from investment activities	$	1,990			$	(4,122	)
Net gains (losses) from debt	(883		)		6,434
Interest and other income	7,822				10,553
Interest and other expenses	(4,821		)		(11,546		)
Net gains from investment activities of consolidated variable interest entities	$	4,108			$	1,319


(1)	Amounts reflect consolidation eliminations.

Senior Secured Notes and Subordinated 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 March 31, 2017 and December 31, 2016 :



	As of March 31, 2017						As of December 31, 2016
	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years	Principal Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior Secured Notes ⁽²⁾⁽³⁾	$	714,065	1.71	%		12.0	$	704,976	1.83	%		12.3
Subordinated Notes ⁽²⁾⁽³⁾	88,926		N/A		⁽¹⁾	18.9	87,794		N/A		⁽¹⁾	19.2
Total	$	802,991					$	792,770


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


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

(3)

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

Variable Interest Entities Which are Not Consolidated

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

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



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


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


(2)	Represents debt and other payables.

(3)

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



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


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


(2)	Represents debt and other payables.

(3)

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

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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 for which the fair value option has been elected by the fair value hierarchy as of March 31, 2017 and December 31, 2016 :



	As of March 31, 2017
	Level I ⁽¹⁾		Level II ⁽¹⁾		Level III		Total			Cost of Investments, at Fair Value
Assets
Investments, at fair value:
Investments of consolidated Apollo funds	$	4,535	$	4,424	$	643	$	9,602		$	9,665
Other investments	—		—		45,599		45,599			47,690
Investment in Athene Holding ⁽²⁾	—		705,479		—		705,479			387,526
Total investments, at fair value	4,535		709,903		46,242		760,680		⁽⁷⁾	$	444,881
Investments of VIEs, at fair value ⁽³⁾	—		848,274		137,344		985,618
Investments of VIEs, valued using NAV	—		—		—		5,435
Total investments of VIEs, at fair value	—		848,274		137,344		991,053
Derivative assets	—		942		—		942
Total Assets	$	4,535	$	1,559,119	$	183,586	$	1,752,675

Liabilities
Liabilities of consolidated Apollo funds	$	338	$	5,273	$	35	$	5,646
Liabilities of VIEs, at fair value ⁽³⁾⁽⁵⁾	—		797,328		11,192		808,520
Contingent consideration obligations ⁽⁶⁾	—		—		87,663		87,663
Derivative liabilities ⁽⁴⁾	—		761		—		761
Total Liabilities	$	338	$	803,362	$	98,890	$	902,590



	As of December 31, 2016
	Level I ⁽¹⁾		Level II ⁽¹⁾		Level III		Total			Cost of Investments, at Fair Value
Assets
Investments, at fair value:
Investments of consolidated Apollo funds	$	3,336	$	1,475	$	567	$	5,378		$	5,463
Other investments	—		—		45,154		45,154			47,690
Investment in Athene Holding ⁽²⁾	—		657,548		—		657,548			387,526
Total investments, at fair value	3,336		659,023		45,721		708,080		⁽⁷⁾	$	440,679
Investments of VIEs, at fair value ⁽³⁾	—		816,167		92,474		908,641
Investments of VIEs, valued using NAV	—		—		—		5,186
Total investments of VIEs, at fair value	—		816,167		92,474		913,827
Derivative assets	—		1,360		—		1,360
Total Assets	$	3,336	$	1,476,550	$	138,195	$	1,623,267

Liabilities
Liabilities of VIEs, at fair value ⁽³⁾⁽⁵⁾	$	—	$	786,545	$	11,055	$	797,600
Contingent consideration obligations ⁽⁶⁾	—		—		106,282		106,282
Derivative liabilities ⁽⁴⁾	—		1,167		—		1,167
Total Liabilities	$	—	$	787,712	$	117,337	$	905,049


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


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


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


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


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


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


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

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

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



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


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



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


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



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


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

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



	As of March 31, 2017
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Investments of consolidated Apollo funds	$	643	Third party pricing ⁽¹⁾	N/A	N/A	N/A
Investments in other	45,599		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Investments of consolidated VIEs:
Bank debt term loans	19,437		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Corporate loans/bonds/CLO notes	15,456		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Equity securities			Transaction	N/A	N/A	N/A
	102,451		Book value multiple	Book value multiple	0.77x	0.77x
			Discounted cash flow	Discount rate	13.3%	13.3%
Total investments of consolidated VIEs	137,344
Total Financial Assets	$	183,586
Financial Liabilities
Liabilities of consolidated Apollo funds	$	35	Third party pricing ⁽¹⁾	N/A	N/A	N/A
Liabilities of consolidated VIEs	11,192		Other	N/A	N/A	N/A
Contingent consideration obligation	87,663		Discounted cash flow	Discount rate	13.0% - 17.8%	17.7%
Total Financial Liabilities	$	98,890


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



	As of December 31, 2016
	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average
Financial Assets
Investments of consolidated Apollo funds	$	567	Third party pricing ⁽¹⁾	N/A	N/A	N/A
Investments in other	45,154		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Investments of consolidated VIEs:
Bank debt term loans	4,701		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Corporate loans/bonds/CLO notes	15,496		Third party pricing ⁽¹⁾	N/A	N/A	N/A
Equity securities	72,277		Transaction	N/A	N/A	N/A
Total investments of consolidated VIEs	92,474
Total Financial Assets	$	138,195
Financial Liabilities
Liabilities of consolidated VIEs	$	11,055	Other	N/A	N/A	N/A
Contingent consideration obligation	106,282		Discounted cash flow	Discount rate	13.0% - 17.3%	17.2%
Total Financial Liabilities	$	117,337


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

Investment in Athene Holding

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

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

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

Investments of Consolidated Apollo Funds

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Other Investments

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

Consolidated VIEs

Investments

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

Liabilities

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

Contingent Consideration Obligations

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

6 . CARRIED INTEREST RECEIVABLE

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



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

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



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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

7 . PROFIT SHARING PAYABLE

Profit sharing payable consisted of the following:



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

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



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


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

(2)

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

8 . INCOME TAXES

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

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

The Company’s primary jurisdictions in which it operates are the United States, New York State, New York City, California and the United Kingdom. There are no unremitted earnings with respect to the United Kingdom and other foreign entities due to the flow-through nature of these entities. In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax authorities. With a few exceptions, as of March 31, 2017 , the Company’s U.S. federal, state, local and foreign income tax returns for the years 2013 through 2016 are open under the general statute of limitations provisions and therefore subject to examination. Currently, the Internal Revenue Service is examining the tax return of certain subsidiaries for the 2011 and 2012 tax years. The State and City of New York is examining certain subsidiaries’ tax returns for tax years 2011 to 2013.

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

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

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



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 Three Months Ended March 31, 2017	$	861	$	—	$	861

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

9 . DEBT

Debt consisted of the following:



	As of March 31, 2017							As of December 31, 2016
	Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate		Outstanding Balance		Fair Value			Annualized Weighted Average Interest Rate
2013 AMH Credit Facilities - Term Facility ⁽¹⁾	$	299,571	$	298,875	⁽⁵⁾	2.14	%	$	299,543	$	298,500	⁽⁵⁾	1.82	%
2024 Senior Notes ⁽²⁾	495,370		503,963		⁽⁶⁾	4.00		495,208		498,336		⁽⁶⁾	4.00
2026 Senior Notes ⁽³⁾	495,293		510,274		⁽⁶⁾	4.40		495,165		497,923		⁽⁶⁾	4.40
2014 AMI Term Facility I ⁽⁴⁾	14,636		14,636		⁽⁵⁾	2.00		14,449		14,449		⁽⁵⁾	2.00
2014 AMI Term Facility II ⁽⁴⁾	16,516		16,516		⁽⁵⁾	1.75		16,306		16,306		⁽⁵⁾	1.75
2016 AMI Term Facility I ⁽⁴⁾	18,082		18,082		⁽⁵⁾	1.75		17,852		17,852		⁽⁵⁾	1.75
2016 AMI Term Facility II ⁽⁴⁾	14,104		14,104		⁽⁵⁾	2.00		13,924		13,924		⁽⁵⁾	2.00
Total Debt	$	1,353,572	$	1,376,450				$	1,352,447	$	1,357,290


(1)	Outstanding balance is presented net of unamortized debt issuance costs of $0.4 million and $0.5 million as of March 31, 2017 and December 31, 2016 , respectively.


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


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


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



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

(5)

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


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

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

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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

Facility was 0.125% . The $300 million carrying value of debt that is recorded on the condensed consolidated statements of financial condition at March 31, 2017 is the amount for which the Company is obligated to settle the 2013 AMH Credit Facilities.

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

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

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

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

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



	For the Three Months Ended March 31,
	2017		2016
Interest Expense: ⁽¹⁾
2013 AMH Term Facility	$	1,912	$	2,463
2024 Senior Notes	5,163		5,163
2026 Senior Notes	5,628		—
AMI Term Facilities	296		247
Total Interest Expense	$	12,999	$	7,873


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

10 . NET INCOME PER CLASS A SHARE

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

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

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



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


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


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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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


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


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

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

Any distribution equivalent paid to an employee will not be returned to the Company upon forfeiture of the award by the employee. Vested and unvested RSUs that are entitled to non-forfeitable distribution equivalents qualify as participating securities and are included in the Company’s basic and diluted earnings per share computations using the two-class method. The holder of an RSU participating security would have a contractual obligation to share in the losses of the entity if the holder is obligated to fund the losses of the issuing entity or if the contractual principal or mandatory redemption amount of the participating security is reduced as a result of losses incurred by the issuing entity. Because the 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 transfer restrictions set forth in the agreements with the respective holders, and may a limited number of times each year, upon notice (subject to the terms of the Exchange Agreement), exchange their AOG Units for Class A shares on a one -for- one basis. An AOG Unit holder must exchange one unit in each of the Apollo Operating Group partnerships to effectuate an exchange for one Class A share.

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

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



	For the Three Months Ended March 31,
	2017	2016
Weighted average vested RSUs	1,233,685	3,142,789
Weighted average unvested RSUs	6,252,139	6,211,882
Weighted average unexercised options	222,920	222,920
Weighted average AOG Units outstanding	215,286,909	216,169,856
Weighted average unvested restricted shares	74,362	99,135

11 . 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. Equity-based awards granted to non-employees for services provided to related parties are remeasured to fair value at the end of each reporting period and expensed over the relevant service period.

RSUs

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



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


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


(2)	Based on the Finnerty Model calculation.

The estimated total grant date fair value is charged to compensation expense on a straight-line basis over the vesting period, which for Plan Grants is generally up to six years, with the first installment vesting one year after grant and quarterly vesting thereafter, and for Bonus Grants is generally annual vesting over three years. The fair value of grants made during the three months ended March 31, 2017 was $8.4 million .

In addition, the Company provides for the vesting of RSUs when certain performance metrics have been achieved. In accordance with U.S. GAAP, equity-based compensation expense is recognized only when certain performance metrics are met or deemed probable. Accordingly, for the three months ended March 31, 2017, no equity-based compensation expense was recognized relating to these RSUs.

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



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

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



	Unvested			Weighted Average Grant Date Fair Value		Vested		Total Number of RSUs Outstanding
Balance at January 1, 2017	9,391,566			$	15.80	2,752,455		12,144,021		⁽¹⁾
Granted	500,000			16.87		—		500,000
Forfeited	(403,738	)		16.17		—		(403,738	)
Issued	—			18.75		(2,614,093	)	(2,614,093	)
Vested	(287,374	)		17.23		287,374		—
Balance at March 31, 2017	9,200,454		(2)	$	15.80	425,736		9,626,190		⁽¹⁾


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


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

Restricted Share Awards—Athene Holding

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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

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

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



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

Equity-Based Compensation Allocation

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

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



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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



	For the Three Months Ended March 31, 2016
	Total Amount			Non- Controlling Interest % in Apollo Operating Group		Allocated to Non-Controlling Interest in Apollo Operating Group ⁽¹⁾			Allocated to Apollo Global Management, LLC
RSUs, share options and restricted share awards	$	18,992		—	%	$	—		$	18,992
AHL Awards	(7,034		)	54.1		(3,805		)	(3,229		)
Other equity-based compensation awards	2,044			54.1		1,106			938
Total equity-based compensation	$	14,002				(2,699		)	16,701
Less other equity-based compensation awards ⁽²⁾						2,699			1,766
Capital increase related to equity-based compensation						$	—		$	18,467


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


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

12 . EQUITY

Class A Shares

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

Issuance of Class A Shares

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

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



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


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

Share Repurchase Plan

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

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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



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


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

Preferred Share Issuance

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

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

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

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

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

Distributions

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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



Distribution Declaration Date	Distribution per Class A Share		Distribution Payment Date	Distribution to Class A Shareholders		Distribution to Non-Controlling Interest Holders in the Apollo Operating Group		Total Distributions from Apollo Operating Group		Distribution Equivalents on Participating Securities
February 3, 2016	0.28		February 29, 2016	51.4		60.5		111.9		2.1
May 6, 2016	0.25		May 31, 2016	46.0		54.0		100.0		1.8
August 3, 2016	0.37		August 31, 2016	68.4		79.9		148.3		2.4
October 28, 2016	0.35		November 30, 2016	64.9		75.4		140.3		2.1
For the year ended December 31, 2016	$	1.25		$	230.7	$	269.8	$	500.5	$	8.4
February 3, 2017	$	0.45	February 28, 2017	$	84.2	$	97.0	$	181.2	$	2.9
For the three months ended March 31, 2017	$	0.45		$	84.2	$	97.0	$	181.2	$	2.9

Interests in Consolidated Entities

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



	For the Three Months Ended March 31,
	2017			2016
Interest in management companies and a co-investment vehicle ⁽¹⁾	$	(867	)	$	(2,082	)
Other consolidated entities	(2,517		)	47
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)
Net (income) loss attributable to Non-Controlling Interests in the Apollo Operating Group	(206,450		)	43,768
Net (Income) Loss attributable to Non-Controlling Interests	$	(209,834	)	$	41,733
Other comprehensive income attributable to Non-Controlling Interests	(875		)	(2,634		)
Comprehensive (Income) Loss Attributable to Non-Controlling Interests	$	(210,709	)	$	39,099


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

13 . RELATED PARTY TRANSACTIONS AND INTERESTS IN CONSOLIDATED ENTITIES

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

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NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



	As of March 31, 2017		As of December 31, 2016
Due from Related Parties:
Due from private equity funds	$	19,796	$	19,089
Due from portfolio companies	37,720		34,339
Due from credit funds	121,984		112,516
Due from Contributing Partners, employees and former employees	49,179		72,305
Due from real estate funds	21,202		16,604
Total Due from Related Parties	$	249,881	$	254,853
Due to Related Parties:
Due to Managing Partners and Contributing Partners	$	506,542	$	506,542
Due to private equity funds	24,530		56,880
Due to credit funds	67,615		66,859
Due to real estate funds	281		281
Distributions payable to employees	7		7,564
Total Due to Related Parties	$	598,975	$	638,126

Tax Receivable Agreement and Other

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

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

Due from Contributing Partners, Employees and Former Employees

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

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

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Indemnity

Carried interest income from certain funds that the Company manages can be distributed to the Company on a current basis, but is subject to repayment by the subsidiary 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. Pursuant to an existing shareholders agreement, the Company has agreed to indemnify each of the Company’s Managing Partners and certain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor of certain funds that the Company manages (including costs and expenses related to investigating the basis for or objecting to any claims made in respect of the guarantees) for all interests that the Company’s Managing Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.

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

Due to Private Equity Funds

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

Due to Credit Funds

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

Athene

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

The Company, through its consolidated subsidiary, Athene Asset Management, provides asset management services to Athene, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions, asset diligence hedging and other asset management services, and receives a gross management fee of 0.40% per annum on all assets under management in accounts owned by or related to Athene (the “Athene Accounts”) with certain limited exceptions. Another subsidiary of the Company, AAME, provides investment advisory services to Athene and receives a gross fee of 0.10% per annum on the assets with respect to which it advises.

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The Company provides sub-advisory services with respect to a portion of the assets in the Athene Accounts. In addition, from time to time, Athene also invests in funds and investment vehicles that Apollo manages. The Company broadly refers to “Athene Sub-Advised” assets under management as those assets in the Athene Accounts which the Company explicitly sub-advises as well as those assets in the Athene Accounts which are invested directly in funds and investment vehicles Apollo manages (“Athene Assets Directly Invested”).

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

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

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

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 is not entitled to receive any carried interest with respect to the shares of Athene Holding that were acquired (and not in satisfaction of prior commitments to buy such shares) by AAA Investments in the contribution of certain assets by AAA to Athene in October 2012. Apollo may elect to receive payment of carried interest receivable from AAA Investments in cash or in common shares of Athene Holding (valued at the then fair market value); and if Apollo elects to receive payment of such carried interest in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such carried interest in cash. For the three months ended March 31, 2017 and 2016 , the Company recorded carried interest income, taking into account the related profit sharing expense, of $14.1 million and $(19.1) million , respectively, from AAA Investments, which is recorded in the condensed consolidated statements of operations. As of March 31, 2017 and December 31, 2016 , the Company had a $249.3 million and $229.8 million carried interest receivable, respectively, from AAA Investments. As of March 31, 2017 and December 31, 2016 , the Company had a related profit sharing payable of $71.5 million and $80.6 million , respectively, recorded in profit sharing payable in the condensed consolidated statements of financial condition. In connection with the March 28, 2017 follow-on offering of common shares of Athene Holding that closed on April 3, 2017, the carried interest receivable balance from AAA Investments, L.P. declined to $204.2 million , or $145.6 million net of profit sharing, reflecting receipt of the carried interest amount that was presented within realized carried interest income for the three months ended March 31, 2017.

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

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

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

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in AAA and the Company’s approximate 0.06% economic ownership interest in AAA Investments, multiplied by AAA Investments’ approximate 39.4% economic ownership interest in Athene, calculated without giving effect to restricted common shares issued under Athene’s management equity plan as of December 31, 2016 .

AAA Investments Credit Agreement

On April 30, 2015, Apollo entered into a revolving credit agreement with AAA Investments (“AAA Investments Credit Agreement”). Under the terms of the AAA Investments Credit Agreement, the Company shall make available to AAA Investments one or more advances at the discretion of AAA Investments in the aggregate amount not to exceed a balance of $10.0 million at an applicable rate of LIBOR plus 1.5% . The Company receives an annual commitment fee of 0.125% on the unused portion of the loan. As of March 31, 2017 and December 31, 2016 , $4.0 million had been advanced by the Company and remained outstanding on the AAA Investments Credit Agreement.

Regulated Entities

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

14 . COMMITMENTS AND CONTINGENCIES

Investment Commitments— As a limited partner, general partner and manager of the Apollo funds, Apollo had unfunded capital commitments as of March 31, 2017 and December 31, 2016 of $588.5 million and $607.9 million , respectively.

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

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.

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

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

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

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

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

•

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

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

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response was stayed during the pendency of motions to dismiss under a September 23, 2014 stipulated order. On March 18, 2015, the Delaware Court denied Defendants’ motion to dismiss. Apollo served responses and objections to WSFS’ subpoena on March 25, 2015. Caesars Entertainment answered the complaint on April 1, 2015. During the pendency of CEOC’s bankruptcy proceedings, the WSFS Action has been automatically stayed with respect to CEOC. WSFS additionally advised the Illinois Bankruptcy Court that, during CEOC’s bankruptcy proceedings, WSFS would only pursue claims in the WSFS Action relating to whether Caesars Entertainment remains liable on a guarantee of certain of CEOC’s second priority notes. On July 17, 2015, WSFS served supplemental subpoenas to several entities affiliated with AGM, and AGM and these entities have substantially completed their production of non-privileged documents responsive to those subpoenas. On March 11, 2016, WSFS filed a motion for partial summary judgment (the “Summary Judgment Motion”) on its breach of contract claim against Caesars Entertainment. On April 25, 2016, Caesars Entertainment filed a joint Cross-Motion for Partial Summary Judgment and answering brief in opposition to WSFS’ Summary Judgment Motion (the “Cross-Motion”). WSFS filed its joint reply and opposition to Caesars Entertainment’s Cross-Motion on May 25, 2016, and Caesars Entertainment filed a reply to WSFS’ opposition on June 9, 2016. On June 15, 2016, the Illinois Bankruptcy Court issued a temporary restraining order and preliminary injunction pursuant to Section 105(a) of the Bankruptcy Code enjoining the plaintiffs in the WSFS Action from prosecuting actions against Caesars Entertainment until August 29, 2016. On October 17, 2016, the Illinois Bankruptcy Court granted the 105 Injunction staying the WSFS Action initially through the first omnibus hearing after Plan confirmation, and now through, inter alia, the Plan Effective Date. Pursuant to the Plan, the Apollo Released Parties will be released from all claims relating to the WSFS Action. As aforementioned, the Plan was confirmed by an order dated January 17, 2017.

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


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

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

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

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

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

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

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

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

The Bankruptcy Court administering the CEOC bankruptcy proceedings appointed an examiner (the “Examiner”) to report on certain transactions engaged in by CEOC and certain of its subsidiaries. The Examiner issued his report on March 16, 2016. The Examiner’s report states that potential claims may exist against “Apollo” and persons affiliated with it relating to certain transactions that occurred in the years preceding CEOC’s bankruptcy filing, principally relating to Bankruptcy Code fraudulent conveyance claims as well as aiding and abetting claims. Apollo and persons affiliated with it deny any wrongdoing and deny any liability in connection with such transactions, and if any new claim is asserted against any of them, such claim will be vigorously contested.

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

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

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

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

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

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

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

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2017; and (3) Defendants’ replies are due by July 14, 2017. Because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

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

On June 20, 2016 Banca Carige S.p.A. (“Carige”) commenced a lawsuit in the Court of Genoa (Italy) (No. 8965/2016), against its former Chairman, its former Chief Executive Officer, AGM and certain entities (the “Apollo Entities”) organized and owned by investment funds managed by affiliates of AGM. The complaint alleges that AGM and the Apollo Entities (i) aided and abetted breaches of fiduciary duty to Carige allegedly committed by Carige’s former Chairman and former CEO in connection with the sale to the Apollo Entities of Carige subsidiaries engaged in the insurance business; and (ii) took wrongful actions aimed at weakening Banca Carige’s financial condition supposedly to facilitate an eventual acquisition of Carige. The causes of action are based in tort under Italian law. Carige purportedly seeks damages of €450 million in connection with the sale of the insurance businesses and €800 million for other losses. The first hearing has been scheduled for May 9, 2017. Based on the allegations made in the complaint, Apollo believes that there is no merit to Carige’s claims. Additionally, as the case is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

On December 12, 2016, the CORE Litigation Trust (the “Trust”), which was created under the Chapter 11 reorganization plan for CORE Media and other affiliated entities, including CORE Entertainment, Inc. (“CORE”), approved by the Southern District of New York Bankruptcy Court on September 22, 2016, commenced an action in California Superior Court for Los Angeles County, captioned Core Litigation Trust v. Apollo Global Management, LLC, et al., Case No. BC 643732, which was removed to the United States District Court for the Central District of California on February 3, 2017. On February 21, 2017, the Trust moved to remand the action to California state court, and Defendants moved to transfer the case to the Southern District of New York (“SDNY”). On April 5, 2017, the Court granted Defendants’ motion to transfer the case to the SDNY and denied the Trust’s motion to remand, without prejudice to the Trust refiling its remand motion in the SDNY. On April 20, 2017, the SDNY District Court referred the case to the SDNY Bankruptcy Court. On April 27, 2017, the Trust filed a motion for mandatory abstention, permissive abstention, and remand to California state court. Defendants’ opposition to that motion is due May 16, 2017, the Trust’s reply is due May 26, 2017, and a hearing on the motion has been noticed for June 13, 2017. The Trust’s complaint asserts claims for inducing the breach of and tortiously interfering with $360 million in loans under the 2011 loan agreements entered into between CORE and certain First and Second Lien Lenders (the “Lenders”), who assigned their loan-agreement claims to the Trust as part of CORE’s Chapter 11 plan of reorganization. The complaint names as defendants: (i) AGM, (ii) Apollo Global Securities, LLC, (iii) other AGM subsidiaries, (iv) the funds managed by Apollo that were the beneficial owners of CORE Media (the “CORE Funds”), (v) certain affiliated-entities through which the CORE Funds owned their beneficial interest in CORE Media, (vi) Twenty-First Century Fox, Inc. (“Fox”) and certain Fox affiliates, and (vii) Endemol USA Holding, Inc. (“Endemol”) and certain Endemol-affiliated entities. The Trust alleges that defendants’ participation in certain transactions related to CORE, including the December 12, 2014 formation of the joint venture through which the CORE Funds and Fox beneficially owned CORE Media and Endemol Shine, induced CORE to breach the loan agreements and tortiously interfered with CORE’s performance of its obligations under the loan agreements. The Trust seeks unspecified compensatory and punitive damages. Apollo believes these claims are without merit. Because this action is in its early stages, no reasonable estimate of possible loss, if any, can be made at this time.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

In December 2016, the Company received a subpoena from the SEC principally concerning the Company's disclosure of IRR calculations for certain private equity funds, costs associated with a European service provider, and certain personnel changes. These topics generally track matters with which the Company is familiar and has previously examined. The Company is fully cooperating with the SEC in this matter.

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

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



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

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

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



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

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 March 31, 2017 and that would be reversed approximates $3.1 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.

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 or as otherwise set forth in the respective limited partnership agreement of the fund. See note 13 to our condensed consolidated financial statements for further details regarding the general partner obligation.

Certain funds may not generate carried interest income 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.

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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

As of March 31, 2017 , one of the Company’s subsidiaries had unfunded contingent commitments of $0.9 million , to facilitate fundings at closing by lead arrangers for syndicated term loans issued by portfolio companies of a fund managed by Apollo. The commitments expired on April 30, 2017.

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 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 remaining contingent obligation was $87.7 million and $106.3 million as of March 31, 2017 and December 31, 2016 , respectively.

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 is reflected in profit sharing expense in the condensed consolidated statements of operations.

The contingent consideration obligations are measured at fair value and are characterized as Level III liabilities. See note 5 for further information regarding fair value measurements.

15 . SEGMENT REPORTING

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

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

Economic Income

Economic Income, or “EI”, 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 EI, such as the amount of management fees, advisory and transaction fees and carried interest income, are indicative of the Company’s performance. Management uses EI in making key operating decisions such as the following:


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


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

•

Decisions relating 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.

EI is a measure of profitability and has certain limitations in that it does not take into account certain items included under U.S. GAAP. EI represents segment income before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets, contingent consideration and certain other charges associated with acquisitions. In addition, segment data excludes non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, compensation and administrative related expense reimbursements, as well as the assets, liabilities and operating results of the funds and VIEs that are included in the condensed consolidated financial statements.

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



	As of and for the Three Months Ended March 31, 2017
	Private Equity Segment			Credit Segment			Real Estate Segment			Total Reportable Segments
Revenues:
Management fees from related parties	$	77,398		$	158,342		$	16,313		$	252,053
Advisory and transaction fees from related parties, net	11,772			2,556			739			15,067
Carried interest income from related parties:
Unrealized ⁽¹⁾	163,619			6,322			2,604			172,545
Realized	155,461			30,936			64			186,461
Total carried interest income from related parties	319,080			37,258			2,668			359,006
Total Revenues ⁽²⁾	408,250			198,156			19,720			626,126
Expenses:
Compensation and benefits:
Salary, bonus and benefits	31,469			54,882			8,370			94,721
Equity-based compensation	7,095			9,102			548			16,745
Profit sharing expense:
Unrealized	55,016			2,215			2,034			59,265
Realized	75,252			13,445			26			88,723
Realized: Equity-based	—			287			—			287
Total profit sharing expense	130,268			15,947			2,060			148,275
Total compensation and benefits	168,832			79,931			10,978			259,741
Non-compensation expenses:
General, administrative and other	17,360			32,090			4,482			53,932
Placement fees	134			1,770			—			1,904
Total non-compensation expenses	17,494			33,860			4,482			55,836
Total Expenses ⁽²⁾	186,326			113,791			15,460			315,577
Other Income (Loss):
Income from equity method investments	31,728			6,483			1,003			39,214
Net gains from investment activities	3,396			31,094			—			34,490
Net interest loss	(4,242		)	(6,522		)	(1,224		)	(11,988		)
Other income, net	17,790			811			63			18,664
Total Other Income (Loss) ⁽²⁾	48,672			31,866			(158		)	80,380
Non-Controlling Interests	—			(934		)	—			(934		)
Economic Income ⁽²⁾	$	270,596		$	115,297		$	4,102		$	389,995
Total Assets ⁽²⁾	$	2,472,357		$	2,533,034		$	209,650		$	5,215,041


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


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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



	For the Three Months Ended March 31, 2016
	Private Equity Segment			Credit Segment			Real Estate Segment			Total Reportable Segments
Revenues:
Management fees from related parties	$	74,918		$	142,511		$	13,504		$	230,933
Advisory and transaction fees from related parties, net	2,713			4,410			876			7,999
Carried interest income (loss) from related parties:
Unrealized ⁽¹⁾	(146,335		)	(21,179		)	(3,377		)	(170,891		)
Realized	—			45,152			4,771			49,923
Total carried interest income (loss) from related parties	(146,335		)	23,973			1,394			(120,968		)
Total Revenues ⁽²⁾	(68,704		)	170,894			15,774			117,964
Expenses:
Compensation and benefits:
Salary, bonus and benefits	32,074			51,612			8,684			92,370
Equity-based compensation	7,385			8,560			775			16,720
Profit sharing expense:
Unrealized	(57,374		)	(9,137		)	(1,171		)	(67,682		)
Realized	—			30,561			3,628			34,189
Total profit sharing expense	(57,374		)	21,424			2,457			(33,493		)
Total compensation and benefits	(17,915		)	81,596			11,916			75,597
Non-compensation expenses:
General, administrative and other	15,731			30,486			6,144			52,361
Placement fees	994			707			—			1,701
Total non-compensation expenses	16,725			31,193			6,144			54,062
Total Expenses ⁽²⁾	(1,190		)	112,789			18,060			129,659
Other Loss:
Income (loss) from equity method investments	(5,483		)	848			776			(3,859		)
Net losses from investment activities	(4,106		)	(52,393		)	—			(56,499		)
Net interest loss	(2,428		)	(3,655		)	(808		)	(6,891		)
Other loss, net	(124		)	(408		)	(29		)	(561		)
Total Other Loss ⁽²⁾	(12,141		)	(55,608		)	(61		)	(67,810		)
Non-Controlling Interests	—			(2,385		)	—			(2,385		)
Economic Income (Loss) ⁽²⁾	$	(79,655	)	$	112		$	(2,347	)	$	(81,890	)


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


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



	For the Three Months Ended March 31,
	2017			2016
Total Consolidated Revenues	$	643,551		$	120,826
Equity awards granted by unconsolidated related parties and reimbursable expenses ⁽¹⁾	(18,223		)	(4,966		)
Adjustments related to consolidated funds and VIEs ⁽¹⁾	798			652
Other ⁽¹⁾	—			1,452
Total Reportable Segments Revenues	$	626,126		$	117,964


(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 related parties to employees of the Company and certain compensation and administrative related expense reimbursements.

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



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

(1)

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

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



	For the Three Months Ended March 31,
	2017			2016
Total Consolidated Other Income (Loss)	$	96,628		$	(58,635	)
Reclassification of interest expense	(12,999		)	(7,873		)
Adjustments related to consolidated funds and VIEs ⁽¹⁾	(3,316		)	(638		)
Other	67			(664		)
Total Reportable Segments Other Income (Loss)	$	80,380		$	(67,810	)


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

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APOLLO GLOBAL MANAGEMENT, LLC

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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



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


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

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



	As of March 31, 2017		As of December 31, 2016
Total reportable segment assets	$	5,215,041	$	4,694,643
Adjustments ⁽¹⁾	1,046,522		934,910
Total assets	$	6,261,563	$	5,629,553


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

16 . SUBSEQUENT EVENTS

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

On April 28, 2017 , the Company declared a cash distribution of $0.433854 per Preferred share, which will be paid on June 15, 2017 to holders of record on June 1, 2017 .

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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)



	As of March 31, 2017
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs			Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	1,084,218		$	—		$	—		$	1,084,218
Cash and cash equivalents held at consolidated funds	—			7,880			—			7,880
Restricted cash	4,946			—			—			4,946
Investments	1,641,030			9,602			(74,945		)	1,575,687
Assets of consolidated variable interest entities:
Cash and cash equivalents	—			60,086			—			60,086
Investments, at fair value	—			991,339			(286		)	991,053
Other assets	—			55,268			—			55,268
Carried interest receivable	1,422,707			—			(1,847		)	1,420,860
Due from related parties	250,648			—			(767		)	249,881
Deferred tax assets	561,524			—			—			561,524
Other assets	140,110			345			(153		)	140,302
Goodwill	88,852			—			—			88,852
Intangible assets, net	21,006			—			—			21,006
Total Assets	$	5,215,041		$	1,124,520		$	(77,998	)	$	6,261,563
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	72,170		$	—		$	—		$	72,170
Accrued compensation and benefits	54,257			—			—			54,257
Deferred revenue	171,267			—			—			171,267
Due to related parties	598,975			—			—			598,975
Profit sharing payable	634,668			—			—			634,668
Debt	1,353,572			—			—			1,353,572
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			839,231			(41,903		)	797,328
Other liabilities	—			127,833			(153		)	127,680
Due to related parties	—			2,615			(2,615		)	—
Other liabilities	97,668			6,187			—			103,855
Total Liabilities	2,982,577			975,866			(44,671		)	3,913,772

Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Preferred shares	264,683			—			—			264,683
Additional paid in capital	1,763,146			—			—			1,763,146
Accumulated deficit	(838,686		)	14,884			(14,884		)	(838,686		)
Accumulated other comprehensive loss	(11,970		)	(2,849		)	3,016			(11,803		)
Total Apollo Global Management, LLC shareholders’ equity	1,177,173			12,035			(11,868		)	1,177,340
Non-Controlling Interests in consolidated entities	5,731			136,619			(21,459		)	120,891
Non-Controlling Interests in Apollo Operating Group	1,049,560			—			—			1,049,560
Total Shareholders’ Equity	2,232,464			148,654			(33,327		)	2,347,791
Total Liabilities and Shareholders’ Equity	$	5,215,041		$	1,124,520		$	(77,998	)	$	6,261,563

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APOLLO GLOBAL MANAGEMENT, LLC

CONSOLIDATING STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(dollars in thousands, except share data)



	As of December 31, 2016
	Apollo Global Management, LLC and Consolidated Subsidiaries			Consolidated Funds and VIEs			Eliminations			Consolidated
Assets:
Cash and cash equivalents	$	806,329		$	—		$	—		$	806,329
Cash and cash equivalents held at consolidated funds	—			7,335			—			7,335
Restricted cash	4,680			—			—			4,680
Investments	1,567,388			5,378			(78,022		)	1,494,744
Assets of consolidated variable interest entities:
Cash and cash equivalents	—			41,318			—			41,318
Investments, at fair value	—			914,110			(283		)	913,827
Other assets	—			46,666			—			46,666
Carried interest receivable	1,258,887			—			(1,782		)	1,257,105
Due from related parties	255,342			—			(489		)	254,853
Deferred tax assets	572,263			—			—			572,263
Other assets	118,181			768			(89		)	118,860
Goodwill	88,852			—			—			88,852
Intangible assets, net	22,721			—			—			22,721
Total Assets	$	4,694,643		$	1,015,575		$	(80,665	)	$	5,629,553
Liabilities and Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	57,465		$	—		$	—		$	57,465
Accrued compensation and benefits	52,754			—			—			52,754
Deferred revenue	174,893			—			—			174,893
Due to related parties	638,126			—			—			638,126
Profit sharing payable	550,148			—			—			550,148
Debt	1,352,447			—			—			1,352,447
Liabilities of consolidated variable interest entities:
Debt, at fair value	—			827,854			(41,309		)	786,545
Other liabilities	—			68,123			(89		)	68,034
Due to related parties	—			2,271			(2,271		)	—
Other liabilities	81,568			45			—			81,613
Total Liabilities	2,907,401			898,293			(43,669		)	3,762,025

Shareholders’ Equity:
Apollo Global Management, LLC shareholders’ equity:
Additional paid in capital	1,830,025			—			—			1,830,025
Accumulated deficit	(986,187		)	16,131			(16,130		)	(986,186		)
Accumulated other comprehensive loss	(5,750		)	(3,029		)	56			(8,723		)
Total Apollo Global Management, LLC shareholders’ equity	838,088			13,102			(16,074		)	835,116
Non-Controlling Interests in consolidated entities	6,805			104,180			(20,922		)	90,063
Non-Controlling Interests in Apollo Operating Group	942,349			—			—			942,349
Total Shareholders’ Equity	1,787,242			117,282			(36,996		)	1,867,528
Total Liabilities and Shareholders’ Equity	$	4,694,643		$	1,015,575		$	(80,665	)	$	5,629,553

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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, 2016 filed with the SEC on February 13, 2017 (the “2016 Annual Report”). The highlights listed below have had significant effects on many items within our condensed consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.

General

Our Businesses

Founded in 1990, Apollo is a leading global alternative investment manager. We are a contrarian, value-oriented investment manager in private equity, credit and real estate with significant distressed expertise and a flexible mandate in the majority of our funds which enables our funds to invest opportunistically across a company’s capital structure. We raise, invest and manage funds on behalf of some of the world’s most prominent pension, endowment and sovereign wealth funds as well as other institutional and individual investors. Apollo is led by our Managing Partners, Leon Black, Joshua Harris and Marc Rowan, who have worked together for more than 30 years and lead a team of 989 employees, including 371 investment professionals, as of March 31, 2017 .

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


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


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

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

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

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

As of March 31, 2017 , we had total AUM of $197.5 billion across all of our businesses. More than 90% of our total AUM was in funds with a contractual life at inception of seven years or more, and 45% of such AUM was in permanent capital vehicles. On December 31, 2013, Fund VIII held a final closing raising a total of $17.5 billion in third-party capital and approximately $880 million of additional capital from Apollo and affiliated investors, and as of March 31, 2017 , Fund VIII had $7.4 billion of uncalled commitments remaining. Additionally, Fund VII held a final closing in December 2008, raising a total of $14.7 billion, and as of March 31, 2017 , Fund VII had $2.3 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 25% net IRR on a compound annual basis from inception through March 31, 2017 . Apollo’s private equity fund appreciation was 8% for the three months ended March 31, 2017 .

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For our credit segment, total gross and net returns, excluding assets managed by Athene Asset Management that are not directly invested in Apollo funds and investment vehicles or sub-advised by Apollo, were 1.9% and 1.6% , respectively, for the three months ended March 31, 2017 .

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

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

Holding Company Structure

The diagram below depicts our current organizational structure:

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

(1)

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

(2)

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


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


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

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


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

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

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


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

•

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

Business Environment

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

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

Conditions in the credit markets also have a significant impact on our business. Credit markets rose in the first quarter of 2017, with the BofAML HY Master II Index increasing 2.7% and the S&P/LSTA Leveraged Loan Index increasing 1.2%. Benchmark interest rates decreased slightly in the first quarter, following consecutive quarters of increasing, as investors weigh potential monetary policy actions by the Federal Reserve. The U.S. 10-year Treasury yield fell slightly to finish the quarter at 2.4%.

Foreign exchange rates can impact the valuations of our funds’ investments that are denominated in currencies other than the U.S. dollar. Relative to the U.S. dollar, the Euro appreciated 1.3% in the first quarter of 2017, after depreciating 6.4% in the fourth quarter of 2016, while the British pound appreciated 1.7% in the first quarter of 2017, after depreciating by 4.9% in the fourth quarter of 2016. Commodities were generally mixed in the first quarter of 2017. The price of crude oil declined 5.8% during the first quarter of 2017, compared to a significant increase of 11.4% during the fourth quarter of 2016.

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

Regardless of the market or economic environment at any given time, Apollo relies on its contrarian, value-oriented approach to consistently invest capital on behalf of its fund investors by focusing on opportunities that management believes are often overlooked by other investors. As such, Apollo’s global integrated investment platform deployed $3.4 billion and $17.2 billion of capital through the funds it manages during the first quarter and the twelve months ended March 31, 2017, respectively. We believe Apollo’s expertise in credit and its focus on nine core industry sectors, combined with more than 25 years of investment experience, has allowed Apollo to respond quickly to changing environments. Apollo’s core industry sectors include chemicals, manufacturing and industrial, natural resources, consumer and retail, consumer services, business services, financial services, leisure, and media/telecom/technology. Apollo believes that these attributes have contributed to the success of its private equity funds investing in buyouts and credit opportunities during both expansionary and recessionary economic periods.

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

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

Managing Business Performance

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

Economic Income

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

Economic Net Income represents EI adjusted to reflect income tax provision on EI that has been calculated assuming that all income is allocated to Apollo Global Management, LLC, which would occur following an exchange of all AOG Units for Class A shares of Apollo Global Management, LLC. The economic assumptions and methodologies that impact the implied income tax provision are similar to those methodologies and certain assumptions used in calculating the income tax provision for Apollo’s condensed consolidated statements of operations under U.S. GAAP.

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

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

Fee Related Earnings

Fee Related Earnings (“FRE”) is derived from our segment reported results and refers to a component of EI that is used as a supplemental measure to assess whether revenues that we believe are generally more stable and predictable in nature, primarily consisting of management fees, are sufficient to cover associated operating expenses and generate profits. FRE is the sum across all segments of (i) management fees, (ii) advisory and transaction fees, (iii) carried interest income earned from a publicly traded business development company we manage and (iv) other income, net excluding gains (losses) arising from the reversal of a portion of the tax receivable agreement liability, less (y) salary, bonus and benefits, excluding equity-based compensation and (z) other associated operating expenses.

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Distributable Earnings

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

Fee Related EBITDA

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

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

Operating Metrics

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

Assets Under Management

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



	As of March 31, 2017
	Private Equity		Credit		Real Estate		Total
	(in millions)
Fee-Generating	$	30,774	$	114,914	$	8,466	$	154,154
Non-Fee-Generating	13,799		26,018		3,495		43,312
Total Assets Under Management	$	44,573	$	140,932	$	11,961	$	197,466



	As of March 31, 2016
	Private Equity		Credit		Real Estate		Total
	(in millions)
Fee-Generating	$	29,325	$	104,904	$	6,844	$	141,073
Non-Fee-Generating	8,377		18,950		4,113		31,440
Total Assets Under Management	$	37,702	$	123,854	$	10,957	$	172,513

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	As of December 31, 2016
	Private Equity		Credit		Real Estate		Total
	(in millions)
Fee-Generating	$	30,722	$	111,781	$	8,295	$	150,798
Non-Fee-Generating	12,906		24,826		3,158		40,890
Total Assets Under Management	$	43,628	$	136,607	$	11,453	$	191,688

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



	As of March 31, 2017		As of March 31, 2016		As of December 31, 2016
	(in millions)
Private Equity	$	1,895	$	2,052	$	1,977
Credit	6,622		6,098		6,533
Real Estate	759		975		639
Total AUM with Future Management Fee Potential	$	9,276	$	9,125	$	9,149

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



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



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



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

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



Category / Fund	Invested AUM Not Currently Generating Carry		Investment Period Active > 24 Months		Appreciation Required to Achieve Carry ⁽¹⁾
	(in millions)
Private Equity:
Total Private Equity	$	264	$	264	40%
Credit:
Drawdown	4,106		3,980		29%
Liquid/Performing	8,189		6,824		< 250bps
			17		250-500bps
			534		> 500bps
Permanent Capital Vehicles ex Athene Non-Sub-Advised	641		641		< 250bps
Total Credit	12,936		11,996		11%
Real Estate:
Total Real Estate	355		250		> 250bps
Total	$	13,555	$	12,510


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

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



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


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



	As of March 31, 2016
	Private Equity			Credit		Real Estate		Total
	(in millions)
Fee-Generating AUM based on capital commitments	$	20,319		$	6,042	$	376	$	26,737
Fee-Generating AUM based on invested capital	8,209			4,279		3,799		16,287
Fee-Generating AUM based on gross/adjusted assets	378			86,161		2,580		89,119
Fee-Generating AUM based on NAV	419			8,422		89		8,930
Total Fee-Generating AUM	$	29,325	⁽¹⁾	$	104,904	$	6,844	$	141,073


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

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	As of December 31, 2016
	Private Equity			Credit		Real Estate		Total
	(in millions)
Fee-Generating AUM based on capital commitments	$	21,782		$	8,072	$	724	$	30,578
Fee-Generating AUM based on invested capital	8,058			4,212		4,374		16,644
Fee-Generating AUM based on gross/adjusted assets	882			88,196		3,131		92,209
Fee-Generating AUM based on NAV	—			11,301		66		11,367
Total Fee-Generating AUM	$	30,722	⁽¹⁾	$	111,781	$	8,295	$	150,798


(1)	The weighted average remaining life of the private equity funds excluding permanent capital vehicles at December 31, 2016 was 66 months.

The following table presents total AUM and Fee-Generating AUM amounts for our private equity segment:



	Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2017		2016		2016		2017		2016		2016
	(in millions)
Traditional Private Equity Funds	$	31,004	$	30,647	$	30,490	$	24,457	$	24,826	$	24,457
Natural Resources	5,505		3,120		5,223		4,181		2,654		4,181
Other ⁽¹⁾	8,064		3,935		7,915		2,136		1,845		2,084
Total	$	44,573	$	37,702	$	43,628	$	30,774	$	29,325	$	30,722


(1)	Includes co-investments contributed to Athene by AAA through its investment in AAA Investments as discussed in note 13 of the condensed consolidated financial statements.

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



	Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2017		2016		2016		2017		2016		2016
	(in millions)
Liquid/Performing	$	37,203	$	36,789	$	35,684	$	32,919	$	30,903	$	31,562
Drawdown	23,810		20,088		23,852		13,794		11,743		13,645
Permanent capital vehicles ex Athene Non-Sub-Advised ⁽¹⁾	12,328		14,993		12,330		11,462		10,274		11,460
Athene Non-Sub-Advised ⁽¹⁾	56,739		51,984		55,114		56,739		51,984		55,114
Advisory	10,852		—		9,627		—		—		—
Total	$	140,932	$	123,854	$	136,607	$	114,914	$	104,904	$	111,781


(1)	Athene Non-Sub-Advised reflects total Athene-related AUM of $73.1 billion less $16.4 billion of assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo. Athene Non-Sub-Advised includes $4.4 billion of Athene AUM for which AAME provides investment advisory services.

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



	Total AUM
	As of March 31,				As of December 31,
	2017		2016		2016
	(in millions)
Private Equity	$	1,136	$	1,025	$	1,099
Credit
Liquid/Performing	10,100		8,290		9,407
Drawdown	1,083		883		1,075
Total Credit	11,183		9,173		10,482
Real Estate
Debt	3,628		3,375		3,698
Equity	423		332		439
Total Real Estate	4,051		3,707		4,137
Total	$	16,370	$	13,905	$	15,718

The following table presents total AUM and Fee-Generating AUM amounts for our real estate segment:



	Total AUM						Fee-Generating AUM
	As of March 31,				As of December 31,		As of March 31,				As of December 31,
	2017		2016		2016		2017		2016		2016
	(in millions)
Debt	$	8,861	$	7,768	$	8,604	$	6,666	$	5,335	$	6,577
Equity	3,100		3,189		2,849		1,800		1,509		1,718
Total	$	11,961	$	10,957	$	11,453	$	8,466	$	6,844	$	8,295

The following tables summarize changes in total AUM for each of Apollo’s three segments for the three months ended March 31, 2017 and 2016 :



	For the Three Months Ended March 31,
	2017												2016
	Private Equity			Credit			Real Estate			Total			Private Equity			Credit			Real Estate			Total
	(in millions)
Change in Total AUM ⁽¹⁾ :
Beginning of Period	$	43,628		$	136,607		$	11,453		$	191,688		$	37,502		$	121,361		$	11,260		$	170,123
Inflows	297			4,385			631			5,313			482			3,663			432			4,577
Outflows ⁽²⁾	(71		)	(698		)	—			(769		)	(306		)	(1,374		)	—			(1,680		)
Net Flows	226			3,687			631			4,544			176			2,289			432			2,897
Realizations	(1,050		)	(365		)	(265		)	(1,680		)	(21		)	(320		)	(798		)	(1,139		)
Market Activity ⁽³⁾⁽⁴⁾	1,769			1,003			142			2,914			45			524			63			632
End of Period	$	44,573		$	140,932		$	11,961		$	197,466		$	37,702		$	123,854		$	10,957		$	172,513

(1)

At the individual segment level, inflows include new subscriptions, commitments, capital raised, other increases in available capital, purchases, acquisitions and portfolio company appreciation. Outflows represent redemptions, other decreases in available capital and portfolio company depreciation. Realizations represent fund distributions of realized proceeds. Market activity represents gains (losses), the impact of foreign exchange rate fluctuations and other income.


(2)	Outflows for Total AUM include redemptions of $297.9 million and $347.3 million during the three months ended March 31, 2017 and 2016 , respectively.

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(3)	Includes foreign exchange impacts of $38.2 million , $288.8 million and $25.5 million for private equity, credit and real estate, respectively, during the three months ended March 31, 2017 .


(4)	Includes foreign exchange impacts of $59.8 million , $425.5 million and $9.6 million for private equity, credit and real estate, respectively, during the three months ended March 31, 2016 .

Total AUM was $197.5 billion at March 31, 2017 , an increase of $5.8 billion , or 3.0% , compared to $191.7 billion at December 31, 2016 . The net increase was primarily due to:

Net flows of $4.5 billion primarily related to:


•	a $3.7 billion increase related to funds we manage in the credit segment primarily consisting of a net increase in AUM relating to Athene and Advisory assets of $1.9 billion and $1.1 billion, respectively, and subscriptions of $1.1 billion, offset by redemptions of $0.3 billion, a net change in leverage of $0.2 billion and net segment transfers of $0.2 billion;


•	a $0.6 billion increase related to funds we manage in the real estate segment primarily consisting of subscriptions of $0.2 billion primarily related to AGRE Debt Fund I, L.P. ("AGRE Debt Fund I") and a net change in leverage of $0.2 billion; and


•	a $0.2 billion increase related to funds we manage in the private equity segment consisting of subscriptions attributable to co-investments for Fund VIII transactions of $0.2 billion.

Market activity of $2.9 billion primarily related to $1.8 billion and $1.0 billion of appreciation in the funds we manage in the private equity and credit segments, respectively.

Offsetting these increases were:

Realizations of $1.7 billion primarily related to:


•	$1.1 billion related to funds we manage in the private equity segment primarily consisting of distributions of $0.7 billion and $0.3 billion from our traditional private equity funds and co-investment vehicles, respectively;


•	$0.4 billion related to funds we manage in the credit segment primarily consisting of distributions of $0.1 billion, $0.1 billion and $0.1 billion from drawdown funds, liquid/performing funds and permanent capital vehicles, respectively; and


•	$0.3 billion related to funds we manage in the real estate segment primarily consisting of distributions of $0.3 billion from our real estate debt funds.

The following tables summarize changes in Fee-Generating AUM for each of Apollo’s three segments for the three months ended March 31, 2017 and 2016 :



	For the Three Months Ended March 31,
	2017											2016
	Private Equity		Credit			Real Estate			Total			Private Equity			Credit			Real Estate			Total
	(in millions)
Change in Fee-Generating AUM ⁽¹⁾ :
Beginning of Period	$	30,722	$	111,781		$	8,295		$	150,798		$	29,258		$	101,522		$	7,317		$	138,097
Inflows	31		3,602			347			3,980			281			3,891			117			4,289
Outflows ⁽²⁾	—		(984		)	—			(984		)	(214		)	(608		)	(46		)	(868		)
Net Flows	31		2,618			347			2,996			67			3,283			71			3,421
Realizations	—		(236		)	(245		)	(481		)	—			(179		)	(547		)	(726		)
Market Activity ⁽³⁾	21		751			69			841			—			278			3			281
End of Period	$	30,774	$	114,914		$	8,466		$	154,154		$	29,325		$	104,904		$	6,844		$	141,073

(1)


(2)	Outflows for Fee-Generating AUM include redemptions of $277.3 million and $290.0 million during the three months ended March 31, 2017 and 2016 , respectively.


(3)	Includes foreign exchange impacts of $140.7 million and $2.8 million for credit and real estate, respectively, during the three months ended March 31, 2017 , and foreign exchange impacts of $386.6 million and $15.5 million for credit and real estate, respectively, during the three months ended March 31, 2016 .

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Total Fee-Generating AUM was $154.2 billion at March 31, 2017 , an increase of $3.4 billion or 2.3% , compared to $150.8 billion at December 31, 2016 . The net increase was primarily due to:

Net flows of $3.0 billion primarily related to:


•	a $2.6 billion increase related to funds we manage in the credit segment primarily consisting of a net increase in AUM relating to Athene of $1.9 billion, subscriptions of $1.0 billion, and an increase in fee-generating capital deployment of $0.4 billion, offset by a net change in leverage of $0.3 billion, redemptions of $0.3 billion and net segment transfers of $0.1 billion; and


•	a $0.3 billion increase related to funds we manage in the real estate segment primarily consisting of subscriptions of $0.3 billion and net segment transfers of $0.1 billion.

Market activity of $0.8 billion primarily related to appreciation in the funds we manage in the credit segment.

Offsetting these increases were:

Realizations of $0.5 billion primarily related to:


•	$0.2 billion related to funds we manage in the real estate segment primarily driven by distributions of $0.2 billion from our real estate debt funds; and


•	$0.2 billion related to funds we manage in the credit segment primarily driven by certain of our liquid/performing funds.

Capital Deployed and Uncalled Commitments

Capital deployed is the aggregate amount of capital that has been invested during a given period by our drawdown funds, SIAs that have a defined maturity date and funds and SIAs in our real estate debt strategy. Uncalled commitments, by contrast, represents unfunded capital commitments that certain of Apollo’s funds and SIAs have received from fund investors to fund future or current fund investments and expenses.

Capital deployed and uncalled commitments are indicative of the pace and magnitude of fund capital that is deployed or will be deployed, and which therefore could result in future revenues that include management fees, transaction fees and incentive income to the extent they are fee-generating. Capital deployed and uncalled commitments can also give rise to future costs that are related to the hiring of additional resources to manage and account for the additional capital that is deployed or will be deployed. Management uses capital deployed and uncalled commitments as key operating metrics since we believe the results measure our fund’s investment activities.

Capital Deployed

The following table summarizes by segment the capital deployed for funds and SIAs with a defined maturity date and certain funds and SIAs in Apollo’s real estate debt strategy during the specified reporting periods:



	For the Three Months Ended March 31,
	2017		2016
	(in millions)
Private Equity	$	1,564	$	501
Credit	992		1,337
Real Estate ⁽¹⁾	867		334
Total capital deployed	$	3,423	$	2,172


(1)	Included in capital deployed is $735 million and $302 million for the three months ended March 31, 2017 and 2016 , respectively, related to funds in Apollo’s real estate debt strategy.

Uncalled Commitments

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

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	As of March 31, 2017		As of December 31, 2016
	(in millions)
Private Equity	$	14,759	$	16,079
Credit	12,083		11,816
Real Estate	1,314		1,414
Total uncalled commitments ⁽¹⁾	$	28,156	$	29,309

(1)

As of March 31, 2017 and December 31, 2016 , $24.2 billion and $25.9 billion , respectively, represented the amount of capital available for investment or reinvestment subject to the provisions of the applicable limited partnership agreements or other governing agreements of the funds, partnerships and accounts we manage. These amounts exclude uncalled commitments which can only be called for fund fees and expenses.

The Historical Investment Performance of Our Funds

Below we present information relating to the historical performance of our funds, including certain legacy Apollo funds that do not have a meaningful amount of unrealized investments, and in respect of which the general partner interest has not been contributed to us.

When considering the data presented below, you should note that the historical results of our funds are not indicative of the future results that you should expect from such funds, from any future funds we may raise or from your investment in our Class A shares.

An investment in our Class A shares is not an investment in any of the Apollo funds, and the assets and revenues of our funds are not directly available to us. The historical and potential future returns of the funds we manage are not directly linked to returns on our Class A shares. Therefore, you should not conclude that continued positive performance of the funds we manage will necessarily result in positive returns on an investment in our Class A shares. However, poor performance of the funds that we manage would cause a decline in our revenue from such funds, and would therefore have a negative effect on our performance and in all likelihood the value of our Class A shares.

Moreover, the historical returns of our funds should not be considered indicative of the future results you should expect from such funds or from any future funds we may raise. There can be no assurance that any Apollo fund will continue to achieve the same results in the future.

Finally, our private equity IRRs have historically varied greatly from fund to fund. For example, Fund IV generated a 12% gross IRR and a 9% net IRR since its inception through March 31, 2017 , while Fund V generated a 61% gross IRR and a 44% net IRR since its inception through March 31, 2017 . 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 2016 Annual Report.

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Investment Record

The following table summarizes the investment record by segment of Apollo’s significant drawdown funds and SIAs that have a defined maturity date in which investors make a commitment to provide capital at the formation of such funds and deliver capital when called as investment opportunities become available. The funds included in the investment record table below have greater than $500 million of AUM and/or form part of a flagship series of funds. The SIAs included in the investment record table below have greater than $200 million of AUM and did not predominantly invest in other Apollo funds or SIAs.

All amounts are as of March 31, 2017 , unless otherwise noted:



																As of March 31, 2017
($ in millions)	Vintage Year	Total AUM		Committed Capital		Total Invested Capital ⁽¹⁾		Realized Value ⁽¹⁾		Remaining Cost ⁽¹⁾		Unrealized Value ⁽¹⁾		Total Value ⁽¹⁾		Gross IRR ⁽¹⁾			Net IRR ⁽¹⁾
Private Equity:
Fund VIII	2013	$	20,598	$	18,377	$	10,854	$	1,684	$	9,668	$	12,583	$	14,267	27	%		16	%
Fund VII	2008	6,559		14,677		16,097		29,423		3,686		4,177		33,600		35			26
Fund VI	2006	3,515		10,136		12,457		18,100		3,407		2,895		20,995		12			9
Fund V	2001	315		3,742		5,192		12,697		138		58		12,755		61			44
Fund I, II, III, IV and MIA ⁽³⁾	Various	17		7,320		8,753		17,400		—		2		17,402		39			26
Traditional Private Equity Funds ⁽⁴⁾		$	31,004	$	54,252	$	53,353	$	79,304	$	16,899	$	19,715	$	99,019	39	%		25	%
ANRP II	2016	3,809		3,454		810		144		734		1,180		1,324		NM		⁽²⁾	NM		⁽²⁾
ANRP I	2012	1,696		1,323		1,035		241		868		1,361		1,602		18			12
AION	2013	687		826		328		137		216		194		331		5	%		(7	)%
Total Private Equity ⁽⁹⁾		$	37,196	$	59,855	$	55,526	$	79,826	$	18,717	$	22,450	$	102,276
Credit:
Credit Opportunity Funds
COF III	2014	$	3,131	$	3,426	$	4,375	$	2,174	$	2,559	$	2,129	$	4,303	(2	)%		(3	)%
COF I and II	2008	442		3,068		3,787		7,396		127		159		7,555		23			20
European Principal Finance Funds
EPF II ⁽⁵⁾	2012	4,139		3,391		3,547		1,471		2,077		3,265		4,736		18			11
EPF I ⁽⁵⁾	2007	262		1,380		1,813		3,013		—		40		3,053		23			17
Structured Credit Funds
FCI II	2013	2,345		1,555		2,022		749		1,596		1,795		2,544		15			11
FCI I	2012	1,030		559		1,265		881		809		824		1,705		15			12
SCRF III ⁽¹²⁾	2015	1,033		1,238		1,716		1,125		697		708		1,833		17			14
SCRF I and II ¹²⁾	Various	2		222		707		885		—		—		885		27			21
Other Drawdown Funds & SIAs ⁽⁶⁾	Various	6,537		8,803		7,741		7,644		2,144		1,979		9,623		9			6
Total Credit ⁽¹⁰⁾		$	18,921	$	23,642	$	26,973	$	25,338	$	10,009	$	10,899	$	36,237
Real Estate:
U.S. RE Fund II ⁽⁷⁾	2016	$	826	$	771	$	408	$	75	$	384	$	441	$	516	19	%		17	%
U.S. RE Fund I ⁽⁷⁾	2012	517		649		631		584		277		344		928		17			13
AGRE Debt Fund I ⁽¹³⁾	2011	1,163		2,148		2,058		1,148		1,135		1,065		2,213		8			6
CPI Funds ⁽⁸⁾	Various	602		4,794		2,485		2,553		282		84		2,637		15			12
Total Real Estate ⁽¹¹⁾		$	3,108	$	8,362	$	5,582	$	4,360	$	2,078	$	1,934	$	6,294


(1)	Refer to the definitions of Vintage Year, Total Invested Capital, Realized Value, Remaining Cost, Unrealized Value, Total Value, Gross IRR and Net IRR described elsewhere in this report.


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

(3)

The general partners and managers of Funds I, II and MIA, as well as the general partner of Fund III, were excluded assets in connection with the 2007 Reorganization. As a result, Apollo did not receive the economics associated with these entities. The investment performance of these funds, combined with Fund IV, is presented to illustrate fund performance associated with Apollo’s Managing Partners and other investment professionals.


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


(5)	Funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to $1.07 as of March 31, 2017 .

(6)

Amounts presented have been aggregated for (i) drawdown funds with AUM greater than $500 million that do not form part of a flagship series of funds and (ii) SIAs with AUM greater than $200 million that do not predominantly invest in other Apollo funds or SIAs. Certain SIAs’ historical figures are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.07 as of March 31, 2017 . Additionally, certain SIAs totaling $1.8 billion of AUM have been excluded from Total Invested Capital, Realized Value, Remaining Cost, Unrealized Value and Total Value. These SIAs have an open ended life and a significant turnover in their portfolio assets due to the ability to recycle capital. These SIAs had $9.5 billion of Total Invested Capital through March 31, 2017 .


(7)	U.S. RE Fund I and U.S. RE Fund II had $153 million and $298 million of co-investment commitments raised as of March 31, 2017 , respectively, which are included in the figures in the table. A co-invest entity within U.S. RE Fund I is denominated in GBP and translated into U.S. dollars at an exchange rate of £1.00 to $1.26 as of March 31, 2017 .

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(8)

As part of the acquisition of Citi Property Investors (“CPI”), Apollo acquired general partner interests in fully invested funds. CPI Funds refers to CPI Capital Partners North America, CPI Capital Partners Asia Pacific, CPI Capital Partners Europe and other CPI funds or individual investments of which Apollo is not the general partner or manager and only receives fees pursuant to either a sub-advisory agreement or an investment management and administrative agreement. For CPI Capital Partners North America, CPI Capital Partners Asia Pacific and CPI Capital Partners Europe, the gross and net IRRs are presented in the investment record table since acquisition on November 12, 2010. The aggregate net IRR for these funds from their inception to March 31, 2017 was (1)% . This net IRR was primarily achieved during a period in which Apollo did not make the initial investment decisions and Apollo only became the general partner or manager of these funds upon completing the acquisition on November 12, 2010.


(9)	Certain private equity co-investment vehicles and funds with AUM less than $500 million have been excluded. These co-investment vehicles and funds had $7.4 billion of aggregate AUM as of March 31, 2017 .


(10)	Certain credit funds and SIAs with AUM less than $500 million and $200 million, respectively, have been excluded. These funds and SIAs had $4.9 billion of aggregate AUM as of March 31, 2017 .


(11)	Certain accounts owned by or related to Athene, certain co-investment vehicles and certain funds with AUM less than $500 million have been excluded. These accounts, co-investment vehicles and funds had $4.8 billion of aggregate AUM as of March 31, 2017 .


(12)	Remaining cost for certain of our credit funds may include physical cash called, invested or reserved for certain levered investments.

(13)

The investor in this U.S. Dollar denominated fund has chosen to make contributions and receive distributions in the local currency of each underlying investment. As a result, Apollo has not entered into foreign currency hedges for this fund and the returns presented include the impact of foreign currency gains or losses. The investor’s gross and net IRR, before the impact of foreign currency gains or losses, from the fund’s inception to March 31, 2017 was 10% and 9% , respectively.

Private Equity

The following table summarizes the investment record for distressed investments made in our traditional private equity fund portfolios, since the Company’s inception. All amounts are as of March 31, 2017 :



	Total Invested Capital		Total Value		Gross IRR
	(in millions)
Distressed for Control	$	7,795	$	18,548	29	%
Non-Control Distressed	5,490		8,481		71
Total	13,285		27,029		49
Corporate Carve-outs, Opportunistic Buyouts and Other Credit ⁽¹⁾	40,068		71,990		22
Total	$	53,353	$	99,019	39	%


(1)	Other Credit is defined as investments in debt securities of issuers other than portfolio companies that are not considered to be distressed.

The following tables provide additional detail on the composition of the Fund VIII, Fund VII and Fund VI private equity portfolios based on investment strategy. Amounts for Fund I, II, III, IV and V are included in the table above but not presented below as their remaining value is less than $100 million or the fund has been liquidated. All amounts are as of March 31, 2017 :

Fund VIII ⁽¹⁾



	Total Invested Capital		Total Value
	(in millions)
Corporate Carve-outs	$	2,318	$	3,394
Opportunistic Buyouts	8,037		10,188
Distressed	499		685
Total	$	10,854	$	14,267

Fund VII ⁽¹⁾



	Total Invested Capital		Total Value
	(in millions)
Corporate Carve-outs	$	2,176	$	4,578
Opportunistic Buyouts	4,338		10,628
Distressed/Other Credit ⁽²⁾	9,583		18,394
Total	$	16,097	$	33,600

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Fund VI



	Total Invested Capital		Total Value
	(in millions)
Corporate Carve-outs	$	3,397	$	5,783
Opportunistic Buyouts	6,374		10,246
Distressed/Other Credit ⁽²⁾	2,686		4,966
Total	$	12,457	$	20,995


(1)	Committed capital less unfunded capital commitments for Fund VIII and Fund VII was $11.0 billion and $14.0 billion , respectively, which represents capital commitments from limited partners to invest in such funds less capital that is available for investment or reinvestment subject to the provisions of the applicable limited partnership agreement or other governing agreements.


(2)	The distressed investment strategy includes distressed for control, non-control distressed and other credit.

During the recovery and expansionary periods of 1994 through 2000 and late 2003 through the first half of 2007, our private equity funds invested or committed to invest approximately $13.7 billion primarily in traditional and corporate partner buyouts. During the recessionary periods of 1990 through 1993, 2001 through late 2003 and the recessionary and post recessionary periods (beginning the second half of 2007 through March 31, 2017 ), our private equity funds have invested $43.5 billion , of which $18.7 billion was in distressed buyouts and debt investments when the debt securities of quality companies traded at deep discounts to par value. Our average entry multiple for Fund VIII, VII and VI was 5.5x , 6.1x and 7.7x , respectively, as of March 31, 2017 . Our average entry multiple for a private equity fund is the average of the total enterprise value over an applicable adjusted earnings before interest, taxes, depreciation and amortization which may incorporate certain adjustments based on the investment team’s estimate and we believe captures the true economics of our funds’ investments in portfolio companies. The average entry multiple of actively investing funds may include committed investments not yet closed.

Credit

The following table presents the AUM and gross and net returns information for Apollo’s credit segment by category type:



	As of March 31, 2017								Gross Returns	Net Returns
Category	AUM		Fee-Generating AUM		Carry-Eligible AUM		Carry-Generating AUM		For the Three Months Ended March 31, 2017 ⁽¹⁾
	(in millions)
Liquid/Performing	$	37,203	$	32,919	$	20,393	$	11,157	1.9%	1.8%
Drawdown ⁽²⁾	23,810		13,794		21,040		7,887		1.6	1.2
Permanent capital vehicles ex Athene Non-Sub-Advised ⁽³⁾	12,328		11,462		9,992		8,708		2.7	1.8
Athene Non-Sub-Advised ⁽³⁾	56,739		56,739		—		—		N/A	N/A
Advisory	10,852		—		—		—		N/A	N/A
Total Credit	$	140,932	$	114,914	$	51,425	$	27,752	1.9%	1.6%


(1)	The gross and net returns for the three months ended March 31, 2017 for total credit excludes assets managed by AAM that are not directly invested in Apollo funds and investment vehicles or sub-advised by Apollo.


(2)	As of March 31, 2017 , significant drawdown funds and SIAs had inception-to-date gross and net IRRs of 16.1% and 12.3% , respectively. Significant drawdown funds and SIAs include funds and SIAs with AUM greater than $200 million that do not predominantly invest in other Apollo funds or SIAs.


(3)	Athene Non-Sub-Advised reflects total Athene-related AUM of $73.1 billion less $16.4 billion of assets that were either sub-advised by Apollo or invested in funds and investment vehicles managed by Apollo. Athene Non-Sub-Advised includes $4.4 billion of Athene AUM for which AAME provides investment advisory services.

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Liquid/Performing

The following table summarizes the investment record for funds in the liquid/performing category within Apollo’s credit segment. The significant funds included in the investment record table below have greater than $200 million of AUM and do not predominantly invest in other Apollo funds or SIAs.



		Total AUM		Net Returns
	Vintage Year	As of March 31, 2017		For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016
Credit:		(in millions)
Hedge Funds ⁽¹⁾	Various	$	6,389	1	%	2	%
CLOs ⁽²⁾	Various	12,035		1		2
SIAs / Other	Various	18,779		2		—
Total		$	37,203


(1)	Hedge Funds primarily includes Apollo Credit Strategies Master Fund Ltd., Apollo Credit Master Fund Ltd. and Apollo Credit Short Opportunities Fund.


(2)	CLO returns are calculated based on gross return on invested assets, which excludes cash.

Permanent Capital

The following table summarizes the investment record for our permanent capital vehicles by segment, excluding Athene-related assets managed or advised by Athene Asset Management and AAME:



		Total AUM		Total Returns ⁽¹⁾
	IPO Year ⁽²⁾	As of March 31, 2017		For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016
Credit:		(in millions)
MidCap ⁽³⁾	N/A	$	7,249	4	%	1	%
AIF	2013	390		9		1
AFT	2011	432		2		2
AINV ⁽⁴⁾	2004	4,331		14		10
Real Estate:
ARI	2009	4,080		16	%	(3	) %
Total		$	16,482


(1)	Total returns are based on the change in closing trading prices during the respective periods presented taking into account dividends and distributions, if any, as if they were reinvested without regard to commission.


(2)	An IPO year represents the year in which the vehicle commenced trading on a national securities exchange.


(3)	MidCap is not a publicly traded vehicle and therefore IPO year is not applicable. The returns presented are a gross return based on NAV. The net returns based on NAV were 2% and 1% for the three months ended March 31, 2017 and 2016, respectively.

(4)

All amounts are as of December 31, 2016 , except for total returns. Refer to www.apolloic.com for the most recent financial information on AINV. The information contained on AINV’s website is not part of this report. Includes $1.5 billion of AUM related to a non-traded business development company sub-advised by Apollo. Total returns exclude performance of the non-traded business development company.

Athene and SIAs

As of March 31, 2017 , Apollo managed or advised $73.1 billion of total AUM in accounts owned by or related to Athene, of which approximately $16.4 billion was either sub-advised by Apollo or invested in Apollo funds and investment vehicles managed by Apollo. Of the approximately $16.4 billion of AUM, the vast majority were in sub-advisory managed accounts that manage high grade credit asset classes, such as CLO debt, commercial mortgage backed securities, and insurance-linked securities.

As of March 31, 2017 , Apollo managed approximately $19 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.

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Overview of Results of Operations

Revenues

Advisory and Transaction Fees from Related Parties, Net. As a result of providing advisory services with respect to actual and potential 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 advisory fees for advisory services provided to certain credit funds. In addition, monitoring fees are generated on certain structured portfolio company investments. Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs (“Management Fee Offset”). Such amounts are presented as a reduction to advisory and transaction fees from related parties, net, in the condensed consolidated statements of operations. See note 2 to our condensed consolidated financial statements for more detail on advisory and transaction fees from related parties, net.

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.

Management Fees from Related Parties. 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 Related Parties. The general partners of our funds, in general, are entitled to an incentive return that can normally 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 related parties 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 related parties for any period is based upon an assumed liquidation of the funds’ assets at the reporting date, and distribution of the net proceeds in accordance with the funds’ allocation provisions.

As of March 31, 2017 , approximately 54% of the value of our funds’ investments on a gross basis was determined using market-based valuation methods (i.e., reliance on broker or listed exchange quotes) and the remaining 46% was 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 March 31, 2017 was 24% , 73% and 42% , respectively. See “Item 1A. Risk Factors—Risks Related to Our Businesses—Our funds’ performance, and our performance, may be adversely affected by the financial performance of our funds’ portfolio companies and the industries in which our funds invest” in the 2016 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 of our credit and real estate funds allocate carried interest to the general 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. The actual general partner obligation, however, would not become payable or realized until the end of a fund’s life or as otherwise set forth in the respective limited partnership agreement of the fund.

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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 as of and for the three months ended March 31, 2017 :



	As of March 31, 2017			For the Three Months Ended March 31, 2017
	Carried Interest Receivable on an Unconsolidated Basis			Unrealized Carried Interest Income (Loss)			Realized Carried Interest Income		Total Carried Interest Income (Loss)
	(in thousands)
Private Equity Funds:
Fund VIII	$	421,260		$	98,033		$	57,812	$	155,845
Fund VII ⁽¹⁾	95,197			20,542			19,817		40,359
Fund VI ⁽¹⁾	—		⁽³⁾	35,443			—		35,443
Fund IV and V	310		⁽³⁾	(5,794		)	—		(5,794		)
ANRP I and II	133,131			55,647			372		56,019
AAA/Other ⁽²⁾⁽⁵⁾	343,560			(40,252		)	77,460		37,208
Total Private Equity Funds	993,458			163,619			155,461		319,080
Total Private Equity Funds, net of profit share	634,696			108,603			80,209		188,812
Credit Category:
Drawdown	294,950		⁽³⁾	(8,401		)	26,659		18,258
Liquid/Performing	55,582			6,534			3,551		10,085
Permanent capital vehicles ex AAM	43,592			8,189			726		8,915
Total Credit Funds	394,124			6,322			30,936		37,258
Total Credit Funds, net of profit share	133,327			4,107			17,204		21,311
Real Estate Funds:
CPI Funds	304			(59		)	—		(59		)
U.S. RE Fund I & II	22,512			2,249			64		2,313
Other ⁽⁵⁾	12,309			414			—		414
Total Real Estate Funds	35,125			2,604			64		2,668
Total Real Estate Funds, net of profit share	20,016			570			38		608
Total	$	1,422,707		$	172,545		$	186,461	$	359,006
Total, net of profit share	$	788,039	⁽⁴⁾	$	113,280		$	97,451	$	210,731

(1)

As of March 31, 2017 , the remaining investments and escrow cash of Fund VII and Fund VI were valued at 107% and 86% of the fund’s unreturned capital, respectively, which were below the required escrow ratio of 115%. As a result, these funds are required to place in escrow current and future carried interest income distributions to the general partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation. As of March 31, 2017 , Fund VI had $167.6 million of gross carried interest income, or $110.7 million net of profit sharing, in escrow. As of March 31, 2017 , Fund VII had $58.6 million of gross carried interest income, or $32.6 million net of profit sharing, in escrow. With respect to Fund VII and Fund VI, realized carried interest income currently distributed to the general partner is limited to potential tax distributions pursuant to the fund’s partnership agreement.

(2)

AAA/Other includes $249.3 million of carried interest receivable, or $ 177.8 million net of profit sharing, from AAA Investments, L.P. as of March 31, 2017 . Following a transaction that settled on April 3, 2017, the receivable balance declined to $204.2 million , or $145.6 million net of profit sharing, reflecting receipt of the carried interest amount that was presented within realized carried interest income for the three months ended March 31, 2017. If Apollo receives payment of any remaining carried interest in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such carried interest in cash.

(3)

As of March 31, 2017 , certain credit funds and certain private equity funds had $60.4 million and $23.9 million , respectively, in general partner obligations to return previously distributed carried interest income. The fair value gain on investments and income at the fund level needed to reverse the general partner obligations for certain credit funds and certain private equity funds was $328.3 million and $164.5 million , respectively, as of March 31, 2017 .


(4)	There was a corresponding profit sharing payable of $634.7 million as of March 31, 2017 , including profit sharing payable related to amounts in escrow and contingent consideration obligations of $87.7 million .


(5)	Other includes certain SIAs.

The general partners of the private equity, credit and real estate funds listed in the table above were accruing carried interest income as of March 31, 2017 . The investment manager of AINV accrues carried interest as it is earned. The general partners of certain of our credit funds accrue carried interest when the fair value of investments exceeds the cost basis of the individual investors’ investments in the fund, including any allocable share of expenses incurred in connection with such investments, which we refer to as “high water marks.” These high water marks are applied on an individual investor basis. Certain of our credit funds have investors with various high water marks, the achievement of which is subject to market conditions and investment performance.

Carried interest income 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 related parties on the condensed consolidated statements of financial condition.

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The following table summarizes our carried interest since inception for our combined segments through March 31, 2017 :



	Carried Interest Since Inception ⁽¹⁾
	Undistributed by Fund and Recognized		Distributed by Fund and Recognized ⁽²⁾		Total Undistributed and Distributed by Fund and Recognized ⁽³⁾		General Partner Obligation as of March 31, 2017 ⁽³⁾		Maximum Carried Interest Income Subject to Potential Reversal ⁽⁴⁾
	(in millions)
Private Equity Funds:
Fund VIII	$	421.3	$	68.5	$	489.8	$	—	$	463.9
Fund VII	95.2		3,121.5		3,216.7		—		575.5
Fund VI	—		1,658.9		1,658.9		6.8		1,105.9
Fund IV and V	0.3		2,053.1		2,053.4		17.1		9.2
ANRP I and II	133.1		19.8		152.9		—		143.7
AAA/Other	343.6		213.0		556.6		—		266.2
Total Private Equity Funds	993.5		7,134.8		8,128.3		23.9		2,564.4
Credit Category ⁽⁵⁾ :
Drawdown	295.0		981.5		1,276.5		60.4		366.2
Liquid/Performing	55.6		493.1		548.7		—		72.3
Permanent capital vehicles ex AAM	36.3		—		36.3		—		36.3
Total Credit Funds	386.9		1,474.6		1,861.5		60.4		474.8
Real Estate Funds:
CPI Funds	0.3		9.6		9.9		—		0.3
U.S. RE Fund I & II	22.5		12.9		35.4		—		30.0
Other ⁽⁶⁾	12.3		4.2		16.5		—		12.4
Total Real Estate Funds	35.1		26.7		61.8		—		42.7
Total	$	1,415.5	$	8,636.1	$	10,051.6	$	84.3	$	3,081.9


(1)	Certain funds are denominated in Euros and historical figures are translated into U.S. dollars at an exchange rate of €1.00 to $1.07 as of March 31, 2017 .


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

(3)

Amounts were computed based on the fair value of fund investments on March 31, 2017 . Carried interest income has 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 March 31, 2017 . The actual determination and any required payment of any such general partner obligation would not take place until the final disposition of the fund’s investments based on contractual termination of the fund.

(4)

Represents the amount of carried interest income that would be reversed if remaining fund investments became worthless on March 31, 2017 . 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’ governing documents.


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


(6)	Other includes certain SIAs.

Expenses

Compensation and Benefits. Our most significant expense is compensation and benefits expense. This consists of fixed salary, discretionary and non-discretionary bonuses, profit sharing expense associated with the carried interest income 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.

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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 13 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, which vested over a period of five to six years and certain employees were granted RSUs, which vested over a period of typically six years. In addition, AHL Awards (as defined in note 11 to our condensed consolidated financial statements) and other equity-based compensation awards have been granted to the Company and certain employees, which amortize over the respective vesting periods. In addition, the Company grants equity awards to certain employees, including RSUs, restricted Class A shares and options, that generally vest and become exercisable in quarterly installments or annual installments depending on the contract terms over a period of three to six years. See note 11 to our condensed consolidated financial statements for further discussion of AOG Units and other equity-based compensation.

Other Expenses. The balance of our other expenses includes interest, placement fees, and general, administrative and other operating expenses. Interest expense consists primarily of interest related to the 2013 AMH Credit Facilities, the 2024 Senior Notes and the 2026 Senior Notes as discussed in note 9 to our condensed consolidated financial statements. Placement fees are incurred in connection with our capital raising activities. General, administrative and other expenses includes occupancy expense, depreciation and amortization, professional fees and costs related to travel, information technology and administration. Occupancy expense represents charges related to office leases and associated expenses, such as utilities and maintenance fees. Depreciation and amortization of fixed assets is normally calculated using the straight-line method over their estimated useful lives, ranging from two to sixteen years, taking into consideration any residual value. Leasehold improvements are amortized over the shorter of the useful life of the asset or the expected term of the lease. Intangible assets are amortized based on the future cash flows over the expected useful lives of the assets.

Other Income (Loss)

Net Gains (Losses) from Investment Activities. The performance of the consolidated Apollo funds has impacted our net gains (losses) from investment activities. Net gains (losses) from investment activities include both realized gains and losses and the change in unrealized gains and losses in our investment portfolio between the opening reporting date and the closing reporting date. Net unrealized gains (losses) are a result of changes in the fair value of unrealized investments and reversal of unrealized gains (losses) due to dispositions of investments during the reporting period. Significant judgment and estimation goes into the assumptions that drive these models and the actual values realized with respect to investments could be materially different from values obtained based on the use of those models. The valuation methodologies applied impact the reported value of investment company holdings and their underlying portfolios in our condensed consolidated financial statements.

Net Gains (Losses) from Investment Activities of Consolidated Variable Interest Entities. Changes in the fair value of the consolidated VIEs’ assets and liabilities and related interest, dividend and other income and expenses subsequent to consolidation are presented within net gains (losses) from investment activities of consolidated variable interest entities and are attributable to Non-Controlling Interests in the condensed consolidated statements of operations.

Other Income (Losses), Net. Other income (losses), net includes gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities, reversal of a portion of the tax receivable agreement liability 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

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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, certain consolidated entities are, or are treated as, corporations for U.S. and non-U.S. tax purposes and therefore subject to U.S. federal, state and local corporate income tax, and the Company's provision for income taxes is accounted for in accordance with U.S. GAAP.

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 53.4% and 54.1% ownership interest in the Apollo Operating Group held by the Managing Partners and Contributing Partners through their limited partner interests in Holdings as of March 31, 2017 and 2016 , respectively. Non-Controlling Interests also include limited partner interests in certain consolidated funds and VIEs.

The authoritative guidance for Non-Controlling Interests in the condensed consolidated financial statements requires reporting entities to present Non-Controlling Interest as equity and provides guidance on the accounting for transactions between an entity and Non-Controlling Interests. According to the guidance, (1) Non-Controlling Interests are presented as a separate component of shareholders’ equity on the Company’s condensed consolidated statements of financial condition, (2) net income (loss) includes the net income (loss) attributable to the Non-Controlling Interest holders on the Company’s condensed consolidated statements of operations, (3) the primary components of Non-Controlling Interest are separately presented in the Company’s condensed consolidated statements of changes in shareholders’ equity to clearly distinguish the interests in the Apollo Operating Group and other ownership interests in the consolidated entities and (4) profits and losses are allocated to Non-Controlling Interests in proportion to their ownership interests regardless of their basis.

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Results of Operations

Below is a discussion of our condensed consolidated results of operations for the three months ended March 31, 2017 and 2016 . For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:



	For the Three Months Ended March 31,						Amount Change			Percentage Change
	2017			2016			Amount Change			Percentage Change
Revenues:	(in thousands)
Management fees from related parties	$	269,543		$	233,795		$	35,748		15.3	%
Advisory and transaction fees from related parties, net	15,067			7,999			7,068			88.4
Carried interest income (loss) from related parties	358,941			(120,968		)	479,909			NM
Total Revenues	643,551			120,826			522,725			432.6
Expenses:
Compensation and benefits:
Salary, bonus and benefits	101,613			97,234			4,379			4.5
Equity-based compensation	23,107			14,002			9,105			65.0
Profit sharing expense	144,324			(37,605		)	181,929			NM
Total compensation and benefits	269,044			73,631			195,413			265.4
Interest expense	12,999			7,873			5,126			65.1
General, administrative and other	62,040			58,631			3,409			5.8
Placement fees	1,905			1,764			141			8.0
Total Expenses	345,988			141,899			204,089			143.8
Other Income (Loss):
Net gains (losses) from investment activities	34,517			(56,469		)	90,986			NM
Net gains from investment activities of consolidated variable interest entities	4,108			1,319			2,789			211.4
Income (loss) from equity method investments	38,553			(3,817		)	42,370			NM
Interest income	803			585			218			37.3
Other income (loss), net	18,647			(253		)	18,900			NM
Total Other Income (Loss)	96,628			(58,635		)	155,263			NM
Income (loss) before income tax provision	394,191			(79,708		)	473,899			NM
Income tax (provision) benefit	(39,161		)	5,147			(44,308		)	NM
Net Income (Loss)	355,030			(74,561		)	429,591			NM
Net (income) loss attributable to Non-Controlling Interests	(209,834		)	41,733			(251,567		)	NM
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)	$	178,024		NM


Note:	“NM” denotes not meaningful. Changes from negative to positive amounts and positive to negative amounts are not considered meaningful. Increases or decreases from zero and changes greater than 500% are also not considered meaningful.

Revenues

Our revenues and other income include fixed components that result from measures of capital and asset valuations and variable components that result from realized and unrealized investment performance, as well as the value of successfully completed transactions.

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Management fees from related parties increase d by $35.7 million for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 . This change was primarily attributable to increased management fees earned from Apollo European Principal Finance Fund III, L.P. (“EPF III"), Athene and ANRP II of $9.0 million, $8.2 million, and $4.0 million, respectively, as well as modest increases across most of our other funds and investment vehicles. Management fees earned from EPF III and ANRP II increased as a result of capital raises that occurred after March 31, 2016. This increase was partially offset by decreases in management fees earned with respect to EPF II of $5.2 million resulting from a step down in fee basis from committed capital to invested capital during the three months ended March 31, 2017 as compared to the same period during 2016 .

Advisory and transaction fees from related parties, net, increase d by $7.1 million for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in net advisory and transaction fees earned with respect to Fund VIII’s portfolio companies of $9.2 million, partially offset by decreases in net advisory and transaction fees earned with respect to FCI II of $2.2 million during the three months ended March 31, 2017 as compared to the same period during 2016 .

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Carried interest income from related parties increased by $479.9 million for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 . This change was primarily attributable to increased carried interest income earned from our private equity and credit funds of $465.4 million and $13.3 million , respectively, during the three months ended March 31, 2017 as compared to the same period in 2016 . For additional details regarding changes in carried interest income in each segment, see “—Segment Analysis” below.

Expenses

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Compensation and benefits increase d by $195.4 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in profit sharing expense of $181.9 million due to increased carried interest income during the three months ended March 31, 2017 , as compared to the same period in 2016 . In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating carried interest in the period.

Included in profit sharing expense is $18.0 million and $18.5 million for the three months ended March 31, 2017 and 2016 , respectively, related to 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 (referred to herein as the “Incentive Pool”). Allocations to participants in the Incentive Pool contain both a fixed component and a discretionary component, each of which may vary year to year. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period. See “—Critical Accounting Policies—Profit Sharing Expense” for an overview of the Incentive Pool.

Interest expense increase d $5.1 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 primarily as a result of the issuance of the 2026 Senior Notes in May 2016, as described in note 9 to our condensed consolidated financial statements.

General, administrative and other expense increase d by $3.4 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 as a result of increased professional fees as well as new fund organizational expenses related to the launch of Apollo Investment Fund IX, L.P. (together with its parallel funds and alternative investment vehicles, “Fund IX”) incurred during the three months ended March 31, 2017 , as compared to the same period in 2016 .

Other Income (Loss)

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Net gains from investment activities was $34.5 million for the three months ended March 31, 2017 , as compared to net losses from investment activities of $56.5 million for the three months ended March 31, 2016 . This change was primarily attributable to an increase in the fair value of the Company’s investment in Athene during the three months ended March 31, 2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower valuations of publicly traded comparable companies. See note 5 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene.

Income from equity method investments was $38.6 million for the three months ended March 31, 2017 , as compared to a loss from equity method investments of $3.8 million for the three months ended March 31, 2016 . The increase of $42.4 million was primarily driven by increases in the value of investments held by certain Apollo funds and other entities in which the Company has a direct interest, mainly with respect to AAA, Fund VIII, Fund VII, MidCap and ANRP II of $14.9 million, $9.5 million, $5.5 million, $2.3 million and $2.0 million, respectively, during the three months ended March 31, 2017 , as compared to the same period in 2016 .

Other income, net was $18.6 million for the three months ended March 31, 2017 , as compared to other loss, net of $0.3 million for the three months ended March 31, 2016 . The increase of $18.9 million was primarily attributable to insurance proceeds received during the three months ended March 31, 2017 in connection with fees and expenses relating to a legal proceeding.

Income Tax Provision

The Apollo Operating Group and its subsidiaries generally operate as partnerships for U.S. federal income tax purposes. As a result, only a portion of the income we earn is subject to corporate-level tax in the United States and foreign jurisdictions. The provision for income taxes includes federal, state and local income taxes in the United States and foreign income taxes.

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Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

The income tax provision was $39.2 million for the three months ended March 31, 2017 , as compared to an income tax benefit of $5.1 million for the three months ended March 31, 2016 . The increase of $44.3 million was primarily due to a change in the mix of earnings which are subject to corporate-level taxation, as well as an increase in Fee Related Earnings subject to corporate-level taxation. 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 9.9% and 6.5% for the three months ended March 31, 2017 and 2016 , 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; and (iii) state and local income taxes including NYC UBT (see note 8 to the condensed consolidated financial statements for further details regarding the Company’s income tax provision).

Non-Controlling Interests

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



	For the Three Months Ended March 31,
	2017			2016
	(in thousands)
Net income (loss)	$	355,030		$	(74,561	)
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)
Net income (loss) after Non-Controlling Interests in consolidated entities	351,646			(76,596		)
Adjustments:
Income tax provision (benefit) ⁽¹⁾	39,161			(5,147		)
NYC UBT and foreign tax provision (benefit) ⁽²⁾	(5,395		)	951
Net loss in non-Apollo Operating Group entities	2			20
Total adjustments	33,768			(4,176		)
Net income (loss) after adjustments	385,414			(80,772		)
Approximate weighted average ownership percentage of Apollo Operating Group	53.6		%	54.2		%
Net income (loss) attributable to Non-Controlling Interests in Apollo Operating Group	$	206,450		$	(43,768	)


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


(2)	Reflects NYC UBT and foreign taxes that are attributable to the Apollo Operating Group and its subsidiaries related to its operations in the U.S. as partnerships and in non-U.S. jurisdictions as corporations. As such, these amounts are considered in the income attributable to the Apollo Operating Group.

Segment Analysis

Discussed below are our results of operations for each of our reportable segments. They represent the segment information available and utilized by our executive management, which consists of our Managing Partners, who operate collectively as our chief operating decision maker, to assess performance and to allocate resources. Management divides its operations into three reportable segments: 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 and the level of control over the investment. Segment results represent segment income (loss) before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent consideration and certain other charges associated with acquisitions. In addition, segment results exclude non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, as well as the assets, liabilities and operating results of the funds and VIEs that are included in the consolidated financial statements.

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 table sets forth our segment statement of operations information and our supplemental performance measure, EI, within our private equity segment for the three months ended March 31, 2017 and 2016 Prior period financial data has been updated to conform to the current presentation.



	For the Three Months Ended March 31,						Total Change			Percentage Change
	2017			2016			Total Change			Percentage Change
	(in thousands)
Private Equity:
Revenues:
Management fees from related parties	$	77,398		$	74,918		$	2,480		3.3	%
Advisory and transaction fees from related parties, net	11,772			2,713			9,059			333.9
Carried interest income (loss) from related parties:
Unrealized ⁽¹⁾	163,619			(146,335		)	309,954			NM
Realized	155,461			—			155,461			NM
Total carried interest income (loss) from related parties	319,080			(146,335		)	465,415			NM
Total Revenues	408,250			(68,704		)	476,954			NM
Expenses:
Compensation and benefits:
Salary, bonus and benefits	31,469			32,074			(605		)	(1.9	)
Equity-based compensation	7,095			7,385			(290		)	(3.9	)
Profit sharing expense:
Unrealized	55,016			(57,374		)	112,390			NM
Realized	75,252			—			75,252			NM
Total profit sharing expense	130,268			(57,374		)	187,642			NM
Total compensation and benefits	168,832			(17,915		)	186,747			NM
Non-compensation expenses:
General, administrative and other	17,360			15,731			1,629			10.4
Placement fees	134			994			(860		)	(86.5	)
Total non-compensation expenses	17,494			16,725			769			4.6
Total Expenses	186,326			(1,190		)	187,516			NM
Other Income (Loss):
Income (loss) from equity method investments	31,728			(5,483		)	37,211			NM
Net gains (losses) from investment activities	3,396			(4,106		)	7,502			NM
Net interest loss	(4,242		)	(2,428		)	(1,814		)	74.7
Other income (loss), net	17,790			(124		)	17,914			NM
Total Other Income (Loss)	48,672			(12,141		)	60,813			NM
Economic Income (Loss)	$	270,596		$	(79,655	)	$	350,251		NM

(1)

Included in unrealized carried interest income (loss) from related parties for the three months ended March 31, 2017 and 2016 was a reversal of previously realized carried interest income due to the general partner obligation to return previously distributed carried interest income. See note 13 to our condensed consolidated financial statements for further detail regarding the general partner obligation.

Revenues

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Management fees from related parties increase d by $2.5 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in management fees earned with respect to ANRP II of $4.0 million during the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 as a result of capital raises for the fund that occurred after March 31, 2016.

Advisory and transaction fees from related parties, net increase d by $9.1 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in net advisory and transaction fees earned with respect to Fund VIII’s portfolio companies of $9.2 million during the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 .

Carried interest income from related parties was $319.1 million for the three months ended March 31, 2017 , as compared to carried interest loss of $146.3 million for the three months ended March 31, 2016 . This increase of $465.4 million

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was primarily attributable to increases in carried interest income earned from Fund VIII, Fund VII, AAA/Other and Fund VI of $153.9 million, $90.4 million, $90.3 million and $69.0 million, respectively, during the three months ended March 31, 2017 as compared to the three months ended March 31, 2016. The increase in carried interest income earned from Fund VIII was primarily driven by the fund being above its priority return threshold as of March 31, 2017 and the fund being below its priority return threshold as of March 31, 2016. The increase in carried interest income earned from Fund VII was primarily driven by appreciation in the value of its privately held portfolio companies. AAA/Other’s increase in carried interest income was driven by appreciation in the value of its investment in Athene. The increase in carried interest income earned from Fund VI was primarily driven by appreciation in value in the fund’s public portfolio companies.

Expenses

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Compensation and benefits expense increase d by $186.7 million for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in profit sharing expense of $187.6 million as a result of a corresponding increase in carried interest income as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating carried interest in the period.

Included in profit sharing expense is $15.5 million related to the Incentive Pool for the three months ended March 31, 2017 . The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular period.

General, administrative and other increase d by $1.6 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily driven by new fund organizational expenses related to the launch of Fund IX incurred during the three months ended March 31, 2017 .

Placement fees decrease d by $0.9 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily driven by a decrease in placement fees incurred in connection with capital raising activity relating to ANRP II of $0.8 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 .

Other Income (Loss)

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Income from equity method investments was $31.7 million for the three months ended March 31, 2017 , as compared to a loss from equity method investments of $5.5 million for the three months ended March 31, 2016 . The increase of $37.2 million was driven by increases in income from Apollo’s equity ownership interest in AAA, Fund VIII and Fund VII of $14.9 million, $9.5 million and $5.5 million, respectively, as well as modest increases across most of our other equity method investments during the three months ended March 31, 2017 , as compared to the same period in 2016 .

Net gains from investment activities was $3.4 million for the three months ended March 31, 2017 , as compared to net losses from investment activities of $4.1 million for the three months ended March 31, 2016 . This change was primarily attributable to an increase in the fair value of the Company’s investment in Athene during the three months ended March 31, 2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower valuations of publicly traded comparable companies. See note 5 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene.

Net interest loss increased by $1.8 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 , primarily due to additional interest expense incurred during the three months ended March 31, 2017 primarily as a result of the issuance of the 2026 Senior Notes in May 2016, as described in note 9 to our condensed consolidated financial statements.

Other income, net was $17.8 million for the three months ended March 31, 2017 , as compared to other loss, net of $0.1 million for the three months ended March 31, 2016 . The increase of $17.9 million was primarily attributable to insurance proceeds received during the three months ended March 31, 2017 in connection with fees and expenses relating to a legal proceeding.

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Credit

The following table sets forth segment statement of operations information and EI within our credit segment for the three months ended March 31, 2017 and 2016 . Prior period financial data has been updated to conform to the current presentation.



	For the Three Months Ended March 31,						Total Change			Percentage Change
	2017			2016			Total Change			Percentage Change
	(in thousands)
Credit:
Revenues:
Management fees from related parties	$	158,342		$	142,511		$	15,831		11.1	%
Advisory and transaction fees from related parties, net	2,556			4,410			(1,854		)	(42.0	)
Carried interest income (loss) from related parties:
Unrealized ⁽¹⁾	6,322			(21,179		)	27,501			NM
Realized	30,936			45,152			(14,216		)	(31.5	)
Total carried interest income from related parties	37,258			23,973			13,285			55.4
Total Revenues	198,156			170,894			27,262			16.0
Expenses:
Compensation and benefits:
Salary, bonus and benefits	54,882			51,612			3,270			6.3
Equity-based compensation	9,102			8,560			542			6.3
Profit sharing expense:
Unrealized	2,215			(9,137		)	11,352			NM
Realized	13,445			30,561			(17,116		)	(56.0	)
Realized: Equity-based	287			—			287			NM
Total profit sharing expense	15,947			21,424			(5,477		)	(25.6	)
Total compensation and benefits	79,931			81,596			(1,665		)	(2.0	)
Non-compensation expenses
General, administrative and other	32,090			30,486			1,604			5.3
Placement fees	1,770			707			1,063			150.4
Total non-compensation expenses	33,860			31,193			2,667			8.5
Total Expenses	113,791			112,789			1,002			0.9
Other Income (Loss):
Income from equity method investments	6,483			848			5,635			NM
Net gains (losses) from investment activities	31,094			(52,393		)	83,487			NM
Net interest loss	(6,522		)	(3,655		)	(2,867		)	78.4
Other income (loss), net	811			(408		)	1,219			NM
Total Other Income (Loss)	31,866			(55,608		)	87,474			NM
Non-Controlling Interest	(934		)	(2,385		)	1,451			(60.8	)
Economic Income	$	115,297		$	112		$	115,185		NM

(1)

Revenues

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Management fees from related parties increase d by $15.8 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to increase s in management fees earned from EPF III, Athene and SCRF III of $9.0 million, $8.2 million and $1.7 million, respectively. Management fees earned from EPF III increased as a result of capital raises that occurred after March 31, 2016. This increase was partially offset by a decrease in management fees earned from EPF II of $5.2 million resulting from a step down in fee basis from committed capital to invested capital during the three months ended March 31, 2017 , as compared to the same period during 2016 .

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Advisory and transaction fees from related parties, net, decrease d by $1.9 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This decrease was primarily driven by a decrease in net advisory and transaction fees from FCI II of $2.2 million during the three months ended March 31, 2017 , as compared to the same period during 2016 .

Carried interest income from related parties increase d by $13.3 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to increases in carried interest income earned from EPF II and Apollo Strategic Value Fund, L.P. (“SVF”) of $20.8 million and $6.7 million, respectively, during the three months ended March 31, 2017 , as compared to the same period in 2016 . This was offset by decreases in carried interest income earned from a permanent capital vehicle and FCI II of $8.2 million and $7.6 million, respectively, during the three months ended March 31, 2017 , as compared to the same period during 2016 .

The increase in carried interest income earned from EPF II was primarily attributable to appreciation on the fund’s European commercial real estate portfolio as well as appreciation of certain of the fund’s shipping investments during the three months ended March 31, 2017. Carried interest losses with respect to EPF II during the three months ended 2016 were a result of the fund’s performance not exceeding the growth in preferred return requirements. There was minimal carried interest income earned from SVF during the three months ended March 31, 2017 as the fund went into liquidation, compared to carried interest losses earned from SVF during the three months ended March 31, 2016. Carried interest income earned from the permanent capital vehicle decreased during the three months ended March 31, 2017 as compared to the same period in 2016 as a result of a reserve taken on certain receivables during the three months ended March 31, 2017. The decrease in carried interest income earned from FCI II was primarily attributable to appreciation of the fund’s portfolio of opportunistic life asset investments as a result of a favorable increase in discount rates during the three months ended March 31, 2016 that did not recur in the current period.

Expenses

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Compensation and benefits expense decrease d by $1.7 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to a decrease in profit sharing expense of $5.5 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . Included in profit sharing expense is $2.5 million and $16.9 million related to the Incentive Pool for the three months ended March 31, 2017 and 2016, respectively. The Incentive Pool is separate from the fund related profit sharing expense and may result in greater variability in compensation and have a variable impact on the blended profit sharing percentage during a particular quarter. The decrease in the Incentive Pool was offset by an increase related to the profit sharing expense as a result of the corresponding increase in carried interest income as described above. In any period the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds that are generating carried interest in the period. The decrease in profit sharing expense was partially offset by an increase in salary, bonus and benefits of $3.3 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 .

General, administrative and other increase d by $1.6 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . The change was primarily driven by an increase in professional fees and research service expenses during the three months ended March 31, 2017 , as compared to the same period in 2016 .

Placement fees increase d by $1.1 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily driven by placement fees incurred in connection with capital raising activity relating to EPF III of $1.4 million during the three months ended March 31, 2017 .

Other Income

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Income from equity method increased by $5.6 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This increase was driven by increases in income from Apollo’s equity ownership interest in MidCap, COF III, AINV and EPF II of $2.3 million, $1.4 million, $1.4 million and $0.5 million, respectively, during the three months ended March 31, 2017 , as compared to the same period in 2016 .

Net gains from investment activities was $31.1 million for the three months ended March 31, 2017 , as compared to net losses from investment activities of $52.4 million for the three months ended March 31, 2016 . This change was primarily attributable to an increase in the fair value of the Company’s investment in Athene during the three months ended March 31, 2017 and an unrealized loss on the Company’s investment in Athene during the three months ended March 31, 2016 as a result of lower

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valuations of publicly traded comparable companies. See note 5 to the condensed consolidated financial statements for further information regarding the Company’s investment in Athene.

Net interest loss increased by $2.9 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 , primarily due to additional interest expense incurred during the three months ended March 31, 2017 primarily as a result of the issuance of the 2026 Senior Notes in May 2016, as described in note 9 to our condensed consolidated financial statements.

Other income, net was $0.8 million for the three months ended March 31, 2017 , as compared to other loss, net of $0.4 million for the three months ended March 31, 2016 . This change was primarily driven by foreign exchange gains during the three months ended March 31, 2017 , compared to foreign exchange losses during the three months ended March 31, 2016 .

Real Estate

The following table sets forth our segment statement of operations information and EI within our real estate segment for the three months ended March 31, 2017 and 2016 . Prior period financial data has been updated to conform to the current presentation.



	For the Three Months Ended March 31,						Total Change			Percentage Change
	2017			2016			Total Change			Percentage Change
	(in thousands)
Real Estate:
Revenues:
Management fees from related parties	$	16,313		$	13,504		$	2,809		20.8	%
Advisory and transaction fees from related parties, net	739			876			(137		)	(15.6	)
Carried interest income (loss) from related parties:
Unrealized	2,604			(3,377		)	5,981			NM
Realized	64			4,771			(4,707		)	(98.7	)
Total carried interest income from related parties	2,668			1,394			1,274			91.4
Total Revenues	19,720			15,774			3,946			25.0
Expenses:
Compensation and benefits:
Salary, bonus and benefits	8,370			8,684			(314		)	(3.6	)
Equity-based compensation	548			775			(227		)	(29.3	)
Profit sharing expense:
Unrealized	2,034			(1,171		)	3,205			NM
Realized	26			3,628			(3,602		)	(99.3	)
Total profit sharing expense	2,060			2,457			(397		)	(16.2	)
Total compensation and benefits	10,978			11,916			(938		)	(7.9	)
Non-compensation expenses:
General, administrative and other	4,482			6,144			(1,662		)	(27.1	)
Total non-compensation expenses	4,482			6,144			(1,662		)	(27.1	)
Total Expenses	15,460			18,060			(2,600		)	(14.4	)
Other Loss:
Income from equity method investments	1,003			776			227			29.3
Net interest loss	(1,224		)	(808		)	(416		)	51.5
Other income (loss), net	63			(29		)	92			NM
Total Other Loss	(158		)	(61		)	(97		)	159.0
Economic Income (Loss)	$	4,102		$	(2,347	)	$	6,449		NM

Revenues

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Management fees from related parties increase d by $2.8 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to increases in management fees earned with respect to ARI, Apollo Asia Real Estate Fund, L.P. (“Asia RE Fund”) and U.S. RE Fund II of $1.7 million, $0.5 million and $0.4 million, respectively, during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 .

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Carried interest income from related parties increase d by $1.3 million for the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to an increase in carried interest income earned from U.S. RE Fund II of $1.8 million offset by a decrease in carried interest income earned from CPI funds in Europe of $0.6 million during the three months ended March 31, 2017 , as compared to the same period during 2016 . The increase in carried interest income earned from U.S. Real Estate Fund II is primarily the result of strong operating performance across many of the funds’ underlying properties and appreciation of several real estate investments during the three months ended March 31, 2017. The decrease in carried interest income earned from the CPI funds in Europe was attributable to the appreciation of the value of the underlying investments in one of the funds during the three months ended March 31, 2016 that did not recur in 2017.

Expenses

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

General, administrative and other decrease d by $1.7 million during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 . This change was primarily attributable to a decrease in professional fees and new fund organizational expenses related to U.S. RE Fund II during the three months ended March 31, 2017 , as compared to the three months ended March 31, 2016 .

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Summary of Combined Results

The following table is a summary of our combined segments EI for the three months ended March 31, 2017 and 2016 . Prior period financial data has been updated to conform to the current presentation.



	For the Three Months Ended March 31,
	2017			2016
	(in thousands)
Revenues:
Management fees from related parties	$	252,053		$	230,933
Advisory and transaction fees from related parties, net	15,067			7,999
Carried interest income (loss) from related parties:
Unrealized ⁽¹⁾	172,545			(170,891		)
Realized	186,461			49,923
Total carried interest income (loss) from related parties	359,006			(120,968		)
Total Revenues	626,126			117,964
Expenses:
Compensation and benefits:
Salary, bonus and benefits	94,721			92,370
Equity-based compensation	16,745			16,720
Profit sharing expense:
Unrealized	59,265			(67,682		)
Realized	88,723			34,189
Realized: Equity-based	287			—
Profit sharing expense	148,275			(33,493		)
Total compensation and benefits	259,741			75,597
Non-compensation expenses:
General, administrative and other	53,932			52,361
Placement fees	1,904			1,701
Total non-compensation expenses	55,836			54,062
Total Expenses	315,577			129,659
Other Income (Loss):
Income (loss) from equity method investments	39,214			(3,859		)
Net gains (losses) from investment activities	34,490			(56,499		)
Net interest loss	(11,988		)	(6,891		)
Other income (loss), net	18,664			(561		)
Total Other Income (Loss)	80,380			(67,810		)
Non-Controlling Interests	(934		)	(2,385		)
Economic Income (Loss)	$	389,995		$	(81,890	)
Income tax (provision) benefit	(58,372		)	8,926
Economic Net Income (Loss)	$	331,623		$	(72,964	)

(1)

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

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Summary of Fee Related Earnings

The following table is a summary of Fee Related Earnings for the three months ended March 31, 2017 and 2016 .



	For the Three Months Ended March 31,
	2017			2016
	(in thousands, except per share data)
Management Fees	$	252,053		$	230,933
Advisory and Transaction Fees from Related Parties, net	15,067			7,999
Carried Interest Income from Related Parties ⁽¹⁾	726			8,917
Salary, Bonus and Benefits	(94,721		)	(92,370		)
Non-compensation Expenses	(55,836		)	(54,062		)
Other Income (Loss) attributable to Fee Related Earnings ⁽²⁾	18,120			(228		)
Non-Controlling Interest	(934		)	(2,385		)
Fee Related Earnings	$	134,475		$	98,804


(1)	Represents carried interest income earned from a publicly traded business development company we manage.


(2)	Includes $17.5 million in insurance proceeds received in connection with fees and expenses relating to a legal proceeding.

Summary of Distributable Earnings

The following table is a reconciliation of Distributable Earnings per share of common and equivalents ⁽¹⁾ to net distribution per share of common and equivalent for the three months ended March 31, 2017 and 2016 .



	For the Three Months Ended March 31,
	2017			2016
	(in thousands, except per share data)
Distributable Earnings	$	239,605		$	104,755
Taxes and related payables ⁽²⁾	(6,348		)	(2,273		)
Distributable Earnings After Taxes and Related Payables	233,257			102,482
Add back: Tax and related payables attributable to common and equivalents	4,560			2
Distributable Earnings before certain payables ⁽³⁾	237,817			102,484
Percent to common and equivalents	47		%	47		%
Distributable Earnings before other payables attributable to common and equivalents	112,874			48,085
Less: Tax and related payables attributable to common and equivalents	(4,560		)	(2		)
Distributable Earnings attributable to common and equivalents	$	108,314		$	48,083
Distributable Earnings per share of common and equivalent ⁽⁴⁾	$	0.57		$	0.25
Retained capital per share of common and equivalent ⁽⁴⁾⁽⁵⁾	(0.08		)	—
Net distribution per share of common and equivalent ⁽⁴⁾	$	0.49		$	0.25


(1)	Common and equivalents refers to Class A shares outstanding and RSUs that participate in distributions.


(2)	Represents the estimated current corporate, local and non-U.S. taxes as well as the payable under Apollo’s tax receivable agreement.


(3)	Distributable earnings before certain payables represents Distributable Earnings before the deduction for the estimated current corporate taxes and the payable under Apollo’s tax receivable agreement.


(4)	Per share calculations are based on end of period Distributable Earnings Shares Outstanding, which consists of total Class A shares outstanding and RSUs that participate in distributions (collectively referred to as “common & equivalents”).


(5)	Retained capital is withheld pro-rata from common and equivalent holders and AOG Unit holders.

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Summary of Non-U.S. GAAP Measures

The table below sets forth a reconciliation of net income attributable Apollo Global Management, LLC to our non-U.S. GAAP performance measures for the three months ended March 31, 2017 and 2016 :



	For the Three Months Ended March 31,
	2017			2016
	(in thousands)
Net Income (Loss) Attributable to Apollo Global Management, LLC	$	145,196		$	(32,828	)
Net income attributable to Non-Controlling Interests in consolidated entities	3,384			2,035
Net income (loss) attributable to Non-Controlling Interests in the Apollo Operating Group	206,450			(43,768		)
Net Income (Loss)	$	355,030		$	(74,561	)
Income tax provision (benefit)	39,161			(5,147		)
Income (Loss) Before Income Tax Provision (Benefit)	$	394,191		$	(79,708	)
Transaction-related charges and equity-based compensation	(812		)	(147		)
Net income attributable to Non-Controlling Interests in consolidated entities	(3,384		)	(2,035		)
Economic Income (Loss)	$	389,995		$	(81,890	)
Income tax (provision) benefit on Economic Income (Loss)	(58,372		)	8,926
Economic Net Income (Loss)	$	331,623		$	(72,964	)
Income tax provision (benefit) on Economic Income (Loss)	58,372			(8,926		)
Carried interest (income) loss from related parties ⁽¹⁾	(358,280		)	129,885
Profit sharing expense	148,275			(33,493		)
Equity-based compensation ⁽²⁾	16,745			16,720
(Income) loss from equity method investments	(39,214		)	3,859
Net (gains) losses from investment activities	(34,490		)	56,499
Net interest loss	11,988			6,891
Other	(544		)	333
Fee Related Earnings	$	134,475		$	98,804
Depreciation, amortization and other, net	2,513			2,581
Fee Related EBITDA	$	136,988		$	101,385
Net realized carried interest income ⁽¹⁾	97,012			6,817
Fee Related EBITDA + 100% of Net Realized Carried Interest	$	234,000		$	108,202
Non-cash revenues	(843		)	(842		)
Realized income from equity method investments	18,436			4,349
Net interest loss	(11,988		)	(6,891		)
Other	—			(63		)
Distributable Earnings	$	239,605		$	104,755
Taxes and related payables	(6,348		)	(2,273		)
Distributable Earnings After Taxes and Related Payables	$	233,257		$	102,482


(1)	Excludes carried interest income from a publicly traded business development company we manage.


(2)	Includes equity-based compensation related to RSUs (excluding RSUs granted in connection with the 2007 private placement), share options and restricted share awards.

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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 reflect 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 and VIEs 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;


•	Distributing cash flow to investors; and


•	Issuing debt to finance investments (CLOs).

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 described in note 9 to the condensed consolidated financial statements.

We determine whether to make capital commitments to our funds in excess of our minimum required amounts based on a variety of factors, including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded, estimates regarding the amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising, and our general working capital requirements.

Cash Flows

Significant amounts from our condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 are summarized and discussed within the table and corresponding commentary below:



	For the Three Months Ended March 31,
	2017			2016
	(in thousands)
Operating Activities	$	204,834		$	124,194
Investing Activities	(12,882		)	(56,999		)
Financing Activities	86,482			(135,114		)
Net Increase (Decrease) in Cash and Cash Equivalents	$	278,434		$	(67,919	)

Operating Activities

Our net cash provided by operating activities was $204.8 million and $124.2 million during the three months ended March 31, 2017 and 2016 , respectively. These amounts were primarily driven by:


•	net income (loss) of $355.0 million and $(74.6) million during the three months ended March 31, 2017 and 2016 , respectively, as well as non-cash adjustments, net of $(14.7) million and $76.4 million, respectively;


•	a net (increase) decrease in our carried interest receivable of $(168.7) million and $153.5 million during the three months ended March 31, 2017 and 2016 , respectively, due to a change in the fair value of our funds that generate carried interest of $327.0 million and $(116.2) million during the three months ended March 31, 2017 and 2016 , respectively, offset by

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fund distributions to the Company of $163.2 million and $37.3 million during the three months ended March 31, 2017 and 2016 , respectively;


•	purchases of investments held by consolidated VIEs in the amount of $187.6 million and $119.0 million, offset by proceeds from sales of investments held by consolidated VIEs in the amount of $120.9 million and $117.7 million during the three months ended March 31, 2017 and 2016 , respectively;


•	a net increase (decrease) in changes to other assets and other liabilities of consolidated VIEs in the amount of $49.9 million and $(7.0) million during the three months ended March 31, 2017 and 2016 , respectively;


•	a net (decrease) increase in due from and due to related parties in the amount of $(45.8) million and $12.5 million during the three months ended March 31, 2017 and 2016 , respectively;


•	a net increase (decrease) in accrued compensation and benefits in the amount of $1.5 million and $(6.8) million during the three months ended March 31, 2017 and 2016 , respectively;

•

a net increase (decrease) in our profit sharing payable of $103.3 million and $(32.7) million during the three months ended March 31, 2017 and 2016 , respectively, due to profit sharing expense of $134.6 million and $(23.4) million during the three months ended March 31, 2017 and 2016 , respectively, offset by payments of $50.1 million and $14.1 million during the three months ended March 31, 2017 and 2016 , respectively; and


•	a (decrease) increase in cash held at consolidated VIEs of $(14.7) million and $23.6 million during the three months ended March 31, 2017 and 2016 , respectively.

Investing Activities

Our net cash used in investing activities was $(12.9) million and $(57.0) million during the three months ended March 31, 2017 and 2016 , respectively. These amounts were primarily driven by:


•	net cash contributions to our equity method investments of $23.8 million and $32.2 million during the three months ended March 31, 2017 and 2016 , respectively;


•	issuance of related party loans of $5.4 million during the three months ended March 31,2017;


•	repayment of related party loans of $17.7 million during the three months ended March 31,2017; and


•	purchases of investments in the amount of $24.6 million during the three months ended March 31,2016.

Financing Activities

Our net cash provided by (used in) financing activities was $86.5 million and $(135.1) million during the three months ended March 31, 2017 and 2016 , respectively. These amounts were primarily driven by:


•	cash received, net of issuance costs, in connection with the issuance of Preferred shares of $264.7 million during the three months ended March 31, 2017;


•	cash distributions paid to our Class A shareholders of $87.1 million and $53.6 million, during the three months ended March 31, 2017 and 2016 , respectively;


•	cash distributions paid to the Non-Controlling Interest holders in the Apollo Operating Group of $97.0 million and $60.5 million during the three months ended March 31, 2017 and 2016 , respectively;


•	cash contributions from Non-Controlling Interest holders in consolidated VIEs of $28.6 million during the three months ended March 31, 2017;


•	cash used for purchases of Class A shares of $0.2 million and $12.9 million during the three months ended March 31, 2017 and 2016 , respectively;


•	net distributions related to issuances of Class A shares in settlement of RSUs of $20.6 million and $22.0 million during the three months ended March 31, 2017 and 2016 , respectively; and


•	issuance of debt of $18.4 million during the three months ended March 31, 2016.

Distributions

In addition to other distributions such as payments pursuant to the tax receivable agreement, see note 13 to the condensed consolidated financial statements for information regarding the quarterly distributions which were made at the sole discretion of the Company’s manager during 2017 and 2016 .

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Future Cash Flows

Our ability to execute our business strategy, particularly our ability to increase our AUM, depends on our ability to establish new funds and to raise additional investor capital within such funds. Our liquidity will depend on a number of factors, such as our ability to project our financial performance, which is highly dependent on our funds and our ability to manage our projected costs, fund performance, our access to credit facilities, our being in compliance with existing credit agreements, as well as industry and market trends. Also during economic downturns the funds we manage might experience cash flow issues or liquidate entirely. In these situations we might be asked to reduce or eliminate the management fee and incentive fees we charge, which could adversely impact our cash flow in the future.

An increase in the fair value of our funds’ investments, by contrast, could favorably impact our liquidity through higher management fees where the management fees are calculated based on the net asset value, gross assets and 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.

As of March 31, 2017 , Fund VII’s and Fund VI’s remaining investments and escrow cash were valued at 107% and 86% of the fund’s unreturned capital, respectively, which was below the required escrow ratio of 115%. As a result, these funds are required to place in escrow current and future carried interest income distributions to the general partner until the specified return ratio of 115% is met (at the time of a future distribution) or upon liquidation.

On April 20, 2010, the Company announced that it entered into a strategic relationship agreement with CalPERS. The strategic relationship agreement provides that Apollo will reduce fees charged to CalPERS on funds it manages, or in the future will manage, solely for CalPERS by $125 million over a five-year period or as close a period as required to provide CalPERS with that benefit. The agreement further provides that Apollo will not use a placement agent in connection with securing any future capital commitments from CalPERS. As of March 31, 2017 , the Company had reduced fees charged to CalPERS on the funds it manages by approximately $104.5 million .

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.

In February 2016, Apollo adopted a plan to repurchase up to $250 million in the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through a reduction of Class A shares to be issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan, which we refer to as net share settlement. Under the share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise, with the size and timing of these repurchases depending on legal requirements, price, market and economic conditions and other factors. See note 12 to the condensed consolidated financial statements for further information regarding the Company’s share repurchase program and net share settlement during the three months ended March 31, 2017 and 2016 .

On March 11, 2016, it was announced that Apollo intended to embark on a program to purchase $50 million of AINV’s common stock, subject to certain regulatory approvals. Under the program, shares may be purchased from time to time in open market transactions and in accordance with applicable law. As of March 31, 2017 , Apollo had purchased approximately 871 thousand shares, or approximately $4.9 million of AINV’s common stock.

On April 14, 2017, Apollo made an unfunded commitment to AGER Bermuda Holding Ltd. (“AGER”), a strategic platform established by Apollo and Athene to acquire or reinsure blocks of insurance business in the German and broader European life insurance market. The unfunded commitment of €125 million to purchase new Class B-1 equity interests in AGER during the commitment period may be reduced to the extent that certain employees, officers, directors and advisors of the Company, AGER, Apollo and/or their respective affiliates hereafter commit to purchase from AGER more than €25 million of new equity interests in AGER. Apollo further committed to purchase new Class C-1 equity interests in AGER on the closing date that represent a profits interest in AGER which, upon meeting certain vesting triggers, will be convertible by Apollo into additional Class B-1 equity interests in AGER. Apollo and Athene will be minority investors in AGER and long term strategic partners with aggregate voting powers of 35% and 10%, respectively.

Carried interest income from our funds can be distributed to us on a current basis, but is subject to repayment by the subsidiaries of the Apollo Operating Group that act as 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

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subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to a particular Managing Partner’s or Contributing Partner’s distributions. Pursuant to the shareholders agreement dated July 13, 2007, as amended (the “Shareholders Agreement”), we agreed to indemnify each of our Managing Partners and certain Contributing Partners against all amounts that they pay pursuant to any of these personal guarantees in favor of Fund IV, Fund V and Fund VI (including costs and expenses related to investigating the basis for or objecting to any claims made in respect of the guarantees) for all interests that our Managing Partners and Contributing Partners have contributed or sold to the Apollo Operating Group.

Accordingly, in the event that our Managing Partners, Contributing Partners and certain investment professionals are required to pay amounts in connection with a general partner obligation to return previously distributed carried interest income with respect to Fund IV, Fund V and Fund VI, we will be obligated to reimburse our Managing Partners and certain Contributing Partners for the indemnifiable percentage of amounts that they are required to pay even though we did not receive the distribution to which that general partner obligation related.

The Company has future debt obligations. See note 9 to the condensed consolidated financial statements for further information regarding the Company’s debt arrangements.

On April 28, 2017 , the Company declared a cash distribution of $0.49 per Class A share, which will be paid on May 31, 2017 to holders of record on May 19, 2017 . Also, the Company declared a cash distribution of $0.433854 per Preferred share, which will be paid on June 15, 2017 to holders of record on June 1, 2017 .

Investment Management Agreements - Athene Asset Management

Apollo, through its consolidated subsidiary, AAM, provides asset management services to Athene, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions asset diligence hedging and other asset management services and receives management fees for providing these services.

As of March 31, 2017 , AAM managed $68.2 billion of AUM in the Athene Accounts on which the Company earns a gross management fee of 0.40% per annum with certain limited exceptions.

On March 15, 2017, the Company and Athene announced an agreement to amend certain fee arrangements relating to investment management fees and sub-advisory fees that are paid by Athene to the Company. More specifically, the Company and Athene have agreed to enter into a revised fee agreement, which provides for, among other things, a fee of 0.30% per year (reduced from 0.40% per year) on all assets that the Company manages in accounts owned by Athene in the U.S. and Bermuda or in accounts supporting reinsurance ceded to U.S. and Bermuda subsidiaries of Athene Holding by third-party insurers (the “North American Accounts”) in excess of $65.846 billion (the level of assets in the North America Accounts as of December 31, 2016). The Company’s fee on the first $65.846 billion of assets in the North America Accounts remains 0.40% per year, subject to certain discounts and exceptions.

In addition, the Company and Athene also agreed to amend the sub-advisory agreements they have in place whereby, with limited exceptions, the Company will earn 0.40% per year on all assets in the North American Accounts explicitly sub-advised by the Company up to $10 billion, 0.35% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $10 billion up to $12.4 billion (the level of fee-paying sub-advised assets in the North American Accounts at December 31, 2016), 0.40% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $12.4 billion up to $16 billion and 0.35% per year on all assets in such accounts explicitly sub-advised by the Company in excess of $16 billion.

The amendments to the investment management fees and sub-advisory fees are subject to the approval by Athene Holding’s shareholders at its 2017 annual general meeting of shareholders of certain Athene Holding bye-law amendments relating to the term and termination of the investment management agreements between the Company and Athene. However, upon such shareholder approval, the amendments to the investment management fees and sub-advisory fees will be effective retroactive to January 1, 2017.

AAM discounts certain fees due from Athene. For the total dollar amount of all liabilities sourced through Athene’s organic distribution channels during 2016 in excess of $5.1 billion (subject to certain exceptions, “Excess Liabilities”), AAM agreed to discount fees as follows:

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•	During 2016, a discount of 0.40% per annum multiplied by such Excess Liabilities. The 2016 discount relating to such Excess Liabilities was intended to reasonably approximate a full discount of the AAM fee on the assets relating to such Excess Liabilities during the remainder of the 2016 calendar year.


•	For 2017, a discount of 0.20% per annum multiplied by such Excess Liabilities, resulting in a reasonable approximation of a 0.20% fee on the assets relating to such Excess Liabilities during the 2017 calendar year.


•	For 2018 and thereafter, a discount of 0.075% per annum, resulting in a reasonable approximation of a 0.325% fee on the assets relating to such Excess Liabilities during the 2018 calendar year and thereafter.

Investment Advisory Agreement - AAME

Apollo, through AAME, provides investment advisory services to Athene and receives a gross fee of 0.10% per annum on the Athene assets it advises. As of March 31, 2017 , AAME provided investment advisory services with respect to $4.9 billion of AUM in the Athene Accounts, of which $0.5 billion is sub-advised by the Company.

Sub-Advisory Agreement and Fund Investments

Apollo provides sub-advisory services with respect to a portion of the assets in the Athene Accounts, pursuant to a master sub-advisory agreement among AAM and certain other Apollo subsidiaries. In addition from time to time, Athene also invests in funds and investment vehicles that Apollo manages. The Company broadly refers to “Athene Sub-Advised” AUM as those assets in the Athene Accounts which the Company explicitly sub-advises as well as those assets in the Athene Accounts which are invested directly in funds and investment vehicles Apollo manages (“Athene Assets Directly Invested”). As of March 31, 2017 , the Athene Sub-Advised AUM totaled $16.4 billion , of which $2.8 billion was Athene Assets Directly Invested.

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

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

The Company refers to the portion of the AUM in the Athene Accounts that is not Athene Sub-Advised AUM as “Athene Non-Sub-Advised” AUM. Accordingly, as of March 31, 2017 , Athene Non-Sub-Advised AUM totaled $56.7 billion , which includes $4.4 billion of Athene AUM for which AAME provides investment advisory services. Apollo incurs all expenses associated with its provision of services to Athene.

In connection with the Athene Private Placement, Athene Holding amended its registration rights agreement to provide (i) investors who are party to such agreement, including AAA Investments, the potential opportunity for liquidity on their shares of Athene Holding through sales in registered public offerings over a 15 month period beginning on the date of Athene Holding’s initial public offering (the “Athene IPO”) and (ii) Athene Holding the right to cause certain investors who are party to the registration rights agreement to include in such offerings a certain percentage of their common shares of Athene Holding subject to the terms and conditions set forth in the agreement. However, pursuant to the registration rights agreement, any shares of Athene Holding held by Apollo (other than shares distributed to AAA in payment of carried interest to be sold for cash) will not be subject to such arrangements and instead will be subject to a lock-up period of two years following the effective date of the registration statement relating to the Athene IPO, but Athene Holding will not have the right to cause any shares owned by Apollo to be included in the Athene IPO or any follow-on offering. Apollo may elect to receive payment of carried interest in cash or in common shares of Athene Holding (valued at the then fair market value); and if Apollo elects to receive payment of such carried interest in cash, then common shares of Athene Holding shall be distributed to Apollo and immediately sold by Apollo to pay for such carried interest in cash. On March 16, 2017, AAA announced a conditional distribution of freely tradeable common shares of Athene to its unitholders. The distribution was conditioned upon the pricing of an underwritten follow-on secondary offering of Class A common shares of Athene Holding. On March 28, 2017, Athene announced the base follow-on offering size of 27.5 million shares of Athene Holding at a price of $48.50 per share, which was subsequently increased to 31.6 million shares of Athene Holding after the underwriters’ exercise of a 15% over-allotment option. The follow-on offering successfully closed on April 3, 2017.

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Distributions to Managing Partners and Contributing Partners

The three Managing Partners who became employees of Apollo on July 13, 2007 each receive 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, as a result of the tax receivable agreement, 85% of any tax savings APO Corp. recognizes 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.

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


•	As a result of the tax receivable agreement, 85% of any tax savings APO Corp. recognizes will be paid to the Contributing Partners.

Potential Future Costs

We may make grants of RSUs 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 Company assesses all entities with which it is involved for consolidation on a case by case basis depending on the specific facts and circumstances surrounding each entity. Pursuant to the consolidation guidance, the Company first evaluates whether it holds a variable interest in an entity. Apollo factors in all economic interests including proportionate interests through related parties, to determine if such interests are to be considered a variable interest. As Apollo’s interest in many of these entities is solely through market rate performance fees and/or insignificant indirect interests through related parties, Apollo is generally not considered to have a variable interest in many of these entities under the guidance and no further consolidation analysis is performed. For entities where the Company has determined that it does hold a variable interest, the Company performs an assessment to determine whether each of those entities qualify as a VIE.

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

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

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could potentially be significant to the VIE. If Apollo alone is not considered to have a controlling financial interest in the VIE but Apollo and its related parties under common control in the aggregate have a controlling financial interest in the VIE, Apollo will still be deemed to be the primary beneficiary if it is the party within the related party group that is most closely associated with the VIE. If Apollo and its related parties not under common control in the aggregate have a controlling financial interest in a VIE, then Apollo is deemed to be the primary beneficiary if substantially all the activities of the entity are performed on behalf of Apollo. Apollo determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. Investments and redemptions (either by Apollo, related parties of Apollo or third parties) or amendments to the governing documents of the respective entity may affect an entity’s status as a VIE or the determination of the primary beneficiary.

The assessment of whether an entity is a VIE and the determination of whether Apollo should consolidate such VIE requires judgment by our management. Those judgments include, but are not limited to: (i) determining whether the total equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (ii) evaluating whether the holders of equity investment at risk, as a group, can make decisions that have a significant effect on the success of the entity, (iii) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive the expected residual returns from an entity and (iv) evaluating the nature of the relationship and activities of those related parties with shared power or under common control for purposes of determining which party within the related-party group is most closely associated with the VIE. Judgments are also made in determining whether a member in the equity group has a controlling financial interest including power to direct activities that most significantly impact the VIE’s economic performance and rights to receive benefits or obligations to absorb losses that could be potentially significant to the VIE. This analysis considers all relevant economic interests including proportionate interests held through related parties.

Revenue Recognition

Carried Interest Income (Loss) from Related Parties. 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 Related Parties. 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

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

Private Equity Investments. The majority of the illiquid investments within our private equity funds are valued using the market approach, which provides an indication of fair value based on a comparison of the subject company to comparable publicly traded companies and transactions in the industry.

Market Approach. The market approach is driven by current market conditions, including actual trading levels of similar companies and, to the extent available, actual transaction data of similar companies. Judgment is required by management when assessing which companies are similar to the subject company being valued. Consideration may also be given to any of the following factors: (1) the subject company’s historical and projected financial data; (2) valuations given to comparable companies; (3) the size and scope of the subject company’s operations; (4) the subject company’s individual strengths and weaknesses; (5) expectations relating to the market’s receptivity to an offering of the subject company’s securities; (6) applicable restrictions on transfer; (7) industry and market information; (8) general economic and market conditions; and (9) other factors deemed relevant. Market approach valuation models typically employ a multiple that is based on one or more of the factors described above. Enterprise value as a multiple of EBITDA is common and relevant for most companies and industries, however, other industry specific multiples are employed where available and appropriate. Sources for gaining additional knowledge related to comparable companies include public filings, annual reports, analyst research reports, and press releases. Once a comparable company set is determined, we review certain aspects of the subject company’s performance and determine how its performance compares to the group and to certain individuals in the group. We compare certain measurements such as EBITDA margins, revenue growth over certain time periods, leverage ratios and growth opportunities. In addition, we compare our entry multiple and its relation to the comparable set at the time of acquisition to understand its relation to the comparable set on each measurement date.

Income Approach. For investments where the market approach does not provide adequate fair value information, we rely on the income approach. The income approach is also used to validate the market approach within our private equity funds. The income approach provides an indication of fair value based on the present value of cash flows that a business or security is expected to generate in the future. The most widely used methodology for the income approach is a discounted cash flow method. Inherent in the discounted cash flow method are significant assumptions related to the subject company’s expected results, the determination of a terminal value and a calculated discount rate, which is normally based on the subject company’s weighted average cost of capital, or “WACC.” The WACC represents the required rate of return on total capitalization, which is comprised of a required rate of return on equity, plus the current tax-effected rate of return on debt, weighted by the relative percentages of equity and debt that are typical in the industry. The most critical step in determining the appropriate WACC for each subject company is to select companies that are comparable in nature to the subject company and the credit quality of the subject company. Sources for gaining additional knowledge about the comparable companies include public filings, annual reports, analyst research reports, and press releases. The general formula then used for calculating the WACC considers the after-tax rate of return on debt capital and the rate of return on common equity capital, which further considers the risk-free rate of return, market beta, market risk premium and small stock premium, if applicable. The variables used in the WACC formula are inferred from the comparable market data obtained. The Company evaluates the comparable companies selected and concludes on WACC inputs based on the most comparable company or analyzes the range of data for the investment.

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

Credit Investments. The majority of investments in Apollo’s credit funds are valued based on quoted market prices and valuation models.

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

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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 loans in Apollo’s real estate funds are evaluated for possible impairment on a quarterly basis. For Apollo’s 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.

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

The fair values of the investments in our funds can be impacted by changes to the assumptions used in the underlying valuation models. For further discussion on the impact of changes to valuation assumptions see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Sensitivity” in our 2016 Annual Report. There have been no material changes to the valuation approaches utilized during the periods that our financial results are presented in this report.

Fair Value of Financial Instruments

Except for the Company’s debt obligations (each as defined in note 9 to our condensed consolidated financial statements), Apollo’s financial instruments are recorded at fair value or at amounts whose carrying values approximate fair value. See “—Investments, at Fair Value” above. While Apollo’s valuations of portfolio investments are based on assumptions that Apollo believes are reasonable under the circumstances, the actual realized gains or losses will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may ultimately differ significantly from the assumptions on which the valuations were based. Financial instruments’ carrying values generally approximate fair value because of the short-term nature of those instruments or variable interest rates related to the borrowings.

Profit Sharing Expense. Profit sharing expense is primarily a result of agreements with our Contributing Partners and employees to compensate them based on the ownership interest they have in the general partners of the Apollo funds. Therefore, changes in the fair value of the underlying investments in the funds we manage and advise affect profit sharing expense. The Contributing Partners and employees are allocated approximately 30% to 50% of the total carried interest income which is driven primarily by changes in fair value of the underlying fund’s investments and is treated as compensation expense. Additionally, profit sharing expenses paid may be subject to clawback from employees, former employees and Contributing Partners to the extent not indemnified. When applicable, the accrual for potential clawback of previously distributed profit sharing amounts, which is a component of due from related parties on the condensed consolidated statements of financial condition, represents all amounts previously distributed to employees, former employees and Contributing Partners that would need to be returned to the general partner if the Apollo funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual general partner receivable, however, would not become realized until the end of a fund’s life.

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

The Incentive Pool enables certain partners and employees to earn discretionary compensation based on carried interest realizations earned by the Company in a given year, which amounts are reflected in profit sharing expense in the accompanying

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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.

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

Equity-Based Compensation. Equity-based compensation is accounted for in accordance with U.S. GAAP, which requires that the cost of employee services received in exchange for an award is generally measured based on the grant date fair value of the award. Equity-based awards that do not require future service (i.e., vested awards) are expensed immediately. Equity-based employee awards that require future service are recognized over the relevant service period. As discussed in note 2, in connection with the adoption of new share-based payment guidance during the quarter ended March 31, 2017, the Company made an accounting policy election to no longer estimate forfeitures in determining the number of equity-based awards that are expected to vest. Under the Company’s new policy, which was applied prospectively as of January 1, 2017, forfeitures are accounted for when they occur. Apollo’s equity-based awards consist of, or provide rights with respect to, AOG Units, RSUs, share options, restricted shares, AHL Awards and other equity-based compensation awards. For more information regarding Apollo’s equity-based compensation awards, see note 11 to our condensed consolidated financial statements. The Company’s assumptions made to determine the fair value on grant date are embodied in the calculations of compensation expense.

A significant part of our compensation expense is derived from amortization of RSUs. The fair value of all RSU grants after March 29, 2011 is based on the grant date fair value, which considers the public share price of the Company. RSUs are comprised of Plan Grants, which generally do not pay distributions until vested and, for grants made after 2011, the underlying shares are generally issued by March 15 ^th after the year in which they vest, and Bonus Grants, which pay distributions on both vested and unvested grants and are generally issued after vesting on an approximate two-month lag. For Plan Grants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions and lack of distributions until vested. For Bonus Grants, the grant date fair value is based on the public share price of the Company, and is discounted for transfer restrictions.

We utilize the present value of a growing annuity formula to calculate a discount for the lack of pre-vesting distributions on Plan Grant RSUs. There were no Plan Grants awarded during the three months ended March 31, 2016 and no Bonus Grants awarded during the three months ended March 31, 2017 and 2016. The weighted average for the inputs utilized for the shares granted during the three months ended March 31, 2017 are presented in the table below for Plan Grants:



	For the Three Months Ended March 31, 2017
Distribution Yield ⁽¹⁾	6.5%
Cost of Equity Capital Rate ⁽²⁾	11.3%


(1)	Calculated based on the historical distributions paid during the twelve months ended March 31, 2017 and the Company’s Class A share price as of the measurement date of the grant on a weighted average basis.


(2)	Assumes a discount rate that was equivalent to the opportunity cost of foregoing distributions on unvested Plan Grant RSUs as of the valuation date, based on the Capital Asset Pricing Model (“CAPM”). CAPM is a commonly used mathematical model for developing expected returns.

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The following table summarizes the weighted average discounts for Plan Grants for the three months ended March 31, 2017:



	For the Three Months Ended March 31, 2017
Plan Grants:
Discount for the lack of distributions until vested ⁽¹⁾	11.0%


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

We utilize the Finnerty Model to calculate a marketability discount on the Plan Grant and Bonus Grant RSUs to account for the lag between vesting and issuance. The Finnerty Model provides for a valuation discount reflecting the holding period restriction embedded in a restricted security preventing its sale over a certain period of time.

The Finnerty Model proposes to estimate a discount for lack of marketability such as transfer restrictions by using an option pricing theory. This model has gained recognition through its ability to address the magnitude of the discount by considering the volatility of a company’s stock price and the length of restriction. The concept underpinning the Finnerty Model is that a restricted security cannot be sold over a certain period of time. Further simplified, a restricted share of equity in a company can be viewed as having forfeited a put on the average price of the marketable equity over the restriction period (also known as an “Asian Put Option”). If we price an Asian Put Option and compare this value to that of the assumed fully marketable underlying security, we can effectively estimate the marketability discount.

The inputs utilized in the Finnerty Model are (i) length of holding period, (ii) volatility and (iii) distribution yield. The weighted average for the inputs utilized for the shares granted during the three months ended March 31, 2017 are presented in the table below for Plan Grants:



	For the Three Months Ended March 31, 2017
Plan Grants:
Holding Period Restriction (in years)	0.2
Volatility ⁽¹⁾	20.0%
Distribution Yield ⁽²⁾	6.5%


(1)	The Company determined the expected volatility based on the volatility of the Company’s Class A share price as of the grant date with consideration to comparable companies.


(2)	Calculated based on the historical distributions paid during the twelve months ended March 31, 2017 and the Company’s Class A share price as of the measurement date of the grant on a weighted average basis.

The following table summarizes the weighted average marketability discounts for Plan Grants for the three months ended March 31, 2017:



	For the Three Months Ended March 31, 2017
Plan Grants:
Marketability discount for transfer restrictions ⁽¹⁾	2.0%


(1)	Based on the Finnerty Model calculation.

Bonus Grants constitute a component of the discretionary annual compensation awarded to certain of our professionals. During 2016, the Company increased the default portion of annual compensation to be awarded as a discretionary Bonus Grant relative to the portion awarded in previous years. The increase in the proportion of discretionary annual compensation awarded as a Bonus Grant will be offset by a decrease in discretionary annual cash bonuses. These changes are intended to further align the interests of Apollo’s employees and stakeholders and strengthen the long-term commitment of our partners and employees.

Fair Value Measurements

See note 5 to our condensed consolidated financial statements for a discussion of the Company’s fair value measurements.

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Recent Accounting Pronouncements

A list of recent accounting pronouncements that are relevant to Apollo and its industry is included in note 2 to our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

In the normal course of business, we engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. See note 14 to our condensed consolidated financial statements for a discussion of guarantees and contingent obligations and note 2 for a discussion of derivatives.

Contractual Obligations, Commitments and Contingencies

As of March 31, 2017 , the Company’s material contractual obligations consisted of lease obligations, contractual commitments as part of the ongoing operations of the funds and debt obligations. Fixed and determinable payments due in connection with these obligations are as follows:



	Remaining 2017		2018		2019		2020		2021		Thereafter		Total
	(in thousands)
Operating lease obligations ⁽¹⁾	$	26,283	$	31,075	$	30,255	$	13,523	$	4,622	$	6,876	$	112,634
Other long-term obligations ⁽²⁾	19,290		5,948		2,935		1,365		1,365		1,365		32,268
2013 AMH Credit Facilities - Term Facility ⁽³⁾	5,123		6,830		6,830		6,830		300,342		—		325,955
2013 AMH Credit Facilities - Revolver Facility ⁽⁴⁾	469		625		625		625		8		—		2,352
2024 Senior Notes ⁽⁵⁾	15,000		20,000		20,000		20,000		20,000		548,333		643,333
2026 Senior Notes ⁽⁶⁾	16,500		22,000		22,000		22,000		22,000		596,983		701,483
2014 AMI Term Facility I	219		293		293		293		14,872		—		15,970
2014 AMI Term Facility II	217		289		16,789		—		—		—		17,295
2016 AMI Term Facility I	237		316		316		316		18,095		—		19,280
2016 AMI Term Facility II	212		282		282		282		14,238		—		15,296
Obligations as of March 31, 2017	$	83,550	$	87,658	$	100,325	$	65,234	$	395,542	$	1,153,557	$	1,885,866


(1)	The Company has entered into sublease agreements and is expected to contractually receive approximately $0.5 million over the life of the agreements.


(2)	Includes (i) payments on management service agreements related to certain assets and (ii) payments with respect to certain consulting agreements entered into by the Company. Note that a significant portion of these costs are reimbursable by funds.


(3)	$300 million of the outstanding Term Facility matures in January 2021. The interest rate on the $300 million Term Facility as of March 31, 2017 was 2.28% . See note 9 of the condensed consolidated financial statements for further discussion of the 2013 AMH Credit Facilities.


(4)	The commitment fee as of March 31, 2017 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 March 31, 2017 was 4.00% . See note 9 of the condensed consolidated financial statements for further discussion of the 2024 Senior Notes.


(6)	$500 million of the 2026 Senior Notes matures in May 2026. The interest rate on the 2026 Senior Notes as of March 31, 2017 was 4.40% . See note 9 of the condensed consolidated financial statements for further discussion of the 2026 Senior Notes.


Note:	Due to the fact that the timing of certain amounts to be paid cannot be determined or for other reasons discussed below, the following contractual commitments have not been presented in the table above.

(i)

As noted previously, we have entered into a tax receivable agreement with our Managing Partners and Contributing Partners which requires us to pay to our Managing Partners and Contributing Partners 85% of any tax savings received by APO Corp. from our step-up in tax basis. The tax savings achieved may not ensure that we have sufficient cash available to pay this liability and we might be required to incur additional debt to satisfy this liability.


(ii)	Debt amounts related to the consolidated VIEs are not presented in the table above as the Company is not a guarantor of these non-recourse liabilities.

(iii)

In connection with the Stone Tower acquisition, the Company agreed to pay the former owners of Stone Tower a specified percentage of any future carried interest income earned from certain of the Stone Tower funds, CLOs and strategic investment accounts. This contingent consideration liability is remeasured to fair value at each reporting period until the obligations are satisfied. See note 14 to the condensed consolidated financial statements for further information regarding the contingent consideration liability.


(iv)	Commitments from certain of our subsidiaries to contribute to the funds we manage and certain related parties.

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Commitments

Certain of our management companies and general partners are committed to contribute to the funds we manage and certain related parties. While a small percentage of these amounts are funded by us, the majority of these amounts have historically been funded by our related parties, including certain of our employees and certain Apollo funds. The table below presents the commitment and remaining commitment amounts of Apollo and its related parties, the percentage of total fund commitments of Apollo and its related parties, the commitment and remaining commitment amounts of Apollo only (excluding related parties), and the percentage of total fund commitments of Apollo only (excluding related parties) for each private equity, credit and real estate fund as of March 31, 2017 as follows ($ in millions):

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Fund	Apollo and Related Party Commitments			% of Total Fund Commitments		Apollo Only (Excluding Related Party) Commitments		Apollo Only (Excluding Related Party) % of Total Fund Commitments		Apollo and Related Party Remaining Commitments		Apollo Only (Excluding Related Party) Remaining Commitments
Private Equity:
Fund VIII	$	1,543.5		8.40	%	$	396.5	2.16	%	$	630.2	$	164.0
Fund VII	467.2			3.18		178.1		1.21		74.4		28.0
Fund VI	246.3			2.43		6.1		0.06		9.7		0.2
Fund V	100.0			2.67		0.5		0.01		6.2		—
Fund IV	100.0			2.78		0.2		0.01		0.5		—
AION	151.5			18.34		50.0		6.05		89.7		29.2
ANRP I	426.1			32.21		10.1		0.76		97.4		2.1
ANRP II	581.2			16.83		48.0		1.39		430.5		40.1
A.A. Mortgage Opportunities, L.P.	425.0			84.46		—		—		—		—
Apollo Rose, L.P.	299.1			100.00		—		—		134.8		—
Champ, L.P.	110.0			100.00		17.6		16		11.2		1.9
Apollo Royalties Management, LLC	108.6			100.00		—		—		—		—
Other Private Equity	110.5			Various		10.5		Various		63.7		6.1
Credit:
Apollo Credit Opportunity Fund III, L.P. (“COF III”)	358.1			10.45		83.1		2.43		81.1		19.3
Apollo Credit Opportunity Fund II, L.P. (“COF II”)	30.5			1.93		23.4		1.48		0.8		0.6
Apollo Credit Opportunity Fund I, L.P. (“COF I”)	449.2			30.25		29.7		2.00		237.1		4.2
Apollo European Principal Finance Fund III, L.P. (“EPF III”) ⁽²⁾	491.4			17.85		66.4		2.41		491.4		66.4
Apollo European Principal Finance Fund II, L.P. (“EPF II”) ⁽²⁾	409.6			12.08		63.4		1.87		111.8		20.7
Apollo European Principal Finance Fund, L.P. (“EPF I”) ⁽²⁾	286.3			20.75		18.9		1.37		46.6		4.3
Financial Credit Investment II, L.P. (“FCI II”)	244.6			15.73		—		—		80.9		—
Financial Credit Investment I, L.P. (“FCI I”)	95.3			17.05		—		—		60.5		—
Apollo Structured Credit Recovery Master Fund III, L.P. (“SCRF III”)	230.2			18.59		3.6		0.29		91.4		1.4
Apollo Structured Credit Recovery Master Fund II, Ltd. (“SCRF II”)	7.8			7.47		—		—		—		—
MidCap	1,672.6			80.23		110.9		5.32		229.0		31.0
Apollo Moultrie Credit Fund, L.P.	400.0			100.00		—		—		255.0		—
Apollo/Palmetto Short-Maturity Loan Portfolio, L.P.	300.0			100.00		—		—		—		—
Apollo Asia Private Credit Fund, L.P. (“APC”)	158.5			69.06		0.1		0.04		—		—
Apollo Energy Opportunity Fund, L.P. (“AEOF”)	125.5			12.01		25.5		2.44		94.7		19.2
Other Credit	380.8			Various		208.2		Various		271.9		112.8
Real Estate:
U.S. RE Fund II	377.5			49.01		7.6		0.99		179.3		3.7
U.S. RE Fund I	434.2		⁽¹⁾	66.85		16.4		2.53		125.9		2.9
CPI Capital Partners North America, L.P.	7.6			1.27		2.1		0.35		0.6		0.2
CPI Capital Partners Europe, L.P. ⁽²⁾	5.8			0.47		—		—		0.4		—
CPI Capital Partners Asia Pacific, L.P.	6.9			0.53		0.5		0.04		0.1		—
Apollo Asia Real Estate Fund, L.P.	206.9			73.39		6.9		2.44		205.4		6.9
Other Real Estate	98.7			Various		1.7		Various		12.3		0.3
Other:
Apollo SPN Investments I, L.P.	27.4			0.68		27.4		0.68		23.0		23.0
Total	$	11,474.4				$	1,413.4			$	4,147.5	$	588.5


(1)	Figures for U.S. RE Fund I include base, additional, and co-investment commitments. A co-investment vehicle within U.S. RE Fund I is denominated in pound sterling and translated into U.S. dollars at an exchange rate of £1.00 to $1.26 as of March 31, 2017 .


(2)	Apollo’s commitment in these funds is denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.07 as of March 31, 2017 .

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On April 30, 2015, Apollo entered into the AAA Investments Credit Agreement (see note 13 for further disclosure regarding this facility). Under the terms of the AAA Investments Credit Agreement, the Company shall make available to AAA Investments one or more advances at the discretion of AAA Investments in the aggregate amount not to exceed a balance of $10.0 million at an applicable rate of LIBOR plus 1.5% . The Company receives an annual commitment fee of 0.125% on the unused portion of the loan. As of March 31, 2017 and December 31, 2016 , $4.0 million had been advanced by the Company and remained outstanding on the AAA Investments Credit Agreement.

The 2013 AMH Credit Facilities, 2024 Senior Notes and 2026 Senior Notes will have future impacts on our cash uses. See note 9 of our condensed consolidated financial statements for information regarding the Company’s debt arrangements.


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 1,000 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 Chief Risk Officer. The risk committee is tasked with assisting the Company’s manager in monitoring and managing enterprise-wide risk. The risk committee generally meets on a quarterly basis and reports to senior management of the Company’s manager at such times as the committee deems appropriate and at least on an annual basis.

On at least a monthly basis, the Company’s risk department provides a summary analysis of fund level market and credit risk to the portfolio managers of the Company’s funds and the heads of the various business segments. On a periodic basis, the Company’s risk department presents a consolidated summary analysis of fund level market and credit risk to the Company’s risk committee. In addition, the Company’s Chief Risk Officer reviews specific investments from the perspective of risk mitigation and discusses such analysis with the Company’s risk committee and/or the executive committee of the Company’s manager at

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such times as the Company’s Chief Risk Officer determines such discussions are warranted. On an annual basis, the Company’s Chief Risk Officer provides senior management of the Company’s manager with a comprehensive overview of risk management along with an update on current and future risk initiatives.

Impact on Management Fees —Our management fees are based on one of the following:


•	capital commitments to an Apollo fund;


•	capital invested in an Apollo fund;


•	the gross, net or adjusted asset value of an Apollo fund, as defined; or


•	as otherwise defined in the respective agreements.

Management fees could be impacted by changes in market risk factors and management could consider an investment permanently impaired as a result of (i) such market risk factors causing changes in invested capital or in market values to below cost, in the case of 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, if applicable, are reflected as a reduction to advisory and transaction fees from related parties. 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 distributions are 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. Volatility in debt and equity markets can impact our pace of capital deployment, the timing of receipt of transaction fee revenues and the timing of realizations. These market conditions could have an impact on the value of fund investments and rates of return. Accordingly, depending on the instruments or activities impacted, market risks can have wide ranging, complex adverse effects on our results from operations and our overall financial condition. We monitor market risk using certain strategies and methodologies which management evaluates periodically for appropriateness. We intend to continue to monitor this risk going forward and continue to monitor our exposure to all market factors.

Interest Rate Risk— Interest rate risk represents exposure we and our funds have to instruments whose values vary with the change in interest rates. These instruments include, but are not limited to, loans, borrowings and derivative instruments. We may seek to mitigate risks associated with the exposures by having our funds take offsetting positions in derivative contracts. Hedging instruments allow us to seek to mitigate risks by reducing the effect of movements in the level of interest rates, changes in the shape of the yield curve, as well as, changes in interest rate volatility. Hedging instruments used to mitigate these risks may include related derivatives such as options, futures and swaps.

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Credit Risk— Certain of our funds are subject to certain inherent risks through their investments.

Certain of our entities invest substantially all of their excess cash in open-end money market funds and money market demand accounts, which are included in cash and cash equivalents. The money market funds invest primarily in government securities and other short-term, highly liquid instruments with a low risk of loss. We continually monitor the funds’ performance in order to manage any risk associated with these investments.

Certain of our funds hold derivative instruments that contain an element of risk in the event that the counterparties may be unable to meet the terms of such agreements. We seek to minimize our risk exposure by limiting the counterparties with which our funds enter into contracts to banks and investment banks who meet established credit and capital guidelines. As of March 31, 2017 , we do not expect any counterparty to default on its obligations and therefore do not expect to incur any loss due to counterparty default.

Foreign Exchange Risk— Foreign exchange risk represents exposures our funds have to changes in the values of current fund holdings and future cash flows denominated in other currencies and investments in non-U.S. companies. The types of investments exposed to this risk include investments in foreign subsidiaries, foreign currency-denominated loans, foreign currency-denominated transactions, and various foreign exchange derivative instruments whose values fluctuate with changes in currency exchange rates or foreign interest rates. Instruments used to mitigate this risk are foreign exchange options, currency swaps, futures and forwards. These instruments may be used to help insulate our funds against losses that may arise due to volatile movements in foreign exchange rates and/or interest rates.

In our capacity as investment manager of the funds we manage, we continuously monitor a variety of markets for attractive opportunities for managing risk. For example, certain of the funds we manage may put in place foreign exchange hedges or borrowings with respect to certain foreign currency denominated investments to provide a hedge against foreign exchange exposure.

Non-U.S. Operations— We conduct business throughout the world and are continuing to expand into foreign markets. We currently have offices outside the U.S. in Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong and Shanghai and have been strategically growing our international presence. Our fund investments and our revenues are primarily derived from our U.S. operations. With respect to our non-U.S. operations, we are subject to risk of loss from currency fluctuations, social instability, changes in governmental policies or policies of central banks, expropriation, nationalization, unfavorable political and diplomatic developments and changes in legislation relating to non-U.S. ownership. Our funds also invest in the securities of companies which are located in non-U.S. jurisdictions. As we continue to expand globally, we will continue to focus on monitoring and managing these risk factors as they relate to specific non-U.S. investments.


ITEM 4 .	CONTROLS AND PROCEDURES

We maintain “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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No changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act) occurred during our most recent quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

See note 14 to our condensed consolidated financial statements for a summary of the Company’s legal proceedings.

ITEM 1A. RISK FACTORS

For a discussion of our potential risks and uncertainties, see the information under the heading "Risk Factors" in our 2016 Annual Report, which is accessible on the Securities and Exchange Commission's website at www.sec.gov. There have been no material changes to the risk factors for the three months ended March 31, 2017 .

The risks described in our 2016 Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/ or operating results.


ITEM 2.	UNREGISTERED SALE OF EQUITY SECURITIES

On February 7, 2017 and February 10, 2017 , we issued 1,683,662 and 136 Class A shares, respectively, net of taxes to Apollo Management Holdings, L.P., a subsidiary of Apollo Global Management, LLC, in connection with issuances of shares to participants in the Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Equity Plan”) for an aggregate purchase price of $37.3 million and $3.0 thousand , respectively. The issuance was exempt from registration under the Securities Act in accordance with Section 4(a)(2) and Rule 506(b) thereof, as transactions by the issuer not involving a public offering. We determined that the purchaser of Class A shares in the transactions, Apollo Management Holdings, L.P., was an accredited investor.

Issuer Purchases of Equity Securities

The following table sets forth purchases of our Class A shares made by us or on our behalf during the fiscal quarter ended March 31, 2017 .



Period	Total Number of Class A Shares Purchased ⁽¹⁾	Average Price Paid per Share
January 1, 2017 through January 31, 2017	—	$	—
February 1, 2017 through February 28, 2017	—	—
March 1, 2017 through March 31, 2017	6,612	22.79
Total	6,612


(1)	During the fiscal quarter ended March 31, 2017 , we repurchased a number of our Class A shares equal to the number of Class A restricted shares issued under our equity incentive plan during the quarter. All such repurchases were made in open-market transactions not pursuant to a publicly-announced repurchase plan or program.

In February 2016, the Company announced its adoption of a program to repurchase up to $250 million in the aggregate of its Class A shares, including up to $150 million in the aggregate of its outstanding Class A shares through a share repurchase program and up to $100 million through a reduction of Class A shares to be issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan, which we refer to as net share settlement. Under the share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise, with the size and timing of these repurchases depending on legal requirements, price, market and economic conditions and other factors. The Company expects that the share repurchase program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used to repurchase Class A shares. The share repurchase program does not require the Company to repurchase any specific number of Class A shares, and the share repurchase program may be suspended, extended, modified or discontinued at any time. Reductions of Class A shares issued to employees to satisfy associated tax obligations in connection with the settlement of equity-based awards granted under the 2007 Equity Plan are not included in the table. There were no share repurchases made as part of the share repurchase program during the three months ended March 31, 2017 , and as of March 31, 2017 , the approximate dollar value of Class A shares that may be purchased under the program is $137.1 million.

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ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.


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		Second Amended and Restated Limited Liability Company Agreement of Apollo Global Management, LLC dated March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 7, 2017 (File No. 001-35107)).

4.1		Specimen Certificate evidencing the Registrant’s Class A shares (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

4.2		Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)).

4.3		First Supplemental Indenture dated as of May 30, 2014, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107)).

4.4		Form of 4.000% Senior Note due 2024 (included in Exhibit 4.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014 (File No. 001-35107), which is incorporated by reference).

4.5		Second Supplemental Indenture dated as of January 30, 2015, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings X, L.P. and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

4.6		Third Supplemental Indenture dated as of February 1, 2016, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings XI, LLC and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

4.7		Fourth Supplemental Indenture dated as of May 27, 2016, among Apollo Management Holdings, L.P., the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2016 (File No. 001-35107)).

*4.8		Fifth Supplemental Indenture dated as of April 13, 2017, among Apollo Management Holdings, L.P., the Guarantors party thereto, Apollo Principal Holdings XII, L.P. and Wells Fargo Bank, National Association, as trustee.

4.9		Form of 6.375% Series A Preferred Shares Certificate (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 7, 2017 (File No. 001-35107)).

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Exhibit Number		Exhibit Description

10.1		Amended and Restated Limited Liability Company Operating Agreement of AGM Management, LLC dated as of July 10, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

*10.2		Fourth Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings I, L.P. dated as of March 7, 2017.

*10.3		Fourth Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings II, L.P. dated as of March 7, 2017.

*10.4		Fourth Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings III, L.P. dated as of March 7, 2017.

*10.5		Fourth Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IV, L.P. dated as of March 7, 2017.

+10.6		Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.7		Agreement Among Principals, dated as of July 13, 2007, by and among Leon D. Black, Marc J. Rowan, Joshua J. Harris, Black Family Partners, L.P., MJR Foundation LLC, AP Professional Holdings, L.P. and BRH Holdings, L.P. (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.8		Shareholders Agreement, dated as of July 13, 2007, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowan and Joshua J. Harris (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

*10.9		Fifth Amended and Restated Exchange Agreement, dated as of April 28, 2017, by and among Apollo Global Management, LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, Apollo Principal Holdings XII, L.P., AMH Holdings (Cayman), L.P. and the Apollo Principal Holders (as defined therein) from time to time party thereto.

10.10		Amended and Restated Tax Receivable Agreement, dated as of May 6, 2013, by and among APO Corp., Apollo Principal Holdings II, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings VI, Apollo Principal Holdings VIII, L.P., AMH Holdings (Cayman), L.P. and each Holder defined therein. (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q for the period ended June 30, 2016 (File No. 001-35107)).

10.11		Employment Agreement with Leon D. Black dated January 4, 2017 (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).

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Exhibit Number		Exhibit Description

10.12		Employment Agreement with Marc J. Rowan dated January 4, 2017 (incorporated by reference to Exhibit 10.12 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).

10.13		Employment Agreement with Joshua J. Harris dated January 4, 2017 (incorporated by reference to Exhibit 10.13 to the Registrant’s Form 10-K for the period ended December 31, 2016 (File No. 001-35107)).

*10.14		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings V, L.P. dated as of March 7, 2017.

*10.15		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VI, L.P. dated as of March 7, 2017.

*10.16		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings VII, L.P. dated as of March 7, 2017.

*10.17		Third Amended and Restated Limited Partnership Agreement of Apollo Principal Holdings VIII, L.P. dated as of March 7, 2017.

*10.18		Third Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings IX, L.P. dated as of March 7, 2017.

*10.19		Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings X, L.P. dated as of March 7, 2017.

*10.20		Second Amended and Restated Limited Liability Company Agreement of Apollo Principal Holdings XI, LLC dated as of March 7, 2017.

*10.21		Second Amended and Restated Exempted Limited Partnership Agreement of Apollo Principal Holdings XII, L.P. dated as of March 7, 2017.

10.22		Fourth Amended and Restated Limited Partnership Agreement of Apollo Management Holdings, L.P. dated as of October 30, 2012 (incorporated by reference to Exhibit 10.25 to the Registrant’s Form 10-Q for the period ended March 31, 2013 (File No. 001-35107)).

10.23		Settlement Agreement, dated December 14, 2008, by and among Huntsman Corporation, Jon M. Huntsman, Peter R. Huntsman, Hexion Specialty Chemicals, Inc., Hexion LLC, Nimbus Merger Sub, Inc., Craig O. Morrison, Leon Black, Joshua J. Harris and Apollo Global Management, LLC and certain of its affiliates (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

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Exhibit Number		Exhibit Description

10.24		First Amendment and Joinder, dated as of August 18, 2009, to the Shareholders Agreement, dated as of July 13, 2007, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, Leon D. Black, Marc J. Rowan and Joshua J. Harris (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.25		Joinder, dated as of May 5, 2016, to the Shareholders Agreement, dated as of July 13, 2007, as amended by the First Amendment and Joinder dated as of August 18, 2009, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, MJH Partners, L.P., Leon D. Black, Marc J. Rowan and Joshua J. Harris, and, solely in connection with Article VII of the Agreement, APO Corp., APO Asset Co., LLC, APO (FC), LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P. and Apollo Management Holdings, L.P. (incorporated by reference to Exhibit 10.24 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

*10.26		Joinder, dated as of May 3, 2017, to the Shareholders Agreement, dated as of July 13, 2007, as amended by the First Amendment and Joinder dated as of August 18, 2009, by and among Apollo Global Management, LLC, AP Professional Holdings, L.P., BRH Holdings, L.P., Black Family Partners, L.P., MJR Foundation LLC, MJH Partners, L.P., Leon D. Black, Marc J. Rowan and Joshua J. Harris, and, solely in connection with Article VII of the Agreement, APO Corp., APO Asset Co., LLC, APO (FC), LLC, Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX, L.P. and Apollo Management Holdings, L.P. and as supplemented by the Joinder dated as of May 5, 2016, by and among Apollo Principal Holdings X, L.P., AMH Holdings (Cayman), L.P., Apollo Principal Holdings XI, LLC, APO (FC II), LLC and APO UK (FC), Limited.

10.27		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.28		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Plan Grants) (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.29		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Bonus Grants) (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.30		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for new independent directors) (incorporated by reference to Exhibit 10.31 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.31		Form of Restricted Share Unit Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for continuing independent directors) (incorporated by reference to Exhibit 10.32 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.32		Form of Restricted Share Award Grant Notice and Restricted Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.33 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

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Exhibit Number		Exhibit Description

+10.33		Form of Share Award Grant Notice and Share Award Agreement under the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan (for Retired Partners) (incorporated by reference to Exhibit 10.34 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.34		Apollo Management Companies AAA Unit Plan (incorporated by reference to Exhibit 10.34 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

+10.35		Non-Qualified Share Option Agreement pursuant to the Apollo Global Management, LLC 2007 Omnibus Equity Incentive Plan with Marc Spilker dated December 2, 2010 (incorporated by reference to Exhibit 10.40 to the Registrant’s Registration Statement on Form S-1 (File No. 333-150141)).

10.36		Amended Form of Independent Director Engagement Letter (incorporated by reference to Exhibit 10.38 to the Registrant’s Form 10-Q for the period ended March 31, 2014 (File No. 001-35107)).

+10.37		Employment Agreement with Martin Kelly, dated July 2, 2012 (incorporated by reference to Exhibit 10.42 to the Registrant’s Form 10-Q for the period ended June 30, 2012 (File No. 001-35107)).

*10.38		Third Amended and Restated Exempted Limited Partnership Agreement of AMH Holdings (Cayman), L.P., dated March 7, 2017.

+10.39		Amended and Restated Limited Partnership Agreement of Apollo Advisors VI, L.P., dated as of April 14, 2005 and amended as of August 26, 2005 (incorporated by reference to Exhibit 10.41 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.40		Third Amended and Restated Limited Partnership Agreement of Apollo Advisors VII, L.P. dated as of July 1, 2008 and effective as of August 30, 2007 (incorporated by reference to Exhibit 10.42 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.41		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors I, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.42		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity Advisors II, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.44 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.43		Third Amended and Restated Limited Partnership Agreement of Apollo Credit Liquidity Advisors, L.P., dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.45 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.44		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)).

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Exhibit Number		Exhibit Description

+10.45		Second Amended and Restated Limited Partnership Agreement Apollo Credit Opportunity CM Executive Carry I, L.P. dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.47 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.46		Second Amended and Restated Limited Partnership Agreement of Apollo Credit Opportunity CM Executive Carry II, L.P. dated January 12, 2011 and made effective as of July 14, 2009 (incorporated by reference to Exhibit 10.48 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

+10.47		Second Amended and Restated Exempted Limited Partnership Agreement of AGM Incentive Pool, L.P., dated June 29, 2012 (incorporated by reference to Exhibit 10.49 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

10.48		Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the other guarantors party thereto from time to time, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.50 to the Registrant’s Form 10-K for the period ended December 31, 2013 (File No. 001-35107)).

10.49		Guarantor Joinder Agreement, dated as of January 30, 2015, by Apollo Principal Holdings X, L.P. to the Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.49 to the Registrant’s Form 10-Q for the period ended March 31, 2015 (File No. 001-35107)).

10.50		Guarantor Joinder Agreement, dated as of February 1, 2016, by Apollo Principal Holdings XI, LLC to the Credit Agreement, dated as of December 18, 2013, by and among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers party thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.48 to the Registrant’s Form 10-Q for the period ended March 31, 2016 (File No. 001-35107)).

10.51		Amendment No. 1, dated as of March 11, 2016, to the Credit Agreement, dated as of December 18, 2013, among Apollo Management Holdings, L.P., Apollo Management, L.P., Apollo Capital Management, L.P., Apollo International Management, L.P., AAA Holdings, L.P., Apollo Principal Holdings I, L.P., Apollo Principal Holdings II, L.P., Apollo Principal Holdings III, L.P., Apollo Principal Holdings IV, L.P., Apollo Principal Holdings V, L.P., Apollo Principal Holdings VI, L.P., Apollo Principal Holdings VII, L.P., Apollo Principal Holdings VIII, L.P., Apollo Principal Holdings IX L.P., Apollo Principal Holdings X, L.P., Apollo Principal Holdings XI, LLC, ST Holdings GP, LLC and ST Management Holdings, LLC, the guarantors party thereto, the lenders party thereto, the issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 15, 2016 (File No. 001-35107)).

*10.52		Guarantor Joinder Agreement, dated as of April 13, 2017, by Apollo Principal Holdings XII, L.P. to the Credit Agreement, dated as of December 18, 2013, as supplemented and as amended by Amendment No. 1 to the Credit Agreement dated as of March 11, 2016, among Apollo Management Holdings, L.P., as the Term Facility Borrower and a Revolving Facility Borrower, the other Revolving Facility Borrowers thereto, the existing guarantors party thereto, the lenders party thereto from time to time, the issuing banks party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent.

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Exhibit Number		Exhibit Description

+10.53		Form of Letter Agreement under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014 (incorporated by reference to Exhibit 10.56 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.54		Form of Award Letter under the Amended and Restated Limited Partnership Agreement of Apollo Advisors VIII, L.P. effective as of January 1, 2014 (incorporated by reference to Exhibit 10.57 to the Registrant’s Form 10-Q for the period ended June 30, 2014 (File No. 001-35107)).

+10.55		Amended and Restated Limited Partnership Agreement of Apollo EPF Advisors, L.P., dated as of February 3, 2011 (incorporated by reference to Exhibit 10.52 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+10.56		First Amended and Restated Exempted Limited Partnership Agreement of Apollo EPF Advisors II, L.P. dated as of April 9, 2012 (incorporated by reference to Exhibit 10.53 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+10.57		Amended and Restated Agreement of Exempted Limited Partnership of Apollo CIP Partner Pool, L.P., dated as of December 18, 2014 (incorporated by reference to Exhibit 10.54 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+10.58		Form of Award Letter under the Amended and Restated Agreement of Exempted Limited Partnership Agreement of Apollo CIP Partner Pool, L.P. (incorporated by reference to Exhibit 10.55 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+10.59		Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III (APO FC), L.P., dated as of December 18, 2014 (incorporated by reference to Exhibit 10.56 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

+10.60		Form of Award Letter under Second Amended and Restated Agreement of Limited Partnership of Apollo Credit Opportunity Advisors III (APO FC), L.P. (incorporated by reference to Exhibit 10.57 to the Registrant’s Form 10-K for the period ended December 31, 2014 (File No. 001-35107)).

*+10.61		Amended and Restated Agreement of Limited Partnership of Apollo Global Carry Pool Aggregator, L.P., dated May 4, 2017 and effective as of July 1, 2016.

*+10.62		Form of Award Agreement for Apollo Global Carry Pool Aggregator, L.P.

*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

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Exhibit Number		Exhibit Description


*101.SCH		XBRL Taxonomy Extension Scheme Document

*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB		XBRL Taxonomy Extension Label Linkbase Document

*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



*	Filed herewith.



+	Management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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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: May 5, 2017	By:	/s/ Martin Kelly
		Name:	Martin Kelly
		Title:	Chief Financial Officer (principal financial officer and authorized signatory)

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Exhibit 4.8

EXECUTION VERSION

This Fifth Supplemental Indenture, dated as of April 13, 2017 (the “ Fifth Supplemental Indenture ”), among Apollo Management Holdings, L.P., a limited partnership duly organized and existing under the laws of the State of Delaware (the “ Company ”), the Guarantors party hereto, Apollo Principal Holdings XII, L.P., an exempted limited partnership duly formed and existing under the laws of the Cayman Islands (the “ New Guarantor ”), and Wells Fargo Bank, National Association, a national banking association, as Trustee under the Indenture (as hereinafter defined) and hereunder (the “ Trustee ”), supplements that certain Indenture, dated as of May 30, 2014, among the Company, the Guarantors named therein and the Trustee (the “ Base Indenture ”), as supplemented by the first supplemental indenture, dated as of May 30, 2014, (the “ First Supplemental Indenture ”), as further supplemented by the second supplemental indenture, dated as of January 30, 2015, (the “ Second Supplemental Indenture ”), as further supplemented by the third supplemental indenture, dated as of February 1, 2016, and as further supplemented by the fourth supplemental indenture, dated as of May 27, 2016, (as so supplemented, the “ Indenture ”). Capitalized terms used herein without definitions shall have the meaning assigned to them in the Indenture.

RECITALS OF THE COMPANY

The Company and the Guarantors party thereto have heretofore executed and delivered to the Trustee the Base Indenture providing for the issuance from time to time of one or more series of the Company’s senior unsecured debt securities.

The Company and the Guarantors party thereto have heretofore executed and delivered to the Trustee (a) the First Supplemental Indenture providing for the issuance and the terms of a series of Securities designated as the Company’s “4.000% Senior Notes due 2024” and (b) the Fourth Supplemental Indenture providing for the issuance and the terms of a series of Securities designated as the Company’s “4.400% Senior Notes due 2026”.

The Company and the Guarantors party thereto have heretofore executed and delivered to the Trustee the Second Supplemental Indenture and the Third Supplemental Indenture pursuant to which APO X and APO XI, respectively, (i) agreed to become a party to the Indenture as a Guarantor and (ii) to fully and unconditionally Guarantee to each Holder of the Notes and the Trustee the obligations of the Company pursuant to and as set forth in Article XIV of the Base Indenture.

Section 1402 of the Indenture provides that the Company and each Guarantor shall cause each New Apollo Operating Group Entity (other than a Non-Guarantor Entity) to become a Guarantor pursuant to the Indenture and provide a Guarantee in respect of the Notes.

The New Guarantor is a New Apollo Operating Group Entity and is not a Non-Guarantor Entity under the terms and conditions set forth under the Indenture.

Pursuant to Section 901 of the Indenture, the Company, the Guarantors and the Trustee may, without the consent of any Holders, enter into this Fifth Supplemental Indenture for the purpose of adding the New Guarantor as a Guarantor under the Indenture.

Pursuant to Sections 901 and 1413 of the Indenture, the Trustee is authorized to execute and deliver this Fifth Supplemental Indenture.

This Fifth Supplemental shall not result in a material modification of the Notes for purposes of the Foreign Account Tax Compliance Act.

Section 1.1 Agreement to be Bound . The New Guarantor hereby agrees to become a party to the Indenture as a Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture.

Section 1.2 Guarantee . The New Guarantor agrees, on a joint and several basis, with the existing Guarantors, to fully and unconditionally Guarantee to each Holder of the Notes and the Trustee the obligations of the Company pursuant to and as set forth in Article XIV of the Base Indenture.

Section 1.3 Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 105 of the Base Indenture.

Section 1.4 Execution as Supplemental Indenture . This Fifth Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Base Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture, and, as provided in the Base Indenture, forms part thereof.

Section 1.5 Not Responsible for Recitals . The recitals contained herein shall be taken as the statements of the Company, the Guarantors party hereto and the New Guarantor, as the case may be, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Fifth Supplemental Indenture or of the Guarantees.

Section 1.6 Separability Clause . In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 1.7 Successors and Assigns . All covenants and agreements in this Fifth Supplemental Indenture by the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not. All agreements of the Trustee in this Fifth Supplemental Indenture shall bind its successors and assigns, whether so expressed or not.

Section 1.8 Execution and Counterparts . This Fifth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. This exchange of copies of this Fifth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fifth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fifth Supplemental Indenture and signature pages for all purposes.

Section 1.9 Governing Law . This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of law.

[Signature page to follow.]

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed all as of the day and year first above written.

Apollo Management Holdings, L.P., as Issuer


By:	Apollo Management Holdings GP, LLC, its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings I, L.P., as Guarantor


By:	Apollo Principal Holdings I GP, LLC, its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings II, L.P., as Guarantor


By:	Apollo Principal Holdings II GP, LLC, its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings III, L.P., as Guarantor


By:	Apollo Principal Holdings III GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings IV, L.P., as Guarantor


By:	Apollo Principal Holdings IV GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings V, L.P., as Guarantor


By:	Apollo Principal Holdings V GP, LLC, its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings VI, L.P., as Guarantor


By:	Apollo Principal Holdings VI GP, LLC, its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings VII, L.P., as Guarantor


By:	Apollo Principal Holdings VII GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings VIII, L.P., as Guarantor


By:	Apollo Principal Holdings VIII GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings IX, L.P., as Guarantor


By:	Apollo Principal Holdings IX GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings X, L.P., as Guarantor


By:	Apollo Principal Holdings X GP, Ltd., its general partner


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

AMH Holdings (Cayman), L.P., as Guarantor


By:	AMH Holdings GP, Ltd., its general partner


By:	Apollo Management Holdings GP, LLC, its sole director


By:	/s/ Jessica L. Lomm Name: Jessica L. Lomm Title: Vice President

Apollo Principal Holdings XI, LLC, as Guarantor


By:	/s/ Dominic Fry Name: Dominic Fry Title: Manager

Apollo Principal Holdings XII, L.P., as Guarantor


By:	Apollo Principal Holdings XII GP, LLC., its general partner


By:	/s/ John J. Suydam Name: John J. Suydam Title: Authorized Signatory

Wells Fargo Bank, National Association,
as Trustee


By:	/s/ Raymond Delli Colli Name: Raymond Delli Colli Title: Vice President

- 1 –

Exhibit 10.2

EXECUTION VERSION

FOURTH AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

APOLLO PRINCIPAL HOLDINGS I, L.P.

Dated as of March 7, 2017

THE PARTNERSHIP UNITS OF APOLLO PRINCIPAL HOLDINGS I, L.P. HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

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TABLE OF CONTENTS

Page



Article I DEFINITIONS	2
Section 1.01. Definitions	2
Article II FORMATION, TERM, PURPOSE AND POWERS	11
Section 2.01. Formation	11
Section 2.02. Name	11
Section 2.03. Term	11
Section 2.04. Offices	11
Section 2.05. Agent for Service of Process	12
Section 2.06. Business Purpose	12
Section 2.07. Powers of the Partnership	12
Section 2.08. Partners; Admission of New Partners	12
Section 2.09. Withdrawal	12
Article III MANAGEMENT	12
Section 3.01. General Partner	12
Section 3.02. Compensation	13
Section 3.03. Expenses	13
Section 3.04. Authority of Partners	13
Section 3.05. Action by Written Consent or Ratification	14
Article IV DISTRIBUTIONS	14
Section 4.01. Distributions	14
Section 4.02. Liquidation Distribution	15
Section 4.03. Limitations on Distribution	15
Section 4.04. Distributions on Series A Preferred Mirror Units	15
Article V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS	15
Section 5.01. Initial Capital Contributions	15
Section 5.02. No Additional Capital Contributions	15
Section 5.03. Capital Accounts	16
Section 5.04. Allocations of Profits and Losses	16
Section 5.05. Special Allocations	16
Section 5.06. Tax Allocations	18
Section 5.07. Tax Advances	18
Section 5.08. Tax Matters	18
Section 5.09. Other Allocation Provisions	19
Article VI BOOKS AND RECORDS; REPORTS	19
Section 6.01. Books and Records	19
Article VII PARTNERSHIP UNITS	20
Section 7.01. Units	20
Section 7.02. Register	20

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Section 7.03. Registered Partners	20
Article VIII FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS	21
Section 8.01. Limited Partner Transfers	21
Section 8.02. Encumbrances	21
Section 8.03. Further Restrictions	21
Section 8.04. Rights of Assignees	22
Section 8.05. Admissions, Withdrawals and Removals	22
Section 8.06. Admission of Assignees as Substitute Limited Partners	23
Section 8.07. Withdrawal and Removal of Limited Partners	23
Article IX DISSOLUTION, LIQUIDATION AND TERMINATION	23
Section 9.01. No Dissolution	23
Section 9.02. Events Causing Dissolution	23
Section 9.03. Distribution upon Dissolution	24
Section 9.04. Time for Liquidation	25
Section 9.05. Termination	25
Section 9.06. Claims of the Partners	25
Section 9.07. Survival of Certain Provisions	25
Article X LIABILITY AND INDEMNIFICATION	25
Section 10.01. Liability of Partners	25
Section 10.02. Indemnification	26
Article XI TERMS, RIGHTS, POWERS, PREFERENCES AND DUTIES OF SERIES A PREFERRED MIRROR UNITS	28
Section 11.01. Designation	28
Section 11.02. Distributions	28
Section 11.03. Rank	29
Section 11.04. Redemption	30
Section 11.05. Series A Distribution Rate	31
Section 11.06. Allocations	31
Section 11.07. Voting	31
Section 11.08. Liquidation Rights	31
Section 11.09. No Duties to Series A Holders	32
Section 11.10. Coordination Among Apollo Operating Group	33
Section 11.11. Amendments and Waivers	33
Section 11.12. Expenses	33
Article XII MISCELLANEOUS	33
Section 12.01. Severability	33
Section 12.02. Notices	33
Section 12.03. Cumulative Remedies	34
Section 12.04. Binding Effect	34
Section 12.05. Interpretation	34
Section 12.06. Counterparts	34
Section 12.07. Further Assurances	34
Section 12.08. Entire Agreement	35

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Section 12.09. Governing Law	35
Section 12.10. Expenses	35
Section 12.11. Amendments and Waivers	35
Section 12.12. No Third Party Beneficiaries	36
Section 12.13. Headings	36
Section 12.14. Construction	36
Section 12.15. Power of Attorney	37
Section 12.16. Letter Agreements; Schedules	37
Section 12.17. Partnership Status	37

iii

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FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
APOLLO PRINCIPAL HOLDINGS I, L.P.

This FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Apollo Principal Holdings I, L.P. (the “ Partnership ”) is made as of March 7, 2017, by and among Apollo Principal Holdings I GP, LLC, a limited liability company formed under the laws of the State of Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.

WHEREAS, the Partnership was formed as a limited partnership pursuant to the Act on the execution of the Limited Partnership Agreement of the Partnership on April 5, 2007 (the “ Original Agreement ”) by the General Partner and Laurie Medley (the “ Initial Limited Partner ”) and the filing of a Certificate of Limited Partnership (the “ Certificate ”) with the Office of the Secretary of State of the State of Delaware on April 5, 2007;

WHEREAS, on July 13, 2007, the Original Agreement was amended and restated (the “ First Amended Agreement ”) to permit the admission of additional limited partners (the “ Original Limited Partners ”) to the Partnership and the withdrawal of the Initial Limited Partner;

WHEREAS, on July 13, 2007, pursuant to the transactions effected by a Contribution, Purchase and Sale Agreement and the Roll-up Agreements, the Original Limited Partners transferred their limited partner interests to the current Limited Partners and the current Limited Partners were admitted to the Partnership (the “ Restructuring ”);

WHEREAS, as of October 13, 2008, the First Amended Agreement was amended and restated (the “ Second Amended Agreement ”) to reflect the withdrawal of the Original Limited Partners and the admission of the current Limited Partners pursuant to the Restructuring;

WHEREAS, as of April 14, 2010, the Second Amended Agreement was further amended and restated (the “ Third Amended Agreement ”);

WHEREAS, Section 7.01 of the Third Amended Agreement provides that the General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other classes, and one or more series of any such class, of units into which the interests of the Partnership may be classified or divided, with such designations, preferences, rights, powers and duties (which may be senior to then-existing classes of interests in the Partnership) as shall be determined by the General Partner;

WHEREAS, Section 11.11 of the Third Amended Agreement provides that the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect, among other things, any amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of equity interest in the Partnership; and

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WHEREAS, pursuant to the aforementioned sections of the Third Amended Agreement, the General Partner desires to establish a new class of interest in the Partnership to be named Series A Preferred Mirror Units, with such designations, preferences, rights, powers and duties as are set forth herein, and, in connection therewith, desires to further amend and restate the Third Amended Agreement as set forth herein (as so further amended and restated, this “ Agreement ”).

NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree as follows:

Article I

DEFINITIONS

Section 1.01. Definitions . Capitalized terms used herein without definition have the following meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):

“ Act ” means, the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as it may be amended from time to time.

“ Additional Credit Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ Adjusted Capital Account Balance ” means, with respect to each Partner, the balance in such Partner’s Capital Account adjusted (i) by taking into account the adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(c)(4), (5) and (6); and (ii) by adding to such balance such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5), and any amounts such Partner is obligated to restore pursuant to any provision of this Agreement or by applicable Law. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“ Affiliate ” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

“ Agreement ” has the meaning set forth in the recitals.

“ Amended Tax Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ AOG Mirror Interests ” means, collectively, the series of preferred interests of each member of the Apollo Operating Group (other than the Partnership) with economic terms that are materially the same as those of the Series A Preferred Mirror Units.

“ AP Professional ” means AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership.

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“ APO Corp. ” means APO Corp., a Delaware corporation.

“ APO LLC ” means APO Asset Co., LLC, a Delaware limited liability company.

“ Apollo Operating Group ” means each of the Partnership, Apollo Principal Holdings II, L.P., a Delaware limited partnership, Apollo Principal Holdings III, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IV, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings V, L.P., a Delaware limited partnership, Apollo Principal Holdings VI, L.P., a Delaware limited partnership, Apollo Principal Holdings VII, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings VIII, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IX, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings X, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings XI, LLC, an Anguilla limited liability company, Apollo Principal Holdings XII, L.P., a Cayman Islands exempted limited partnership, Apollo Management Holdings, L.P., a Delaware limited partnership, AMH Holdings (Cayman), L.P., a Cayman Islands exempted limited partnership, and any successors thereto or other entities formed to serve as holding vehicles for the Issuer’s carry vehicles, management companies or other entities formed to engage in the asset management business (including alternative asset management), as set forth on Annex A , as amended from time to time.

“ Assignee ” has the meaning set forth in Section 8.04 .

“ Assumed Tax Rate ” means the highest effective marginal combined United States federal, state and local income tax rate for a Fiscal Year prescribed for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g., long-term or short-term capital gain or ordinary or exempt income) of the applicable income, but not taking into account the deductibility of state and local income taxes for United States federal income tax purposes). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Partners.

“ Authorized Person ” has the meaning set forth in Section 3.01(b) .

“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

“ Capital Account ” means the separate capital account maintained for each Partner in accordance with Section 5.03 .

“ Capital Contribution ” means, with respect to any Partner, the aggregate amount of money contributed to the Partnership and the Carrying Value of any property (other than money), net of any liabilities assumed by the Partnership upon contribution or to which such property is subject, contributed to the Partnership pursuant to Article V .

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determined by the General Partner, and the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of (a) the date of the acquisition of any additional Partnership interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership interest is relinquished to the Partnership; (d) any other date specified in the Treasury Regulations or (e) any other date specified by the General Partner; provided , however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for United States federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.

“ Certificate ” has the meaning set forth in the recitals.

“ Change of Control Event ” has the meaning set forth in the Issuer LLC Agreement.

“ Class ” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time pursuant to the provisions of this Agreement.

“ Class A Shares ” means the Class A Common Shares of the Issuer representing Class A limited liability company interests of the Issuer.

“ Class A Units ” means the Units of partnership interest in the Partnership designated as the “Class A Units” herein and having the rights pertaining thereto as are set forth in this Agreement.

“ Code ” means the United States Internal Revenue Code of 1986, as amended from time to time.

“ Common Units ” means the Class A Units.

“ Contingencies ” has the meaning set forth in Section 9.03(a) .

“ Contribution, Purchase and Sale Agreement ” means the Contribution, Purchase and Sale Agreement, dated as of July 13, 2007, by and among the Partnership, Apollo Principal Holdings II, L.P., a Delaware limited partnership, Apollo Principal Holdings III, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IV, L.P., a Cayman Islands exempted limited partnership, and Apollo Management Holdings, L.P., a Delaware limited partnership, and certain other signatories party thereto.

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and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

“ Covered Person ” and “ Covered Persons ” have the meanings set forth in Section 10.02(a) .

“ Credit Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ Creditable Foreign Tax ” means a non-United States tax paid or accrued for United States federal income tax purposes by the Partnership, in either case to the extent that such tax is eligible for credit under Section 901(a) of the Code. A non-United States tax is a Creditable Foreign Tax for these purposes without regard to whether a partner receiving an allocation of such non-United States tax elects to claim a credit for such amount. This definition is intended to be consistent with the definition of “Creditable Foreign Tax” in Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

“ Disabling Event ” means the General Partner ceasing to be the general partner of the Partnership pursuant to Section 17-402 of the Act.

“ Dissolution Event ” has the meaning set forth in Section 9.02 .

“ Dissolution Exception ” has the meaning set forth in Section 11.08(e) .

“ Distributable Cash ” means cash received by the Partnership from dividends and distributions or other income, other than cash reserves to account for reasonably anticipated expenses and other liabilities, including, without limitation, tax liabilities, as the General Partner may determine to be appropriate.

“ Distribution Payment Date ” means March 15, June 15, September 15 and December 15 of each year, commencing June 15, 2017.

“ Distribution Period ” means the period from and including a Distribution Payment Date to, but excluding, the next Distribution Payment Date, except that the initial Distribution Period commences on and includes March 7, 2017.

“ Encumbrance ” means any mortgage, claim, lien, encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever.

“ ERISA ” means the United States Employee Retirement Income Security Act of 1974, as amended.

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

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“ Exchange Agreement ” means the Fourth Amended and Restated Exchange Agreement dated as of May 5, 2016 among the Issuer, the Apollo Operating Group, and the limited partners of the Apollo Operating Group entities from time to time, as amended from time to time.

“ Exchange Transaction ” means an exchange of Class A Units for Class A Shares pursuant to, and in accordance with, the Exchange Agreement or, if the Issuer and the exchanging Limited Partner shall mutually agree, a Transfer of Class A Units to the Issuer, the Partnership or any of their Subsidiaries for other consideration.

“ Final Adjudication ” has the meaning set forth in Section 10.02(a) .

“ Final Tax Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ First Amended Agreement ” has the meaning set forth in the recitals.

“ Fiscal Year ” means (i) the period commencing upon the formation of the Partnership and ending on December 31, 2007 or (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31.

“ Fund ” means any pooled investment vehicle or similar entity sponsored or managed, directly or indirectly, by the Issuer or any of its Subsidiaries.

“ General Partner ” means Apollo Principal Holdings I GP, LLC, a limited liability company formed under the laws of the State of Delaware or any successor general partner admitted to the Partnership in accordance with the terms of this Agreement, each in its capacity as general partner of the Partnership.

“ Gross Ordinary Income ” has the meaning set forth in Section 11.06 .

“ Incapacity ” means, with respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.

“ Initial Limited Partner ” has the meaning set forth in the recitals.

“ Issuer ” means Apollo Global Management, LLC, a limited liability company formed under the laws of the State of Delaware, or any successor thereto.

“ Issuer LLC Agreement ” means the Second Amended and Restated Limited Liability Company Agreement of the Issuer dated as of the date hereof.

“ Junior Units ” means Common Units and any other equity securities that the Partnership may issue in the future ranking, as to the payment of distributions, junior to the Series A Preferred Mirror Units.

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provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Partnership or any Partner, as the case may be.

“ Limited Partner ” means each of the Persons from time to time listed as a limited partner in the books and records of the Partnership, each in their capacity as a limited partner of the Partnership.

“ Liquidation Agent ” has the meaning set forth in Section 9.03 .

“ Liquidation Preference ” means, in respect of any Preferred Units, the “Liquidation Preference” per Preferred Unit specified for such Preferred Units.

“ Net Taxable Income ” has the meaning set forth in Section 4.01(b)(i) .

“ Nonrecourse Deductions ” has the meaning set forth in Treasury Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions of the Partnership for a Fiscal Year equals the net increase, if any, in the amount of Partnership Minimum Gain of the Partnership during that Fiscal Year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).

“ Offering Expenses ” has the meaning set forth in Section 11.12 .

“ Original Agreement ” has the meaning set forth in the recitals.

“ Original Limited Partners ” has the meaning set forth in the recitals.

“ Parity Units ” means any Partnership securities, including Preferred Units, that the Partnership has authorized or issued or may authorize or issue, the terms of which provide that such securities shall rank equally with the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event.

“ Partner Nonrecourse Debt Minimum Gain ” means an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

“ Partner Nonrecourse Deductions ” has the meaning ascribed to the term “partner nonrecourse deductions” set forth in Treasury Regulations Section 1.704-2(i)(2).

“ Partners ” means, at any time, each person listed as a partner (including the General Partner) on the books and records of the Partnership, in each case for so long as he, she or it remains a partner of the Partnership as provided hereunder.

“ Partnership ” has the meaning set forth in the recitals.

“ Partnership Minimum Gain ” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

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“ Partnership Representative ” means the “partnership representative” as defined in Section 6223 of the Code after amendment by P.L. 114-74.

“ Percentage Interest ” means, with respect to any Partner and subject to Section 11.01 , the quotient obtained by dividing the number of Units then owned by such Partner by the number of Units then owned by all Partners.

“ Permitted Jurisdiction ” means the United States or any state thereof, Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Gibraltar, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, the United Kingdom or British Crown Dependencies, any other member country of the Organization for Economic Co-operation and Development, or any political subdivision of any of the foregoing.

“ Permitted Reorganization ” means the (i) voluntary or involuntary liquidation, dissolution or winding up of any of the Partnership’s Subsidiaries or upon any reorganization of the Partnership into another limited partnership pursuant to provisions of this Agreement that allow the Partnership to convert, merge or convey its assets to another entity with or without General Partner approval or (ii) reorganization or other transaction in which a successor to the Partnership issues equity securities to the Series A Holders that have rights, powers and preferences that are substantially similar to the rights, powers and preferences of the Series A Preferred Mirror Units pursuant to provisions of this Agreement that allow the Partnership to do so without General Partner approval.

“ Permitted Transfer ” means the sale, conveyance, exchange or transfer, for cash, shares of capital stock, securities or other consideration, of all or substantially all of the Partnership’s property or assets or the consolidation, merger or amalgamation of the Partnership with or into any other entity or the consolidation, merger or amalgamation of any other entity with or into the Partnership.

“ Person ” means any individual, corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.

“ Portfolio Company ” means any Person in which any Fund owns or has made, directly or indirectly, an investment.

“ Preferred Units ” means (i) the Series A Preferred Mirror Units and (ii) any other Class of Units that entitles the Record Holders thereof to a preference or priority over the Record Holders of any other Class of Units in the right to share profits or losses or items thereof, the right to share in Partnership distributions or rights upon dissolution or liquidation of the Partnership.

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Value of any asset differs from its adjusted tax basis for United States federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for United States federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the United States federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis; provided that if the United States federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be treated as deductible items.

“ Record Date ” means a date established by the General Partner in its sole discretion for determining the identity of Record Holders entitled to receive a distribution.

“ Record Holder ” or “ holder ” means, with respect to any Units, the Person in whose name such Units are registered on the books of the Partnership as of the opening of business on a particular Business Day.

“ Restructuring ” has the meaning set forth in the recitals.

“ Roll-up Agreements ” mean collectively, each Roll-up Agreement, by and among BRH Holdings, L.P., a Cayman Islands exempted limited partnership, AP Professional, the Issuer, APO LLC, APO Corp., and an employee of the Issuer or one of its Subsidiaries, dated as of July 13, 2007, each as amended, restated, supplemented or otherwise modified from time to time.

“ SEC ” means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.

“ Second Amended Agreement ” has the meaning set forth in the recitals.

“ Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Series A Distribution Rate ” means 6.375%.

“ Series A Holder ” means a holder of Series A Preferred Mirror Units.

“ Series A Liquidation Preference ” means $25.00 per Series A Preferred Mirror Unit. The Series A Liquidation Preference shall be the “Liquidation Preference” with respect to the Series A Preferred Mirror Units.

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“ Series A Preferred Shares ” means the 6.375% Series A Preferred Shares of the Issuer.

“ Series A Preferred Mirror Unit ” means a 6.375% Series A Preferred Mirror Unit having the designations, preferences, rights, powers and duties set forth in Article XI .

“ Series A Record Date ” means, with respect to any Distribution Payment Date, the March 1, June 1, September 1 or December 1, as the case may be, immediately preceding the relevant March 15, June 15, September 15 or December 15 Distribution Payment Date, respectively. These Series A Record Dates shall apply regardless of whether a particular Series A Record Date is a Business Day. The Series A Record Dates shall constitute Record Dates with respect to the Series A Preferred Mirror Units for the purpose of distributions on the Series A Preferred Mirror Units.

“ Similar Law ” means any law or regulation that could cause the underlying assets of the Partnership to be treated as assets of the Limited Partner by virtue of its limited partner interest in the Partnership and thereby subject the Partnership and the General Partner (or other persons responsible for the investment and operation of the Partnership’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

“ Subsidiary ” means, with respect to any Person, as of any date of determination, any other Person as to which such Person owns, directly or indirectly, or otherwise controls, more than 50% of the voting shares or other similar interests or the sole general partner interest or managing member or similar interest of such Person. The term “Subsidiary” does not include at any time any Funds or Portfolio Companies.

“ Substantially All Merger ” means a merger or consolidation of one or more members of the Apollo Operating Group with or into another Person that would, in one or a series of related transactions, result in the transfer or other disposition, directly or indirectly, of all or substantially all of the combined assets of the Apollo Operating Group taken as a whole to a Person that is not a member of the Apollo Operating Group immediately prior to such transaction.

“ Substantially All Sale ” means a sale, assignment, transfer, lease or conveyance, in one or a series of related transactions, directly or indirectly, of all or substantially all of the assets of the Apollo Operating Group taken as a whole to a Person that is not a member of the Apollo Operating Group immediately prior to such transaction.

“ Tax Advances ” has the meaning set forth in Section 5.07 .

“ Tax Amount ” has the meaning set forth in Section 4.01(b)(i) .

“ Tax Distributions ” has the meaning set forth in Section 4.01(b)(i) .

“ Tax Matters Partner ” has the meaning set forth in Section 5.08 .

“ Tax Redemption Event ” has the meaning set forth in the Issuer LLC Agreement.

“ Third Amended Agreement ” has the meaning set forth in the recitals.

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“ Transfer ” means, in respect of any Unit, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof, whether voluntarily or by operation of Law, including, without limitation, the exchange of any Unit for any other security.

“ Treasury Regulations ” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“ Units ” means the Class A Units and any other Class of Units authorized in accordance with this Agreement, including the Series A Preferred Mirror Units, which shall constitute interests in the Partnership as provided in this Agreement and under the Act; entitling the holders thereof to the relative rights, title and interests in the profits, losses, deductions and credits of the Partnership at any particular time as set forth in this Agreement, and any and all other benefits to which a holder thereof may be entitled as a Partner as provided in this Agreement, together with the obligations of such Partner to comply with all terms and provisions of this Agreement.

“ 2007 Omnibus Equity Incentive Plan ” means the Issuer’s 2007 Omnibus Equity Incentive Plan, as amended, restated, supplemented or otherwise modified from time to time.

Article II

FORMATION, TERM, PURPOSE AND POWERS

Section 2.01. Formation . The Partnership was formed as a limited partnership under the provisions of the Act by the filing on April 5, 2007 of the Certificate as provided in the recitals. The Partnership is hereby continued pursuant to the Act and this Agreement. If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of a limited partnership under the laws of the State of Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate and (c) all other filings required to be made by the Partnership.

Section 2.02. Name . The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of, Apollo Principal Holdings I, L.P.

Section 2.03. Term . The term of the Partnership commenced on the date of the filing of the Certificate, and the term shall continue until the dissolution of the Partnership in accordance with Article IX . The existence of the Partnership shall continue until cancellation of the Certificate in the manner required by the Act.

Section 2.04. Offices . The Partnership may have offices at such places as the General Partner from time to time may select.

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Section 2.05. Agent for Service of Process . The Partnership’s registered agent for service of process in the State of Delaware shall be as set forth in the Certificate, as the same may be amended by the General Partner from time to time.

Section 2.06. Business Purpose . The Partnership shall have the power to engage in any lawful act or activity for which limited partnerships may be formed under the Act and engage in any and all activities necessary or incidental thereto.

Section 2.07. Powers of the Partnership . Subject to the limitations set forth in this Agreement, the Partnership will possess and may exercise all of the powers and privileges granted to it by the Act including, without limitation, the ownership and operation of the assets contributed to the Partnership by the Partners, by any other Law or this Agreement, together with all powers incidental thereto, so far as such powers are necessary or convenient to the conduct, promotion or attainment of the purpose of the Partnership set forth in Section 2.06 .

Section 2.08. Partners; Admission of New Partners . Each of the Partners of the Partnership hereby continues as Partners of the Partnership. The rights, duties and liabilities of the Partners shall be as provided in the Act, except as is otherwise expressly provided herein, and the Partners consent to the variation of such rights, duties and liabilities as provided herein. A Person may be admitted from time to time as a new Partner in accordance with Section 8.05 and Section 8.06 ; provided, however, that each new Partner shall execute and deliver to the General Partner an appropriate supplement or counterpart to this Agreement pursuant to which the new Partner agrees to be bound by the terms and conditions of the Agreement, as it may be amended from time to time.

Section 2.09. Withdrawal . No Partner shall have the right to withdraw as a Partner of the Partnership other than following the Transfer of all Units owned by such Partner in accordance with Article VIII ; provided, however, that a new General Partner or substitute General Partner may be admitted to the Partnership in accordance with Section 8.05 .

Article III

MANAGEMENT

Section 3.01. General Partner .

(a) The business, property and affairs of the Partnership shall be managed under the sole, absolute and exclusive direction of the General Partner, which may from time to time delegate authority to officers or to others to act on behalf of the Partnership.

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therewith, execute any form of required resolution necessary to open any such bank accounts; (ii) to prepare, execute and file with the appropriate authorities such federal, state or local applications, forms and papers on behalf of the Partnership as may be required by law or deemed by the General Partner or any Authorized Person, or any of them, to be necessary, appropriate or otherwise in the best interests of the Partnership, as applicable; and (iii) pay on behalf of the Partnership any and all fees and expenses incident to and necessary to perfect the organization of the Partnership. Notwithstanding any other provision of this Agreement, the Partnership, acting by the General Partner and/or any Authorized Person on its behalf, is hereby authorized to enter into, and to perform its obligations under, the aforementioned agreements, deeds, receipts, certificates, filings and other documents, without any consent of any Limited Partner, but such authorization shall not be deemed a restriction on the power of the Partnership or the General Partner and/or any Authorized Person acting on behalf of the Partnership to enter into, and to perform its obligations under, other agreements on behalf of the Partnership. The Partners agree that the General Partner and/or any Authorized Person may execute the aforementioned agreements, deeds, receipts, certificates, filings and other documents on behalf of the Partnership under any title, including without limitation “Authorized Person,” that the General Partner or any Authorized Person, or any of them, deems appropriate and that any prior acts of the Partnership and the General Partner and/or any Authorized Person acting on behalf of the Partnership, consistent with the foregoing authorizations, are hereby ratified and confirmed.

Section 3.02. Compensation . The General Partner shall not be entitled to any compensation for services rendered to the Partnership in its capacity as General Partner.

Section 3.03. Expenses . The Partnership shall bear and/or reimburse (i) the General Partner for any expenses incurred by the General Partner in connection with serving as the general partner of the Partnership, and (ii) Issuer and APO LLC, with respect to the Partnership’s allocable share of any expenses solely incurred by or attributable to the Issuer or APO LLC but excluding obligations incurred under the Tax Receivable Agreement, dated as of July 13, 2007 among APO Corp. and the Apollo Operating Group entities party thereto, by the Issuer, income tax expenses of the Issuer or APO LLC and indebtedness incurred by the Issuer or APO LLC.

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responsibility of the Partnership or of any other Partner. Notwithstanding the foregoing, the Partnership may employ one or more Partners from time to time, and such Partners, in their capacity as employees of the Partnership (and not, for clarity, in their capacity as Limited Partners of the Partnership), may take part in the control and management of the business of the Partnership to the extent such authority and power to act for or on behalf of the Partnership has been delegated to them by the General Partner.

Section 3.05. Action by Written Consent or Ratification . Any action required or permitted to be taken by the Partners pursuant to this Agreement shall be taken if all Partners whose consent or ratification is required consent thereto or provide a consent or ratification in writing.

Article IV

DISTRIBUTIONS

Section 4.01. Distributions .

(a) Subject to Section 4.04 and Article XI , all distributions of Distributable Cash shall be made, at the discretion of the General Partner, to the Limited Partners pro rata in accordance with their respective Percentage Interests.

(b) Tax Distributions .

(i) Subject to Section 4.04 and Article XI , in addition to the foregoing, if the General Partner reasonably determines that the taxable income of the Partnership for a Fiscal Year will give rise to taxable income for the Partners (“ Net Taxable Income ”), the General Partner shall cause the Partnership to distribute Distributable Cash in respect of income tax liabilities (the “ Tax Distributions ”) to the extent that other distributions made by the Partnership for such year were otherwise insufficient to cover such tax liabilities, provided that distributions pursuant to Section 4.02 and allocations pursuant to Section 5.04 related to such distributions shall not be taken into account for purposes of this Section 4.01(b) . The Tax Distributions payable with respect to any Fiscal Year shall be computed based upon the General Partner’s estimate of the allocable Net Taxable Income in accordance with Article V , multiplied by the Assumed Tax Rate (the “ Tax Amount ”). For purposes of computing the Tax Amount, the effect of any benefit under Section 743(b) of the Code will be ignored. Any Tax Distributions shall be made to all Partners, whether or not they are subject to such applicable United States federal, state and local taxes, pro rata in accordance with their Percentage Interest.

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the General Partner shall make an amended calculation of the Tax Amount for such Fiscal Year (the “ Amended Tax Amount ”), and shall cause the Partnership to distribute a Tax Distribution, out of Distributable Cash, to the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the Partnership in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by the Partnership in respect of the relevant Fiscal Year, then the difference (the “ Credit Amount ”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Within 30 days following the date on which the Partnership files a tax return on Form 1065, the General Partner shall make a final calculation of the Tax Amount of such Fiscal Year (the “ Final Tax Amount ”) and shall cause the Partnership to distribute a Tax Distribution, out of Distributable Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“ Additional Credit Amount ”) shall be applied against, and shall reduce, the amount of Tax Distributions made for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this Section 4.01(b) for purposes of the computations herein.

(c) 2007 Distributions . The Partners acknowledge that all distributions of Distributable Cash made in 2007 were governed by Article IV of the Second Amended Agreement and the terms of such Article IV of the Second Amended Agreement, which are hereby incorporated by reference, shall govern with respect to all distributions made in 2007.

Section 4.02. Liquidation Distribution . Distributions made upon dissolution of the Partnership shall be made as provided in Section 9.03 .

Section 4.03. Limitations on Distribution . Notwithstanding any provision to the contrary contained in this Agreement, the General Partner shall not make a Partnership distribution to any Partner if such distribution would violate the Act or other applicable Law.

Section 4.04. Distributions on Series A Preferred Mirror Units . No distributions shall be made with respect to the Series A Preferred Mirror Units except as permitted under Article XI . For the avoidance of doubt, and without limitation of the foregoing, no distributions pursuant to Section 4.01 , including Tax Distributions, shall be made with respect to the Series A Preferred Mirror Units.

Article V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;
TAX ALLOCATIONS; TAX MATTERS

Section 5.01. Initial Capital Contributions . The Partners have made, on or prior to the date hereof, Capital Contributions and have acquired the number of Class A Units and/or Series A Preferred Mirror Units as specified in the books and records of the Partnership.

Section 5.02. No Additional Capital Contributions . Except as otherwise provided in this Article V , no Partner shall be required to make additional Capital Contributions to the Partnership

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without the consent of such Partner or permitted to make additional Capital Contributions to the Partnership without the consent of the General Partner.

Section 5.03. Capital Accounts . A separate capital account (a “Capital Account”) shall be established and maintained for each Partner in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall be credited with such Partner’s Capital Contributions, if any, all Profits allocated to such Partner pursuant to Section 5.04 and any items of income or gain which are specially allocated pursuant to Section 5.05 ; and shall be debited with all Losses allocated to such Partner pursuant to Section 5.04 , any items of loss or deduction of the Partnership specially allocated to such Partner pursuant to Section 5.05 , and all cash and the Carrying Value of any property (net of liabilities assumed by such Partner and the liabilities to which such property is subject) distributed by the Partnership to such Partner. Any references in any section of this Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above. In the event of any transfer of any interest in the Partnership in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest. The Capital Account balance of each holder of Series A Preferred Mirror Units with respect to each Series A Preferred Mirror Unit shall equal the Liquidation Preference per Series A Preferred Mirror Unit as of the date such Series A Preferred Mirror Unit is initially issued and shall be increased as set forth in Article XI .

Section 5.04. Allocations of Profits and Losses . Except as otherwise provided in this Agreement (including Section 11.06 ), Profits and Losses (and, to the extent necessary, individual items of income, gain or loss or deduction of the Partnership) shall be allocated in respect of any Common Units held by a Partner in a manner such that the Capital Account of each Partner holding Common Units after giving effect to the special allocations set forth in Section 5.05 is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made pursuant to Article IV if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each non-recourse liability to the Carrying Value of the assets securing such liability) and the net assets of the Partnership were distributed to the Partners pursuant to this Agreement, minus (ii) such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. Notwithstanding the foregoing, the General Partner shall make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.

Section 5.05. Special Allocations . Notwithstanding any other provision in this Article V :

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with Treasury Regulations Section 1.704-2(f). This Section 5.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).

(b) Qualified Income Offset . If any Partner holding Common Units unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit balance in such Partner’s Adjusted Capital Account Balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.05(b) shall be made only to the extent that a Partner would have a deficit Adjusted Capital Account Balance in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if this Section 5.05(b) were not in this Agreement. This Section 5.05(b) is intended to comply with the “qualified income offset” requirement of the Code and shall be interpreted consistently therewith.

(c) Gross Income Allocation . If any Partner holding Common Units has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Partner is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.05(c) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.05(b) and this Section 5.05(c) were not in this Agreement.

(d) Nonrecourse Deductions . Nonrecourse Deductions shall be allocated to the Partners in accordance with their respective Percentage Interests.

(e) Partner Nonrecourse Deductions . Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).

(f) Creditable Foreign Taxes . Creditable Foreign Taxes for any taxable period attributable to the Partnership, or an entity owned directly or indirectly by the Partnership, shall be allocated to the Partners in proportion to the Partners’ distributive shares of income (including income allocated pursuant to Section 704(c) of the Code) to which the Creditable Foreign Tax relates (under principles of Treasury Regulations Section 1.904-6). The provisions of this Section 5.05(f) are intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(4)(viii), and shall be interpreted consistently therewith.

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and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Section 5.05(b) or (c) had not occurred.

Section 5.06. Tax Allocations . For income tax purposes, each item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items, including items of Gross Ordinary Income allocated pursuant to Section 11.06 , are allocated for Capital Account purposes; provided that in the case of any asset the Carrying Value of which differs from its adjusted tax basis for United States federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of Sections 704(b) and (c) of the Code (in any manner determined by the General Partner and permitted by the Code and Treasury Regulations) so as to take account of the difference between Carrying Value and adjusted basis of such asset. Notwithstanding the foregoing, the General Partner shall make such allocations for tax purposes as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.

Section 5.07. Tax Advances . To the extent the General Partner reasonably believes that the Partnership is required by law to withhold or to make tax payments on behalf of or with respect to any Partner or the Partnership is subjected to tax itself by reason of the status of any Partner (“Tax Advances”), the General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. For all purposes of this Agreement such Partner shall be treated as having received the amount of the distribution that is equal to the Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest other than any penalties, additions to tax or interest imposed as a result of the Partnership’s failure to withhold or make a tax payment on behalf of such Partner which withholding or payment is required pursuant to applicable Law but only to the extent amounts sufficient to pay such taxes were not timely distributed to the Partner pursuant to Section 4.01(b) ) with respect to income attributable to or distributions or other payments to such Partner.

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the other Partners reasonably informed as to any tax actions, examinations or proceedings relating to the Partnership and shall submit to the other Partners, for their review and comment, any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Partnership. As soon as reasonably practicable after the end of each Fiscal Year, the Partnership shall send to each Partner a copy of United States Internal Revenue Service Schedule K-1, and any comparable statements required by applicable United States state or local income tax Law as a result of the Partnership’s activities or investments, with respect to such Fiscal Year. The Partnership also shall provide the Partners with such other information as may be reasonably requested for purposes of allowing the Partners to prepare and file their own tax returns. The Partnership shall use any reasonable method or combination of methods in accordance with Section 706(d) of the Code for the purpose of allocating or specifically allocating items of income, gain, loss, deduction and expense of the Partnership for federal income tax purposes to account for the varying interests of the Partners for the Fiscal Year.

Section 5.09. Other Allocation Provisions . Certain of the foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1 (b) and shall be interpreted and applied in a manner consistent with such regulations. Section 5.03 , Section 5.04 and Section 5.05 may be amended at any time by the General Partner if the General Partner believes such amendment is advisable, so long as any such amendment does not materially change the relative economic interests of the Partners. Furthermore, the General Partner shall use its reasonable best efforts to cause its Subsidiaries to make adjustments to Capital Accounts to reflect an adjustment to the carrying value of such Subsidiaries assets consistent with the adjustments to Carrying Values of the Partnerships assets hereunder.

Article VI

BOOKS AND RECORDS; REPORTS

Section 6.01. Books and Records .

(a) At all times during the continuance of the Partnership, the Partnership shall prepare and maintain separate books of account for the Partnership.

(b) Except as limited by Section 6.01(c) , each Limited Partner shall have the right to receive, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partner’s own expense:

(i) a copy of the Certificate and this Agreement and all amendments thereto, together with a copy of the executed copies of all powers of attorney pursuant to which the Certificate and this Agreement and all amendments thereto have been executed; and

(ii) promptly after their becoming available, copies of the Partnership’s federal, state and local income tax returns and reports, if any, for the three most recent years.

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(c) The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole discretion, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner believes is not in the best interests of the Partnership, could damage the Partnership or its business or that the Partnership is required by law or by agreement with any third party to keep confidential.

Article VII

PARTNERSHIP UNITS

Section 7.01. Units . Interests in the Partnership shall be represented by Units. As of the date of this Agreement, the Units are comprised of two Classes: Class A Units and Series A Preferred Mirror Units. The terms, rights, powers, preferences and duties of the Series A Preferred Mirror Units are as set forth in Article XI . The General Partner may establish, from time to time in accordance with such procedures as the General Partner shall determine from time to time, other Classes, one or more series of any such Classes, or other Partnership securities with such designations, preferences, rights, powers and duties (which may be senior to existing Classes and series of Units or other Partnership securities), as shall be determined by the General Partner, including (i) the right to share in Profits and Losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem the Units or other Partnership securities (including sinking fund provisions); (v) whether such Unit or other Partnership security is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Unit or other Partnership security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining the Percentage Interest as to such Units or other Partnership securities; and (viii) the right, if any, of the holder of each such Unit or other Partnership security to vote on Partnership matters, including matters relating to the relative designations, preferences, rights, powers and duties of such Units or other Partnership securities. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include the Class A Units, the Series A Preferred Mirror Units and any other Classes that may be established in accordance with this Agreement. All Units of a particular Class shall have identical rights in all respects as all other Units of such Class, except in each case as otherwise specified in this Agreement.

Section 7.02. Register . The register of the Partnership shall be the definitive record of ownership of each Unit and all relevant information with respect to each Partner. Unless the General Partner shall determine otherwise, Units shall be uncertificated and recorded in the books and records of the Partnership.

Section 7.03. Registered Partners . The Partnership shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act or other applicable Law.

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Article VIII

FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS

Section 8.01. Limited Partner Transfers .

(a) Except as provided in clauses (b) and (c) of this Section 8.01 , no Limited Partner or Assignee thereof may Transfer (including by exchanging in an Exchange Transaction) all or any portion of its Units or other interest in the Partnership (or beneficial interest therein) without the prior consent of the General Partner, which consent may be given or withheld, or made subject to such conditions (including, without limitation, the receipt of such legal opinions and other documents that the General Partner may require) as are determined by the General Partner, in each case in the General Partner’s sole discretion. Any such determination in the General Partner’s discretion in respect of Units shall be final and binding. Such determinations need not be uniform and may be made selectively among Limited Partners, whether or not such Limited Partners are similarly situated, and shall not constitute the breach of any duty hereunder or otherwise existing at law, in equity or otherwise. Any purported Transfer of Units that is not in accordance with, or subsequently violates, this Agreement shall be, to the fullest extent permitted by law, null and void.

(b) Notwithstanding clause (a) above, and subject to Section 8.03 , each Limited Partner may exchange or otherwise Transfer Common Units in an Exchange Transaction pursuant to the terms of the Exchange Agreement. In the case of a Transfer of Common Units in connection with an Exchange Transaction, the Percentage Interests of the Limited Partners shall be appropriately adjusted to provide for, as applicable, a decrease in the number of Common Units owned by the exchanging Limited Partner and an increase in the number of Common Units owned by APO LLC.

(c) Notwithstanding clause (a) above, and subject to Section 8.04 , each Limited Partner that is a party to a Roll-up Agreement may exchange or otherwise Transfer Units pursuant to the terms and provisions thereof.

Section 8.02. Encumbrances . No Limited Partner or Assignee may create an Encumbrance with respect to all or any portion of its Units (or any beneficial interest therein) other than Encumbrances that run in favor of the Limited Partner unless the General Partner consents in writing thereto, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in the General Partner’s sole discretion. Consent of the General Partner shall be withheld until the holder of the Encumbrance acknowledges the terms and conditions of this Agreement. Any purported Encumbrance that is not in accordance with this Agreement shall be, to the fullest extent permitted by law, null and void.

Section 8.03. Further Restrictions . Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Limited Partner or Assignee if:

(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;

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(b) such Transfer would require the registration of such transferred Unit or of any Class of Unit pursuant to any applicable United States federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other non-U.S. securities laws (including Canadian provincial or territorial securities laws) or would constitute a non-exempt distribution pursuant to applicable provincial or state securities laws;

(c) such Transfer would cause (i) all or any portion of the assets of the Partnership to (A) constitute “plan assets” (under ERISA, the Code or any applicable Similar Law) of any existing or contemplated Limited Partner, or (B) be subject to the provisions of ERISA, Section 4975 of the Code or any applicable Similar Law, or (ii) the General Partner to become a fiduciary with respect to any existing or contemplated Limited Partner, pursuant to ERISA, any applicable Similar Law, or otherwise;

(d) to the extent requested by the General Partner, the Partnership does not receive such legal and/or tax opinions and written instruments (including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form satisfactory to the General Partner, as determined in the General Partner’s sole discretion; or

(e) such Transfer would create a substantial risk that the Partnership would be classified or otherwise treated other than as a partnership for United States federal income tax purposes.

Section 8.04. Rights of Assignees . Subject to Section 8.05 and Section 8.06 , the transferee of any permitted Transfer pursuant to this Article VIII will be an assignee only (“Assignee”), and only will receive, to the extent transferred, the distributions and allocations of income, gain, loss, deduction, credit or similar item to which the Partner which transferred its Units would be entitled, and such Assignee will not be entitled or enabled to exercise any other rights or powers of a Partner, such other rights, and all obligations relating to, or in connection with, such interest remaining with the transferring Partner. The transferring Partner will remain a Partner even if it has transferred all of its Units to one or more Assignees until such time as the Assignee(s) is admitted to the Partnership as a Partner pursuant to Section 8.05 or Section 8.06 .

Section 8.05. Admissions, Withdrawals and Removals .

(b) No Limited Partner will be removed or entitled to withdraw from being a Partner of the Partnership except in accordance with Section 8.07 .

(c) Except as otherwise provided in Article IX or the Act, no admission, substitution, withdrawal or removal of a Partner will cause the dissolution of the Partnership. To

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the fullest extent permitted by law, any purported admission, withdrawal or removal that is not in accordance with this Agreement shall be null and void.

Section 8.06. Admission of Assignees as Substitute Limited Partners . An Assignee will become a substitute Limited Partner only if and when each of the following conditions is satisfied:

(a) the General Partner consents in writing to such admission, which consent may be given or withheld, or made subject to such conditions as are determined by the General Partner, in each case in the General Partner’s sole discretion;

(b) if required by the General Partner, the General Partner receives written instruments (including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a substitute Limited Partner) that are in a form satisfactory to the General Partner (as determined in its sole discretion);

(c) if required by the General Partner, the General Partner receives an opinion of counsel satisfactory to the General Partner to the effect that such Transfer is in compliance with this Agreement and all applicable Law; and

(d) if required by the General Partner, the parties to the Transfer, or any one of them, pays all of the Partnership’s reasonable expenses connected with such Transfer (including, but not limited to, the reasonable legal and accounting fees of the Partnership).

Section 8.07. Withdrawal and Removal of Limited Partners . If a Limited Partner ceases to hold any Units, then such Limited Partner shall withdraw from the Partnership and shall cease to be a Limited Partner and to have the power to exercise any rights or powers of a Limited Partner.

Article IX

DISSOLUTION, LIQUIDATION AND TERMINATION

Section 9.01. No Dissolution . Except as required by the Act, the Partnership shall not be dissolved by the admission of additional Partners or withdrawal of Partners in accordance with the terms of this Agreement. The Partnership may be dissolved, liquidated wound up and terminated only pursuant to the provisions of this Article IX , and the Partners hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Partnership or a sale or partition of any or all of the Partnership assets.

Section 9.02. Events Causing Dissolution . The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events (each, a “Dissolution Event”):

(a) the entry of a decree of judicial dissolution of the Partnership under Section 17-802 of the Act upon the finding that it is not reasonably practicable to carry on the business of the Partnership in conformity with this Agreement;

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(b) any event which makes it unlawful for the business of the Partnership to be carried on by the Partners;

(d) any other event not inconsistent with any provision hereof causing a dissolution of the Partnership under the Act;

(e) the Incapacity or removal of the General Partner or the occurrence of a Disabling Event with respect to the General Partner; provided that the Partnership will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.02(e) if: (i) at the time of the occurrence of such event there is at least one other general partner of the Partnership who is hereby authorized to, and elects to, carry on the business of the Partnership; or (ii) APO LLC consents to or ratifies the continuation of the business of the Partnership and the appointment of another general partner of the Partnership, effective as of the event that caused the General Partner to cease to be a general partner of the Partnership, within 120 days following the occurrence of any such event.

Section 9.03. Distribution upon Dissolution . Upon dissolution, the Partnership shall not be terminated and shall continue until the winding up of the affairs of the Partnership is completed. Upon the dissolution of the Partnership, the General Partner, or any other Person designated by the General Partner (the “Liquidation Agent”), shall take full account of the assets and liabilities of the Partnership and shall, unless the General Partner determines otherwise, liquidate the assets of the Partnership as promptly as is consistent with obtaining the fair value thereof. The proceeds of any liquidation shall be applied and distributed in the following order:

(a) First, to the satisfaction of debts and liabilities of the Partnership (including satisfaction of all indebtedness to Partners and/or their Affiliates to the extent otherwise permitted by law) including the expenses of liquidation, and including the establishment of any reserve which the Liquidation Agent shall deem reasonably necessary for any contingent, conditional or unmatured contractual liabilities or obligations of the Partnership (“ Contingencies ”). Any such reserve may be paid over by the Liquidation Agent to any attorney-at-law, or acceptable party, as escrow agent, to be held for disbursement in payment of any Contingencies and, at the expiration of such period as shall be deemed advisable by the Liquidation Agent for distribution of the balance in the manner hereinafter provided in this Section 9.03 ;

(b) Second, to the holders of the Series A Preferred Mirror Units as provided in Article XI ; and

(c) The balance, if any, to the Partners, pro rata to each of the Partners in accordance with their Percentage Interests.

Section 9.04. Time for Liquidation . A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Liquidation Agent to minimize the losses attendant upon such liquidation.

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Section 9.05. Termination . The Partnership shall terminate when all of the assets of the Partnership, after payment of or due provision for all debts, liabilities and obligations of the Partnership, shall have been distributed to the holders of Units in the manner provided for in this Article IX , and the Certificate shall have been cancelled in the manner required by the Act.

Section 9.06. Claims of the Partners . The Partners shall look solely to the Partnership’s assets for the return of their Capital Contributions, and if the assets of the Partnership remaining after payment of or due provision for all debts, liabilities and obligations of the Partnership are insufficient to return such Capital Contributions, the Partners shall have no recourse against the Partnership or any other Partner or any other Person. No Partner with a negative balance in such Partner’s Capital Account shall have any obligation to the Partnership or to the other Partners or to any creditor or other Person to restore such negative balance during the existence of the Partnership, upon dissolution or termination of the Partnership or otherwise, except to the extent required by the Act.

Section 9.07. Survival of Certain Provisions . Notwithstanding anything to the contrary in this Agreement, the provisions of Section 10.02 and Section 12.09 shall survive the termination of the Partnership.

Article X

LIABILITY AND INDEMNIFICATION

Section 10.01. Liability of Partners .

(a) No Limited Partner shall be liable for any debt, obligation or liability of the Partnership or of any other Partner or have any obligation to restore any deficit balance in its Capital Account solely by reason of being a Limited Partner of the Partnership, except to the extent required by the Act.

(b) Except as required by law, this Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Partners (including without limitation, the General Partner) hereto or on their respective Affiliates. Further, the Partners hereby eliminate, to the fullest extent permitted by law, any and all fiduciary duties that, absent such elimination, may exist at or be implied by Law or in equity, and in doing so, recognize, acknowledge and agree that their duties and obligations to one another and to the Partnership are only as expressly set forth in this Agreement and those required by the Act.

(c) To the extent that, at law or in equity, any Partner (including without limitation, the General Partner) has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, the Partners (including without limitation, the General Partner) acting under this Agreement will not be liable to the Partnership or to any such other Partner for their 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 relating thereto of any Partner (including without limitation, the General Partner) otherwise existing at law or in equity to the Partnership or the Partners, are agreed by the Partners to replace or eliminate to that extent such

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other duties and liabilities of the Partners relating thereto (including without limitation, the General Partner).

(d) The General Partner may consult with legal counsel, accountants and financial or other advisors and any act or omission suffered or taken by the General Partner on behalf of the Partnership or in furtherance of the interests of the Partnership in good faith in reliance upon and in accordance with the advice of such counsel, accountants or financial or other advisors will, with respect to the Partnership and the other Partners, be full justification for any such act or omission, and the General Partner will be fully protected from liability to the Partnership and the other Partners in so acting or omitting to act so long as such counsel or accountants or financial or other advisors were selected with reasonable care.

(e) To the fullest extent permitted by law and notwithstanding any other provision of this Agreement or any agreement contemplated herein or otherwise applicable provision of law or equity, whenever in this Agreement the General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or the Limited Partners, or (ii) in its “good faith” or under another expressed standard, such General Partner shall act under such express standard and shall not be subject to any other or different standards.

Section 10.02. Indemnification .

(a) The General Partner, the Tax Matters Partner, the Partnership Representative (including, without limitation, for this purpose each former and present director, officer, consultant, advisor, manager, member, employee and stockholder of the General Partner, the Tax Matters Partner or the Partnership Representative) 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 (each, a “ Covered Person ” and collectively, the “ Covered Persons ”) shall not be liable to the Partnership or, to the extent applicable, to any of the other Partners for any loss, claim, damage or liability occasioned by any acts or omissions in the performance of its 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 the Partnership and that failed to satisfy the duty of care owed pursuant to the Partnership(as modified by this Agreement).

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of serving or having served as a director, officer, consultant, advisor, manager, member, partner, employee or stockholder of any enterprise in which the Partnership or any of its Affiliates has or had a financial interest; 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 its acts or its failure to act (i) were in bad faith or with criminal intent, or (ii) were of a nature that makes indemnification by the relevant Affiliate unavailable. The right to indemnification granted by this Section 10.02 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 it 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 10.02 , 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 10.02 . 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 10.02 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 Section 10.02 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 Section 10.02 . 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 Section 10.02 .

(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 its 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 or eliminate such other duties and liabilities of each such Covered Person.

Article XI

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TERMS, RIGHTS, POWERS, PREFERENCES AND DUTIES OF SERIES A PREFERRED MIRROR UNITS

Section 11.01. Designation . The Series A Preferred Mirror Units are hereby designated and created as a series of Preferred Units. Each Series A Preferred Mirror Unit shall be identical in all respects to every other Series A Preferred Mirror Unit. As of any date of determination, the Percentage Interest as to any Series A Holder in its capacity as such with respect to Series A Preferred Mirror Units shall be 0% as such term applies to all Partners; provided , however, that when such term is used to only apply to Series A Holders, “Percentage Interest” shall mean, with respect to any holder of Series A Preferred Mirror Units in its capacity as such as of any date, the ratio (expressed as a percentage) of the number of Series A Preferred Mirror Units held by such holder on such date relative to the aggregate number of Series A Preferred Mirror Units then outstanding as of such date. The General Partner may cause the Partnership to, from time to time, without notice to or consent of the Series A Holders or holders of other Parity Units, issue additional Series A Preferred Mirror Units.

Section 11.02. Distributions .

(a) The Series A Holders shall be entitled to receive with respect to each Series A Preferred Mirror Unit owned by such holder, when, as and if declared by the General Partner in its sole discretion out of funds legally available therefor, non-cumulative quarterly cash distributions, on the applicable Distribution Payment Date that corresponds to the Record Date for which the General Partner has declared a distribution, if any, at a rate per annum equal to the Series A Distribution Rate (subject to Section 11.05 of this Agreement) of the Series A Liquidation Preference. Such distributions shall be non-cumulative. Distributions payable on the Series A Preferred Mirror Units for any period less than a full Distribution Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Declared distributions will be payable on the relevant Distribution Payment Date to Series A Holders as they appear on the Partnership’s register at the close of business, New York City time, on a Series A Record Date, provided that if the Series A Record Date is not a Business Day, the declared distributions will be payable on the relevant Distribution Payment Date to Series A Holders as they appear on the Partnership’s register at the close of business, New York City time on the Business Day immediately preceding such Series A Record Date.

(b) So long as any Series A Preferred Mirror Units are outstanding, for any then-current Distribution Period, unless distributions have been declared and paid or declared and set apart for payment on (i) all AOG Mirror Interests or (ii) the Series A Preferred Shares, then, in each case for such then-current Distribution Period only, (i) no distributions may be declared or paid or set apart for payment by the Partnership on any Junior Units and (ii) the Partnership may not repurchase any of its Junior Units; provided , however, that, the foregoing limitations shall not apply to (x) a distribution to any holder of equity interests of the Partnership in order to permit such holder (or parent of such holder) to net share settle equity-based awards granted under the Issuer’s 2007 Omnibus Equity Incentive Plan in order to satisfy associated tax obligations, (y) pro rata Tax Distributions in accordance with Section 4.01(b) as in effect on the date the Series A Shares are

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first issued and/or (z) distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units.

(c) The General Partner may, in its sole discretion, choose to pay distributions on the Series A Preferred Mirror Units without the payment of any distributions on any Junior Units.

(d) When distributions are not declared and paid (or duly provided for) on any Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) in full upon the Series A Preferred Mirror Units or any Parity Units, all distributions declared upon the Series A Preferred Mirror Units and all such Parity Units payable on such Distribution Payment Date (or, in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates, on a distribution payment date falling within the related Distribution Period) shall be declared pro rata so that the respective amounts of such distributions shall bear the same ratio to each other as all declared and unpaid distributions per Unit on the Series A Preferred Mirror Units and all unpaid distributions, including any accumulations, on all Parity Units payable on such Distribution Payment Date (or in the case of Parity Units having distribution payment dates different from the Distribution Payment Dates pertaining to the Series A Preferred Mirror Units, on a distribution payment date falling within the related Distribution Period) bear to each other.

(e) No distributions may be declared or paid or set apart for payment on any Series A Preferred Mirror Units if at the same time any arrears exist or default exists in the payment of distributions on any outstanding Units ranking, as to the payment of distributions and distribution of assets upon a Dissolution Event, senior to the Series A Preferred Mirror Units, subject to any applicable terms of such outstanding Units.

(f) Series A Holders shall not be entitled to any distributions, whether payable in cash or property, other than as provided in this Agreement and shall not be entitled to interest, or any sum in lieu of interest, in respect of any distribution payment, including any such payment which is delayed or foregone.

(g) The Partnership and the Series A Holders intend that no portion of the distributions paid to the Series A Holders pursuant to this Section 11.02 shall be treated as a “guaranteed payment” within the meaning of Section 707(c) of the Code, and the Partnership and Series A Holders shall not take any position inconsistent to such intention, except if there is a change in applicable law or final determination by the Internal Revenue Service that is inconsistent with such intention.

Section 11.03. Rank . The Series A Preferred Mirror Units shall rank, with respect to payment of distributions and distribution of assets upon a Dissolution Event:

(a) junior to all of the Partnership’s existing and future indebtedness and any equity securities, including Preferred Units, that the Partnership may authorize or issue, the terms of which provide that such securities shall rank senior to the Series A Preferred Mirror Units with respect to payment of distributions and distribution of assets upon a Dissolution Event;

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(b) equally to any Parity Units; and

Section 11.04. Redemption .

(a) Notwithstanding anything to the contrary contained in this Agreement, at any time and from time to time, the Partnership may, in the General Partner’s sole discretion, redeem the Series A Preferred Mirror Units, out of funds legally available therefor, in whole or in part, at a redemption price equal to the Series A Liquidation Preference plus an amount equal to declared and unpaid distributions from the Distribution Payment Date immediately preceding the redemption date to, but excluding, the redemption date.

(b) If the Issuer redeems its Series A Preferred Shares pursuant to a Change of Control Event or a Tax Redemption Event, then the Partnership may, in the General Partner’s sole discretion, redeem the Series A Preferred Mirror Units, in whole but not in part, out of funds legally available therefor, at a redemption price equal to $25.25 per Series A Preferred Mirror Unit plus an amount equal to the declared and unpaid distributions. So long as funds sufficient to pay the redemption price for all of the Series A Preferred Mirror Units called for redemption have been set aside for payment, from and after the redemption date, such Series A Preferred Mirror Units called for redemption shall no longer be deemed outstanding, and all rights of the Series A Holders thereof shall cease other than the right to receive the redemption price, without interest.

(c) Without limiting clause (b) of this Section 11.04 , if the Partnership shall deposit on or prior to any date fixed for redemption of Series A Preferred Mirror Units, with any bank or trust company, as a trust fund, or in an account for the benefit of and/or Controlled by the General Partner or the Partnership, a fund sufficient to redeem the Series A Preferred Mirror Units called for redemption, with irrevocable instructions and authority to such bank or trust company (if applicable) to pay on and after the date fixed for redemption or such earlier date as the General Partner may determine, to the respective Series A Holders, the redemption price thereof, then from and after the date of such deposit (although prior to the date fixed for redemption) such Series A Preferred Mirror Units so called shall be deemed to be redeemed and such deposit shall be deemed to constitute full payment of such Series A Preferred Mirror Units to the holders thereof and from and after the date of such deposit such Series A Preferred Mirror Units shall no longer be deemed to be outstanding, and the holders thereof shall cease to be holders of Units with respect to such Series A Preferred Mirror Units, and shall have no rights with respect thereto except only the right to receive from such bank or trust company, or account for the benefit of and/or Controlled by the General Partner or the Partnership, on the redemption date or such earlier date as the General Partner may determine, payment of the redemption price of such Series A Preferred Mirror Units without interest.

(d) The Series A Holders shall have no right to require redemption of any Series A Preferred Mirror Units.

Section 11.05. Series A Distribution Rate . If the distribution rate per annum on the Series A Preferred Shares issued by the Issuer shall increase pursuant to Section 13.5 of the Issuer LLC

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Agreement, then the Series A Distribution Rate shall increase by the same amount beginning on the same date as set forth in Article XIII of the Issuer LLC Agreement.

Section 11.06. Allocations . Before giving effect to the allocations set forth in Article V , Gross Ordinary Income for the Fiscal Year shall be specially allocated pro rata to the holders of Series A Preferred Mirror Units in accordance with each holder’s Percentage Interest with respect to their Series A Preferred Mirror Units in an amount equal to the sum of (i) the amount of cash distributed with respect to the Series A Preferred Mirror Units pursuant to Section 11.02 during such Fiscal Year and (ii) the excess, if any, of the amount of cash distributed with respect to the Series A Preferred Mirror Units pursuant to Section 11.02 in all prior Fiscal Years over the amount of Gross Ordinary Income allocated to the Series A Holders pursuant to this Section 11.06 in all prior Fiscal Years. For purposes of this Section 11.06 , “Gross Ordinary Income” means the Partnership’s gross income excluding any gross income attributable to the sale or exchange of “capital assets” as defined in Section 1221 of the Code. Allocations to Series A Holders of Gross Ordinary Income shall consist of a proportionate share of each Partnership item of Gross Ordinary Income for such Fiscal Year in accordance with each such holder’s Percentage Interest with respect to such holder’s Series A Preferred Mirror Units.

Section 11.07. Voting . Notwithstanding any provision in this Agreement or the Act to the contrary, the Series A Preferred Mirror Units shall not have any relative, participating, optional or other voting, consent or approval rights or powers, and the vote, consent or approval of the Series A Holders shall not be required for the taking of any Partnership action or inaction.

Section 11.08. Liquidation Rights .

(a) Upon any Dissolution Event, after payment or provision for the liabilities of the Partnership (including the expenses of such Dissolution Event) and the satisfaction of all claims ranking senior to the Series A Preferred Mirror Units in accordance with Section 9.03 , the Series A Holders shall be entitled to receive out of the assets of the Partnership or proceeds thereof available for distribution to Partners, before any payment or distribution of assets is made in respect of Junior Units, distributions equal to the positive balance in their Capital Accounts (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 11.06 for the taxable year in which the Dissolution Event occurs) pursuant to Section 9.03 , pro rata based on the full respective distributable amounts to which each Series A Holder is entitled pursuant to this Section 11.08(a) .

(b) Upon a Dissolution Event, after each Series A Holder receives a payment equal to the positive balance in its Capital Account (to the extent such positive balance is attributable to ownership of the Series A Preferred Mirror Units and after taking into account allocations of Gross Ordinary Income to the Series A Holders pursuant to Section 11.06 for the taxable year in which the Dissolution Event occurs), such Series A Holder shall not be entitled to any further participation in any distribution of assets by the Partnership.

(c) If the assets of the Partnership available for distribution upon a Dissolution Event are insufficient to pay in full the aggregate amount payable to the Series A Holders and holders

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of all other outstanding Parity Units, if any, such assets shall be distributed to the Series A Holders and holders of such Parity Units pro rata, based on the full respective distributable amounts to which each such Partner is entitled pursuant to this Section 11.08 .

(d) Nothing in this Section 11.08 shall be understood to entitle the Series A Holders to be paid any amount upon the occurrence of a Dissolution Event until holders of any classes or series of Units ranking, as to the distribution of assets upon a Dissolution Event, senior to the Series A Preferred Mirror Units have been paid all amounts to which such classes or series of Units are entitled.

(e) For the purposes of this Section 11.08 , a Dissolution Event shall not be deemed to have occurred in connection with (i) a Substantially All Merger or a Substantially All Sale whereby a member of the Apollo Operating Group is the surviving Person or the Person formed by such transaction is organized under the laws of a Permitted Jurisdiction and has expressly assumed all of the obligations under the AOG Mirror Interests, (ii) the sale or disposition of a member of the Apollo Operating Group (whether by merger, consolidation or the sale of all or substantially all of its assets) if such sale or disposition is not a Substantially All Merger or Substantially All Sale, (iii) the sale or disposition of a member of the Apollo Operating Group should such member not constitute a “significant subsidiary” of the Issuer under Rule 1-02(w) of Regulation S-X promulgated by the SEC, (iv) an event where the Series A Preferred Shares have been fully redeemed pursuant to the terms of the Issuer LLC Agreement or if proper notice of redemption of the Series A Preferred Shares has been given and funds sufficient to pay the redemption price for all of the Series A Preferred Shares called for redemption have been set aside for payment pursuant to the terms of the Issuer LLC Agreement, (v) transactions where the assets of a member of the Apollo Operating Group being liquidated, dissolved or wound up are immediately contributed to another member of the Apollo Operating Group, and (vi) with respect to a member of the Apollo Operating Group, a Permitted Transfer or a Permitted Reorganization (any of (i) through (vi), a “ Dissolution Exception ”).

(f) In the event that any member of the Apollo Operating Group liquidates, dissolves or winds up, including a Dissolution Event, the Partnership shall not declare or pay or set apart payment on its Junior Units unless the outstanding liquidation preference on all outstanding AOG Mirror Interests of each member of the Apollo Operating Group shall have been repaid via redemption or otherwise. Notwithstanding the foregoing, no such limitation shall apply to or upon (i) a Dissolution Exception or (ii) an event where the Issuer’s Series A Preferred Shares have been fully redeemed pursuant to the terms of the Issuer LLC Agreement or if proper notice of redemption of the Series A Preferred Shares has been given and funds sufficient to pay the redemption price for all of the Series A Preferred Shares called for redemption have been set aside by or on behalf of the Issuer for payment pursuant to the terms of the Issuer LLC Agreement.

Section 11.09. No Duties to Series A Holders . Notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted by law, neither the General Partner nor any other Covered Person shall have any duties or liabilities to the Series A Holders.

Section 11.10. Coordination Among Apollo Operating Group . To facilitate compliance with the limitations set forth in Section 11.02(b) and Section 11.08(f) above, the General Partner

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shall coordinate with, and provide advance notice to, the general partner or manager of each other member of the Apollo Operating Group with respect to planned distributions, holdbacks, liquidations, dissolutions, redemptions or repurchases of equity interests and extraordinary transactions, using such procedures as the General Partner and such other general partners collectively shall determine from time to time.

Section 11.11. Amendments and Waivers . Notwithstanding the provisions of Section 12.11 of the Agreement, the provisions of this Article XI may be amended, supplemented, waived or modified by the action of the General Partner without the consent of any other Partner.

Section 11.12. Expenses . It is the intent of the Issuer, the Partnership and the other members of the Apollo Operating Group that the offering of the Series A Preferred Shares by the Issuer is for the benefit of the Partnership and the other members of the Apollo Operating Group and therefore the fees and expenses (including any underwriter discounts and fees) associated with the offering of the Series A Preferred Shares by the Issuer (the “ Offering Expenses ”) shall be borne by the members of the Apollo Operating Group. In order to implement such intent, (i) the Issuer will be deemed to have contributed the gross proceeds raised in the offering of the Series A Preferred Shares to APO LLC, APO (FC), LLC, APO (FC II), LLC, APO (FC III), LLC, APO UK (FC), LLC and APO Corp. (in exchange for a note in the case of APO Corp.), in accordance with the books and records of such entities, which will in turn contribute the gross proceeds to the Partnership and the other members of the Apollo Operating Group in exchange for Series A Preferred Mirror Units issued by the Partnership and the other members of the Apollo Operating Group, and (ii) the Partnership and the other members of the Apollo Operating Group will be deemed to have paid the Offering Expenses, pro rata based on the relative amount of gross proceeds each member of the Apollo Operating Group is deemed to have received.

Article XII

MISCELLANEOUS

Section 12.01. Severability . If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 12.02. Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12.02 ):

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(a) If to the Partnership, to:

Apollo Principal Holdings I, L.P.
c/o Apollo Principal Holdings I GP, LLC
9 West 57 ^th St., 43 ^rd Floor
New York, NY 10019

(b) If to any Limited Partner, to:

Apollo Principal Holdings I, L.P.
c/o Apollo Principal Holdings I GP, LLC
9 West 57th St., 43rd Floor
New York, NY 10019

Apollo Principal Holdings I GP, LLC
9 West 57th St., 43rd Floor
New York, NY 10019

Section 12.03. Cumulative Remedies . The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law.

Section 12.04. Binding Effect . This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.

Section 12.06. Counterparts . This Agreement may be executed and delivered (including by facsimile transmission or other electronic means) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 12.06 .

Section 12.07. Further Assurances . Each Limited Partner shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

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Section 12.08. Entire Agreement .

(a) This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

(b) For the avoidance of doubt, each of the Limited Partners that serve as a senior managing director of any of the Apollo Operating Group entities or their Subsidiaries may from time to time enter into agreements with the Partnership in respect of the terms of such service.

Section 12.09. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. To the fullest extent permitted by applicable law, the General Partner and each Limited Partner hereby agree that any claim, action or proceeding by any Limited Partner seeking any relief whatsoever based on, arising out of or in connection with, this Agreement or the Partnership’s business or affairs shall be brought only in the Chancery Court of the State of Delaware (or other appropriate state court in the State of Delaware) or the federal courts located in the State of Delaware, and not in any other state or federal court in the United States of America or any court in any other country. EACH PARTNER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY .

Section 12.10. Expenses . Except as otherwise specified in this Agreement, the Partnership shall be responsible for all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with its operation.

Section 12.11. Amendments and Waivers .

(a) This Agreement (including the Annexes hereto) may be amended, supplemented, waived or modified by the written consent of the General Partner, subject to Article XI ; provided that any amendment that would have a material adverse effect on the rights or preferences of any Class of Units in relation to other Classes of Units must be approved by the holders of not less than a majority of the Percentage Interests of the Class affected; provided further , that the General Partner may, without the written consent of any Limited Partner or any other Person, amend, supplement, waive or modify any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect: (i) any amendment, supplement, waiver or modification that the General Partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of any class or series of equity interest in the Partnership; (ii) the admission, substitution, withdrawal or removal of Partners in accordance with this Agreement; (iii) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership; (iv) any amendment, supplement, waiver or modification that the General Partner determines in its sole discretion to be necessary or appropriate to address changes in United States federal income tax regulations, legislation or interpretation; and (v) a change in the Fiscal Year or taxable year of the Partnership and any other

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changes that the General Partner determines to be necessary or appropriate as a result of a change in the Fiscal Year or taxable year of the Partnership including a change in the dates on which distributions are to be made by the Partnership.

(b) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

(c) The General Partner may, in its sole discretion, unilaterally amend this Agreement on or before the effective date of the final regulations to provide for (i) the election of a safe harbor under Proposed Treasury Regulation Section 1.83-3(1) (or any similar provision) under which the fair market value of a partnership interest that is transferred is treated as being equal to the liquidation value of that interest, (ii) an agreement by the Partnership and each of its Partners to comply with all of the requirements set forth in such regulations and Notice 2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such election) with respect to all partnership interests transferred in connection with the performance of services while the election remains effective, and (iii) any other related amendments.

(d) Except as may be otherwise required by law in connection with the winding-up, liquidation, or dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for judicial accounting or for partition of any of the Partnership’s property.

(e) Upon obtaining such approvals required by this Agreement and without further action or execution by any other Person, including any Limited Partner, (i) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner, and (ii) the Limited Partners shall be deemed a party to and bound by such amendment of this Agreement.

Section 12.12. No Third Party Beneficiaries . This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (other than pursuant to Section 10.02 ).

Section 12.13. Headings . The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

Section 12.14. Construction . Each party hereto acknowledges and agrees it has had the opportunity to draft, review and edit the language of this Agreement and that it is the intent of the parties hereto that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any dispute relating to, in connection with or involving this Agreement. Accordingly, the parties hereby waive to the fullest extent permitted by law the benefit

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of any rule of Law or any legal decision that would require that in cases of uncertainty, the language of a contract should be interpreted most strongly against the party who drafted such language.

Section 12.15. Power of Attorney . Each Limited Partner, by its execution hereof, hereby irrevocably makes, constitutes and appoints the General Partner as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear to, record and file (a) any amendment to this Agreement that has been adopted as herein provided; (b) all certificates and other instruments (including consents and ratifications which the Limited Partners have agreed to provide upon a matter receiving the agreed support of Limited Partners) deemed advisable by the General Partner to carry out the provisions of this Agreement (including the provisions of Section 8.04 ) and Law or to permit the Partnership to become or to continue as a limited partnership or partnership wherein the Limited Partners have limited liability in each jurisdiction where the Partnership may be doing business; (c) all instruments that the General Partner deems appropriate to reflect a change or modification of this Agreement or the Partnership in accordance with this Agreement, including, without limitation, the admission of additional Limited Partners or substituted Limited Partners pursuant to the provisions of this Agreement; (d) all conveyances and other instruments or papers deemed advisable by the General Partner to effect the liquidation and termination of the Partnership; and (e) all fictitious or assumed name certificates required or permitted (in light of the Partnership’s activities) to be filed on behalf of the Partnership.

Section 12.16. Letter Agreements; Schedules . Notwithstanding the provisions of this Agreement, including Section 12.11 , 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 a side letter or similar agreement to or with a Limited Partner which has 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 to or with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement. The General Partner may from time to time execute and deliver to the Limited Partners schedules which set forth information contained in the books and records of the Partnership and any other matters deemed appropriate by the General Partner. Such schedules shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.

Section 12.17. Partnership Status . The parties intend to treat the Partnership as a partnership for United States federal income tax purposes.

[Signature Page Follows]

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IN WITNESS WHEREOF , the undersigned, intending to be legally bound hereby, have duly executed this Agreement as of the date first above written.



General Partner:	APOLLO PRINCIPAL HOLDINGS I GP, LLC By: _/s/ John J. Suydam________________ Name: John J. Suydam Title: Vice President
Limited Partners:	APO ASSET CO., LLC By: _/s/ John J. Suydam________________ Name: John J. Suydam Title: Vice President
	AP PROFESSIONAL HOLDINGS, L.P. By: BRH Holdings GP, Ltd., its general partner By: _/s/ John J. Suydam________________ Name: John J. Suydam Title: Vice President

Apollo Principal Holdings I, L.P.
Fourth Amended and Restated LPA
Signature Page

Annex A

Apollo Principal Holdings I, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings II, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings III, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings IV, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings V, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings VI, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings VII, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings VIII, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings IX, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings X, L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings XI, LLC and each of its affiliated carry and co-invest vehicles;

Apollo Principal Holdings XII, L.P. and each of its affiliated carry and co-invest vehicles;

AMH Holdings (Cayman), L.P. and each of its affiliated carry and co-invest vehicles;

Apollo Management Holdings, L.P. and each of its affiliated carry and co-invest vehicles

Exhibit 10.3

EXECUTION VERSION

FOURTH AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

APOLLO PRINCIPAL HOLDINGS II, L.P.

Dated as of March 7, 2017

THE PARTNERSHIP UNITS OF APOLLO PRINCIPAL HOLDINGS II, L.P. HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY STATE, PROVINCE OR ANY OTHER APPLICABLE SECURITIES LAWS AND ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR PROVINCE, AND ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS LIMITED PARTNERSHIP AGREEMENT. THE UNITS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS AND OTHER TRANSFEREES OF SUCH UNITS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT OR ACQUISITION FOR AN INDEFINITE PERIOD OF TIME.

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TABLE OF CONTENTS

Page



Article I DEFINITIONS	2
Section 1.01. Definitions	2
Article II FORMATION, TERM, PURPOSE AND POWERS	11
Section 2.01. Formation	11
Section 2.02. Name	11
Section 2.03. Term	11
Section 2.04. Offices	12
Section 2.05. Agent for Service of Process	12
Section 2.06. Business Purpose	12
Section 2.07. Powers of the Partnership	12
Section 2.08. Partners; Admission of New Partners	12
Section 2.09. Withdrawal	12
Article III MANAGEMENT	12
Section 3.01. General Partner	12
Section 3.02. Compensation	13
Section 3.03. Expenses	13
Section 3.04. Authority of Partners	13
Section 3.05. Action by Written Consent or Ratification	14
Article IV DISTRIBUTIONS	14
Section 4.01. Distributions	14
Section 4.02. Liquidation Distribution	15
Section 4.03. Limitations on Distribution	15
Section 4.04. Distributions on Series A Preferred Mirror Units	15
Article V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS	15
Section 5.01. Initial Capital Contributions	15
Section 5.02. No Additional Capital Contributions	16
Section 5.03. Capital Accounts	16
Section 5.04. Allocations of Profits and Losses	16
Section 5.05. Special Allocations	16
Section 5.06. Tax Allocations	18
Section 5.07. Tax Advances	18
Section 5.08. Tax Matters	18
Section 5.09. Other Allocation Provisions	19
Article VI BOOKS AND RECORDS; REPORTS	19
Section 6.01. Books and Records	19
Article VII PARTNERSHIP UNITS	20
Section 7.01. Units	20
Section 7.02. Register	20

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Section 7.03. Registered Partners	20
Article VIII FORFEITURE OF INTERESTS; TRANSFER RESTRICTIONS	21
Section 8.01. Limited Partner Transfers	21
Section 8.02. Encumbrances	21
Section 8.03. Further Restrictions	22
Section 8.04. Rights of Assignees	22
Section 8.05. Admissions, Withdrawals and Removals	22
Section 8.06. Admission of Assignees as Substitute Limited Partners	23
Section 8.07. Withdrawal and Removal of Limited Partners	23
Article IX DISSOLUTION, LIQUIDATION AND TERMINATION	23
Section 9.01. No Dissolution	23
Section 9.02. Events Causing Dissolution	23
Section 9.03. Distribution upon Dissolution	24
Section 9.04. Time for Liquidation	25
Section 9.05. Termination	25
Section 9.06. Claims of the Partners	25
Section 9.07. Survival of Certain Provisions	25
Article X LIABILITY AND INDEMNIFICATION	25
Section 10.01. Liability of Partners	25
Section 10.02. Indemnification	26
Article XI TERMS, RIGHTS, POWERS, PREFERENCES AND DUTIES OF SERIES A PREFERRED MIRROR UNITS	28
Section 11.01. Designation	28
Section 11.02. Distributions	28
Section 11.03. Rank	29
Section 11.04. Redemption	30
Section 11.05. Series A Distribution Rate	31
Section 11.06. Allocations	31
Section 11.07. Voting	31
Section 11.08. Liquidation Rights	31
Section 11.09. No Duties to Series A Holders	32
Section 11.10. Coordination Among Apollo Operating Group	33
Section 11.11. Amendments and Waivers	33
Section 11.12. Expenses	33
Article XII MISCELLANEOUS	33
Section 12.01. Severability	33
Section 12.02. Notices	33
Section 12.03. Cumulative Remedies	34
Section 12.04. Binding Effect	34
Section 12.05. Interpretation	34
Section 12.06. Counterparts	34
Section 12.07. Further Assurances	34
Section 12.08. Entire Agreement	35

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Section 12.09. Governing Law	35
Section 12.10. Expenses	35
Section 12.11. Amendments and Waivers	35
Section 12.12. No Third Party Beneficiaries	36
Section 12.13. Headings	36
Section 12.14. Construction	36
Section 12.15. Power of Attorney	37
Section 12.16. Letter Agreements; Schedules	37
Section 12.17. Partnership Status	37

iii

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FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
APOLLO PRINCIPAL HOLDINGS II, L.P.

This FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of Apollo Principal Holdings II, L.P. (the “ Partnership ”) is made as of March 7, 2017, by and among Apollo Principal Holdings II GP, LLC, a limited liability company formed under the laws of the State of Delaware, as general partner, and the Limited Partners (as defined herein) of the Partnership.

WHEREAS, the Partnership was formed as a limited partnership pursuant to the Act on the execution of the Limited Partnership Agreement of the Partnership on March 21, 2007 (the “ Original Agreement ”) by the General Partner and the initial limited partners set forth therein (the “ Initial Limited Partners ”) and the filing of a Certificate of Limited Partnership (the “ Certificate ”) with the Office of the Secretary of State of the State of Delaware on March 21, 2007;

WHEREAS, as of April 14, 2010, the Second Amended Agreement was further amended and restated (the “ Third Amended Agreement ”);

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NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree as follows:

Article I

DEFINITIONS

“ Act ” means, the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as it may be amended from time to time.

“ Additional Credit Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ Agreement ” has the meaning set forth in the recitals.

“ Amended Tax Amount ” has the meaning set forth in Section 4.01(b)(ii) .

“ AP Professional ” means AP Professional Holdings, L.P., a Cayman Islands exempted limited partnership.

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“ APO Corp. ” means APO Corp., a Delaware corporation.

“ Apollo Operating Group ” means each of the Partnership, Apollo Principal Holdings I, L.P., a Delaware limited partnership, Apollo Principal Holdings III, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IV, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings V, L.P., a Delaware limited partnership, Apollo Principal Holdings VI, L.P., a Delaware limited partnership, Apollo Principal Holdings VII, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings VIII, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IX, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings X, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings XI, LLC, an Anguilla limited liability company, Apollo Principal Holdings XII, L.P., a Cayman Islands exempted limited partnership, Apollo Management Holdings, L.P., a Delaware limited partnership, AMH Holdings (Cayman), L.P., a Cayman Islands exempted limited partnership, and any successors thereto or other entities formed to serve as holding vehicles for the Issuer’s carry vehicles, management companies or other entities formed to engage in the asset management business (including alternative asset management), as set forth on Annex A , as amended from time to time.

“ Assignee ” has the meaning set forth in Section 8.04 .

“ Authorized Person ” has the meaning set forth in Section 3.01(b) .

“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

“ Capital Account ” means the separate capital account maintained for each Partner in accordance with Section 5.03 .

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Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, as of (a) the date of the acquisition of any additional Partnership interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership assets to a Partner; (c) the date a Partnership interest is relinquished to the Partnership; (d) any other date specified in the Treasury Regulations or (e) any other date specified by the General Partner; provided , however, that adjustments pursuant to clauses (a), (b) (c) and (d) above shall be made only if such adjustments are deemed necessary or appropriate by the General Partner to reflect the relative economic interests of the Partners. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately before such distribution to equal its fair market value. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of “Profits (Losses)” rather than the amount of depreciation determined for United States federal income tax purposes, and depreciation shall be calculated by reference to Carrying Value rather than tax basis once Carrying Value differs from tax basis.

“ Certificate ” has the meaning set forth in the recitals.

“ Change of Control Event ” has the meaning set forth in the Issuer LLC Agreement.

“ Class ” means the classes of Units into which the interests in the Partnership may be classified or divided from time to time pursuant to the provisions of this Agreement.

“ Class A Shares ” means the Class A Common Shares of the Issuer representing Class A limited liability company interests of the Issuer.

“ Code ” means the United States Internal Revenue Code of 1986, as amended from time to time.

“ Common Units ” means the Class A Units.

“ Contingencies ” has the meaning set forth in Section 9.03(a) .

“ Contribution, Purchase and Sale Agreement ” means the Contribution, Purchase and Sale Agreement, dated as of July 13, 2007, by and among the Partnership, Apollo Principal Holdings I, L.P., a Delaware limited partnership, Apollo Principal Holdings III, L.P., a Cayman Islands exempted limited partnership, Apollo Principal Holdings IV, L.P., a Cayman Islands exempted limited partnership, and Apollo Management Holdings, L.P., a Delaware limited partnership, and certain other signatories party thereto.

“ Control ” (including the terms “ Controlled by ” and “ under common Control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of

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securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.