Good morning, and welcome to Apollo Investment Corporation earnings conference call for the period ending March 31, 2013. [Operator Instructions] I will now turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation.

Thank you, operator, and thank you, everyone, for joining us today. With me today are Jim Zelter, Chief Executive Officer; Ted Goldthorpe, President and Chief Investment Officer; and Greg Hunt, Chief Financial Officer. I'd like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Investment Corporation, and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future results, our business prospects and the prospects of our portfolio of companies. You should refer to our registration statement and shareholder reports for risks that apply to our business and may adversely affect any forward-looking statements we make. We do not undertake to update our forward-looking statements or projections unless required by law. To obtain copies of our SEC filings, please visit our website at www.apolloic.com. I'd also like to remind everyone that we've posted a supplemental financial information package on our website, which contains information about the portfolio, as well as the company's financial performance. At this time, I'd like to turn the call over to Jim Zelter.

Thank you, Elizabeth. This morning, we issued our earnings press release and filed our annual report on Form 10-K. I'll begin my remarks with some financial highlights for the quarter and for our fiscal year, followed by some other recent business highlights. Following my remarks, Ted will provide an overview of the market environment and review our investment portfolio activity for the quarter. And finally, Greg will discuss our financial results in greater detail, then, we will open up the call to questions. Starting with financial highlights. We reported net investment income per share of $0.21 for the March quarter. Results were driven by stable recurring interest income and dividends offset slightly by a decrease in other nonrecurring income. Fourth quarter GAAP EPS was $0.32, which included the net gain on assets of $0.12 per share. For the full year ending March 31, 2013, we reported net investment income of $0.83 and GAAP EPS of $0.51. Our net asset value per share was $8.27 on March 31, and that compares to $8.14 at the end of December 2012, an increase of 1.6%. Over the past year, our investment approach has allowed us not only to increase the secured portion of our portfolio, while maintaining a stable yield, but also, to expand our investment platform in the 2 significant industry verticals: energy and aviation. During the March quarter, we invested $428 million, which was driven primarily by origination activity from our specialty industry verticals. Net industry activity was $199 million for the quarter, and for the full year, we invested $1.5 billion, and our net investment activity was $200 million. We are pleased with our repositioning of the portfolio over the past year. At the end of March, secured investments accounted for 44% of the portfolio compared to 32% a year…

Thank you, Jim. The credit markets were stronger in the March quarter, reflecting economic optimism in the muted impact of our -- of the budget sequester. Investors continue to put money into high yield and bank loan markets creating strong demand for both primary and secondary paper. Dealers responded by bringing transactions to lock in attractive yields and leverage multiples. The mezzanine market was virtually nonexistent given the strength in the broader credit market and tight spreads found at high yields. Although underlying fundamentals remain solid, we believe the continued strength in the credit markets is mostly attributable to an abundance of liquidity in the search for yield, which continues to result in a mispricing of risk. The middle market has not been immune to the trends in the more liquid markets. In today's market environment, we are still finding investment opportunities that meet our underwriting standards. Given the risk-reward dynamics we're observing, we were selective investors and focused on direct origination opportunities in both our specialist sourcing verticals, including energy and aviation. We focused on secured investments and investments in companies that we believe are conservatively positioned with ample liquidity. During the March quarter, we invested $428 million in 10 new and 9 existing portfolio companies, which included $204 million in existing portfolio of companies. We also received $98 million of proceeds from selected sales and $131 million from repayments. The yield at cost on new debt investments was 11.5%, and the yield at cost on debt dispositions was 11.7% while the yield at cost on debt repayments was 11.8%. The overall yield of our debt portfolio was 11.9%, unchanged from the prior quarter. The weighted average yield on our unsecured debt portfolio increased to 12.7% from 12.6% from the prior quarter, and the weighted average yield on our…

Thank you, Ted. I'd like to remind everyone that in addition to our 10-K, we have posted a financial supplement presentation on our website. I will now discuss Apollo Investment Corporation's financial performance for the fiscal fourth quarter ended March 31, 2013. Our total investment portfolio had a fair market value of $2.85 billion compared to $2.63 billion at the end of December. The increase was driven by positive net investment activity, as well as portfolio appreciation. Net assets totaled $1.68 billion with a net asset value per share of $8.27 at the end of March. This compares to net assets totaling $1.65 billion and a net asset value per share of $8.14 at the end of December. The increase in NAV was driven from unrealized gains across many investments, partially offset by unrealized losses at only a handful of our other investments. On the liability side of our balance sheet, we had $1.2 billion of total debt outstanding at March 31, up from $1 billion at the end of December. At March 31, the company's debt-to-equity ratio was 0.69, up from 0.63 at the end of December. Our net leverage ratio, which includes the impact of cash and unsettled transactions was 0.7 at the end of March, up from 0.58 at the end of December. Adjusting for our equity -- our recent equity offering, our debt-to-equity ratio would have been 0.52 at the end of March. Our quarter-end leverage was near the upper end of our target range in anticipation of April and May refinancing activity. Regarding our debt, I'd like to mention that earlier this month, Fitch Ratings acknowledged the progress that we have made repositioning our portfolio and maintained our BBB rating and revised their outlook to stable. In the March quarter, one investment, our second-lien position…

Thank you, Greg. Over the past year, we believe that we have made meaningful strides in achieving many of our strategic objectives and repositioning the overall portfolio. Given today's liquid market environment, where spreads have tightened and leverage levels have increased, we will remain highly selective with a focus on direct origination and secure debt investments in companies with strong liquidity. We will also continue to selectively sell lower-yielding assets when possible, while continuing to selectively look for opportunities to grow our specialist origination capabilities. In conclusion, we believe the long-term outlook for capital providers to the middle market like us remains strong. With that, operator, please open the call to some questions.

[Operator Instructions] Your first question comes from Chris York of JMP Securities.

Can you talk about the performance of your investment in Cengage Learning, which you placed on non-accrual this quarter?

Yes. So we obviously talked about this in the last conference call when we obviously took the vast majority of the loss in this position. I think we continue to monitor it very, very closely just given what's going on with the headwinds the businesses are facing, and we continue to risk manage the position.

Okay. So nothing on the fundamentals that is moving?

So if you recall, they came out with earnings that were substantially worse than what people were expecting at the end of last year. And subsequent to that time, the probability -- I think the market has changed the way they look at the company and frankly, has changed their view of the ability for the company to refinance their debt. So that's caused the debt to trade lower and obviously, a position we're very focused on. So the position -- the position still pays interest, but we thought it was the most prudent thing to put it on non-accrual just given where it's valued.

Sure, okay. And then, one last question here for me. What was the weighted average yield on your structured product portfolio?

In terms of new investments we made for the quarter, or our overall portfolio on a static basis at the quarter end?

I'll take both if you got them.

Okay, let me pass it on to Greg here.

Yes, our weighted average on our structured products at the end of the quarter was about 12.2%.

The next question comes from Doug Mewhirter of SunTrust Robinson Humphrey.

I just wanted to know, of the total investments you made this quarter, how much came -- were originated through your energy branch?

So energy was less than 10% of originations this quarter.

Less than 10%.

Yes, it was a very small number in terms of originations this quarter. Because it's proprietary originated, I would say, it varies quite dramatically from quarter-to-quarter.

Yes. Understandable. And just as a reminder, your aircraft leasing is -- it's actually done through a wholly-owned subsidiary. So you're -- the $135 million of investments that, that company made did not -- that doesn't reflect on your total investment activity, right?

It does.

$135 million...

Yes. So the way it works is as we'd make investments out of Merx, which is our aviation subsidiary, we obviously downstream capital, which counts as an investment -- and counts in our investment activity. But Merx was about 1/3 of our investment activity this quarter. It was driven primarily by the GECAS transaction that we talked about in the last conference call.

Your next question comes from Bo Ladyman of Raymond James.

Could you give us a little more color on your position in the capital structure for your airline lease transactions, specifically the GECAS transaction?

Sure. So on the GECAS transaction specifically, it's a highly structured transaction. I think what's -- and we have to be careful because we're obviously under confidentiality, but there was a significant amount of senior secured debt raised against the structure, and then, we -- our investment is kind of below the senior secured debt.

So we -- in typical fashion, we would look at it as, really, as a mezz investment to a diverse portfolio, where we're very comfortable with -- the genesis of this was the idea of when we compare these types of transactions versus corporate transactions, we just felt that there was a greater amount of diversity of hard assets, a greater diversity of counterparties with the leases and long-term inherent value of the asset class with a great partner in the business. So if you were to look at it versus a typical transaction under our corporate mezz book, as Ted said, big piece of secured debt, and then, we are a slice underneath that with the right alignment of interest with our partner.

Any color you could give on the amount of equity behind you in that transaction?

Yes, I'm sorry we can't because, again, it's under -- we're under confidentiality.

Right, right. I understand that. Okay, one other one or maybe 2 more. Last quarter, you talked about seeing some potential spillover origination activity from Q4 into Q1 and potentially, a slowdown in the back half of Q1, calendar Q1. Is that -- did things end up front-end loaded or were they spread pretty evenly through?

Through, sorry, through the March quarter or through the..?

Through the March quarter.

Yes, I mean, I think through the March quarter, it was -- we had a lot of activity at the very start of the quarter that was a spillover from last year. As you recall, given the -- post-election, after the election, there was a lot of deal activity in the fourth calendar quarter, a lot of which got pushed into the first month of the next quarter. So I think it's fair to say that most -- a lot of -- we had a very good first month of originations during the first calendar quarter.

Bo, this is Jim. I'll add a couple of comments to Ted's comments. Certainly, the tone that has been expressed by many of our peers in terms of the elevated number -- the elevated activity in the high-yield market has muted some of the activity, and certainly, we feel very happy that we made this strategic move a year or so ago and expanding our front end right now because for those players that haven't been able to do so, you're really relying on a very, very elevated market in terms of lower pricing and higher leverage. But I think the overall tone, which our peers have expressed, we would echo in the sense that it's -- the credit markets are priced very favorably for issuers right now. And we're making sure that we are appropriately cautious in putting new money to work in this kind of environment.

Yes, I'd make one follow-up comment to that, which is -- and we've mentioned this previously. We are not finding a lot of opportunities in the liquid markets. We also are not seeing a lot of activity. The sponsor channel on our sponsor clients are very active, but there's very little net new activity. A lot of it's refinancing the existing portfolio companies. So most of our origination, all the way through to today, has been direct origination versus, I would say, a sponsor origination.

Could you give us a little more an idea of how investment activity has been shaping up for this quarter?

Yes, I think through today and obviously, things can change going forward, I think we've continued to see relatively robust originations. But we've also seen a decent amount of harvest. So I think in the first quarter -- just in the first calendar quarter, I think you saw a lot of refinancing of bank debt, senior secured bank debt. And I think you're now seeing a spillover into the second-lien market and unsecured market. So we've actually had a -- we feel pretty good about originations this quarter, but we also have been taking out some of our or we expect to be taking out of some of our bond on the capital structure risk. So as we kind of reposition the portfolio, some of this is just happening organically. A lot of the stuff originating is senior secured, top of the capital structure and a lot of the stuff that were being taken out of is mezzanine or unsecured risk.

Right, right. One last one. Could you remind us how much you sort of target for your 2 direct -- the aviation and the energy verticals, how much you can see those being in the future as a percentage of your portfolio?

Yes, we've talked about both of them being plus or minus 10% of the portfolio. You know, if you've got a $2.5 billion to $3 billion portfolio, that should give you some indication. Certainly, we are not driven to that. if the yield were to compress and the opportunity was not as buoyant as it is today, we're not going to just go down that path because we talked about 10%. So -- but that's a general direction which we'd like to go in.

At this time, there are no further questions. I would now like to turn the floor back over to Mr. Jim Zelter for any additional or closing remarks.

Well, once again, we thank everybody for participating on the call today. We appreciate your loyal following and questions and your time. And we look forward to talking to you in the future. With that, we'll say goodbye, and thank you.

Thank you. This concludes your conference. You may now disconnect.