Newcastle Announces Third Quarter 2010 Results
Financial Results
Third Quarter 2010
NEW YORK--(BUSINESS WIRE)-- Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended September 30, 2010, income applicable to common stockholders ("GAAP income") was $162 million, or $2.61 per diluted share, compared to $50 million, or $0.94 per diluted share, for the quarter ended September 30, 2009.
GAAP income of $162 million consisted of the following: $30 million of net interest income less expenses (net of preferred dividends), $37 million of other income, and $95 million from the reversal of prior valuation allowances on loans net of the impairment on securities.
Other income was primarily related to a gain on the extinguishment of CDO debt partially offset by the decrease in value of the Company's derivatives. In the third quarter, Newcastle repurchased $48 million of CDO bonds for $1 million, recording a $47 million gain on the extinguishment of debt.
During the quarter, the Company increased the over-collateralization excess in CDO's VIII, IX and X by $59 million despite $194 million of asset downgrades and received approximately $17 million of net interest cash flow and management fees from its CDO's.
Nine-Months 2010
For the nine-months ended September 30, 2010, GAAP income was $460 million, or $7.77 per diluted share, compared to a loss applicable to common stockholders ("GAAP loss") of $240 million, or $4.54 per diluted share, for the nine-months ended September 30, 2009.
GAAP income of $460 million consisted of the following: $65 million of net interest income less expenses (net of preferred dividends), $146 million of other income, $43 million representing the excess of carrying amount of exchanged preferred stock over the fair value of consideration paid, and $206 million from the reversal of prior valuation allowances on loans net of the impairment on securities.
Other income was primarily related to a gain on the extinguishment of CDO debt and net gain on sale of investments partially offset by the decrease in value of the Company's derivatives. In the nine months year-to-date, the Company repurchased $168 million of CDO bonds for $26 million, recording a $142 million gain on the extinguishment of debt.
For a reconciliation of income (loss) applicable to common stockholders to net interest income less expenses (net of preferred dividends), please refer to the tables following the presentation of GAAP results.
Recourse Debt Financing and Liquidity
In the third quarter, the Company increased unrestricted cash by $21 million to $58 million and repaid the remaining $1 million of non-agency recourse debt. As a result, the Company currently does not have any recourse debt except for the Junior Subordinated Notes due in 2035.
As of November 5, 2010, Newcastle had a total of $239 million of cash to invest, comprised of $63 million of unrestricted cash and $176 million of restricted cash for CDO reinvestment. This compares to $58 million of unrestricted cash and $147 million of restricted cash for CDO reinvestment at September 30, 2010.
CDO Financings
The following table summarizes the cash receipts in the third quarter of 2010 from the Company's consolidated CDO financings, their related coverage tests, and negative watch assets ($ in thousands):
Interest
Coverage
Primary % Excess Over Collateralization Excess (Deficiency) Assets
(Deficiency) on
Collateral Cash October 31, October 31, 2010 September 30, 2010 June 30, 2010(2) Negative
(2) (2)
Type Receipts 2010(2) % $ % $ % $ Watch(3)
(1)
CDO Securities $ 193 104.4% -15.3% (54,513) -15.3% (54,513) -7.8% (28,647) $ 34,478
IV
CDO V Securities 1,656 162.1% 0.5% 1,991 0.5% 1,991 0.8% 3,173 45,053
CDO Securities 116 21.6% -38.7% (148,696) -42.1% (167,624) -39.6% (162,467) 51,140
VI
CDO Loans 4,506 278.6% 15.9% 102,843 16.2% 104,652 15.9% 102,714 113,602
VIII
CDO Loans 6,443 221.3% 17.3% 111,436 16.5% 106,526 9.4% 60,531 29,795
IX
CDO X Securities 3,702 293.7% 3.6% 43,951 3.2% 39,543 2.4% 28,892 340,132
Total $ 16,616 $
614,200
Represents net cash received from each CDO based on all of the interests in
such CDO (including senior management fees). Cash receipts for the quarter
(1) ended September 30, 2010 may not be indicative of cash receipts for
subsequent periods. See Forward-Looking Statements below for risks and
uncertainties that could cause cash receipts for subsequent periods to
differ materially from these amounts.
Represents excess or deficiency under the applicable interest coverage or
over collateralization test to the first threshold at which cash flow would
be redirected. The Company generally does not receive material cash flow
(2) from a CDO until a deficiency is corrected. The information regarding
coverage tests is based on data from the most recent remittance date on or
before October 31, 2010, September 30, 2010, or June 30, 2010, as
applicable. The CDO IV and V tests are conducted only on a quarterly basis
(December, March, June and September).
Represents the face amount of assets on negative watch for possible
downgrade by at least one rating agency (Moody's, S&P or Fitch). Amounts
are as of the determination date pertaining to September 2010 remittances
(3) for CDO IV and V (these tests are conducted only on a quarterly basis) and
as of the determination date pertaining to October 2010 remittances for all
other CDO's. The amounts include $55 million of bonds issued by Newcastle,
which are eliminated in consolidation and not reflected in the investment
portfolio disclosures.
-- $2 million of the $17 million CDO cash receipts were senior collateral
management fees, which were not subject to the related CDO coverage
tests.
-- The cash receipts above also include $4 million of non-recurring
interest and extension fees received in the CDO's.
Book Value
GAAP book value increased by $246 million or $3.97 per share. As of September 30, 2010, GAAP book value was $(653) million or $(10.52) per share compared to $(899) million or $(14.49) per share at June 30, 2010.
Dividends
For the quarter ended September 30, 2010, Newcastle's Board of Directors elected not to pay a common stock or preferred stock dividend. The Company decided to retain capital for working capital purposes.
Investment Portfolio
Newcastle's $4.7 billion investment portfolio (with a basis of $3.1 billion) consists of commercial, residential and corporate debt. During the quarter, the weighted average carrying value of the portfolio changed from 60.2% to 64.0%, an increase of $178 million or 6%. The size of the portfolio decreased by $114 million, primarily as a result of principal repayments of $134 million, sales of $91 million and actual principal write-downs of $43 million, offset by purchases of $148 million at a weighted average price of 70% of par, a weighted average yield of 13.1% and a weighted average life of 6.3 years.
The following table describes the investment portfolio as of September 30, 2010 ($ in millions):
% of Weighted Weighted
Face Basis Total Number of Average Average
Amount Amount Basis Investments Credit Life Carrying
$ $(1) (2) (yrs)(3) Value(4)
Commercial
Assets
CMBS $ 2,070 $ 1,338 43.3 % 271 BB 3.1 62.9 %
Mezzanine 658 368 11.9 % 19 65% 2.0 56.0 %
Loans
B-Notes 283 149 4.8 % 10 59% 2.2 52.7 %
Whole Loans 102 56 1.8 % 4 80% 11.5 54.8 %
Total
Commercial 3,113 1,911 61.8 % 3.0 60.2 %
Assets
Residential
Assets
MH and
Residential 442 377 12.2 % 11,606 704 6.7 85.3 %
Loans
Subprime 379 173 5.6 % 89 B- 4.4 50.4 %
Securities
Real Estate 79 56 1.8 % 22 BB 4.3 70.3 %
ABS
900 606 19.6 % 5.5 69.3 %
FNMA/FHLMC 3 3 0.1 % 1 AAA 3.3 107.3 %
Securities
Total
Residential 903 609 19.7 % 5.5 69.4 %
Assets
Corporate
Assets
REIT Debt 376 375 12.1 % 44 BB+ 3.4 38.0 %
Corporate 301 196 6.4 % 9 C 3.6 102.4 %
Bank Loans
Total
Corporate 677 571 18.5 % 3.5 73.8 %
Assets
Total/Weighted $ 4,693 $ 3,091 100.0 % 3.6 64.0 %
Average(5)
(1) Net of impairment.
Credit represents the weighted average of minimum ratings for rated assets,
the Loan to Value ratio (based on the appraised value at the time of
purchase or refinancing) for non-rated commercial assets, or the FICO score
(2) for non-rated residential assets and an implied AAA rating for FNMA/FHLMC
securities. Ratings provided above were determined by third party rating
agencies as of a particular date, may not be current and are subject to
change (including a "negative watch" assignment) at any time.
(3) Weighted average life is based on the timing of expected principal
reduction on the asset.
(4) As a percentage of face amount.
Excludes CDO securities with a face amount of $80 million, as they are
(5) valued at zero in the current period, operating real estate held for sale
of $9 million and loans subject to call option with a face amount of $406
million.
Commercial Assets
The Company owns $3.1 billion of commercial assets (with a basis of $1.9 billion), which includes CMBS, mezzanine loans, B-Notes and whole loans.
-- During the quarter, the Company purchased $137 million, sold $84
million, had principal repayments of $95 million and had $23 million of
actual principal write-downs. The Company purchased 12 CMBS assets with
a weighted average rating of "BBB-" and made an additional investment in
a whole loan using $6 million of unrestricted cash.
-- No commercial assets were upgraded, 12 securities or $72 million were
affirmed and 31 securities or $191 million were downgraded (from a
weighted average rating of BB+ to B-).
-- The weighted average carrying value of these assets changed from 55.1%
to 60.2%, an increase of $161 million or 9%, in the quarter.
CMBS portfolio ($ in thousands):
Average Face Basis % of Delinquency Principal Weighted
Minimum Total Average
Vintage Rating Number Amount $ Amount $ Basis 60+/FC/REO Subordination Life
(1) (2) (3) (4) (yrs)(5)
Pre 2004 BBB- 84 417,718 379,932 28.4% 5.8% 10.5% 2.5
2004 BB 60 427,435 261,147 19.5% 3.9% 5.5% 2.7
2005 BB 38 375,044 168,926 12.6% 5.9% 8.2% 3.1
2006 BBB- 56 505,578 346,212 25.9% 4.3% 12.6% 3.8
2007 & BB- 33 344,068 181,559 13.6% 6.3% 13.1% 3.2
Later
TOTAL/WA BB 271 2,069,843 1,337,776 100.0% 5.1% 10.0% 3.1
(1) The year in which the securities were issued.
Ratings provided above were determined by third party rating agencies as of
a particular date, which may not be current and are subject to change
(2) (including a "negative watch" assignment) at any time. The Company had
approximately $372 million of CMBS assets that were on negative watch for
possible downgrade by at least one rating agency as of September 30, 2010.
(3) The percentage of underlying loans that are 60+ days delinquent, in
foreclosure or considered real estate owned (REO).
(4) The percentage of the outstanding face amount of securities that is
subordinate to the Company's investments.
(5) Weighted average life is based on the timing of expected principal
reduction on the asset.
Mezzanine loans, B-Notes and whole loans portfolio ($ in thousands):
% of WA WA
Face Basis Total First Last $
$
Loan Loan
Asset Number Amount Amount Basis to to Delinquency
Type ($) ($) Value Value (%)(2)
(1) (1)
Mezzanine 19 658,103 368,267 64.2% 53.7% 64.5% 13.3%
Loans
B-Notes 10 283,132 149,167 26.0% 46.7% 59.0% 33.6%
Whole 4 102,228 55,973 9.8% 0.0% 79.9% 69.6%
Loans
Total/WA 33 1,043,463 573,407 100.0% 46.5% 64.5% 24.3%
(1) Loan to Value is based on the appraised value at the time of purchase or
refinancing.
(2) The percentage of underlying loans that are non-performing, in foreclosure,
under bankruptcy filing or considered real estate owned.
Residential Assets
The Company owns $903 million of residential assets (with a basis of $609 million), which includes manufactured housing ("MH") loans, residential loans, subprime securities and FNMA/FHLMC securities.
-- During the quarter, the Company had principal repayments of $23 million,
actual principal write-downs of $20 million and purchased $11 million of
residential assets. The Company purchased two ABS assets with a weighted
average rating of "CCC."
-- No ABS securities were upgraded, one security or $17 million was
affirmed, and 11 securities or $52 million were downgraded (from a
weighted average rating of B+ to CC+).
-- The weighted average carrying value of these assets changed from 67.8%
to 69.4%, an increase of $14 million or 2%, in the quarter.
Manufactured housing and residential loan portfolios ($ in thousands):
% of Average
Average Face Basis Total Loan Age Original Delinquency Cumulative
Deal FICO Amount Amount Basis (months) Balance $ 90+/FC/REO Loss to
Score $ $ (1) Date
MH Loans 704 156,273 126,107 33.5% 108 327,855 1.0% 6.5%
Portfolio 1
MH Loans 700 220,027 201,276 53.4% 138 434,743 1.4% 4.5%
Portfolio 2
Residential
Loans 714 61,451 45,900 12.2% 88 646,357 7.1% 0.3%
Portfolio 1
Residential
Loans 737 3,795 3,439 0.9% 68 83,950 0.0% 0.0%
Portfolio 2
TOTAL/WA 704 441,546 376,722 100.0% 120 1,492,905 2.0% 4.6%
(1) The percentage of loans that are 90+ days delinquent, in foreclosure or
considered real estate owned (REO).
Subprime Securities portfolio ($ in thousands):
Security Characteristics:
Average % of
Minimum Face Basis Total Principal Excess
Vintage Rating Number Amount Amount Basis Subordination Spread
(1) (2) $ $ (3) (4)
2003 B 15 19,957 11,641 6.7% 22.3% 4.1%
2004 B 28 85,651 31,163 18.0% 16.9% 4.0%
2005 CCC+ 26 96,682 30,728 17.7% 28.2% 4.7%
2006 CCC 10 90,837 48,184 27.8% 22.4% 4.9%
2007 & B 10 85,692 51,406 29.8% 19.3% 3.3%
Later
TOTAL/WA B- 89 378,819 173,122 100.0% 21.9% 4.2%
Collateral Characteristics:
Average
Loan Age Collateral 3 Month Delinquency Cumulative
Vintage(1) (months) Factor(5) CPR(6) 90+/FC/REO(7) Loss to Date
2003 91 0.10 7.0% 18.2% 3.1%
2004 77 0.14 8.9% 19.9% 3.5%
2005 65 0.20 9.3% 32.4% 8.3%
2006 53 0.41 9.4% 32.8% 15.3%
2007 & Later 39 0.48 8.8% 20.8% 12.5%
TOTAL/WA 60 0.29 9.0% 26.3% 9.6%
Real Estate ABS portfolios ($ in thousands):
Security Characteristics:
Average % of
Minimum Face Basis Total Principal Excess
Asset Type Rating Number Amount Amount Basis Subordination Spread
(2) $ $ (3) (4)
Manufactured BBB 9 48,275 46,935 84.0% 37.6% 1.6%
Housing
Small
Business CCC+ 13 30,709 8,925 16.0% 15.4% 2.9%
Loans
TOTAL/WA BB 22 78,984 55,860 100.0% 29.0% 2.1%
Collateral Characteristics:
Average
Loan Age Collateral 3 Month Delinquency Cumulative
Asset Type (months) Factor(5) CPR(6) 90+/FC/REO(7) Loss to Date
Manufactured 118 0.35 7.4% 3.2% 10.7%
Housing
Small Business 72 0.55 7.6% 29.4% 6.4%
Loans
TOTAL/WA 100 0.43 7.5% 13.4% 9.0%
(1) The year in which the securities were issued.
Ratings provided above were determined by third party rating agencies as of
a particular date, may not be current and are subject to change (including
(2) a "negative watch" assignment) at any time. The Company had approximately
$97 million of subprime and ABS securities that were on negative watch for
possible downgrade by at least one rating agency as of September 30, 2010.
(3) The percentage of the outstanding face amount of securities and residual
interests that is subordinate to the Company's investments.
The annualized amount of interest received on the underlying loans in
(4) excess of the interest paid on the securities, as a percentage of the
outstanding collateral balance.
(5) The ratio of original unpaid principal balance of loans still outstanding.
(6) Three month average constant prepayment rate.
(7) The percentage of underlying loans that are 90+ days delinquent, in
foreclosure or considered real estate owned (REO).
Corporate Assets
The Company owns $677 million of corporate assets (with a basis of $571 million), including REIT debt and corporate bank loans.
-- During the quarter, the Company had principal repayments of $16 million
and sold an $8 million REIT asset.
-- One corporate asset was upgraded (from a rating of CCC to B) and no
assets were affirmed or downgraded.
-- The weighted average carrying value of these assets changed from 73.3%
to 73.8%, an increase of $3 million or 1%, in the quarter.
REIT debt portfolio ($ in thousands):
Average
Face Basis % of Total
Minimum
Industry Rating(1) Number Amount $ Amount $ Basis
Retail BBB+ 10 75,665 71,877 19.2%
Diversified CCC+ 10 94,336 95,088 25.3%
Office BBB 11 115,469 117,041 31.2%
Multifamily BBB 3 12,765 12,824 3.4%
Hotel BBB 3 29,220 29,641 7.9%
Healthcare BBB- 5 41,600 41,689 11.1%
Storage A- 1 5,000 5,057 1.3%
Industrial BB- 1 2,000 2,069 0.6%
TOTAL/WA BB+ 44 376,055 375,286 100.0%
Corporate bank loan portfolio ($ in thousands):
Average % of
Minimum Face Basis Total
Industry Rating(1) Number Amount $ Amount $ Basis
Real Estate CC 3 31,996 30,102 15.3%
Media CC 2 111,764 42,051 21.5%
Resorts NR 1 112,191 82,191 42.0%
Restaurant B 2 18,159 15,813 8.1%
Transportation NR 1 26,992 25,643 13.1%
TOTAL/WA C 9 301,102 195,800 100.0%
Ratings provided above were determined by third party rating agencies as of
a particular date, may not be current and are subject to change (including
(1) a "negative watch" assignment) at any time. The Company had approximately
$2 million of REIT assets that were on negative watch for possible
downgrade by at least one rating agency as of September 30, 2010.
Conference Call
Newcastle's management will conduct a live conference call today, November 9, 2010, at 11:00 A.M. Eastern Time to review the financial results for the quarter ended September 30, 2010. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (888) 243-2046 (from within the U.S.) or (706) 679-1533 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Newcastle Third Quarter Earnings Call."
A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newcastleinv.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.
A telephonic replay of the conference call will also be available until 11:59 P.M. Eastern Time on Tuesday, November 23, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code "19732150."
About Newcastle
Newcastle Investment Corp. owns and manages a portfolio of diversified, credit sensitive real estate debt that is primarily financed with match funded debt. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.
Forward-Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to our liquidity, future losses and impairment charges, our ability to acquire assets with attractive returns and the delinquent and loss rates on our subprime portfolios. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. Newcastle can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Newcastle's expectations include, but are not limited to, the risk that the ongoing challenging credit and liquidity conditions continue to cause downgrades of a significant number of our securities and recording of additional impairment charges or reductions in shareholders' equity; the risk that we can find additional suitably priced investments; the risk that investments made or committed to be made cannot be financed on the basis and for the term at which we expect; the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; and the relative spreads between the yield on the assets we invest in and the cost and availability of debt and equity financing. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in the Company's Quarterly Report on Form 10-Q, which is available on the Company's website (www.newcastleinv.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Newcastle expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
Newcastle Investment Corp.
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended September Nine Months Ended September 30,
30,
2010 2009 2010 2009
Interest income $ 81,040 $ 75,222 $ 225,315 $ 287,033
Interest expense 42,547 52,438 131,277 167,154
Net interest income 38,493 22,784 94,038 119,879
Impairment
Valuation allowance (105,360 ) (6,926 ) (292,668 ) 83,093
(reversal) on loans
Other-than-temporary
impairment on 3,616 130,555 102,397 526,691
securities
Portion of
other-than-temporary
impairment on
securities
recognized in other
comprehensive income 6,425 (32,827 ) (15,575 ) (88,105 )
(loss),
net of reversal of
other comprehensive
loss into net income
(loss)
(95,319 ) 90,802 (205,846 ) 521,679
Net interest income
(loss) after 133,812 (68,018 ) 299,884 (401,800 )
impairment
Other Income (Loss)
Gain (loss) on
settlement of (1,134 ) (1,709 ) 17,497 7,788
investments, net
Gain on
extinguishment of 46,624 132,534 141,698 186,209
debt
Other income (loss), (8,828 ) (1,956 ) (12,606 ) 2,474
net
36,662 128,869 146,589 196,471
Expenses
Loan and security 1,116 1,097 3,473 3,869
servicing expense
General and
administrative 1,775 2,230 6,751 6,821
expense
Management fee to 4,258 4,492 12,993 13,475
affiliate
Depreciation and 36 73 161 218
amortization
7,185 7,892 23,378 24,383
Income (loss) from 163,289 52,959 423,095 (229,712 )
continuing operations
Income (loss) from
discontinued 213 79 186 (96 )
operations
Net Income (Loss) 163,502 53,038 423,281 (229,808 )
Preferred dividends (1,395 ) (3,375 ) (6,058 ) (10,126 )
Excess of carrying
amount of exchanged
preferred stock - - 43,043 -
over fair value of
consideration paid -
Note 9
Income (Loss)
Applicable to Common $ 162,107 $ 49,663 $ 460,266 $ (239,934 )
Stockholders
Income (loss) Per
Share of Common Stock
Basic $ 2.61 $ 0.94 $ 7.77 $ (4.54 )
Diluted $ 2.61 $ 0.94 $ 7.77 $ (4.54 )
Income (loss) from
continuing operations
per share of common
stock,
after preferred
dividends and excess
of carrying amount
of
exchanged preferred
stock over fair
value of
consideration paid
Basic $ 2.61 $ 0.94 $ 7.77 $ (4.54 )
Diluted $ 2.61 $ 0.94 $ 7.77 $ (4.54 )
Income (loss) from
discontinued
operations per share
of common stock
Basic $ - $ - $ - $ -
Diluted $ - $ - $ - $ -
Weighted Average
Number of Shares of
Common Stock
Outstanding
Basic 62,024,945 52,905,335 59,249,175 52,850,034
Diluted 62,024,945 52,905,335 59,249,175 52,850,034
Dividends Declared
per Share of Common $ - $ - $ - $ -
Stock
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
September 30, 2010
(Unaudited) December 31, 2009
Assets
Non-Recourse VIE Financing Structures
Real estate securities, available for $ 1,941,162 $ 1,784,487
sale
Real estate related loans, held for 736,386 554,367
sale, net
Residential mortgage loans, held for 127,830 -
investment, net
Residential mortgage loans, held for 255,452 380,123
sale, net
Subprime mortgage loans subject to 403,584 403,006
call option
Restricted cash 156,825 200,251
Derivative assets 4,403 -
Receivables and other assets 32,571 36,643
3,658,213 3,358,877
Recourse Financing Structures and
Unlevered Assets
Real estate securities, available for 1,117 46,308
sale
Real estate related loans, held for 32,821 19,495
sale, net
Residential mortgage loans, held for 343 3,524
sale, net
Operating real estate, held for sale 9,066 9,966
Cash and cash equivalents 58,336 68,300
Receivables and other assets 170 8,158
101,853 155,751
$ 3,760,066 $ 3,514,628
Liabilities and Stockholders' Equity
(Deficit)
Liabilities
Non-Recourse VIE Financing Structures
CDO bonds payable $ 3,393,139 $ 4,058,928
Other bonds payable 266,243 303,697
Notes payable 4,516 -
Financing of subprime mortgage loans 403,584 403,006
subject to call option
Derivative liabilities 220,447 203,054
Accrued expenses and other 7,076 2,992
liabilities
4,295,005 4,971,677
Recourse Financing Structures and
Other Liabilities
Repurchase agreements - 71,309
Junior subordinated notes payable 51,255 103,264
Derivative liabilities - 4,100
Due to affiliates 1,419 1,497
Accrued expenses and other 3,571 3,433
liabilities
56,245 183,603
4,351,250 5,155,280
Stockholders' Equity (Deficit)
Preferred stock, $0.01 par value,
100,000,000 shares authorized,
1,347,321 and 2,500,000 shares of
9.75% Series B Cumulative Redeemable
Preferred Stock
496,000 and 1,600,000 shares of 8.05%
Series C Cumulative Redeemable
Preferred Stock, and
620,000 and 2,000,000 shares of
8.375% Series D Cumulative Redeemable
Preferred Stock
liquidation preference $25.00 per
share, issued and outstanding as of
September 30, 2010 and
December 31, 2009, respectively 61,583 152,500
Common stock, $0.01 par value,
500,000,000 shares authorized,
62,024,945 and
52,912,513 shares issued and
outstanding at September 30, 2010 and
December 31, 2009, respectively 620 529
Additional paid-in capital 1,065,362 1,033,520
Accumulated deficit (1,527,368 ) (2,193,383 )
Accumulated other comprehensive (191,381 ) (633,818 )
income (loss)
(591,184 ) (1,640,652 )
$ 3,760,066 $ 3,514,628
Newcastle Investment Corp.
Reconciliation of Net Interest Income Less Expenses (Net of Preferred
Dividends)
(dollars in thousands)
(Unaudited)
Three Months Ended September Nine Months Ended September 30,
30,
2010 2009 2010 2009
Income (Loss)
Applicable to $ 162,107 $ 49,663 $ 460,266 $ (239,934 )
Common
Stockholders
Add (Deduct):
Impairment
(including
the reversal
of prior (95,319 ) 90,802 (205,846 ) 521,679
valuation
allowance on
loans)
Other (36,662 ) (128,869 ) (146,589 ) (196,471 )
(Income) Loss
Excess of
carrying
amount of
exchanged
preferred - - (43,043 ) -
stock over
fair value of
consideration
paid
Loss from
discontinued (213 ) (79 ) (186 ) 96
operations
Net Interest
Income less
Expenses (Net $ 29,913 $ 11,517 $ 64,602 $ 85,370
of Preferred
Dividends)
Source: Newcastle Investment Corp.
Released November 9, 2010