Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information was derived from the application of pro forma adjustments to the consolidated financial statements of Newcastle Investment Corp. and its subsidiaries (collectively, “Newcastle”). These unaudited pro forma condensed consolidated financial statements should be read in conjunction with the related notes to these financial statements and with Newcastle’s historical consolidated financial statements and the related notes included in Newcastle’s previous filings with the Securities and Exchange Commission.

The unaudited pro forma information set forth below reflects the historical information of Newcastle, as adjusted to give effect to the following transaction:

 

   

A spin-off in which Newcastle would separate certain of its investments from the rest of its assets by distributing shares of common stock of New Residential Investment Corp. (“New Residential”), which is currently a wholly-owned subsidiary of Newcastle.

The unaudited pro forma condensed consolidated statements of operations give effect to the spin-off of New Residential as if the spin-off had occurred on January 1, 2012 based on New Residential’s historical consolidated statement of operations. The unaudited pro forma condensed consolidated balance sheet assumes that the spin-off of New Residential occurred on March 31, 2013.

In the opinion of management, all adjustments necessary to reflect the effects of the potential transaction described above have been included and are based upon available information and assumptions that Newcastle believes are reasonable.

Further, the historical financial information presented herein has been adjusted to give pro forma effect to events that Newcastle believes are factually supportable and which are expected to have a continuing impact on Newcastle’s results. However, such adjustments are estimates and may not prove to be accurate. Information regarding these adjustments is subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.

These unaudited pro forma condensed consolidated financial statements are provided for information purposes only. The unaudited pro forma condensed consolidated statements of operations and the unaudited pro forma condensed consolidated balance sheet do not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the dates indicated, nor do they represent the financial position or results of operations of either Newcastle or New Residential for any future date or period.


UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

At March 31, 2013

 

     Newcastle
Consolidated
Historical (A)
    Pro Forma
Adjustments
New Residential
    Newcastle
Consolidated
Pro Forma
 

Assets

      

Real estate securities, available-for-sale

   $ 2,495,473      $ (1,598,868 )(B)    $ 896,605   

Real estate related loans, held-for-sale, net

     851,525        —           851,525   

Residential mortgage loans, held-for-investment, net

     317,708        (35,484 )(C)      282,224   

Residential mortgage loans, held-for-sale, net

     2,380        —           2,380   

Investments in excess mortgage servicing rights at fair value

     236,555        (236,555 )(C)      —      

Investments in equity method investees at fair value

     102,588        (102,588 )(C)      —      

Subprime mortgage loans subject to call option

     406,115        —          406,115   

Investments in real estate, net of accumulated depreciation

     168,515        —          168,515   

Intangibles, net of accumulated amortization

     16,218        —          16,218   

Other investments

     24,907        —          24,907   

Cash and cash equivalents

     534,772        (429,553 )(D)      105,219 (H) 

Restricted cash

     11,494        —          11,494   

Derivative assets

     176        —          176   

Receivables and other assets

     27,577        (450 )(C)      27,127   
  

 

 

   

 

 

   

 

 

 
   $ 5,196,003      $ (2,403,498   $ 2,792,505   
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

      

Liabilities

      

CDO bonds payable

   $ 1,015,560      $ —        $ 1,015,560   

Other bonds and notes payable

     173,723        —          173,723   

Repurchase agreements

     1,473,586        (1,182,212 )(E)      291,374   

Mortgage notes payable

     120,525        —          120,525   

Financing of subprime mortgage loans subject to call option

     406,115        —          406,115   

Junior subordinated notes payable

     51,242        —          51,242   

Derivative liabilities

     26,612        —          26,612   

Dividends payable

     56,596        —          56,596   

Due to affiliates

     4,611        (938 )(F)      3,673   

Purchase price payable on investments in excess mortgage servicing rights

     59        (59 )(C)      —      

Accrued expenses and other liabilities

     17,875        (2,780 )(C)      15,095   
  

 

 

   

 

 

   

 

 

 
   $ 3,346,504      $ (1,185,989   $ 2,160,515   
  

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

      

Preferred stock

   $ 61,583      $ —        $ 61,583   

Common stock

     2,530        —          2,530   

Additional paid-in capital

     2,472,931        —          2,472,931   

Accumulated deficit

     (790,143     (1,185,800 )(G)      (1,975,943

Accumulated other comprehensive income (loss)

     102,598        (31,709 )(C)      70,889   
  

 

 

   

 

 

   

 

 

 
   $ 1,849,499      $ (1,217,509   $ 631,990   
  

 

 

   

 

 

   

 

 

 
   $ 5,196,003      $ (2,403,498   $ 2,792,505   
  

 

 

   

 

 

   

 

 

 


NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

(A) Represents Newcastle’s historical consolidated balance sheet at March 31, 2013.
(B) Represents the fair value of New Residential’s real estate securities at March 31, 2013 adjusted to include securities owned by Newcastle at March 31, 2013 and contributed by Newcastle to New Residential subsequent to March 31, 2013.
(C) Represents New Residential’s assets, liabilities and accumulated other comprehensive income at March 31, 2013.
(D) Represents New Residential’s cash and cash equivalents at May 15, 2013 and the cash used to purchase a consumer loan portfolio, which was a part of New Residential’s initial holdings, subsequent to March 31, 2013.
(E) Represents New Residential’s repurchase agreements at March 31, 2013 adjusted for the additional repurchase agreements to finance the real estate securities described in (B) above.
(F) Represents a reduction of Newcastle’s due to affiliates for the allocation of one month of accrued and unpaid management fees from Newcastle to New Residential.
(G) Represents the distribution of New Residential common stock to Newcastle shareholders.
(H) Represents Newcastle’s cash and cash equivalents at March 31, 2013 adjusted to subtract New Residential’s cash and cash equivalents at May 15, 2013 and the cash used to purchase a consumer loan portfolio, which was a part of New Residential’s initial holdings, subsequent to March 31, 2013.


UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended March 31, 2013

 

     Newcastle
Consolidated
Historical (A)
    Pro Forma
Adjustments
New Residential (B)
    Newcastle
Consolidated
Pro Forma
 

Interest income

   $ 71,367      $ (16,191   $ 55,176   

Interest expense

     22,710        (899     21,811   
  

 

 

   

 

 

   

 

 

 

Net interest income

     48,657        (15,292     33,365   
  

 

 

   

 

 

   

 

 

 

Impairment/(Reversal)

      

Valuation allowance (reversal) on loans

     2,234        —          2,234   

Other-than-temporary impairment on securities

     422        —          422   

Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of the reversal of other comprehensive loss into net income (loss)

     117        —          117   
  

 

 

   

 

 

   

 

 

 
     2,773        —          2,773   
  

 

 

   

 

 

   

 

 

 

Net interest income after impairment/reversal

     45,884        (15,292     30,592   

Other Revenues

      

Rental income

     12,887        —          12,887   

Care and ancillary income

     613        —          613   
  

 

 

   

 

 

   

 

 

 

Total other revenues

     13,500        —          13,500   
  

 

 

   

 

 

   

 

 

 

Other Income (Loss)

      

Gain (loss) on settlement of investments, net

     (3     —          (3

Gain on extinguishment of debt

     1,206        —          1,206   

Change in fair value of investments in excess mortgage servicing rights

     1,858        (1,858     —     

Change in fair value of investments in equity method investees

     969        (969     —     

Other income (loss), net

     4,567        —          4,567   
  

 

 

   

 

 

   

 

 

 
     8,597        (2,827     5,770   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Loan and security servicing expense

     1,034        —          1,034   

Property operating expenses

     8,363        —          8,363   

General and administrative expense

     6,911        (2,719     4,192   

Management fee to affiliate

     9,565        (2,325     7,240   

Depreciation and amortization

     4,079        —           4,079   
  

 

 

   

 

 

   

 

 

 
     29,952        (5,044     24,908   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations

     38,029        (13,075     24,954   

Preferred dividends

     (1,395     —           (1,395
  

 

 

   

 

 

   

 

 

 

Income from continuing operations after preferred dividends

   $ 36,634      $ (13,075   $ 23,559   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations per share of common stock, after preferred dividends

      

Basic

   $ 0.16        $ 0.10   
  

 

 

     

 

 

 

Diluted

   $ 0.15        $ 0.10 (C) 
  

 

 

     

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

      

Basic

     235,136,756          235,136,756   
  

 

 

     

 

 

 

Diluted

     240,079,144          240,079,144 (C) 
  

 

 

     

 

 

 


UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

12 Months Ended December 31, 2012

 

     Newcastle
Consolidated
Historical (A)
    Pro Forma
Adjustments
New Residential (B)
    Newcastle
Consolidated
Pro Forma
 

Interest income

   $ 310,459      $ (33,759   $ 276,700   

Interest expense

     109,924        (704     109,220   
  

 

 

   

 

 

   

 

 

 

Net interest income

     200,535        (33,055     167,480   
  

 

 

   

 

 

   

 

 

 

Impairment/(Reversal)

      

Valuation allowance (reversal) on loans

     (24,587     —          (24,587

Other-than-temporary impairment on securities

     19,359        —          19,359   

Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of the reversal of other comprehensive loss into net income (loss)

     (436     —          (436
  

 

 

   

 

 

   

 

 

 
     (5,664     —          (5,664
  

 

 

   

 

 

   

 

 

 

Net interest income after impairment/reversal

     206,199        (33,055     173,144   

Other Revenues

      

Rental income

     17,081        —          17,081   

Care and ancillary income

     2,994        —          2,994   
  

 

 

   

 

 

   

 

 

 

Total other revenues

     20,075        —          20,075   
  

 

 

   

 

 

   

 

 

 

Other Income (Loss)

      

Gain (loss) on settlement of investments, net

     232,897        —          232,897   

Gain on extinguishment of debt

     24,085        —          24,085   

Change in fair value of investments in excess mortgage servicing rights

     9,023        (9,023     —     

Other income (loss), net

     13,712        (8,400     5,312   
  

 

 

   

 

 

   

 

 

 
     279,717        (17,423     262,294   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Loan and security servicing expense

     4,260        —          4,260   

Property operating expenses

     12,943        —          12,943   

General and administrative expense

     22,942        (5,878     17,064   

Management fee to affiliate

     24,693        (3,353     21,340   

Depreciation and amortization

     6,975        —          6,975   
  

 

 

   

 

 

   

 

 

 
     71,813        (9,231     62,582   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations

     434,178        (41,247     392,931   

Preferred dividends

     (5,580     —          (5,580
  

 

 

   

 

 

   

 

 

 

Income from continuing operations after preferred dividends

   $ 428,598      $ (41,247   $ 387,351   
  

 

 

   

 

 

   

 

 

 

Income from continuing operations per share of common stock, after preferred dividends

      

Basic

   $ 2.97        $ 2.69   
  

 

 

     

 

 

 

Diluted

   $ 2.94        $ 2.66 (C) 
  

 

 

     

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

      

Basic

     144,146,370          144,146,370   
  

 

 

     

 

 

 

Diluted

     145,766,413          145,766,413 (C) 
  

 

 

     

 

 

 


NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED STATEMENT OF OPERATIONS

 

(A) Represents Newcastle’s historical consolidated statement of operations for the three months ended March 31, 2013 and the year ended December 31, 2012.
(B) Represents New Residential’s historical consolidated statement of operations for the three months ended March 31, 2013 and the year ended December 31, 2012.
(C) Does not include potential additional diluted shares as a result of changes to outstanding Newcastle options from the spin-off. The number of additional diluted shares will depend on various factors, including the share prices of Newcastle and New Residential subsequent to the spin-off.