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”). The unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed consolidated balance sheet 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 transactions:

 

    The New Media Investment Group Inc. (“New Media”) February 2014 spin-off transaction from Newcastle.

The unaudited pro forma condensed consolidated statement of operations gives effect to the above transaction as if it occurred on January 1, 2012. The unaudited pro forma condensed consolidated balance sheet assumes that the Media spin-off occurred on September 30, 2013.

In the opinion of management, all adjustments necessary to reflect the effects of the 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 statement of operations does not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the date indicated, nor does it represent the results of operations of either Newcastle or New Media for any future date or period.


NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

At September 30, 2013

 

     Newcastle
Consolidated
Historical (A)
    New Media
Spin-Off
    Newcastle
Consolidated
Pro Forma
 

Assets

      

Real estate securities, available-for-sale

   $ 825,499      $ —        $ 825,499   

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

     795,297        (243,006 )(B)      552,291   

Residential mortgage loans, held-for-investment, net

     260,463        —          260,463   

Residential mortgage loans, held-for-sale, net

     2,236        —          2,236   

Subprime mortgage loans subject to call option

     406,217        —          406,217   

Investments in real estate, net of accumulated depreciation

     409,041        —          409,041   

Intangibles, net of accumulated amortization

     41,371        —          41,371   

Equity method investment in Local Media Group

     57,384        (57,384 )(C)      —     

Other investments

     25,133        —          25,133   

Cash and cash equivalents

     92,134        —          92,134   

Restricted cash

     1,827        —          1,827   

Derivative assets

     43,172        —          43,172   

Receivables and other assets

     27,003        —          27,003   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 2,986,777      $ (300,390   $ 2,686,387   
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

      

Liabilities

      

CDO bonds payable

   $ 718,473      $ (32,337 )(D)      686,136   

Other bonds and notes payable

     153,798        —          153,798   

Repurchase agreements

     376,886        —          376,886   

Mortgage notes payable

     335,238        —          335,238   

Financing of subprime mortgage loans subject to call option

     406,217        —          406,217   

Junior subordinated notes payable

     51,239        —          51,239   

Derivative liabilities

     17,115        —          17,115   

Dividends payable

     30,279        —          30,279   

Due to affilaites

     4,911        —          4,911   

Accrued expenses and other liabilities

     25,266        —          25,266   

Liabilities of discontinued operations

     2,380        —          2,380   
  

 

 

   

 

 

   

 

 

 

Total Liabilities

   $ 2,121,802      $ (32,337   $ 2,089,465   
  

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

      

Preferred stock

   $ 61,583      $ —          61,583   

Common stock

     2,935        —          2,935   

Additional paid-in capital

     2,670,442        (268,053 )(E)      2,402,389   

Accumulated deficit

     (1,941,805     —          (1,941,805

Accumulated other comprehensive income (loss)

     71,820        —          71,820   
  

 

 

   

 

 

   

 

 

 

Total Equity

   $ 864,975      $ (268,053   $ 596,922   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,986,777      $ (300,390   $ 2,686,387   
  

 

 

   

 

 

   

 

 

 

 

(A) Represents Newcastle’s historical consolidated balance sheet at September 30, 2013.
(B) Represents the carrying value of the outstanding GateHouse debt held by Newcastle at September 30, 2013.
(C) Represents the carrying value of the equity method investment in Local Media Group at September 30, 2013.
(D) Represents a reduction of CDO bonds payable by the carrying value of Gatehouse debt held in CDOs.
(E) Represents a reduction in Newcastle’s equity as a result of the distribution of New Residential stock to Newcastle shareholders.


NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Nine Months ended September 30, 2013

 

           Pro Forma Adjustment        
     Newcastle
Consolidated
Historical (A)
    New Media Spin-Off     Newcastle
Consolidated
Pro Forma
 

Interest income

   $ 171,642      $ (7,369 ) (B)    $ 164,273   

Interest expense

     65,263        (398 ) (C)      64,865   
  

 

 

   

 

 

   

 

 

 

Net interest income

     106,379        (6,971     99,408   
  

 

 

   

 

 

   

 

 

 

Impairment (Reversal)

      

Valuation allowance (reversal) on loans

     (11,473     12,027  (D)      554   

Other-than-temporary impairment on securities

     4,405        —          4,405   

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)

     44        —          44   
  

 

 

   

 

 

   

 

 

 

Total Impairment (reversal)

     (7,024     12,027        5,003   
  

 

 

   

 

 

   

 

 

 

Net interest income (loss) after impairment/reversal

     113,403        (18,998     94,405   

Other Revenues

      

Rental income

     44,344        —          44,344   

Care and ancillary income

     8,081        —          8,081   
  

 

 

   

 

 

   

 

 

 

Total other revenues

     52,425        —          52,425   
  

 

 

   

 

 

   

 

 

 

Other Income (Loss)

      

Gain (loss) on settlement of investments, net

     6,451        —          6,451   

Gain on extinguishment of debt

     4,565        —          4,565   

Equity in earnings of Local Media Group

     1,045        (1,045 ) (E)      —     

Other income, net

     9,554        (1,541 ) (F)      8,013   
  

 

 

   

 

 

   

 

 

 

Total other income

     21,615        (2,586     19,029   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Loan and security servicing expense

     2,963        —          2,963   

Property operating expenses

     32,576        —          32,576   

General and administrative expense

     23,507        —          23,507   

Management fee to affiliate

     24,879        —          24,879   

Depreciation and amortization

     15,881        —          15,881   
  

 

 

   

 

 

   

 

 

 

Total expenses

     99,806        —          99,806   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     87,637        (21,584     66,053   

Preferred dividends

     (4,185     —          (4,185
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations after preferred dividends

   $ 83,452      $ (21,584   $ 61,868   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations per share of commonstock, after preferred dividends

      

Basic

   $ 0.32        $ 0.24   
  

 

 

     

 

 

 

Diluted

   $ 0.31        $ 0.23  (G) 
  

 

 

     

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

      

Basic

     262,792,986          262,792,986   
  

 

 

     

 

 

 

Diluted

     269,057,682          269,057,682  (G) 
  

 

 

     

 

 

 


NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Year ended December 31, 2012

 

           Pro Forma Adjustment        
     Newcastle
Consolidated
Historical (A)
    New Media
Spin-Off
    Newcastle
Consolidated
Pro Forma
 

Interest income

   $ 282,951      $ (2,712 )(B)    $ 280,239   

Interest expense

     109,924        (531 )(C)      109,393   
  

 

 

   

 

 

   

 

 

 

Net interest income

     173,027        (2,181     170,846   
  

 

 

   

 

 

   

 

 

 

Impairment (Reversal)

      

Valuation allowance (reversal) on loans

     (24,587     17,414 (D)      (7,173

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
  

 

 

   

 

 

   

 

 

 

Total Impairment (reversal)

     (5,664     17,414        11,750   
  

 

 

   

 

 

   

 

 

 

Net interest income (loss) after impairment/reversal

     178,691        (19,595     159,096   

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   

Other income, net

     5,312        (59 )(F)      5,253   
  

 

 

   

 

 

   

 

 

 

Total other income

     262,294        (59     262,235   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Loan and security servicing expense

     4,260        —          4,260   

Property operating expenses

     12,943        —          12,943   

General and administrative expense

     17,247        —          17,247   

Management fee to affiliate

     24,693        —          24,693   

Depreciation and amortization

     6,975        —          6,975   
  

 

 

   

 

 

   

 

 

 

Total expenses

     66,118        —          66,118   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     394,942        (19,654     375,288   

Preferred dividends

     (5,580     —          (5,580
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations after preferred dividends

   $ 389,362      $ (19,654   $ 369,708   
  

 

 

   

 

 

   

 

 

 

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

      

Basic

   $ 2.70        $ 2.56   
  

 

 

     

 

 

 

Diluted

   $ 2.67        $ 2.54 (G) 
  

 

 

     

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

      

Basic

     144,146,370          144,146,370   
  

 

 

     

 

 

 

Diluted

     145,766,413          145,766,413 (G) 
  

 

 

     

 

 

 

 

(A) Represents Newcastle’s historical consolidated statement of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012.
(B) Represents the interest income recognized by Newcastle related to GateHouse debt.
(C) Represents a reduction in interest expense as a result of the pro forma paydown of debt related to GateHouse debt held in CDOs. This interest expense was calculated based on a weighted average cost of debt of 1.64%. A 1/8% increase (decrease) in the benchmark interest rate would result in an increase (decrease) in interest expense of approximately $40 thousand for the year ended December 31, 2012.
(D) Represents the valuation allowance (reversal) recognized by Newcastle related to GateHouse debt.
(E) Represents the equity in earnings of Local Media Group recognized by Newcastle.
(F) Represents the other income recognized by Newcastle related to GateHouse debt.
(G) 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 Media subsequent to the spin-off.