Quarterly report pursuant to Section 13 or 15(d)

EQUITY AND EARNINGS PER SHARE

v2.4.0.8
EQUITY AND EARNINGS PER SHARE
 6 Months Ended
Jun. 30, 2014
Stockholders' Equity Note [Abstract]  
EQUITY AND EARNINGS PER SHARE
13.    EQUITY AND EARNINGS PER SHARE
 
A. Stockholder's Equity
 
In connection with the spin-off of New Media on February 13, 2014, the strike price of each Newcastle option was reduced by $0.89 to reflect the adjusted value of Newcastle’s shares as a result of the spin-off. The adjusted value was calculated based on the five day average closing price of the New Media‘s shares subsequent to the spin-off date.
 
Newcastle’s outstanding options at June 30, 2014 consisted of the following:
 
Number of Options
 
Strike Price (A)
 
Maturity Date
 
162,500
 
12.84
 
11/22/2014
 
330,000
 
12.03
 
1/12/2015
 
2,000
 
12.62
 
8/1/2015
 
170,000
 
11.95
 
11/1/2016
 
242,000
 
12.80
 
1/23/2017
 
456,000
 
11.19
 
4/11/2017
 
1,495,166
 
1.51
 
3/29/2021
 
2,294,833
 
0.86
 
9/27/2021
 
2,000
 
1.07
 
12/20/2021
 
1,867,167
 
1.61
 
4/3/2022
 
2,265,000
 
1.84
 
5/21/2022
 
2,499,167
 
1.83
 
7/31/2022
 
5,750,000
 
3.03
 
1/11/2023
 
2,300,000
 
3.54
 
2/15/2023
 
4,025,000
 
3.76
 
6/17/2023
 
5,795,095
 
4.04
 
11/22/2023
Total W/A
29,655,928
 
$
3.25
 
 
 
(A)
The strike prices are subject to adjustment in connection with return of capital dividends. In the first quarter of 2014 strike prices were adjusted by $0.32 reflecting the portion of Newcastle’s 2013 dividends which was deemed return of capital.
 
As of June 30, 2014, Newcastle’s outstanding options were summarized as follows:
 
Issued Prior to 2011
 
Issued in 2011 and thereafter
 
Total
Held by the Manager
1,075,130
 
24,396,428
 
25,471,558
Issued to the Manager and subsequently transferred to certain of the Manager's employees
285,370
 
3,895,000
 
4,180,370
Issued to the independent directors
2,000
 
2,000
 
4,000
Total
1,362,500
 
28,293,428
 
29,655,928
Weighted average strike price
$
11.97
 
$
2.83
 
$
3.25
 
On March 14, 2014, Newcastle declared a quarterly dividend of $0.10 per common share, and declared dividends of $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively, for the quarter ended March 31, 2014. Dividends totaling $36.5 million were paid in April 2014.
 
On June 13, 2014, Newcastle declared a quarterly dividend of $0.10 per common share, and declared dividends of $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively, for the quarter ended June 30, 2014. Dividends totaling $36.6 million were paid in July 2014.
 
B. Option Exercises
 
In connection with his resignation, Newcastle's former COO exercised 215,000 options with a weighted average exercise price of $1.12 on May 7, 2014. Upon exercise, 215,000 shares of Newcastle common stock were issued to the former COO. In addition, 88,650 options were forfeited and transferred back to the Manager.
 
C. Earnings Per Share
 
Newcastle is required to present both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted EPS is calculated by dividing net income available for common stockholders by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period. Due to rounding, income per share from continuing operations and income per share from discontinued operations may not sum to the income per share of common stock. Newcastle’s common stock equivalents are its outstanding stock options. As of June 30, 2014, Newcastle had 1,362,500 antidilutive options. During the six months ended June 30, 2014 and 2013, based on the treasury stock method, Newcastle had 11,436,921 and 5,558,512 dilutive common stock equivalents, respectively, resulting from its outstanding options. During the three months ended June 30, 2014 and 2013, based on the treasury stock method, Newcastle had 11,262,505 and 6,167,876 dilutive common stock equivalents, respectively, resulting from its outstanding options. Net income available for common stockholders is equal to net income less preferred dividends and net income attributable to noncontrolling interest.