Quarterly report pursuant to Section 13 or 15(d)

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
 9 Months Ended
Sep. 30, 2013
Pro Forma Condensed Consolidated Financial Information  
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
17. 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. This unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the other information contained in these financial statements and related notes and with Newcastle’s historical consolidated financial statements.

 

The unaudited pro forma information set forth below reflects the historical information of Newcastle, as adjusted to give effect to the New Residential spin-off transaction.

 

The unaudited pro forma condensed consolidated statement of operations gives effect to the spin-off of New Residential as if the spin-off had occurred on January 1, 2013 based on New Residential’s historical consolidated statement of operations.

 

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 Residential for any future date or period.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

Nine months ended September 30, 2013

 

    Newcastle     Pro Forma Adjustments     Newcastle  
    Consolidated     New     Consolidated  
    Historical (A)     Residential (B)     Pro Forma  
                         
Interest income   $ 171,642     $ (12,019 )   $ 159,623  
Interest expense     65,263       (2,152 )     63,111  
Net interest income     106,379       (9,867 )     96,512  
                         
Impairment/(Reversal)                        
Valuation allowance (reversal) on loans     (11,473 )     —       (11,473 )
Other-than-temporary impairment on securities     4,405       (3,756 )     649  
                         
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  
      (7,024 )     (3,756 )     (10,780 )
                         
Net interest income after impairment/reversal     113,403       (6,111 )     107,292  
                         
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       (58 )     6,393  
Gain on extinguishment of debt     4,565       —       4,565  
Equity in earnings of Local Media Group     1,045       —       1,045  
Other income, net     9,554       —       9,554  
      21,615       (58 )     21,557  
Expenses                        
Loan and security servicing expense     2,963       (108 )     2,855  
Property operating expenses     32,576       —       32,576  
General and administrative expense     23,507       (38 )     23,469  
Management fee to affiliate     24,879       (4,134 )     20,745  
Depreciation and amortization     15,881       —       15,881  
      99,806       (4,280 )     95,526  
Income (loss) from continuing operations     87,637       (1,889 )     85,748  
Preferred dividends     (4,185 )     —       (4,185 )
                         
Income (loss) from continuing operations after preferred dividends   $ 83,452     $ (1,889 )   $ 81,563  
                         
Income (loss) from continuing operations per share of common stock, after preferred dividends                        
Basic   $ 0.32             $ 0.31  
Diluted   $ 0.31             $ 0.30  
                         
Weighted Average Number of Shares of Common Stock Outstanding                        
Basic     262,792,986               262,792,986  
Diluted     269,057,682               269,057,682  

 

(A) Represents Newcastle’s historical consolidated statement of operations for the nine months ended September 30, 2013, excluding discontinued operations.

(B) Represents the portion of New Residential’s historical consolidated statement of operations for the period from January 1, 2013 to May 15, 2013 that is not included in Newcastle’s income (loss) from discontinued operations. After the May 15, 2013 spin-off of New Residential from Newcastle, no results of New Residential were reported in Newcastle’s consolidated statement of operations.