Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS

v2.4.1.9
DISCONTINUED OPERATIONS
 12 Months Ended
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
3. DISCONTINUED OPERATIONS

On May 15, 2013, Newcastle completed the spin-off of New Residential from Newcastle.

As previously discussed in Note 1, on February 13, 2014, Newcastle completed the spin-off of New Media from Newcastle.

The following table presents the carrying value of the assets and liabilities of New Media, immediately preceding the February 13, 2014 spin-off and at December 31, 2013.

 
February 13, 2014
 
December 31, 2013
Assets
 
 
 
Property, plant and equipment, net
$
266,385

 
$
270,188

Intangibles, net
144,664

 
145,400

Goodwill
126,686

 
126,686

Cash and cash equivalents
23,845

 
31,811

Restricted cash
6,477

 
6,477

Receivables and other assets
101,940

 
110,184

Total assets
$
669,997

 
$
690,746

 
 
 
 
Liabilities
 
 
 
Credit facilities - media
177,955

 
182,016

Accounts payable, accrued expenses and other liabilities
100,695

 
113,251

Total liabilities
278,650

 
295,267

 
 
 
 
Net Assets
$
391,347

 
$
395,479


As previously discussed in Note 1, on November 6, 2014, Newcastle completed the spin-off of New Senior from Newcastle.

The following table presents the carrying value of the assets and liabilities of New Senior, immediately preceding the November 6, 2014 spin-off and at December 31, 2013.
 
November 6, 2014
 
December 31, 2013
Assets
 
 
 
Investment in senior housing real estate, net
$
1,574,048

 
$
1,362,900

Intangibles, net
107,658

 
100,858

Cash and cash equivalents
245,246

 
31,263

Receivables and other assets
95,942

 
55,430

Total assets
$
2,022,894

 
$
1,550,451

 
 
 
 
Liabilities
 
 
 
Mortgage notes payable
$
1,260,633

 
$
1,076,828

Accounts payable, accrued expenses and other liabilities
89,245

 
61,886

Total liabilities
$
1,349,878

 
$
1,138,714

 
 
 
 
Net Assets
$
673,016

 
$
411,737


As of December 31, 2014, Newcastle plans to sell its commercial real estate properties in Beavercreek, OH.
As a result of the spin-offs and the plan to sell the commercial real estate properties in Beavercreek, OH, for all periods presented, the assets, liabilities and results of operations of those components of Newcastle’s operations that (i) were part of the spin-offs and/or (ii) represent operations Newcastle plans to sell in which it has no significant continuing involvement, are presented separately in discontinued operations in Newcastle’s consolidated financial statements.

With respect to the planned sale of the commercial real estate properties in Beavercreek, Ohio, the assets of discontinued operations include $6.6 million of investments in other real estate and $0.2 million of cash and cash equivalents, restricted cash and receivables and other assets, as of December 31, 2014 and 2013. The liabilities of discontinued operations include $0.5 million and $0.4 million of accounts payable, accrued liabilities and other liabilities, as of December 31, 2014 and 2013, respectively.

Results of operations from discontinued operations were as follows:
 
Year Ended December 31,
 
2014
 
2013
 
2012
Interest income
$
—

 
$
15,098

 
$
27,508

Interest expense
49,705

 
12,372

 
1,688

Net interest income (expense)
(49,705
)
 
2,726

 
25,820

 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
Media income
68,212

 
61,637

 
—

Rental income
194,729

 
74,936

 
17,081

Care and ancillary income
20,428

 
12,387

 
2,994

Total operating revenues
283,369

 
148,960

 
20,075

Other Income
 
 
 
 
 
Other income (loss)
1,444

 
(2,404
)
 
17,339

Change in fair value of investments in excess mortgage servicing rights
—

 
3,894

 
—

Change in fair value of investments in equity method investees
—

 
885

 
—

Earnings from investments in equity method investees
—

 
20,156

 
—

Total other income
1,444

 
22,531

 
17,339

 
 
 
 
 
 
Expenses
 
 
 
 
 
Property operating expenses
152,896

 
53,733

 
12,969

Media operating expenses
—

 
49,092

 
—

General and administrative expense
20,096

 
21,742

 
11,743

Depreciation and amortization
90,627

 
30,969

 
6,975

Management fee to affiliate
7,789

 
5,034

 
1,082

Income tax expense (benefit)
(1,111
)
 
2,100

 
—

Total expenses
270,297

 
162,670

 
32,769

Income (loss) from discontinued operations, net of tax
$
(35,189
)
 
$
11,547

 
$
30,465


The May 15, 2013 spin-off of New Residential also resulted in a $1.2 billion reduction in the basis upon which Newcastle’s management fees are computed (and an equivalent reduction in the basis upon which the incentive compensation threshold is computed), as well as a reduction in the strike price of Newcastle’s then outstanding options (see Note 12).

The February 13, 2014 spin-off of New Media resulted in a $0.4 billion reduction in the basis upon which Newcastle’s management fees are computed (and an equivalent reduction in the basis upon which the incentive compensation threshold is computed), as well as a reduction in the strike price of Newcastle’s then outstanding options (see Note 12).

The November 6, 2014 spin-off of New Senior resulted in a $0.7 billion reduction in the basis upon which Newcastle’s management fees are computed (and an equivalent reduction in the basis upon which the incentive compensation threshold is computed), as well as a reduction in the strike price of Newcastle’s then outstanding options (see Note 12).