| Schedule of pro forma condensed consolidated statements of income |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2013
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Pro Forma Adjustments
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Newcastle
Consolidated
Historical (A)
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New Residential
Spin-off (B)
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Holiday
Portfolio
Acquisition(H)
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Newcastle
Consolidated Pro
Forma
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Interest income
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$
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213,715
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$
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(12,019
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)
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$
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—
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201,696
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Interest expense
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89,382
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(2,152
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)
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33,844
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(C)
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121,074
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Net interest income
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124,333
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(9,867
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)
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(33,844
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)
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80,622
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Impairment (Reversal)
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Valuation allowance (reversal) on loans
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(25,035
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)
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—
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—
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(25,035
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)
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Other-than-temporary impairment on securities
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5,222
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(3,756
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)
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—
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1,466
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Impairment of long-lived assets
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—
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—
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—
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—
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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)
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44
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—
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—
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44
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(19,769
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)
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(3,756
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)
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—
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(23,525
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)
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Net interest income (loss) after impairment/reversal
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144,102
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(6,111
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)
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(33,844
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)
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104,147
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Other Revenues
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Rental income
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74,936
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—
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87,625
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(D)
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162,561
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Care and ancillary income - senior housing
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12,387
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—
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—
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12,387
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Total other revenues
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87,323
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—
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87,625
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174,948
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Other Income (Loss)
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Gain (loss) on settlement of investments, net
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17,369
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(58
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—
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17,311
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Gain on extinguishment of debt
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4,565
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—
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—
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4,565
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Other income (loss), net
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13,367
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—
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—
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13,367
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35,301
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(58
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)
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—
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35,243
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Expenses
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Loan and security servicing expense
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3,857
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(108
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)
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—
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3,749
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Property operating expenses
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53,718
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—
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—
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53,718
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General and administrative expense
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35,196
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(38
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)
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—
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35,158
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Management fee to affiliate
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33,091
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(4,134
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)
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4,038
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(E)
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32,995
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Depreciation and amortization
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27,128
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—
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48,264
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(F)
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75,392
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152,990
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(4,280
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)
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52,302
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201,012
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Income (loss) from continuing operations before income tax
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113,736
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(1,889
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1,479
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113,326
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Income tax expense
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1,038
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—
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—
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1,038
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Income from continuing operations
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112,698
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(1,889
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)
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1,479
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112,288
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Income from discontinued operations
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39,643
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—
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—
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39,643
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Net income
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152,341
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(1,889
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)
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1,479
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151,931
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Preferred dividends
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(5,580
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)
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—
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—
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(5,580
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Net income attributable to noncontrolling interests
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(928
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—
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—
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(928
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Income (loss) applicable to common stockholders
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$
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145,833
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$
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(1,889
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$
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1,479
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$
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145,423
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Income (loss) from continuing operations per share of common
stock, after preferred dividends and noncontrolling interest
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Basic
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0.39
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0.32
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(G)
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Diluted
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0.37
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0.32
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(G)
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Weighted Average Number of Shares of Common Stock Outstanding
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Basic
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276,881,294
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328,481,457
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(G)
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Diluted
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283,309,645
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334,909,808
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(G)
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See notes on next page.
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(A)
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Represents Newcastle’s historical consolidated statement of income
for the year ended December 31, 2013, excluding discontinued
operations.
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(B)
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Represents the portion of New Residential’s historical consolidated
statement of income for the period from January 1, 2013 to May 15,
2013 that is not included in Newcastle’s income (loss) from
discontinued income. After the May 15, 2013 spin-off of New
Residential from Newcastle, no results of New Residential have been
reported in Newcastle’s consolidated statement of income.
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(C)
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Represents the estimated interest expense on the loan related to the
acquisition of the Holiday Portfolio including the estimated
amortization of deferred financing costs.
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(D)
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Represents the estimated rental income from the independent senior
housing properties acquired under a triple net lease agreement for
the year ended December 31, 2013.
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(E)
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Represents the estimated management fees for the year ended December
31, 2013 that Newcastle would have paid Fortress Investment Group
LLC as a result of the public offering of common stock in November
2013.
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(F)
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Represents the estimated depreciation expense for the year ended
December 31, 2013 based on the carrying value of the assets acquired
and their estimated useful life.
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(G)
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Weighted average number of shares of common stock outstanding and
income from continuing operations per share of common stock, after
preferred dividends and noncontrolling interest, were adjusted
retrospectively to reflect the issuance of 57,950,952 shares on
November 22, 2013, the proceeds of which were used to fund a portion
of the purchase price for the Holiday Portfolio. Weighted average
number of shares of common stock outstanding and income from
continuing operations per share of common stock, after preferred
dividends and noncontrolling interest were not adjusted to include
potential additional diluted shares as a result of the changes to
outstanding Newcastle options from the spin-offs. The number of
additional diluted shares will depend on various factors, including
the share prices of Newcastle or New Residential and subsequent to
the spin-offs.
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(H)
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The effect of the Holiday Portfolio acquisition on 2012 revenue if
Newcastle had consummated the acquisition as of January 1, 2012
would have been $89.3 million. The effect of this acquisition on
income from continuing operations would have been $0.1 million.
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