| Schedule of shares of common stock issued in connection with public offerings |
The following table presents shares of common stock issued by Newcastle in connection with public offerings since 2012:
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Price per Share
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Aggregate Shares purchased by
Principals of Fortress
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Options Granted to Manager (A)
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Date
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Number
of Shares
Issued
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To
Public
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To Underwriters
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Net
Proceeds
(millions)
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Number
of Shares
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Price
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Number
of Shares
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Grant Date Strike
Price
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Grant Date
Value (millions)
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April 2012
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3,162,500
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$
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37.32
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N/A
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$
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115.2
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—
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—
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316,250
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$
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37.32
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$
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5.6
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May 2012
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3,833,333
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$
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40.26
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N/A
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$
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152.0
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—
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—
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383,333
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$
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40.26
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$
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7.6
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July 2012
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4,216,667
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N/A
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$
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39.78
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$
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167.4
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75,000
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$
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40.20
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421,667
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$
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40.20
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$
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8.3
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January 2013
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9,583,333
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$
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56.10
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N/A
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$
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526.2
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35,650
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$
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56.10
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958,333
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$
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56.10
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$
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18.0
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February 2013
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3,833,333
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N/A
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$
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62.04
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$
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237.4
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31,833
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$
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62.88
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383,333
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$
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62.88
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$
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8.4
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June 2013
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6,708,333
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N/A
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$
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29.52
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$
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197.6
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125,000
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$
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29.82
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670,833
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$
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29.82
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$
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3.8
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November 2013
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9,658,492
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N/A
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$
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31.26
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$
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301.4
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75,159
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$
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31.50
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965,849
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$
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31.50
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$
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6.0
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August 2014
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7,654,166
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N/A
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$
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25.92
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$
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197.9
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83,333
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$
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26.34
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765,416
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$
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26.34
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$
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1.7
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(A)
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In connection with these offerings, Newcastle granted options to the Manager for the purpose of compensating the Manager for its role in raising capital for Newcastle.
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(B)
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This figure also includes shares purchased by officers of Newcastle.
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| Schedule of outstanding options summary |
Newcastle's outstanding options were summarized as follows:
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Year Ended December 31, 2014
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Year Ended December 31, 2013
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Issued Prior
to 2011
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Issued in 2011
and thereafter
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Total
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Issued Prior to 2011
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Issued in 2011
and thereafter
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Total
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Held by the Manager
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157,791
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4,833,961
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4,991,752
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249,426
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4,332,738
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4,582,164
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Issued to the Manager and subsequently transferred to certain Manager’s employees
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41,869
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466,645
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508,514
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89,262
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418,335
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507,597
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Issued to the independent directors
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333
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—
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333
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333
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333
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666
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Total
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199,993
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5,300,606
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5,500,599
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339,021
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4,751,406
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5,090,427
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| Summary of Newcastle's outstanding options |
The following table summarizes Newcastle’s outstanding options at December 31, 2014. Note that the last sales price on the New York Stock Exchange for Newcastle’s common stock in the year ended December 31, 2014 was $4.49 per share.
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Intrinsic Value at
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Date of
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Options Exercisable at
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Weighted Average
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Fair Value At Grant
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December 31, 2014
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Recipient
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Grant/Exercise
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Number of Options
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December 31, 2014
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Strike Price (A)
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Date (millions) (B)
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(millions)
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Directors
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Various
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3,333
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333
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$
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12.73
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Not Material
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—
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Manager (C)
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2002 - 2007
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587,277
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199,660
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$
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14.09
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$
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6.4
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—
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Manager (C)
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Mar-11
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287,499
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182,527
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$
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1.88
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$
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7.0
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(H)
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$
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0.5
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Manager (C)
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Sep-11
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431,249
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283,305
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$
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1.07
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$
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5.6
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(I)
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$
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1.0
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Manager (C)
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Apr-12
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316,247
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306,991
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$
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2.00
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$
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5.6
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(J)
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$
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0.8
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Manager (C)
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May-12
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383,328
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372,440
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$
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2.29
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$
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7.6
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(K)
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$
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0.8
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Manager (C)
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Jul-12
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421,661
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397,698
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$
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2.27
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$
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8.3
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(L)
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$
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0.9
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Manager (C)
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Jan-13
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958,331
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734,720
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$
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3.76
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$
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18.0
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(M)
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$
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0.7
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Manager (C)
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Feb-13
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383,331
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281,109
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$
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4.39
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$
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8.4
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(N)
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$
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0.1
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Manager (C)
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Jun-13
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670,829
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402,497
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$
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4.67
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$
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3.8
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(O)
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—
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Manager (C)
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Nov-13
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965,847
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418,534
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$
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5.01
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$
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6.0
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(P)
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—
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Manager (C)
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Aug-14
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765,416
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102,055
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$
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5.45
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$
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1.7
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(Q)
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—
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Exercised (D)
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Prior to 2008
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(173,853
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N/A
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$
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14.09
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N/A
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N/A
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Exercised (E)
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Oct-12
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(15,972
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N/A
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$
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1.48
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N/A
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N/A
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Exercised (F)
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Sep-13
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(51,306
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N/A
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$
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1.67
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N/A
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N/A
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Exercised (G)
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2014
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(216,186
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N/A
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$
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1.46
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N/A
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N/A
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Expired unexercised
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2002-2004
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(216,432
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N/A
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N/A
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N/A
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N/A
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Outstanding
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5,500,599
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3,681,869
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(A)
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The strike prices are subject to adjustment in connection with return of capital dividends and spin-offs. A portion of Newcastle’s 2008 dividends was deemed return of capital dividends. The effect on the strike prices was not significant. 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. The strike prices were adjusted for the New Residential, New Media and New Senior spin-offs as described above. As of December 31, 2014, the weighted average strike price of the outstanding options issued prior to 2011 was $14.09.
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(B)
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The fair value of the options was estimated using an option valuation model. Since the Newcastle Option Plan, 2012 Plan and 2014 Plan have characteristics significantly different from those of traded options, and since the assumptions used in such model, particularly the volatility assumption, are subject to significant judgment and variability, the actual value of the options could vary materially from management’s estimate. The volatility assumption for these options was estimated based primarily on the historical volatility of Newcastle’s common stock and management’s expectations regarding future volatility. The expected life assumption for options issued prior to 2011 was estimated based on the simplified term method. This simplified method was used because Newcastle did not have sufficient historical data to conclude on the appropriate expected life of its options and because historical data to date was consistent with the simplified term
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method. The expected life assumption for options issued in 2011 and thereafter was estimated based primarily on the historical expected life of applicable previously issued options.
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(C)
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The Manager assigned certain of its options to Fortress’s employees as follows:
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Date of Grant
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Range of Strike Prices
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Total Unexercised Inception to Date
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2005
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$14.92
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11,687
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2006
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$14.82
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6,373
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2007
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$13.88 - $15.88
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23,809
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2011
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$1.07 - $1.88
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—
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2012
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$2.00 - $2.29
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199,988
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2013
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$3.76 - $5.01
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266,657
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Total
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508,514
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(D)
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111,770 of the total options exercised were by the Manager. 61,417 of the total options exercised were by employees of Fortress subsequent to their assignment. 666 of the total options exercised were by directors.
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(E)
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Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.2 million.
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(F)
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Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.9 million.
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(G)
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215,853 options were exercised by employees of Fortress subsequent to their assignment with an intrinsic value of $4.1 million. 333 options were exercised by directors with a minimal intrinsic value.
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(H)
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The assumptions used in valuing the options were: a 1.7% risk-free rate, 107.8% volatility and a 3.3 year expected term.
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(I)
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The assumptions used in valuing the options were: a 1.13% risk-free rate, 13.2% dividend yield, 151.1% volatility and a 4.6 year expected term.
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(J)
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The assumptions used in valuing the options were: a 1.3% risk-free rate, 12.9% dividend yield, 149.4% volatility and a 4.7 year expected term.
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(K)
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The assumptions used in valuing the options were: a 1.05% risk-free rate, 11.9% dividend yield, 148.4% volatility and a 4.8 year expected term.
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(L)
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The assumptions used in valuing the options were: a 0.75% risk-free rate, 11.9% dividend yield, 147.5% volatility and a 4.8 year expected term.
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(M)
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The assumptions used in valuing the options were: a 2.0% risk-free rate, 8.8% dividend yield, 56.2% volatility and a 10 year term.
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(N)
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The assumptions used in valuing the options were: a 2.1% risk-free rate, 7.8% dividend yield, 55.5% volatility and a 10 year term.
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(O)
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The assumptions used in valuing the options were: a 2.5% risk-free rate, 8.8% dividend yield, 36.9% volatility and a 10 year term.
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(P)
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The assumptions used in valuing the options were: a 2.8% risk-free rate, 6.7% dividend yield, 32.0% volatility and a 10 year term.
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(Q)
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The assumptions used in valuing the options were: a 2.7% risk-free rate, 8.6% dividend yield, 23.4% volatility and a 10 year term.
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