| Schedule of pro forma condensed consolidated balance sheet |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
At March 31, 2013
| |
|
|
|
|
|
|
|
|
|
| |
|
Newcastle
|
|
|
Pro Forma
|
|
|
Newcastle
|
|
| |
|
Consolidated
|
|
|
Adjustments
|
|
|
Consolidated
|
|
| |
|
Historical (A)
|
|
|
New Residential
|
|
|
Pro Forma
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Real estate securities, available-for-sale
|
|
$ |
2,495,473 |
|
|
$ |
(1,598,868 |
) (B) |
|
$ |
896,605 |
|
|
Real estate related loans, held-for-sale, net
|
|
|
851,525 |
|
|
|
— |
|
|
|
851,525 |
|
|
Residential mortgage loans, held-for-investment, net
|
|
|
317,708 |
|
|
|
(35,484 |
) (C) |
|
|
282,224 |
|
|
Residential mortgage loans, held-for-sale, net
|
|
|
2,380 |
|
|
|
— |
|
|
|
2,380 |
|
|
Investments in excess mortgage servicing rights at fair value
|
|
|
236,555 |
|
|
|
(236,555 |
) (C) |
|
|
— |
|
|
Investments in equity method investees at fair value
|
|
|
102,588 |
|
|
|
(102,588 |
) (C) |
|
|
— |
|
|
Subprime mortgage loans subject to call option
|
|
|
406,115 |
|
|
|
— |
|
|
|
406,115 |
|
|
Investments in real estate, net of accumulated depreciation
|
|
|
168,515 |
|
|
|
— |
|
|
|
168,515 |
|
|
Intangibles, net of accumulated amortization
|
|
|
16,218 |
|
|
|
— |
|
|
|
16,218 |
|
|
Other investments
|
|
|
24,907 |
|
|
|
— |
|
|
|
24,907 |
|
|
Cash and cash equivalents
|
|
|
534,772 |
|
|
|
— |
|
|
|
534,772 |
(G) |
|
Restricted cash
|
|
|
11,494 |
|
|
|
— |
|
|
|
11,494 |
|
|
Derivative assets
|
|
|
176 |
|
|
|
— |
|
|
|
176 |
|
|
Receivables and other assets
|
|
|
27,577 |
|
|
|
(450 |
) (C) |
|
|
27,127 |
|
|
|
|
$ |
5,196,003 |
|
|
$ |
(1,973,945 |
) |
|
$ |
3,222,058 |
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDO bonds payable
|
|
$ |
1,015,560 |
|
|
$ |
— |
|
|
$ |
1,015,560 |
|
|
Other bonds and notes payable
|
|
|
173,723 |
|
|
|
— |
|
|
|
173,723 |
|
|
Repurchase agreements
|
|
|
1,473,586 |
|
|
|
(1,182,212 |
) (D) |
|
|
291,374 |
|
|
Mortgage notes payable
|
|
|
120,525 |
|
|
|
— |
|
|
|
120,525 |
|
|
Financing of subprime mortgage loans subject to call option
|
|
|
406,115 |
|
|
|
— |
|
|
|
406,115 |
|
|
Junior subordinated notes payable
|
|
|
51,242 |
|
|
|
— |
|
|
|
51,242 |
|
|
Derivative liabilities
|
|
|
26,612 |
|
|
|
— |
|
|
|
26,612 |
|
|
Dividends payable
|
|
|
56,596 |
|
|
|
— |
|
|
|
56,596 |
|
|
Due to affiliates
|
|
|
4,611 |
|
|
|
(938 |
) (E) |
|
|
3,673 |
|
|
Purchase price payable on investments in excess mortgage servicing rights
|
|
|
59 |
|
|
|
(59 |
) (C) |
|
|
— |
|
|
Accrued expenses and other liabilities
|
|
|
17,875 |
|
|
|
(2,780 |
) (C) |
|
|
15,095 |
|
|
|
|
$ |
3,346,504 |
|
|
$ |
(1,185,989 |
) |
|
$ |
2,160,515 |
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
$ |
61,583 |
|
|
$ |
— |
|
|
$ |
61,583 |
|
|
Common stock
|
|
|
2,530 |
|
|
|
— |
|
|
|
2,530 |
|
|
Additional paid-in capital
|
|
|
2,472,931 |
|
|
|
— |
|
|
|
2,472,931 |
|
|
Accumulated deficit
|
|
|
(790,143 |
) |
|
|
(756,247 |
) (F) |
|
|
(1,546,390 |
) |
|
Accumulated other comprehensive income (loss)
|
|
|
102,598 |
|
|
|
(31,709 |
) (C) |
|
|
70,889 |
|
| |
|
$ |
1,849,499 |
|
|
$ |
(787,956 |
) |
|
$ |
1,061,543 |
|
|
|
|
$ |
5,196,003 |
|
|
$ |
(1,973,945 |
) |
|
$ |
3,222,058 |
|
|
(A)
|
Represents Newcastle’s historical consolidated balance sheet at March 31, 2013.
|
|
(B)
|
Represents the fair value of
New Residential’s real estate securities at March 31, 2013 adjusted to include securities owned by Newcastle at
March 31, 2013 and contributed by Newcastle to New Residential subsequent to March 31, 2013.
|
|
(C)
|
Represents New Residential’s assets, liabilities and accumulated other comprehensive income at March 31, 2013.
|
|
(D)
|
Represents New Residential’s repurchase agreements at March 31, 2013 adjusted for the additional repurchase agreements to finance the real estate securities described in (B) above.
|
|
(E)
|
Represents a reduction of Newcastle’s due to affiliates for the allocation of one month of accrued and unpaid management fees from Newcastle to New Residential.
|
|
(F)
|
Represents the distribution of New Residential common stock to Newcastle shareholders.
|
|
(G)
|
Represents Newcastle’s cash and cash equivalents at March 31, 2013. Newcastle will contribute cash to New Residential in connection with the spin-off subsequent to March 31, 2013.
|
|
| Schedule of pro forma condensed consolidated statement of operations |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2013
| |
|
Newcastle
|
|
|
Pro Forma
|
|
|
Newcastle
|
|
| |
|
Consolidated
|
|
|
Adjustments
|
|
|
Consolidated
|
|
| |
|
Historical (A)
|
|
|
New Residential (B)
|
|
|
Pro Forma
|
|
| |
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
71,367 |
|
|
$ |
(16,191 |
) |
|
$ |
55,176 |
|
|
Interest expense
|
|
|
22,710 |
|
|
|
(899 |
) |
|
|
21,811 |
|
|
Net interest income
|
|
|
48,657 |
|
|
|
(15,292 |
) |
|
|
33,365 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment/(Reversal)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance (reversal) on loans
|
|
|
2,234 |
|
|
|
— |
|
|
|
2,234 |
|
|
Other-than-temporary impairment on securities
|
|
|
422 |
|
|
|
— |
|
|
|
422 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
117 |
|
|
|
— |
|
|
|
117 |
|
| |
|
|
2,773 |
|
|
|
— |
|
|
|
2,773 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after impairment/reversal
|
|
|
45,884 |
|
|
|
(15,292 |
) |
|
|
30,592 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
|
12,887 |
|
|
|
— |
|
|
|
12,887 |
|
|
Care and ancillary income
|
|
|
613 |
|
|
|
— |
|
|
|
613 |
|
|
Total other revenues
|
|
|
13,500 |
|
|
|
— |
|
|
|
13,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on settlement of investments, net
|
|
|
(3 |
) |
|
|
— |
|
|
|
(3 |
) |
|
Gain on extinguishment of debt
|
|
|
1,206 |
|
|
|
— |
|
|
|
1,206 |
|
|
Change in fair value of investments in excess mortgage servicing rights
|
|
|
1,858 |
|
|
|
(1,858 |
) |
|
|
— |
|
|
Change in fair value of investments in equity method investees
|
|
|
969 |
|
|
|
(969 |
) |
|
|
— |
|
|
Other income (loss), net
|
|
|
4,567 |
|
|
|
— |
|
|
|
4,567 |
|
| |
|
|
8,597 |
|
|
|
(2,827 |
) |
|
|
5,770 |
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and security servicing expense
|
|
|
1,034 |
|
|
|
— |
|
|
|
1,034 |
|
|
Property operating expenses
|
|
|
8,363 |
|
|
|
— |
|
|
|
8,363 |
|
|
General and administrative expense
|
|
|
6,911 |
|
|
|
(2,719 |
) |
|
|
4,192 |
|
|
Management fee to affiliate
|
|
|
9,565 |
|
|
|
(2,325 |
) |
|
|
7,240 |
|
|
Depreciation and amortization
|
|
|
4,079 |
|
|
|
— |
|
|
|
4,079 |
|
| |
|
|
29,952 |
|
|
|
(5,044 |
) |
|
|
24,908 |
|
|
Income from continuing operations
|
|
|
38,029 |
|
|
|
(13,075 |
) |
|
|
24,954 |
|
|
Preferred dividends
|
|
|
(1,395 |
) |
|
|
— |
|
|
|
(1,395 |
) |
|
Income from continuing operations after preferred dividends
|
|
$ |
36,634 |
|
|
$ |
(13,075 |
) |
|
$ |
23,559 |
|
Income from continuing operations per share of common stock, after preferred dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.16 |
|
|
|
|
|
|
$ |
0.10 |
|
|
Diluted
|
|
$ |
0.15 |
|
|
|
|
|
|
$ |
0.10 |
(C) |
Weighted Average Number of Shares of Common Stock Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
235,136,756 |
|
|
|
|
|
|
|
235,136,756 |
|
|
Diluted
|
|
|
240,079,144 |
|
|
|
|
|
|
|
240,079,144 |
(C) |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
12 Months Ended December 31, 2012
| |
|
Newcastle
|
|
|
Pro Forma
|
|
|
Newcastle
|
|
| |
|
Consolidated
|
|
|
Adjustments
|
|
|
Consolidated
|
|
| |
|
Historical (A)
|
|
|
New Residential (B)
|
|
|
Pro Forma
|
|
| |
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
310,459 |
|
|
$ |
(33,759 |
) |
|
$ |
276,700 |
|
|
Interest expense
|
|
|
109,924 |
|
|
|
(704 |
) |
|
|
109,220 |
|
|
Net interest income
|
|
|
200,535 |
|
|
|
(33,055 |
) |
|
|
167,480 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment/(Reversal)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance (reversal) on loans
|
|
|
(24,587 |
) |
|
|
— |
|
|
|
(24,587 |
) |
|
Other-than-temporary impairment on securities
|
|
|
19,359 |
|
|
|
— |
|
|
|
19,359 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
(436 |
) |
|
|
— |
|
|
|
(436 |
) |
| |
|
|
(5,664 |
) |
|
|
— |
|
|
|
(5,664 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after impairment/reversal
|
|
|
206,199 |
|
|
|
(33,055 |
) |
|
|
173,144 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
|
17,081 |
|
|
|
— |
|
|
|
17,081 |
|
|
Care and ancillary income
|
|
|
2,994 |
|
|
|
— |
|
|
|
2,994 |
|
|
Total other revenues
|
|
|
20,075 |
|
|
|
— |
|
|
|
20,075 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on settlement of investments, net
|
|
|
232,897 |
|
|
|
— |
|
|
|
232,897 |
|
|
Gain on extinguishment of debt
|
|
|
24,085 |
|
|
|
— |
|
|
|
24,085 |
|
|
Change in fair value of investments in excess mortgage servicing rights
|
|
|
9,023 |
|
|
|
(9,023 |
) |
|
|
— |
|
|
Other income (loss), net
|
|
|
13,712 |
|
|
|
(8,400 |
) |
|
|
5,312 |
|
| |
|
|
279,717 |
|
|
|
(17,423 |
) |
|
|
262,294 |
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and security servicing expense
|
|
|
4,260 |
|
|
|
— |
|
|
|
4,260 |
|
|
Property operating expenses
|
|
|
12,943 |
|
|
|
— |
|
|
|
12,943 |
|
|
General and administrative expense
|
|
|
22,942 |
|
|
|
(5,878 |
) |
|
|
17,064 |
|
|
Management fee to affiliate
|
|
|
24,693 |
|
|
|
(3,353 |
) |
|
|
21,340 |
|
|
Depreciation and amortization
|
|
|
6,975 |
|
|
|
— |
|
|
|
6,975 |
|
| |
|
|
71,813 |
|
|
|
(9,231 |
) |
|
|
62,582 |
|
|
Income from continuing operations
|
|
|
434,178 |
|
|
|
(41,247 |
) |
|
|
392,931 |
|
|
Preferred dividends
|
|
|
(5,580 |
) |
|
|
— |
|
|
|
(5,580 |
) |
|
Income from continuing operations after preferred dividends
|
|
$ |
428,598 |
|
|
$ |
(41,247 |
) |
|
$ |
387,351 |
|
Income from continuing operations per share of common stock, after preferred dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
2.97 |
|
|
|
|
|
|
$ |
2.69 |
|
|
Diluted
|
|
$ |
2.94 |
|
|
|
|
|
|
$ |
2.66 |
(C) |
Weighted Average Number of Shares of Common Stock Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
144,146,370 |
|
|
|
|
|
|
|
144,146,370 |
|
|
Diluted
|
|
|
145,766,413 |
|
|
|
|
|
|
|
145,766,413 |
(C) |
|
(A)
|
Represents Newcastle’s
historical consolidated statement of operations for the three months ended March 31, 2013 and the year ended December 31,
2012.
|
|
(B)
|
Represents New Residential’s historical consolidated statement of operations for the three months ended March 31, 2013 and the year ended December 31, 2012.
|
|
(C)
|
Does not include potential additional diluted shares as a result of changes to outstanding Newcastle options from the spin-off. The number of additional diluted shares will depend on various factors, including the share prices of Newcastle and New Residential subsequent to the spin-off.
|
|