Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.4.0.3
SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING
SEGMENT REPORTING
 
Newcastle conducts its business through the following segments: (i) debt investments financed with collateralized debt obligations (“CDOs”), (ii) other debt investments (“Other Debt”), (iii) investment in golf properties and facilities (“Golf”) and (iv) corporate, which consists primarily of interest income on short term investments, general and administrative expenses, interest expense on the junior subordinated notes payable and management fees pursuant to the Management Agreement.
Summary financial data on Newcastle’s segments is given below, together with reconciliation to the same data for Newcastle as a whole:
 
Debt Investments (A)
 
 
 
 
 
 
 
CDOs
 
Other Debt (B)
 
Golf
 
Corporate
 
Total
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
Interest income
$
1,097

 
$
19,894

 
$
42

 
$
6

 
$
21,039

Interest expense
(491
)
 
(9,433
)
 
(2,665
)
 
(945
)
 
(13,534
)
Net interest income (expense)
606

 
10,461

 
(2,623
)
 
(939
)
 
7,505

Total impairment
110

 
2,198

 
—

 
—

 
2,308

Total operating revenues
—

 
—

 
62,158

 
—

 
62,158

Total other income (loss)
82,130

 
(1,403
)
 
(284
)
 
—

 
80,443

Loan and security servicing expense
30

 
7

 
—

 
—

 
37

Operating expenses - golf (C)
—

 
—

 
54,713

 
—

 
54,713

Operating expenses - golf, repairs and maintenance expenses
—

 
—

 
1,892

 
—

 
1,892

Cost of sales - golf
—

 
—

 
6,211

 
—

 
6,211

General and administrative expense
—

 
—

 
841

 
1,883

 
2,724

General and administrative expense - acquisition and transaction expenses (D)
—

 
—

 
138

 
38

 
176

Management fee to affiliate
—

 
—

 
—

 
2,675

 
2,675

Depreciation and amortization
—

 
—

 
6,031

 
—

 
6,031

Income tax expense
—

 
—

 
44

 
—

 
44

Income (loss) from continuing operations
82,596

 
6,853

 
(10,619
)
 
(5,535
)
 
73,295

Net income (loss)
82,596

 
6,853

 
(10,619
)
 
(5,535
)
 
73,295

Preferred dividends
—

 
—

 
—

 
(1,395
)
 
(1,395
)
Net loss attributable to noncontrolling interests
—

 
—

 
124

 
—

 
124

Income (loss) applicable to common stockholders
$
82,596

 
$
6,853

 
$
(10,495
)
 
$
(6,930
)
 
$
72,024

 
 
 
 
 
 
 
 
 
 
 
 
 
 








Summary segment financial data (continued).
 
Debt Investments (A)
 
 
 
 
 
 
 
CDOs
 
Other Debt (B)
 
Golf
 
Corporate
 
Total
March 31, 2016
 
 
 
 
 
 
 
 
 
Investments
$
—

 
$
943,204

 
$
297,454

 
$
—

 
$
1,240,658

Cash and restricted cash
—

 
660

 
7,634

 
27,730

 
36,024

Other assets
—

 
367,888

 
35,377

 
153

 
403,418

Total assets
—

 
1,311,752

 
340,465

 
27,883

 
1,680,100

Debt, net
—

 
736,498

 
79,649

 
51,223

 
867,370

Other liabilities
—

 
382,407

 
163,292

 
14,272

 
559,971

Total liabilities
—

 
1,118,905

 
242,941

 
65,495

 
1,427,341

Preferred stock
—

 
—

 
—

 
61,583

 
61,583

Noncontrolling interests
—

 
—

 
(381
)
 
—

 
(381
)
Equity (deficit) attributable to common stockholders
$
—

 
$
192,847

 
$
97,905

 
$
(99,195
)
 
$
191,557

 
 
 
 
 
 
 
 
 
 
Additions to investments in real estate
$
—

 
$
—

 
$
2,262

 
$
—

 
$
2,262


Summary segment financial data (continued).

 
Debt Investments (A)
 
 
 
 
 
Discontinued
 
 
 
 
 
CDOs
 
Other Debt
 
Golf
 
Corporate
 
Operations
 
Eliminations
 
Total
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
15,922

 
$
12,595

 
$
35

 
$
4

 
$
—

 
$
(1,478
)
 
$
27,078

Interest expense
(2,583
)
 
(9,579
)
 
(5,097
)
 
(946
)
 
—

 
1,478

 
(16,727
)
Inter-segment elimination
(1,478
)
 
—

 
1,478

 
—

 
—

 
—

 
—

Net interest income (expense)
11,861

 
3,016

 
(3,584
)
 
(942
)
 
—

 
—

 
10,351

Total impairment
337

 
68

 
—

 
—

 
—

 
—

 
405

Total operating revenues
—

 
—

 
60,826

 
—

 
—

 
—

 
60,826

Total other income (loss)
530

 
(37
)
 
8

 
—

 
—

 
—

 
501

Loan and security servicing expense
96

 
—

 
—

 
—

 
—

 
—

 
96

Operating expenses - golf (C)
—

 
—

 
52,971

 
—

 
—

 
—

 
52,971

Operating expenses - golf, repairs and maintenance expenses
—

 
—

 
1,966

 
—

 
—

 
—

 
1,966

Cost of sales - golf
—

 
—

 
6,053

 
—

 
—

 
—

 
6,053

General and administrative expense
—

 
—

 
249

 
1,428

 
—

 
—

 
1,677

General and administrative expense - acquisition and transaction expenses (D)
—

 
—

 
36

 
—

 
—

 
—

 
36

Management fee to affiliate
—

 
—

 
—

 
2,668

 
—

 
—

 
2,668

Depreciation and amortization
—

 
—

 
6,753

 
—

 
—

 
—

 
6,753

Income tax expense
—

 
—

 
46

 
—

 
—

 
—

 
46

Income (loss) from continuing operations
11,958

 
2,911

 
(10,824
)
 
(5,038
)
 
—

 
—

 
(993
)
Income from discontinued operations
—

 
—

 
—

 
—

 
115

 
—

 
115

Net income (loss)
11,958

 
2,911

 
(10,824
)
 
(5,038
)
 
115

 
—

 
(878
)
Preferred dividends
—

 
—

 
—

 
(1,395
)
 
—

 
—

 
(1,395
)
Net loss attributable to non-controlling interests
—

 
—

 
181

 
—

 
—

 
—

 
181

Income (loss) applicable to common stockholders
$
11,958

 
$
2,911

 
$
(10,643
)
 
$
(6,433
)
 
$
115

 
$
—

 
$
(2,092
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A)
Assets held within non-recourse structures, including all of the assets in the CDO segment, are not available to satisfy obligations outside of such financings, except to the extent net cash flow distributions are received from such structures. Furthermore, creditors or beneficial interest holders of these structures generally have no recourse to the general credit of Newcastle. Therefore, the exposure to the economic losses from such structures generally is limited to invested equity in them and economically their book value cannot be less than zero. Therefore, impairment recorded in excess of Newcastle’s investment, which results in negative GAAP book value for a given non-recourse financing structure, cannot economically be incurred and will eventually be reversed through amortization, sales at gains, or as gains at the deconsolidation or termination of such non-recourse financing structure.
(B)
The following table summarizes the investments and debt in the Other Debt segment:
 
March 31, 2016
 
Investments
 
Debt
Non-Recourse
Outstanding
Face Amount
 
Carrying
Value
 
Outstanding
Face Amount
 
Carrying
Value
Subprime mortgage loans subject to call options
$
372,874

 
$
372,874

 
$
372,874

 
$
372,874

Other
 
 
 
 
 
 
 
Unlevered real estate securities (E)
37,471

 
12,638

 
—

 
—

Levered real estate securities (F)
363,080

 
381,206

 
352,049

 
352,049

Real estate related and other loans
246,517

 
155,075

 
11,660

 
11,575

Other investments
N/A

 
20,965

 
—

 
—

Residential mortgage loans
780

 
446

 
—

 
—

 
$
1,020,722

 
$
943,204

 
$
736,583

 
$
736,498


(C)
Operating expenses - golf includes rental expenses recorded under operating leases for carts and equipment in the amount of $1.0 million and $1.1 million for the three months ended March 31, 2016 and 2015, respectively.
(D)
Includes all transaction related expenses.
(E)
Excludes 13 securities with zero value, which had an aggregate face amount of $192.0 million.
(F)
These investments represent purchases that were traded on March 31, 2016 but settled on April 13, 2016. The debt represents repurchase agreements collateralized by sold investments that were traded on March 31, 2016 and settled on April 13, 2016.