Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial statements was derived from the application of pro forma adjustments to the consolidated financial statements of Newcastle Investment Corp. and its subsidiaries which are referred to collectively in this section as “Newcastle.” These unaudited pro forma condensed consolidated financial statements should be read in conjunction with Newcastle’s historical consolidated financial statements and the related notes included in Newcastle’s previous filings with the SEC.
The unaudited pro forma information set forth below reflects the historical information of Newcastle, as adjusted to give effect to Newcastle’s planned spin-off of the New Senior Investment Group Inc.’s (“New Senior”) business from Newcastle and Newcastle’s approved 3-for-1 reverse stock split. To effect the separation, Newcastle will distribute all of the shares of New Senior’s common stock held by Newcastle to holders of Newcastle common stock, subject to a number of conditions. No assurance is given that this spin-off will be formally approved by Newcastle’s board of directors or that the spin-off or reverse stock split will be consummated on the contemplated terms or at all.
The unaudited pro forma condensed consolidated statements of operations give effect to the spin-off of New Senior as if the spin-off had occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet assumes that the spin-off of New Senior occurred on June 30, 2014.
The historical statements of operations presented in the unaudited pro forma condensed consolidated financial statements are for the six months ended June 30, 2014 as presented in Newcastle’s Quarterly Report on Form 10-Q for the six months ended June 30, 2014, filed on August 8, 2014, and for the year ended December 31, 2013 as presented in Form 8-K filed on May 5, 2014. The historical balance sheet presented in the unaudited pro forma condensed consolidated financial statements is as of June 30, 2014 as presented in Newcastle’s Quarterly Report on Form 10-Q for the six months ended June 30, 2014.
In the opinion of management, all adjustments necessary to reflect the effects of the potential transactions described in the notes to the unaudited pro forma condensed consolidated financial statements have been included and are based upon available information and assumptions that Newcastle believes are reasonable.
Further, the historical financial information presented herein has been adjusted to give pro forma effect to events that Newcastle believes are factually supportable and which are expected to have a continuing impact on Newcastle’s results. However, such adjustments are estimates and may not prove to be accurate. Information regarding these adjustments is subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.
These unaudited pro forma condensed consolidated financial statements are provided for information purposes only. The unaudited pro forma condensed consolidated statements of operations and the unaudited pro forma condensed consolidated balance sheet do not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the dates indicated, nor do they represent the financial position or results of operations of either Newcastle or New Senior for any future date or period.
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2014
| Newcastle Consolidated Historical | New Senior spin-off(A) | Newcastle Consolidated Pro Forma | ||||||||||
Assets | ||||||||||||
Real estate securities, available-for-sale | $ | 311,268 | $ | 311,268 | ||||||||
Real estate related and other loans, held-for-sale, net | 289,112 | 289,112 | ||||||||||
Residential mortgage loans, held-for-investment, net | — | — | ||||||||||
Residential mortgage loans, held-for-sale, net | 32,083 | 32,083 | ||||||||||
Subprime mortgage loans subject to call option | 406,217 | 406,217 | ||||||||||
Investments in senior housing real estate, net of accumulated depreciation | 1,547,409 | (1,547,409 | ) | — | ||||||||
Investments in other real estate, net of accumulated depreciation | 263,500 | 263,500 | ||||||||||
Intangibles, net of accumulated amortization | 197,129 | (103,842 | ) | 93,287 | ||||||||
Other investments | 26,123 | 26,123 | ||||||||||
Cash and cash equivalents | 77,922 | (47,539 | ) | 30,383 | ||||||||
Restricted cash | 3,703 | 3,703 | ||||||||||
Receivables and other assets | 109,538 | (72,382 | ) | 37,156 | ||||||||
Assets of discontinued operations | — | — | ||||||||||
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Total assets | $ | 3,264,004 | $ | (1,771,172 | ) | $ | 1,492,832 | |||||
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Liabilities and Equity | ||||||||||||
Liabilities | ||||||||||||
CDO bonds payable | $ | 263,581 | $ | 263,581 | ||||||||
Other bonds and notes payable | 82,053 | 82,053 | ||||||||||
Repurchase agreements | 102,677 | 102,677 | ||||||||||
Mortgage notes payable | 1,104,182 | (1,104,182 | ) | — | ||||||||
Credit facilities and obligations under capital leases, golf | 156,578 | 156,578 | ||||||||||
Financing of subprime mortgage loans subject to call option | 406,217 | 406,217 | ||||||||||
Junior subordinated notes payable | 51,234 | 51,234 | ||||||||||
Dividends payable | 36,101 | 36,101 | ||||||||||
Accounts payable, accrued expenses and other liabilities | 269,778 | (86,398 | ) | 183,380 | ||||||||
Liabilities of discontinued operations | — | — | ||||||||||
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Total liabilities | $ | 2,472,401 | $ | (1,190,580 | ) | $ | 1,281,821 | |||||
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Equity | ||||||||||||
Preferred stock | 61,583 | 61,583 | ||||||||||
Common stock | 3,518 | 3,518 | ||||||||||
Additional paid-in capital | 2,971,223 | (580,592 | ) | 2,390,631 | ||||||||
Accumulated deficit | (2,313,799 | ) | (2,313,799 | ) | ||||||||
Accumulated other comprehensive income | 68,880 | 68,880 | ||||||||||
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Total Newcastle Stockholders’ Equity | 791,405 | (580,592 | ) | 210,813 | ||||||||
Noncontrolling interests | 198 | 198 | ||||||||||
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Total Equity | 791,603 | (580,592 | ) | 211,011 | ||||||||
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Total liabilities and equity | $ | 3,264,004 | $ | (1,771,172 | ) | $ | 1,492,832 | |||||
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| (A) | Gives effect to the distribution of the New Senior common stock held by Newcastle to the holders of Newcastle’s common stock as if it had taken place on June 30, 2014. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 2014
| Newcastle Consolidated Historical | New Senior spin-off (B) | Newcastle Consolidated Pro Forma | ||||||||||
Interest income | $ | 76,345 | $ | — | $ | 76,345 | ||||||
Interest expense | 69,760 | (27,402 | ) | 42,358 | ||||||||
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Net interest income | 6,585 | 27,402 | 33,987 | |||||||||
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Impairment (Reversal) | 2,772 | — | 2,772 | |||||||||
Net interest income (loss) after impairment | 3,813 | 27,402 | 31,215 | |||||||||
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Other revenues | 265,275 | (117,458 | ) | 147,817 | ||||||||
Other income | 57,491 | — | 57,491 | |||||||||
Expenses | 283,375 | (111,037 | ) | 172,338 | ||||||||
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Income (loss) from continuing operations before income taxes | 43,204 | 20,981 | 64,185 | |||||||||
Income tax expense | 835 | (987 | ) | (152 | ) | |||||||
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Income (loss) from continuing operations | 42,369 | 21,968 | 64,337 | |||||||||
Preferred dividends | (2,790 | ) | — | (2,790 | ) | |||||||
Excess of carrying amount of exchanged preferred stock over fair value of consideration paid | — | — | — | |||||||||
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Net income attributable to noncontrolling interests | 690 | — | 690 | |||||||||
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Income (loss) from continuing operations, after preferred dividends, excess of carrying amount of exchanged preferred stock over fair value of consideration paid and net income attributable to noncontrolling interest | 40,269 | 21,968 | 62,237 | |||||||||
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Income (loss) from continuing operations per share of common stock, after preferred dividends, excess of carrying amount of exchanged preferred stock over fair value of consideration paid and net income attributable to noncontrolling interest: | ||||||||||||
Basic | $ | 0.11 | $ | 0.53 | (C) | |||||||
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Diluted | $ | 0.11 | $ | 0.51 | (C) | |||||||
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Weighted average number of shares of common stock outstanding giving effect to the 3-to-1 reverse stock spilt | ||||||||||||
Basic | 351,526 | 117,175 | (C) | |||||||||
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Diluted | 362,964 | 120,988 | (C) | |||||||||
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| (B) | Gives effect to the distribution of the New Senior common stock held by Newcastle to the holders of Newcastle’s common stock as if it had taken place on January 1, 2013. |
| (C) | Gives retroactive effect to the 3-to-1 reverse stock split as approved by Newcastle’s Board of Directors on August 6, 2014. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Twelve Months Ended December 31, 2013
| Newcastle Consolidated Historical | New Senior spin-off(B) | Newcastle Consolidated Pro Forma | ||||||||||
Interest income | $ | 213,715 | $ | — | $ | 213,715 | ||||||
Interest expense | 89,382 | (10,589 | ) | 78,793 | ||||||||
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Net interest income | 124,333 | 10,589 | 134,922 | |||||||||
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Impairment (Reversal) | (19,769) | — | (19,769) | |||||||||
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Net interest income (loss) after impairment | 144,102 | 10,589 | 154,691 | |||||||||
Other Revenues | 87,323 | (85,136 | ) | 2,187 | ||||||||
Other Income | 35,301 | — | 35,301 | |||||||||
Expenses | 152,990 | (103,937 | ) | 49,053 | ||||||||
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Income (loss) from continuing operations before income taxes | 113,736 | 29,390 | 143,126 | |||||||||
Income tax expense | 1,038 | (656 | ) | 382 | ||||||||
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Income (loss) from continuing operations | 112,698 | 30,046 | 142,744 | |||||||||
Preferred dividends | (5,580 | ) | — | (5,580 | ) | |||||||
Excess of carrying amount of exchanged preferred stock over fair value of consideration paid | — | — | — | |||||||||
Net income attributable to noncontrolling interests | (928 | ) | — | (928 | ) | |||||||
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Income (loss) from continuing operations, after preferred dividends, excess of carrying amount of exchanged preferred stock over fair value of consideration paid and net income attributable to noncontrolling interest | 106,190 | 30,046 | 136,236 | |||||||||
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Income (loss) from continuing operations per share of common stock, after preferred dividends, excess of carrying amount of exchanged preferred stock over fair value of consideration paid and net income attributable to noncontrolling interest: | ||||||||||||
Basic | $ | 0.38 | $ | 1.48 | (C) | |||||||
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Diluted | $ | 0.37 | $ | 1.44 | (C) | |||||||
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Weighted average number of shares of common stock outstanding | ||||||||||||
Basic | 276,882 | 92,294 | (C) | |||||||||
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Diluted | 283,310 | 94,437 | (C) | |||||||||
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| (B) | Gives effect to the distribution of the New Senior common stock held by Newcastle to the holders of Newcastle’s common stock as if it had taken place on January 1, 2013. |
| (C) | Gives retroactive effect to the 3-to-1 reverse stock split as approved by Newcastle’s Board of Directors on August 6, 2014. |