Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Drive Shack Inc. | d680306d8k.htm |
| EX-99.1 - EX-99.1 - Drive Shack Inc. | d680306dex991.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information was derived from the application of pro forma adjustments to the consolidated financial statements of Newcastle Investment Corp. and its subsidiaries (collectively, “Newcastle”). The unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed consolidated balance sheet should be read in conjunction with the related notes to these financial statements and with Newcastle’s historical consolidated financial statements and the related notes included in Newcastle’s previous filings with the Securities and Exchange Commission.
The unaudited pro forma information set forth below reflects the historical information of Newcastle, as adjusted to give effect to the following transactions:
| • | The New Media Investment Group Inc. (“New Media”) February 2014 spin-off transaction from Newcastle. |
The unaudited pro forma condensed consolidated statement of operations gives effect to the above transaction as if it occurred on January 1, 2012. The unaudited pro forma condensed consolidated balance sheet assumes that the Media spin-off occurred on September 30, 2013.
In the opinion of management, all adjustments necessary to reflect the effects of the transaction described above 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 statement of operations does not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the date indicated, nor does it represent the results of operations of either Newcastle or New Media for any future date or period.
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
At September 30, 2013
| Newcastle Consolidated Historical (A) |
New Media Spin-Off |
Newcastle Consolidated Pro Forma |
||||||||||
| Assets |
||||||||||||
| Real estate securities, available-for-sale |
$ | 825,499 | $ | — | $ | 825,499 | ||||||
| Real estate related and other loans, held-for-sale, net |
795,297 | (243,006 | )(B) | 552,291 | ||||||||
| Residential mortgage loans, held-for-investment, net |
260,463 | — | 260,463 | |||||||||
| Residential mortgage loans, held-for-sale, net |
2,236 | — | 2,236 | |||||||||
| Subprime mortgage loans subject to call option |
406,217 | — | 406,217 | |||||||||
| Investments in real estate, net of accumulated depreciation |
409,041 | — | 409,041 | |||||||||
| Intangibles, net of accumulated amortization |
41,371 | — | 41,371 | |||||||||
| Equity method investment in Local Media Group |
57,384 | (57,384 | )(C) | — | ||||||||
| Other investments |
25,133 | — | 25,133 | |||||||||
| Cash and cash equivalents |
92,134 | — | 92,134 | |||||||||
| Restricted cash |
1,827 | — | 1,827 | |||||||||
| Derivative assets |
43,172 | — | 43,172 | |||||||||
| Receivables and other assets |
27,003 | — | 27,003 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
$ | 2,986,777 | $ | (300,390 | ) | $ | 2,686,387 | |||||
|
|
|
|
|
|
|
|||||||
| Liabilities and Stockholders’ Equity |
||||||||||||
| Liabilities |
||||||||||||
| CDO bonds payable |
$ | 718,473 | $ | (32,337 | )(D) | 686,136 | ||||||
| Other bonds and notes payable |
153,798 | — | 153,798 | |||||||||
| Repurchase agreements |
376,886 | — | 376,886 | |||||||||
| Mortgage notes payable |
335,238 | — | 335,238 | |||||||||
| Financing of subprime mortgage loans subject to call option |
406,217 | — | 406,217 | |||||||||
| Junior subordinated notes payable |
51,239 | — | 51,239 | |||||||||
| Derivative liabilities |
17,115 | — | 17,115 | |||||||||
| Dividends payable |
30,279 | — | 30,279 | |||||||||
| Due to affilaites |
4,911 | — | 4,911 | |||||||||
| Accrued expenses and other liabilities |
25,266 | — | 25,266 | |||||||||
| Liabilities of discontinued operations |
2,380 | — | 2,380 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
$ | 2,121,802 | $ | (32,337 | ) | $ | 2,089,465 | |||||
|
|
|
|
|
|
|
|||||||
| Stockholders’ Equity |
||||||||||||
| Preferred stock |
$ | 61,583 | $ | — | 61,583 | |||||||
| Common stock |
2,935 | — | 2,935 | |||||||||
| Additional paid-in capital |
2,670,442 | (268,053 | )(E) | 2,402,389 | ||||||||
| Accumulated deficit |
(1,941,805 | ) | — | (1,941,805 | ) | |||||||
| Accumulated other comprehensive income (loss) |
71,820 | — | 71,820 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Equity |
$ | 864,975 | $ | (268,053 | ) | $ | 596,922 | |||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities and Stockholders’ Equity |
$ | 2,986,777 | $ | (300,390 | ) | $ | 2,686,387 | |||||
|
|
|
|
|
|
|
|||||||
| (A) | Represents Newcastle’s historical consolidated balance sheet at September 30, 2013. |
| (B) | Represents the carrying value of the outstanding GateHouse debt held by Newcastle at September 30, 2013. |
| (C) | Represents the carrying value of the equity method investment in Local Media Group at September 30, 2013. |
| (D) | Represents a reduction of CDO bonds payable by the carrying value of Gatehouse debt held in CDOs. |
| (E) | Represents a reduction in Newcastle’s equity as a result of the distribution of New Residential stock to Newcastle shareholders. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months ended September 30, 2013
| Pro Forma Adjustment | ||||||||||||
| Newcastle Consolidated Historical (A) |
New Media Spin-Off | Newcastle Consolidated Pro Forma |
||||||||||
| Interest income |
$ | 171,642 | $ | (7,369 | ) (B) | $ | 164,273 | |||||
| Interest expense |
65,263 | (398 | ) (C) | 64,865 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net interest income |
106,379 | (6,971 | ) | 99,408 | ||||||||
|
|
|
|
|
|
|
|||||||
| Impairment (Reversal) |
||||||||||||
| Valuation allowance (reversal) on loans |
(11,473 | ) | 12,027 | (D) | 554 | |||||||
| Other-than-temporary impairment on securities |
4,405 | — | 4,405 | |||||||||
| 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) |
44 | — | 44 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Impairment (reversal) |
(7,024 | ) | 12,027 | 5,003 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net interest income (loss) after impairment/reversal |
113,403 | (18,998 | ) | 94,405 | ||||||||
| Other Revenues |
||||||||||||
| Rental income |
44,344 | — | 44,344 | |||||||||
| Care and ancillary income |
8,081 | — | 8,081 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total other revenues |
52,425 | — | 52,425 | |||||||||
|
|
|
|
|
|
|
|||||||
| Other Income (Loss) |
||||||||||||
| Gain (loss) on settlement of investments, net |
6,451 | — | 6,451 | |||||||||
| Gain on extinguishment of debt |
4,565 | — | 4,565 | |||||||||
| Equity in earnings of Local Media Group |
1,045 | (1,045 | ) (E) | — | ||||||||
| Other income, net |
9,554 | (1,541 | ) (F) | 8,013 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total other income |
21,615 | (2,586 | ) | 19,029 | ||||||||
|
|
|
|
|
|
|
|||||||
| Expenses |
||||||||||||
| Loan and security servicing expense |
2,963 | — | 2,963 | |||||||||
| Property operating expenses |
32,576 | — | 32,576 | |||||||||
| General and administrative expense |
23,507 | — | 23,507 | |||||||||
| Management fee to affiliate |
24,879 | — | 24,879 | |||||||||
| Depreciation and amortization |
15,881 | — | 15,881 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
99,806 | — | 99,806 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
87,637 | (21,584 | ) | 66,053 | ||||||||
| Preferred dividends |
(4,185 | ) | — | (4,185 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations after preferred dividends |
$ | 83,452 | $ | (21,584 | ) | $ | 61,868 | |||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations per share of commonstock, after preferred dividends |
||||||||||||
| Basic |
$ | 0.32 | $ | 0.24 | ||||||||
|
|
|
|
|
|||||||||
| Diluted |
$ | 0.31 | $ | 0.23 | (G) | |||||||
|
|
|
|
|
|||||||||
| Weighted Average Number of Shares of Common Stock Outstanding |
||||||||||||
| Basic |
262,792,986 | 262,792,986 | ||||||||||
|
|
|
|
|
|||||||||
| Diluted |
269,057,682 | 269,057,682 | (G) | |||||||||
|
|
|
|
|
|||||||||
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 2012
| Pro Forma Adjustment | ||||||||||||
| Newcastle Consolidated Historical (A) |
New Media Spin-Off |
Newcastle Consolidated Pro Forma |
||||||||||
| Interest income |
$ | 282,951 | $ | (2,712 | )(B) | $ | 280,239 | |||||
| Interest expense |
109,924 | (531 | )(C) | 109,393 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net interest income |
173,027 | (2,181 | ) | 170,846 | ||||||||
|
|
|
|
|
|
|
|||||||
| Impairment (Reversal) |
||||||||||||
| Valuation allowance (reversal) on loans |
(24,587 | ) | 17,414 | (D) | (7,173 | ) | ||||||
| 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 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total Impairment (reversal) |
(5,664 | ) | 17,414 | 11,750 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net interest income (loss) after impairment/reversal |
178,691 | (19,595 | ) | 159,096 | ||||||||
| 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 | |||||||||
| Other income, net |
5,312 | (59 | )(F) | 5,253 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total other income |
262,294 | (59 | ) | 262,235 | ||||||||
|
|
|
|
|
|
|
|||||||
| Expenses |
||||||||||||
| Loan and security servicing expense |
4,260 | — | 4,260 | |||||||||
| Property operating expenses |
12,943 | — | 12,943 | |||||||||
| General and administrative expense |
17,247 | — | 17,247 | |||||||||
| Management fee to affiliate |
24,693 | — | 24,693 | |||||||||
| Depreciation and amortization |
6,975 | — | 6,975 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
66,118 | — | 66,118 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
394,942 | (19,654 | ) | 375,288 | ||||||||
| Preferred dividends |
(5,580 | ) | — | (5,580 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations after preferred dividends |
$ | 389,362 | $ | (19,654 | ) | $ | 369,708 | |||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations per share of common stock, after preferred dividends |
||||||||||||
| Basic |
$ | 2.70 | $ | 2.56 | ||||||||
|
|
|
|
|
|||||||||
| Diluted |
$ | 2.67 | $ | 2.54 | (G) | |||||||
|
|
|
|
|
|||||||||
| Weighted Average Number of Shares of Common Stock Outstanding |
||||||||||||
| Basic |
144,146,370 | 144,146,370 | ||||||||||
|
|
|
|
|
|||||||||
| Diluted |
145,766,413 | 145,766,413 | (G) | |||||||||
|
|
|
|
|
|||||||||
| (A) | Represents Newcastle’s historical consolidated statement of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012. |
| (B) | Represents the interest income recognized by Newcastle related to GateHouse debt. |
| (C) | Represents a reduction in interest expense as a result of the pro forma paydown of debt related to GateHouse debt held in CDOs. This interest expense was calculated based on a weighted average cost of debt of 1.64%. A 1/8% increase (decrease) in the benchmark interest rate would result in an increase (decrease) in interest expense of approximately $40 thousand for the year ended December 31, 2012. |
| (D) | Represents the valuation allowance (reversal) recognized by Newcastle related to GateHouse debt. |
| (E) | Represents the equity in earnings of Local Media Group recognized by Newcastle. |
| (F) | Represents the other income recognized by Newcastle related to GateHouse debt. |
| (G) | 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 Media subsequent to the spin-off. |