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Press release from Business Wire

Newcastle Announces First Quarter 2010 Results

<p> <span class='bwunderlinestyle'>First Quarter 2010 Financial Results</span> </p>

Friday, May 07, 2010

Newcastle Announces First Quarter 2010 Results07:00 EDT Friday, May 07, 2010 NEW YORK (Business Wire) -- Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended March 31, 2010, income applicable to common stockholders (“GAAP income”) was $180.2 million, or $3.36 per diluted share, compared to a loss applicable to common stockholders of $242.2 million, or $4.59 per diluted share, for the quarter ended March 31, 2009. GAAP income of $180.2 million consisted of the following: $12.6 million of net interest income less expenses (net of preferred dividends), $56.6 million of other income, $43.0 million representing the excess of the carrying amount of the exchanged preferred stock over the fair value of the consideration paid (“gain on preferred stock exchange”), and $68.0 million from the reversal of prior valuation allowances on loans net of the impairment on securities. Other income is primarily related to a gain on the extinguishment of CDO debt. In the first quarter, Newcastle repurchased a face amount of $56.3 million of CDO bonds for $7.6 million. As a result, Newcastle recorded a gain on the extinguishment of CDO debt of $48.3 million. During the quarter, the Company announced and settled the offer to exchange (the “Exchange Offer”) shares of its common stock and cash for a total of 1,152,679 shares of its Series B Preferred Stock, 1,104,000 shares of its Series C Preferred Stock and 1,380,000 shares of its Series D Preferred Stock. Upon settlement, the Company issued 9,091,698 shares of its Common Stock and paid an aggregate of $16.0 million in cash. In addition, the Company paid accumulated and unpaid dividends to all holders of its Preferred Stock and recorded a $43.0 million gain on the preferred stock exchange. During the quarter, the Company entered into an Exchange Agreement, dated as of January 29, 2010, to exchange $51.9 million aggregate principal amount of junior subordinated notes due 2035 for $37.6 million face amount of previously issued CDO bonds and $9.7 million of cash. For a reconciliation of income (loss) applicable to common stockholders to net interest income less expenses (net of preferred dividends), please refer to the tables following the presentation of the GAAP results. Subsequent Event On April 15, 2010, the Company completed a securitization transaction to refinance its Manufactured Housing Loans Portfolio I. The Company sold $164.1 million outstanding principal balance of manufactured housing loans to Newcastle MH I LLC (the “Issuer”), an indirect wholly-owned subsidiary of the Company. The Issuer issued $134.5 million aggregate principal amount of asset backed notes, of which $97.6 million was sold to third parties and $36.9 million was sold to certain CDOs managed and consolidated by the Company. At the closing of the transaction, the Company used the gross proceeds received from the issuance and repaid the existing debt in full, terminated the existing related interest rate swap contracts and paid related transaction costs. The Company received unrestricted cash of $14 million and retained the residual interest in the securitization. Recourse Debt Financing and Liquidity In the first quarter, the Company reduced its non-agency recourse debt by $22 million and repaid all of its remaining FNMA/FHLMC recourse debt. In April, the Company repaid its remaining $13 million of non-agency recourse debt financing real estate securities, loans, and properties. As detailed below, the Company's unrestricted cash balance currently exceeds its non-agency recourse liabilities (excluding its junior subordinated notes, which are long-term obligations). Certain details regarding the Company's liquidity and current financings are set forth below as of May 5, 2010: Cash – The Company had unrestricted cash of $25 million. In addition, the Company had $160 million of restricted cash for reinvestment in its CDOs; Margin Exposure – The Company had no financings or derivatives subject to margin calls as all of its outstanding repurchase agreements were repaid in full and its remaining interest rate swap agreements subject to margin calls were terminated. The following table illustrates the change in unrestricted cash and recourse financings, excluding junior subordinated notes ($ in millions):          May 5,       March 31,    December 31,201020102009   Unrestricted Cash $ 25 $ 12 $ 68   Recourse Financings Non-FNMA/FHLMC (non-agency) Real Estate Securities, Loans, and Properties - 13 32 Manufacturing Housing Loans   6     7     10   Subtotal 6 20 42   FNMA/FHLMC Investments   -     -     40   Total Recourse Financings $ 6   $ 20   $ 82     The remaining $6 million of recourse debt on the Manufacturing Housing Loans is due over the next six months. CDO Financings The following table summarizes the cash receipts in the first quarter of 2010 from the Company's consolidated CDO financings, their related coverage tests, and negative watch assets ($ in thousands):       InterestCoverage%Excess(Deficiency)Apr 30,2010 (2)               CashReceipts (1)PrimaryCollateralTypeOver Collateralization Excess (Deficiency)Assets onNegativeWatch (3)Apr 30, 2010 (2)Mar 31, 2010 (2)Dec 31, 2009 (2)%   $   %   $   %   $   CDO IV Securities $ 152 148.0 % -7.1 % (26,531 ) -7.1 % (26,531 ) -6.8 % (25,763 ) $ 118,808 CDO V Securities 158 198.5 % -4.0 % (17,622 ) -4.0 % (17,622 ) -3.8 % (17,120 ) 123,561 CDO VI Securities 132 -50.4 % -36.6 % (159,008 ) -24.8 % (108,077 ) -21.8 % (95,647 ) 124,657 CDO VIII Loans 3,017 311.0 % 14.0 % 90,182 9.7 % 62,404 9.8 % 63,502 154,811 CDO IX Loans 3,740 206.6 % 7.8 % 50,582 10.9 % 70,156 10.5 % 68,089 21,750 CDO X Securities   5,309 91.0 % 5.6 % 68,436 6.0 % 73,577 2.8 % 34,769   300,411 Total$12,508$843,998   (1)   Represents net cash received from each CDO based on all of the interests in such CDO (including senior management fees). Cash receipts for the quarter ended March 31, 2010 may not be indicative of cash receipts for subsequent periods. See Forward-Looking Statements below for risks and uncertainties that could cause cash receipts for subsequent periods to differ materially from these amounts. (2) Represents excess or deficiency under the applicable interest coverage or over collateralization test to the first threshold at which cash flow would be redirected. The Company generally does not receive material cash flow from a CDO until a deficiency is corrected. The information regarding coverage tests is based on data from the most recent remittance date on or before April 30, 2010, March 31, 2010, or December 31, 2009, as applicable. The CDO IV and V tests are conducted only on a quarterly basis (December, March, June and September). (3) Represents the face amount of assets on negative watch for possible downgrade by at least one rating agency (Moody's, S&P or Fitch). Amounts are as of the determination date pertaining to March 2010 remittances for CDO IV and V (these tests are conducted only on a quarterly basis) and as of the determination date pertaining to April 2010 remittances for all other CDOs. The amounts include $140.2 million of CDO bonds issued by Newcastle, which are eliminated in consolidation and not reflected in the investment portfolio disclosures. The cash receipts above include $1.6 million of non-recurring fees received in the CDOs. Results for April 30, 2010 include the effect of the default of the $60 million Stuyvesant Mezzanine loan held and subsequently sold out of CDO IX. Effective January 1, 2010, under new accounting guidance issued by the FASB, the Company deconsolidated one of its non-recourse financing structures, CDO VII. The Company determined that it is no longer the primary beneficiary of CDO VII under the new guidance, as an event of default had occurred and the Company may be removed as the collateral manager by a single party. The deconsolidation has reduced the Company's assets by $149.4 million, liabilities by $437.8 million, and stockholder's deficit by $288.4 million. Book Value GAAP book value increased by $614 million or $14.87 per share. As of March 31, 2010, GAAP book value was $(1.2) billion or $(19.02) per share compared to $(1.8) billion or $(33.89) per share at December 31, 2009. Dividends For the quarter ended March 31, 2010, Newcastle's Board of Directors elected not to pay a common stock dividend. The Board of Directors declared accumulated and unpaid dividends as well as a dividend for the period February 1, 2010 through April 30, 2010 on Newcastle's 9.75% Series B, 8.05% Series C and 8.38% Series D Cumulative Redeemable Preferred Stock in the aggregate amounts of $3.66, $3.02 and $3.14 per share, respectively. Investment Portfolio Newcastle's $5.0 billion investment portfolio (with a basis of $3.0 billion) consists of commercial, residential and corporate debt. During the quarter, the portfolio decreased by $600 million, primarily as a result of the deconsolidation of CDO VII (which had $429 million of assets as of January 1, 2010), sales of $193 million and principal repayments of $81 million, offset by purchases of $127 million. The following table describes the investment portfolio as of March 31, 2010 ($ in millions):     FaceAmount $   BasisAmount $ (1)   % ofTotalBasis   Number ofInvestments   Credit (2)   WeightedAverageLife (yrs) (3)Commercial Assets           CMBS $ 2,127 $ 1,415 46.7 % 271 BB+ 3.1 Mezzanine Loans 717 250 8.3 % 21 69% 1.9 B-Notes 308 101 3.4 % 11 76% 2.0 Whole Loans 56 29 1.0 % 3 18% 4.7 CDO (4)   79     -   0.0 % 4 C 0.0 Total Commercial Assets 3,287 1,795 59.4 % 2.7   Residential Assets MH and Residential Loans 471 401 13.2 % 12,314 699 6.8 Subprime Securities 418 167 5.5 % 94 B 4.2 Real Estate ABS   83     62   2.0 % 24 BB+ 4.3 972 630 20.7 % 5.5   FNMA/FHLMC Securities   4     4   0.1 % 1 AAA 3.6 Total Residential Assets 976 634 20.8 % 5.5   Corporate Assets REIT Debt 395 394 13.0 % 46 BB+ 3.8 Corporate Bank Loans   292     208   6.8 % 9 CCC- 3.7 Total Corporate Assets 687 602 19.8 % 3.8             Total/Weighted Average (5) $ 4,950   $ 3,031   100.0 % 3.4   (1)   Net of impairment. (2) Credit represents the weighted average of minimum ratings for rated assets, the Loan to Value ratio (based on the appraised value at the time of purchase) for non-rated commercial assets, or the FICO score for non-rated residential assets and an implied AAA rating for FNMA/FHLMC securities. Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative watch”) at any time. (3) Weighted average life is based on the timing of expected principal reduction on the asset. (4) Includes one CDO bond issued by a third party and three CDO bonds issued by CDO VII, which was deconsolidated, and held as investments by the Company. (5) Excludes operating real estate held for sale of $10 million and loans subject to call option with a face amount of $406 million.   Commercial Assets The Company owns $3.3 billion of commercial assets (with a basis of $1.8 billion), which includes CMBS, mezzanine loans, B-Notes and whole loans. During the quarter, the Company purchased $101 million, sold $78 million, had principal repayments of $32 million and had $13 million of actual principal writedowns. The Company purchased 13 CMBS assets with an average rating of “A-.” The Company had one commercial asset or $3 million upgraded, one security or $3 million affirmed and 37 securities or $316 million downgraded (from an average rating of BB+ to B). CMBS portfolio ($ in thousands): Vintage (1)   AverageMinimumRating (2)   Number   FaceAmount $   BasisAmount $   % of TotalBasis   Delinquency60+/FC/REO (3)   PrincipalSubordination (4)   WeightedAverageLife (yrs) (5)                 Pre 2004 BBB 86 434,488 416,264 29.4% 5.5% 12.4% 2.8 2004 BB 63 438,217 297,633 21.1% 3.2% 5.7% 3.4 2005 BB- 33 340,667 141,691 10.0% 3.7% 7.3% 3.1 2006 BB+ 51 488,676 346,859 24.5% 2.5% 10.7% 3.0 Post 2007   BB-   38   425,547   212,210   15.0%   4.9%   12.8%   3.2   TOTAL/WA   BB+   271   2,127,595   1,414,657   100.0%   3.9%   9.9%   3.1   (1)   The year in which the securities were issued. (2) Ratings provided above were determined by third party rating agencies as of a particular date, which may not be current and are subject to change (including the assignment of a “negative watch”) at any time. The Company had approximately $557 million of CMBS assets that are on negative watch for possible downgrade by at least one rating agency as of March 31, 2010. (3) The percentage of underlying loans that are 60+ days delinquent, or in foreclosure or considered real estate owned (REO). (4) The percentage of the outstanding face amount of securities that is subordinate to the Company's investments. (5) Weighted average life is based on the timing of expected principal reduction on the asset.   Mezzanine loans, B-Notes and whole loans portfolio ($ in thousands): Asset Type   Number   FaceAmount ($)   BasisAmount ($)   % of TotalBasis   WA First $Loan toValue (1)   WA Last $Loan toValue (1)   Delinquency (%) (2) Mezzanine Loans   21   717,134   250,066   65.7%   55.5%   69.3%   18.2% B-Notes 11 308,006 101,452 26.7% 61.7% 75.8% 42.7% Whole Loans   3   56,085   29,111   7.6%   0.0%   18.2%   0.0%   Total/WA   35   1,081,225   380,629   100.0%   54.4%   68.5%   24.2%   (1)   Loan To Value is based on the appraised value at the time of purchase. (2) The percentage of underlying loans that are non-performing, in foreclosure, under bankruptcy filing or considered real estate owned.   Residential Assets The Company owns $976 million of residential assets (with a basis of $634 million), which includes manufactured housing (“MH”) loans, residential loans, subprime securities and FNMA/FHLMC securities. During the quarter, the Company purchased $26 million, sold $55 million, had principal repayments of $41 million and actual principal writedowns of $16 million. The Company purchased two ABS assets with an average rating of “AAA.” The Company had no ABS securities upgraded, seven securities or $67 million affirmed, and 11 securities or $57 million downgraded (from an average rating of BB+ to BB). Manufactured housing and residential loan portfolios ($ in thousands):                               DealFaceAmount $   BasisAmount $   % ofTotalBasis   AverageLoan Age(months)   OriginalBalance $   Delinquency90+/FC/REO (1)   CumulativeLoss to Date   MH Loans Portfolio 1 166,684 134,419 33.5% 101 327,855 1.1% 5.9% MH Loans Portfolio 2 236,065 215,695 53.7% 129 434,743 1.2% 3.9% Residential Loans Portfolio 1 63,900 47,657 11.9% 82 646,357 7.9% 0.3% Residential Loans Portfolio 2 3,794   3,509   0.9%   67   83,950   0.0%   0.0%   TOTAL/WA470,443   401,280   100.0%   112   1,492,905   2.1%   4.1%   (1)   The percentage of loans that are 90+ days delinquent, or in foreclosure or considered real estate owned (REO).   Subprime Securities portfolio ($ in thousands): Security Characteristics: Vintage (1)   AverageMinimumRating (2)   Number   FaceAmount $   BasisAmount $   % ofTotalBasis   PrincipalSubordination (3)   ExcessSpread (4)               2003 BB- 15 21,400 12,836 7.7% 21.8% 4.0% 2004 B 30 100,652 36,458 21.8% 16.1% 4.1% 2005 B+ 27 105,380 32,026 19.2% 26.8% 4.8% 2006 CCC 12 93,068 32,131 19.3% 13.6% 5.0% Post 2007   BB   10   97,768   53,406   32.0%   17.1%   3.5%   TOTAL/WA   B   94   418,268   166,857   100.0%   18.7%   4.3%   Collateral Characteristics: Vintage (1)   AverageLoan Age(months)   CollateralFactor (5)   3 MonthCPR (6)   Delinquency90+/FC/REO (7)   CumulativeLoss to Date           2003 85 0.10 7.9% 18.6% 2.9% 2004 71 0.15 8.7% 21.5% 3.2% 2005 59 0.22 11.5% 36.2% 7.8% 2006 47 0.48 9.8% 38.9% 11.8% Post 2007   34   0.54   8.9%   26.2%   10.1%   TOTAL/WA   55   0.33   9.6%   30.0%   7.9%   Real Estate ABS portfolios ($ in thousands): Security Characteristics:                               Asset Type   AverageMinimumRating (2)   Number   FaceAmount $   BasisAmount $   % ofTotalBasis   PrincipalSubordination (3)   ExcessSpread (4)   Manufactured Housing BBB+ 9 50,534 49,108 79.7% 37.2% 2.5% Small Business Loans   B   15   32,780   12,520   20.3%   18.3%   3.0%   TOTAL/WA   BB+   24   83,314   61,628   100.0%   29.7%   2.7%   Collateral Characteristics: Asset Type   AverageLoan Age(months)   CollateralFactor (5)   3 MonthCPR (6)   Delinquency90+/FC/REO (7)   CumulativeLoss to Date           Manufactured Housing 113 0.37 2.3% 4.8% 10.2% Small Business Loans   68   0.57   3.4%   26.9%   4.7%   TOTAL/WA   95   0.45   2.7%   13.5%   8.0%   (1)   The year in which the securities were issued. (2) Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative watch”) at any time. The Company had approximately $165 million of subprime and ABS securities that are on negative watch for possible downgrade by at least one rating agency as of March 31, 2010. (3) The percentage of the outstanding face amount of securities and residual interests that is subordinate to the Company's investments. (4) The annualized amount of interest received on the underlying loans in excess of the interest paid on the securities, as a percentage of the outstanding collateral balance. (5) The ratio of original unpaid principal balance of loans still outstanding. (6) Three month average constant prepayment rate. (7) The percentage of underlying loans that are 90+ days delinquent, or in foreclosure or considered real estate owned (REO).   Corporate Assets The Company owns $687 million of corporate assets (with a basis of $602 million), including REIT debt and corporate bank loans. During the quarter, the Company sold $60 million and had principal repayments of $8 million. The sales consisted of six REIT assets and one bank loan with an average rating of “B+.” The Company had no REIT assets upgraded or affirmed and one bank loan or $60 million downgraded (from a rating of CCC+ to CC). REIT debt portfolio ($ in thousands): Industry   AverageMinimumRating (1)   Number   FaceAmount $   BasisAmount $   % ofTotalBasis           Retail BBB- 11 80,660 76,856 19.5% Diversified CCC+ 10 106,836 107,723 27.3% Office BBB 11 115,469 117,387 29.8% Multifamily BBB 3 12,765 12,836 3.2% Hotel BBB 4 30,220 30,727 7.8% Healthcare BBB- 5 41,600 41,721 10.6% Storage A- 1 5,000 5,068 1.3% Industrial   BB-   1   2,000   2,078   0.5%   TOTAL/WA   BB+   46   394,550   394,396   100.0%   Corporate bank loan portfolio ($ in thousands): Industry   AverageMinimumRating (1)   Number   FaceAmount $   BasisAmount $   % ofTotalBasis           Real Estate C 3 64,625 41,157 19.9% Media CC 2 111,765 54,765 26.4% Resorts BB- 1 68,833 68,489 33.0% Restaurant B 2 19,375 17,185 8.3% Transportation   NR   1   27,000   25,650   12.4%   TOTAL/WA   CCC-   9   291,598   207,246   100.0%   (1)   Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative watch”) at any time. The Company had approximately $22 million of REIT assets that are on negative watch for possible downgrade by at least one rating agency as of March 31, 2010. Conference Call Newcastle's management will conduct a live conference call today, May 7, 2010, at 1:00 P.M. Eastern Time to review the financial results for the quarter ended March 31, 2010. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (888) 243-2046 (from within the U.S.) or (706) 679-1533 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Newcastle First Quarter Earnings Call." A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newcastleinv.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available until 11:59 P.M. Eastern Time on Friday, May 14, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code “71825005.” About Newcastle Newcastle Investment Corp. owns and manages a portfolio of diversified, credit sensitive real estate debt that is primarily financed with match funded debt. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com. Forward-Looking Statements Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to our liquidity, future losses and impairment charges, our ability to acquire assets with attractive returns and the delinquent and loss rates on our subprime portfolios. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. Newcastle can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Newcastle's expectations include, but are not limited to, the risk that the ongoing challenging credit and liquidity conditions continue to cause downgrades of a significant number of our securities and recording of additional impairment charges or reductions in shareholders' equity; the risk that we can find additional suitably priced investments; the risk that investments made or committed to be made cannot be financed on the basis and for the term at which we expect; the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; and the relative spreads between the yield on the assets we invest in and the cost and availability of debt and equity financing. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Company's Quarterly Report on Form 10-Q, which is available on the Company's website (www.newcastleinv.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Newcastle expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. Newcastle Investment Corp.Consolidated Statements of Operations (Unaudited)(dollars in thousands, except per share data)   Three Months Ended March 312010   2009 Interest income $ 70,092   $ 124,473 Interest expense   45,589     60,544   Net interest income   24,503     63,929     Impairment Valuation allowance (reversal) on loans (95,774 ) 120,888 Other-than-temporary impairment on securities 64,856 186,582 Portion of other-than-temporary impairment on securities recognized in other comprehensive income   (37,114 )   -     (68,032 )   307,470     Net interest income (loss) after impairment 92,535 (243,541 )   Other Income (Loss) Gain (loss) on settlement of investments, net 9,677 (8,047 ) Gain (losses) on extinguishment of debt 48,346 26,845 Other income (loss), net (1,565 ) (6,494 ) Equity in earnings (losses) of equity method investees   85     13     56,543     12,317   Expenses Loan and security servicing expense 1,035 1,402 General and administrative expense 3,038 1,626 Management fee to affiliate 4,477 4,491 Depreciation and amortization   63     72     8,613     7,591     Income (loss) from continuing operations 140,465 (238,815 ) Income (loss) from discontinued operations   (40 )   (33 ) Net Income (Loss) 140,425 (238,848 ) Preferred dividends (3,268 ) (3,375 ) Excess of carrying amount of exchanged preferred stock over fair value of consideration paid   43,043     -   Income (Loss) Applicable to Common Stockholders $ 180,200   $ (242,223 ) Income (loss) Per Share of Common Stock Basic $ 3.36   $ (4.59 ) Diluted $ 3.36   $ (4.59 ) Income (loss) from continuing operations per share of common stock,after preferred dividends and excess of carrying amount ofexchanged preferred stock over fair value of consideration paid Basic $ 3.36   $ (4.59 ) Diluted $ 3.36   $ (4.59 ) Income (loss) from discontinued operations per shareof common stock Basic $ -   $ -   Diluted $ -   $ -     Weighted Average Number of Shares of Common Stock Outstanding Basic   53,619,643     52,807,232   Diluted   53,619,643     52,807,232     Dividends Declared per Share of Common Stock $ -   $ -     Newcastle Investment Corp.Consolidated Balance Sheets(dollars in thousands, except share data)     March 31, 2010(Unaudited)December 31, 2009AssetsNon-Recourse VIE Financing Structures Real estate securities, available for sale $ 1,762,830 $ 1,784,487 Real estate related loans, held for sale, net 578,166 554,367 Residential mortgage loans, held for sale, net 404,474 380,123 Subprime mortgage loans subject to call option 403,190 403,006 Restricted cash 233,979 200,251 Receivables from brokers, dealers and clearing organizations 843 - Receivables and other assets   33,271     36,643     3,416,753     3,358,877   Recourse Financing Structures and Unlevered Assets Real estate securities, available for sale 1,597 46,308 Real estate related loans, held for sale, net 9,722 19,495 Residential mortgage loans, held for sale, net 3,516 3,524 Investments in equity method investees 41 193 Operating real estate, held for sale 9,966 9,966 Cash and cash equivalents 11,838 68,300 Restricted cash 54 5,127 Receivables from brokers, dealers and clearing organizations 16,116 - Receivables and other assets   1,640     2,838     54,490     155,751   $ 3,471,243   $ 3,514,628     Liabilities and Stockholders' Equity (Deficit)LiabilitiesNon-Recourse VIE Financing Structures CDO bonds payable $ 3,623,503 $ 4,058,928 Other bonds payable 292,486 303,697 Notes payable 4,681 - Financing of subprime mortgage loans subject to call option 403,190 403,006 Derivative liabilities 184,798 203,054 Accrued expenses and other liabilities   2,444     2,992     4,511,102     4,971,677   Recourse Financing Structures and Other Liabilities Repurchase agreements 12,889 71,309 Junior subordinated notes payable 51,257 103,264 Derivative liabilities - 4,100 Dividends payable 78 - Due to affiliates 1,482 1,497 Payables to brokers, dealers and clearing organizations 7,407 - Accrued expenses and other liabilities   4,806     3,433     77,919     183,603     4,589,021     5,155,280     Stockholders' Equity (Deficit) Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 and 2,500,000 shares of 9.75% Series B Cumulative Redeemable Preferred Stock 496,000 and 1,600,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 and 2,000,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock liquidation preference $25.00 per share, issued and outstanding as of March 31, 2010 and December 31, 2009, respectively 61,583 152,500 Common stock, $0.01 par value, 500,000,000 shares authorized, 62,004,181 and 52,912,513 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively 620 529 Additional paid-in capital 1,065,302 1,033,520 Accumulated deficit (1,809,759 ) (2,193,383 ) Accumulated other comprehensive income (loss)   (435,524 )   (633,818 )   (1,117,778 )   (1,640,652 ) $ 3,471,243   $ 3,514,628     Newcastle Investment Corp.Reconciliation of Net Interest Income Less Expenses (Net of Preferred Dividends)(dollars in thousands)(Unaudited)   Three Months EndedMarch 31, 2010   March 31, 2009 Income (Loss) Applicable to Common Stockholders $ 180,200 $ (242,223 ) Add (Deduct): Impairment (68,032 ) 307,470 Other (Income) Loss (56,543 ) (12,317 ) Excess of carrying amount of exchanged preferred stock over fair value of consideration paid (43,043 ) - Loss from discontinued operations   40     33   Net Interest Income less Expenses (Net of Preferred Dividends) $ 12,622   $ 52,963