2013 Q4 Form 10-K Financial Statement

#000119312515062531 Filed on February 25, 2015

View on sec.gov

Income Statement

Concept 2013 Q4 2013 Q3 2013 Q2
Revenue $57.49M $57.42M $57.72M
YoY Change 7.67% -3.86% -3.03%
Cost Of Revenue $19.30M $21.70M $21.50M
YoY Change -41.34% -23.32% -66.51%
Gross Profit $38.20M $35.70M $36.30M
YoY Change 86.34% 13.69% -872.34%
Gross Profit Margin 66.44% 62.17% 62.89%
Selling, General & Admin $15.60M $19.50M $20.80M
YoY Change 8.33% 20.37% 44.44%
% of Gross Profit 40.84% 54.62% 57.3%
Research & Development $2.780M $2.318M
YoY Change 126.94% 77.9%
% of Gross Profit 7.79% 6.39%
Depreciation & Amortization $100.0K $100.0K $100.0K
YoY Change -50.0% 0.0% -85.71%
% of Gross Profit 0.26% 0.28% 0.28%
Operating Expenses -$19.67M -$22.32M -$24.43M
YoY Change 271.13% -230.51% -261.09%
Operating Profit $57.87M $58.02M $60.73M
YoY Change 124.3% 305.79% -405.71%
Interest Expense $19.53M $21.73M $21.42M
YoY Change -40.77% -23.19% -25.85%
% of Operating Profit 33.74% 37.44% 35.26%
Other Income/Expense, Net -$12.00M
YoY Change
Pretax Income $27.00M $16.99M $68.71M
YoY Change -36.17% -57.74% 241.53%
Income Tax $1.800M -$4.935M $3.140M
% Of Pretax Income 6.67% -29.04% 4.57%
Net Earnings $25.14M $21.93M $65.57M
YoY Change -40.27% -44.76% 235.81%
Net Earnings / Revenue 43.72% 38.19% 113.61%
Basic Earnings Per Share $0.30 $0.26 $0.78
Diluted Earnings Per Share $0.29 $0.25 $0.71
COMMON SHARES
Basic Shares Outstanding 82.39M shares 82.20M shares 82.12M shares
Diluted Shares Outstanding 84.42M shares 96.17M shares

Balance Sheet

Concept 2013 Q4 2013 Q3 2013 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.856B $1.529B $1.522B
YoY Change 55.99% 13.14% 10.19%
Cash & Equivalents $173.2M $204.6M $207.7M
Short-Term Investments $1.683B $1.325B $1.314B
Other Short-Term Assets $2.000M $2.000M $1.000M
YoY Change 0.0% 0.0% 0.0%
Inventory
Prepaid Expenses
Receivables
Other Receivables
Total Short-Term Assets $206.0M $255.0M $221.0M
YoY Change 134.09% 454.35% 172.84%
LONG-TERM ASSETS
Property, Plant & Equipment $1.232M $1.065M $859.0K
YoY Change 149.39% 106.8% 53.67%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $1.748B $1.385B $1.357B
YoY Change 56.91% -14.14% -13.73%
Other Assets $14.00M $15.00M $16.00M
YoY Change 40.0% -69.39% -36.0%
Total Long-Term Assets $4.403B $4.405B $5.214B
YoY Change 1.07% -16.12% 0.95%
TOTAL ASSETS
Total Short-Term Assets $206.0M $255.0M $221.0M
Total Long-Term Assets $4.403B $4.405B $5.214B
Total Assets $4.609B $4.660B $5.435B
YoY Change 3.7% -12.03% 3.6%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses $55.00M $48.00M $93.00M
YoY Change 77.42% 0.0% 322.73%
Deferred Revenue
YoY Change
Short-Term Debt $862.8M $838.3M $1.446B
YoY Change 56.32% 60.53% 217.5%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $918.0M $886.0M $1.539B
YoY Change 57.46% 55.44% 222.64%
LONG-TERM LIABILITIES
Long-Term Debt $2.419B $2.533B $2.658B
YoY Change -9.37% -29.03% -28.22%
Other Long-Term Liabilities $18.00M $33.00M $30.00M
YoY Change -64.71% -69.72% -73.68%
Total Long-Term Liabilities $2.437B $2.566B $2.688B
YoY Change -10.4% -30.23% -29.58%
TOTAL LIABILITIES
Total Short-Term Liabilities $918.0M $886.0M $1.539B
Total Long-Term Liabilities $2.437B $2.566B $2.688B
Total Liabilities $3.363B $3.452B $4.226B
YoY Change 1.78% -18.71% -1.61%
SHAREHOLDERS EQUITY
Retained Earnings $806.3M $781.2M $759.2M
YoY Change 27.37% 32.18% 37.72%
Common Stock $1.762B $1.759B $1.755B
YoY Change 0.94% 1.03% 2.87%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $1.246B $1.207B $1.209B
YoY Change
Total Liabilities & Shareholders Equity $4.609B $4.660B $5.435B
YoY Change 3.7% -12.03% 3.6%

Cashflow Statement

Concept 2013 Q4 2013 Q3 2013 Q2
OPERATING ACTIVITIES
Net Income $25.14M $21.93M $65.57M
YoY Change -40.27% -44.76% 235.81%
Depreciation, Depletion And Amortization $100.0K $100.0K $100.0K
YoY Change -50.0% 0.0% -85.71%
Cash From Operating Activities $263.6M $547.0M -$579.4M
YoY Change -282.17% -374.87% -4209.22%
INVESTING ACTIVITIES
Capital Expenditures $0.00 -$3.100M $0.00
YoY Change
Acquisitions
YoY Change
Other Investing Activities -$184.4M $205.1M $159.1M
YoY Change -191.24% -22.72% 148.98%
Cash From Investing Activities -$184.4M $202.0M $159.1M
YoY Change -191.24% -23.89% 148.98%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -110.7M -752.0M 549.0M
YoY Change 600.63% 679.27% -447.69%
NET CHANGE
Cash From Operating Activities 263.6M 547.0M -579.4M
Cash From Investing Activities -184.4M 202.0M 159.1M
Cash From Financing Activities -110.7M -752.0M 549.0M
Net Change In Cash -31.50M -3.000M 128.7M
YoY Change -175.72% -90.03% -261.08%
FREE CASH FLOW
Cash From Operating Activities $263.6M $547.0M -$579.4M
Capital Expenditures $0.00 -$3.100M $0.00
Free Cash Flow $263.6M $550.1M -$579.4M
YoY Change -282.17% -376.43%

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CY2014 dei Document Type
DocumentType
10-K
CY2014 dei Entity Registrant Name
EntityRegistrantName
REDWOOD TRUST INC
CY2014 dei Entity Well Known Seasoned Issuer
EntityWellKnownSeasonedIssuer
Yes
CY2014 dei Trading Symbol
TradingSymbol
RWT
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985591 shares
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79535 shares
CY2014 us-gaap Treasury Stock Shares Acquired
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0 shares
CY2014 dei Entity Filer Category
EntityFilerCategory
Large Accelerated Filer
CY2014 dei Entity Voluntary Filers
EntityVoluntaryFilers
No
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CY2014 us-gaap Effective Income Tax Rate Continuing Operations
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CY2014 us-gaap Nature Of Operations
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<div> <p style="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> <b>Note 1. Redwood Trust</b></p> <p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"> Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage- and other real estate-related assets and engaging in residential and commercial mortgage banking activities. We seek to invest in real estate-related assets that have the potential to generate attractive cash flow returns over time and to generate income through our residential and commercial mortgage banking activities.</p> <p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"> Our primary sources of income are net interest income from our investment portfolios and noninterest income from our mortgage banking activities. Net interest income consists of the interest income we earn on investments less the interest expense we incur on borrowed funds and other liabilities. Income from mortgage banking activities consists of the profit we seek to generate through the acquisition or origination of loans and their subsequent sale or securitization. References herein to &#x201C;Redwood,&#x201D; the &#x201C;company,&#x201D; &#x201C;we,&#x201D; &#x201C;us,&#x201D; and &#x201C;our&#x201D; include Redwood Trust, Inc. and its consolidated subsidiaries, unless the context otherwise requires.</p> <p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"> We operate our business in three segments: residential mortgage banking, residential investments, and commercial mortgage banking and investments. Refer to <i>Item&#xA0;1</i> &#x2014; <i>Business</i> in this Annual Report on Form 10-K for additional information on our business.</p> </div>
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CY2014 us-gaap Use Of Estimates
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CY2014 dei Document Period End Date
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2014-12-31
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57.00
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false
CY2014 dei Current Fiscal Year End Date
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CY2014 dei Document Fiscal Year Focus
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2014
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CY2014 rwt Other Assets And Other Liabilities Policy Textblock
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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 14pt"> <b><i>Other Assets and Other Liabilities</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> Other assets primarily consists of margin receivable, pledged collateral, guarantee asset, REO, fixed assets, and prepaid expenses.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> <i>Fannie Mae Risk-Sharing &#x2013; Other Assets and Liabilities</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> In the fourth quarter of 2014, we entered into our first risk-sharing arrangement with Fannie Mae. Under this arrangement we committed to absorb the first one percent of losses realized on a reference pool of recently originated residential mortgage loans that we acquired and then sold to Fannie Mae during the fourth quarter of 2014. During the 10 year term of the arrangement, we receive monthly cash payments from Fannie Mae based on the monthly outstanding unpaid principal balance of the reference pool of loans. Additionally, under this arrangement we are required to maintain collateral with a third party custodian sufficient to cover our maximum loss exposure throughout the term of the arrangement. To the extent approved losses are incurred, the custodian will transfer collateral to Fannie Mae.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%"> As a result of this transaction we recorded &#x201C;pledged collateral&#x201D; and a &#x201C;guarantee asset&#x201D; in the other assets line item, and a &#x201C;guarantee obligation&#x201D; in the other liabilities line item, on our consolidated balance sheets.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%"> Pledged collateral represents U.S. Treasury investments transferred to the custodian to serve as collateral under this arrangement. Although these assets are legally ours, our ability to withdraw and use them is contractually restricted.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%"> The guarantee asset represents the estimated fair value of cash flows we are contractually entitled to receive under the risk-sharing arrangement. This guarantee asset represents a financial asset, for which we have elected the fair value option, and mark-to-market each quarter with the change in estimated fair value recorded in other market valuation adjustments on our consolidated statements of income. The monthly cash payments we receive from Fannie Mae are recorded in other income (expense) on our consolidated statements of income.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%"> The guarantee obligation represents our commitment to absorb losses under the arrangement, which at inception was recorded at fair value based on the fair value of the guarantee asset. This guarantee obligation is amortized over the 10 year term of the arrangement based on changes in the outstanding unpaid principal balance of loans in the reference pool. In addition, we will establish and maintain a separate loss allowance related to this arrangement, based on our estimate of credit losses inherent in the reference pool of loans. To determine the loss allowance, we will assess inherent losses in the reference pool of loans by determining loss factors (defaults, the timing of defaults, and loss severities upon defaults). As of December&#xA0;31, 2014, we determined a loss allowance was not required. We will evaluate the need for a loss allowance on an ongoing basis.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 14pt"> <i>REO</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> REO property acquired through, or in lieu of, foreclosure is initially recorded at fair value, and subsequently reported at the lower of its carrying amount or fair value (less estimated cost to sell). Changes in the fair value of an REO property that has a fair value at or below its carrying amount are recorded in our consolidated statements of income as a component of other market valuation adjustments. Margin receivable reflects cash collateral we have posted with various counterparties relating to our derivative and lending agreements with those counterparties, as applicable.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 9.5pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 10pt"> See <i>Note 11</i> for further discussion on other assets.</p> </div>
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