Two Harbors Investment Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash Flows From Operating Activities:
Net income	$ 167,139	$ 579,039	$ 291,906
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of premiums and discounts on investment securities, net	12,012	17,640	47
Other-than-temporary impairment losses	392	1,662	10,952
Realized and unrealized (gains) losses on investment securities, net	(87,201)	54,608	(122,466)
(Gain) loss on mortgage loans held-for-sale	(17,297)two_GainLossonMortgageLoansHeldforSale	33,846two_GainLossonMortgageLoansHeldforSale	(2,270)two_GainLossonMortgageLoansHeldforSale
Gain on mortgage loans held-for-investment and collateralized borrowings in securitization trusts	(16,840)	(14,204)	0
Loss (gain) on servicing asset	128,388	(13,881)	0
Loss (gain) on termination and option expiration of interest rate swaps and swaptions	55,389	(12,293)	29,579
Unrealized loss (gain) on interest rate swaps and swaptions	198,504	(291,458)	91,748
Unrealized (gain) loss on other derivative instruments	(8,011)us-gaap_UnrealizedGainLossOnDerivatives	(95)us-gaap_UnrealizedGainLossOnDerivatives	542us-gaap_UnrealizedGainLossOnDerivatives
Gain on contribution of entity	0	0	(10,641)
Equity based compensation	15,082us-gaap_ShareBasedCompensation	511us-gaap_ShareBasedCompensation	488us-gaap_ShareBasedCompensation
Depreciation of fixed assets	1,083us-gaap_Depreciation	607us-gaap_Depreciation	212us-gaap_Depreciation
Depreciation of real estate	0	0	1,520
Amortization of intangible assets	533us-gaap_AmortizationOfIntangibleAssets	1,067us-gaap_AmortizationOfIntangibleAssets	0us-gaap_AmortizationOfIntangibleAssets
Purchases of mortgage loans held-for-sale	(1,469,074)	(993,813)	(57,954)
Proceeds from sales of mortgage loans held-for-sale	432,749	25,113	0
Proceeds from repayment of mortgage loans held-for-sale	38,545	35,267	5,521
Net change in assets and liabilities:
Increase in accrued interest receivable	(15,226)	(7,690)	(19,176)
(Increase)/decrease in deferred income taxes, net	(80,261)	83,598	(37,793)
Decrease/(increase) in income taxes receivable	0	4,323	(4,166)
Increase in prepaid and fixed assets	(2,536)	(1,658)	(1,401)
(Increase)/decrease in other receivables	(10,421)	29,772	(31,872)
Increase in servicing advances	(20,192)two_IncreaseDecreaseinServicingAdvances	(7,298)two_IncreaseDecreaseinServicingAdvances	0two_IncreaseDecreaseinServicingAdvances
Increase in Federal Home Loan Bank stock	(100,000)	(10)	0
Increase in equity investments	(3,000)	0	0
Increase in accrued interest payable	3,495	1,217	12,604
Increase/(decrease) in income taxes payable	618	757	(3,898)
Increase in accrued expenses and other liabilities	11,983	14,014	4,383
Net change in assets and liabilities due to purchase of entity	0	(3,306)	0
Net change in assets and liabilities of discontinued operations	0	0	(4,313)
Net cash (used in) provided by operating activities	(764,147)	(456,053)	162,178
Cash Flows From Investing Activities:
Purchases of available-for-sale securities	(6,126,579)	(4,471,289)	(10,799,062)
Proceeds from sales of available-for-sale securities	3,479,329	4,432,696	3,411,580
Principal payments on available-for-sale securities	1,044,487	1,111,906	825,889
Short sales and purchases of other derivative instruments	(81,330)	(55,038)	(388,171)
Proceeds from sales of other derivative instruments, net	73,966	163,657	138,171
Purchases of trading securities	(2,138,647)two_PaymentsToAcquireTradingSecurities	(995,625)two_PaymentsToAcquireTradingSecurities	(996,016)two_PaymentsToAcquireTradingSecurities
Proceeds from sales of trading securities	1,145,410	1,000,946	1,001,904
Purchases of beneficial interests in securitization trusts	0	(30,550)	0
Proceeds from repayment of mortgage loans held-for-investment in securitization trusts	111,129	41,314	0
Purchases of mortgage servicing rights, net of purchase price adjustments	(65,704)	(499,024)	0
Purchases of investments in real estate	0us-gaap_PaymentsToAcquireRealEstate	0us-gaap_PaymentsToAcquireRealEstate	(293,745)us-gaap_PaymentsToAcquireRealEstate
Purchase of entity	0	(6,404)	0
(Decrease)/increase in due to counterparties, net	(205,180)	(79,126)	359,909
Decrease/(increase) in restricted cash	64,876	(99,325)	(135,735)
Increase in escrow deposits of discontinued operations	0	0	(30,208)
Contribution of cash to Silver Bay Realty Trust Corp.	0two_ContributionOfCashToSilverBay	0two_ContributionOfCashToSilverBay	(995)two_ContributionOfCashToSilverBay
Net cash (used in) provided by investing activities	(2,698,243)	514,138	(6,906,479)
Cash Flows From Financing Activities:
Proceeds from repurchase agreements	213,091,865us-gaap_ProceedsFromIssuanceOfDebt	214,649,749us-gaap_ProceedsFromIssuanceOfDebt	70,643,808us-gaap_ProceedsFromIssuanceOfDebt
Principal payments on repurchase agreements	(212,409,852)us-gaap_RepaymentsOfDebt	(215,023,809)us-gaap_RepaymentsOfDebt	(64,679,446)us-gaap_RepaymentsOfDebt
Proceeds from issuance of collateralized borrowings in securitization trusts	728,519	307,119	0
Principal payments on collateralized borrowings in securitization trusts	(182,872)us-gaap_RepaymentsOfLongTermDebt	(42,490)us-gaap_RepaymentsOfLongTermDebt	0us-gaap_RepaymentsOfLongTermDebt
Proceeds from Federal Home Loan Bank advances	4,796,411	0	0
Principal payments on Federal Home Loan Bank advances	(2,296,411)	0	0
Proceeds from issuance of common stock, net of offering costs	588	763,557	1,362,747
Proceeds from exercise of warrants	0us-gaap_ProceedsFromWarrantExercises	107,514us-gaap_ProceedsFromWarrantExercises	213,593us-gaap_ProceedsFromWarrantExercises
Repurchase of common stock	0	(23,894)	0
Dividends paid on common stock	(285,553)us-gaap_PaymentsOfDividendsCommonStock	(591,452)us-gaap_PaymentsOfDividendsCommonStock	(335,309)us-gaap_PaymentsOfDividendsCommonStock
Net cash provided by financing activities	3,442,695	146,294	7,205,393
Net (decrease) increase in cash and cash equivalents	(19,695)	204,379	461,092
Cash and cash equivalents at beginning of period	1,025,487	821,108	360,016
Cash and cash equivalents at end of period	1,005,792	1,025,487	821,108
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	79,276us-gaap_InterestPaid	99,189us-gaap_InterestPaid	11,766us-gaap_InterestPaid
Cash paid (received) for taxes	5,905us-gaap_IncomeTaxesPaidNet	(4,266)us-gaap_IncomeTaxesPaidNet	3,637us-gaap_IncomeTaxesPaidNet
Noncash Investing and Financing Activities:
Transfers of mortgage loans held-for-sale to mortgage loans held-for-investment in securitization trusts	1,022,360	413,848	0
Consolidation of mortgage loans held-for-investment in securitization trusts	0	442,767	0
Consolidation of collateralized borrowings in securitization trusts	0	412,217	0
Servicing Asset at Fair Value, Additions from Sale of Mortgage Loans	288	0	0
Contribution of Two Harbors Property Investment LLC to Silver Bay Realty Trust Corp.	0us-gaap_ContributionOfProperty	0us-gaap_ContributionOfProperty	(319,040)us-gaap_ContributionOfProperty
Equity securities and other assets received from Silver Bay Realty Trust Corp.	0	0	330,676
Distribution of Silver Bay Realty Trust Corp. common stock	0two_DistributionOfSpecialDividend	343,481two_DistributionOfSpecialDividend	0two_DistributionOfSpecialDividend
Cashless exercise of warrants	0	75	268
Dividends declared but not paid at end of period	95,263	0	164,347
Reconciliation of mortgage loans held-for-sale:
Mortgage loans held-for-sale at beginning of period	544,581	58,607	5,782
Purchases of mortgage loans held-for-sale	1,469,074	993,813	57,954
Transfers to mortgage loans held-for-investment in securitization trusts	(1,022,360)	(413,848)	0
Proceeds from sales of mortgage loans held-for-sale	(432,749)	(25,113)	0
Proceeds from repayment of mortgage loans held-for-sale	(38,545)	(35,267)	(5,521)
Realized and unrealized gains (losses) on mortgage loans held-for-sale	15,711	(33,611)	392
Mortgage loans held-for-sale at end of period	$ 535,712	$ 544,581	$ 58,607