The J.G. Wentworth Company ® ('J.G. Wentworth' or the 'Company') ( NYSE: JGW), a diversified consumer financial services company specializing in structured settlement payment purchasing, home lending, prepaid cards, and personal lending, today reported financial results for the third quarter of 2015.

Third Quarter Highlights
  • J.G. Wentworth became a more diversified consumer financial services company by acquiring WestStar Mortgage Inc. and establishing the J.G. Wentworth Home Lending ('Home Lending') segment on July 31, 2015 which represents the accomplishment of a significant step in our strategy. The overall strategy continues to build on our recognizable brand and direct-to-consumer experience by expanding into growth markets.
  • Key integration tasks have been completed in the quarter. The 300+ employees now in our J.G. Wentworth Home Lending division operating in 39 states and the District of Columbia bring a wealth of deep mortgage industry experience. For the two months of the quarter, post acquisition, they contributed $2.0 Million of Adjusted Net Income ('ANI').
  • The Company completed the initial close of the 2015-2 securitization on July 28, 2015 which consisted of approximately $158.5 Million of fixed rate notes with an average annual yield of 4.18%.
  • The Structured Settlement and Annuity Purchasing ('Structured Settlements') segment reported Total Receivables Balance ('TRB') Purchases of $240.4 Million, Adjusted Total Revenues* of $54.1 Million, and $3.2 Million of ANI*.

"Closing of the acquisition and the establishment of J.G. Wentworth Home Lending was a significant milestone in our vision to diversify the company," said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®. "We are excited to have such a talented group of mortgage professionals helping to drive business growth. In our Structured Settlements segment, focused TRB production and close attention on expense management generated positive ANI for the quarter. As we continue to assess and manage through the segment's changing and highly competitive nature, we look to refine our strategy and take out cost from the operation and focus on overall profitability."

GAAP Third Quarter 2015 Results:

  • Consolidated Revenues were $63.5 Million, a decrease of $43.5 Million in third quarter when compared to the third quarter 2014 of $107.0 Million. The decrease was primarily due to a $56.2 Million decline in our Structured Settlements segment unrealized gains on VIE and other finance receivables, long-term debt and derivatives (totaling $4.6 Billion), and a $4.3 Million increase in realized and unrealized losses on marketable securities which were partially offset by a $5.2 Million increase in interest income, and $11.7 Million increase in our Home Lending segment.
  • Consolidated Net Income decreased to a loss of $57.6 Million, a decrease of $70.3 Million in third quarter compared to the third quarter 2014. In our Structured Settlements segment the decline was primarily due to a $56.2 Million decrease in unrealized gains on VIE and other finance receivables, long term debt and derivatives that resulted from a decrease in spread margin and TRB purchases from the prior year, and a $29.9 Million third quarter 2015 non-cash impairment charge to reduce a trade name intangible asset that had been acquired in connection with the prior Peachtree acquisition to its fair value. This was partially offset by an increase of $5.2 Million in Structured Settlements interest income, $2.0 Million increase in pre-tax income generated by our Home Lending segment, and by a $9.4 Million reduction in our consolidated tax provision expense.

Adjusted Non-GAAP* Third Quarter 2015 Results:
  • Consolidated Adjusted Total Revenues* were $65.9 Million, an increase of $2.9 Million when compared to the third quarter 2014 of $63.0 Million. The increase in revenue was due to the addition of our Home Lending segment which contributed $11.7 Million in Adjusted Total Revenues* for August and September. Total Adjusted Revenue* declined for the Structured Settlements segment primarily due to a decline in Spread Revenue* (Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations) which decreased to $42.6 Million, as compared to the third quarter 2014 of $51.3 Million which was driven by a decrease in TRB Purchases and spread margin.
  • Consolidated ANI* decreased to $5.2 Million from $7.2 Million, a decrease of $2.0 Million in the third quarter when compared to the third quarter 2014. In our Structured Settlements segment the decrease was due to the $8.7 Million decline in unrealized revenue on unsecuritized finance receivables which resulted from a reduction in spread margin and a decrease in TRB Purchases. This was partially offset by a $4.9 Million decrease in Adjusted Total Expenses*. In addition, our Home Lending segment contributed $2.0 Million in ANI*.
  • Structured Settlements segment: TRB Purchases were $240.4 Million, as compared to $263.3 Million in the third quarter of 2014. TRB Purchases declined primarily due to a selective reduction of pre-settlement and wholesale purchases.
  • J.G. Wentworth Home Lending: Closed mortgage loan origination volume was $522.0 Million for the third quarter of 2015 with $352.6 Million for August and September of 2015.

Other Items:
  • The company is targeting $12 to $15 Million in cost savings next year from marketing and other operational efficiencies while investing in growth at the newly acquired Home Lending division.
  • The Company named Scott Stevens as its new Executive Vice President and Chief Financial Officer on October 5, 2015.

Scott Stevens, J.G. Wentworth's Chief Financial Officer, said, "I am pleased to be joining Stewart and the entire J.G. Wentworth team as we implement our strategy to diversify into adjacent consumer financial services markets. We believe the strategy is built on a strong funding platform and capital markets success. While the Structured Settlements business continues to operate in a highly competitive and rate sensitive industry, one of my first initiatives is to complement Home Lending's interest rate hedging program. We believe that once implemented, the new strategic Structured Settlements interest rate hedging program will reduce earnings volatility by partially mitigating the general level of interest rates."

Stockdale concluded, "We are confident 'J.G. Wentworth Cash Now' is a strong, overarching brand positioning that resonates with consumers across all our markets. For years it has performed well in Structured Settlements, and all indications suggest it is now being embraced by consumers of Home Lending."

* This earnings press release contains non-GAAP measures, which as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Results for the three and nine month periods ended September 30, 2015 and 2014, as well as our reconciliation of non-GAAP measures and historic financial information from 2014 to the present, are included in the accompanying financial information.

About The J.G. Wentworth Company®

The J.G. Wentworth Company ® is a diversified consumer financial services company. The Company is focused on providing direct-to-consumer access to financing needs through a variety of solutions, including: mortgage lending and refinancing, personal lending, structured settlements payment purchasing, and prepaid cards. Through the J.G. Wentworth, Peachtree Financial Solutions, and Olive Branch Funding brands, the Company is the leading purchaser of structured settlement payments.

Mortgage loans are offered by J.G. Wentworth Home Lending, Inc. NMLS ID # 2925 ( www.nmlsconsumeraccess.org), 3350 Commission Court, Woodbridge, VA 22192; 888-349-3773.

For more information about The J.G. Wentworth Company ®, visit www.jgw.com or use the information provided below.

Conference Call and Webcast

Management will host a webcast to discuss the third quarter 2015 financial results at 10:00 AM Eastern Time today, November 9, 2015. The webcast will include remarks from J.G. Wentworth's Chief Executive Officer, Stewart Stockdale, and Chief Financial Officer, Scott Stevens.

This call will be accompanied by a presentation and will be available via a webcast of the conference call live on the Investor Relations section of the Company's website: The J.G. Wentworth Company® Third Quarter 2015 Webcast .

Interested parties unable to access the conference call and view the presentation via the webcast through this link: The J.G. Wentworth Company® Third Quarter 2015 Webcast, may dial Participant conference number: (877) 201-0168, Conference ID: 64752683.

Please dial in at least 10 minutes before the call to ensure timely participation.

A playback will be available through Monday, November 16th, 2015. To participate, utilize the dial-in information listed below:

Playback conference number: (855) 859-2056, Conference ID: 64752683. The presentation will be posted to the Company's website after the call.

Forward-Looking Statements

Certain statements in this press release constitute forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements. You can identify such statements because they contain words such as plans, expects, or does expect, budget, forecasts, anticipates, or does not anticipate, believes, intends, and similar expressions or statements that certain actions, events or results may, could, would, might, or will, be taken, occur or be achieved. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward- looking statements.

A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. Consideration should also be given to the areas of risk set forth under the heading Risk Factors in our filings with the Securities and Exchange Commission, and as set forth more fully under Part 1, Item 1A. Risk Factors in our Annual Report on Form 10- K for the year ended December 31, 2014 and in Part 2, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015. These risks and uncertainties include, among other things: the effects of local and national economic, credit and capital market conditions on the economy in general and on the mortgage industry in particular, and the effects of interest rates; future opportunities of the combined company; our anticipated needs for working capital; our ability to implement our business strategy; our ability to continue to purchase structured settlement payments and other assets; the compression of the yield spread between the price we pay for and the price at which we sell assets due to changes in interest rates and/or other factors; changes in tax or accounting policies or changes in interpretation of those policies as applicable to our business; changes in current tax law relating to the tax treatment of structured settlements; our ability to complete future securitizations or other financings on beneficial terms; our dependence on the opinions of certain rating agencies; our dependence on outside parties to conduct our transactions including the court system, insurance companies, outside counsel, delivery services and notaries; our ability to remain in compliance with the terms of our substantial indebtedness; changes in existing state laws governing the transfer of structured settlement payments or the interpretation thereof; availability of or increases in the cost of our financing sources relative to our purchase discount rate; changes to state or federal, licensing and regulatory regimes; unfavorable press reports about our business model; our dependence on the effectiveness of our direct response marketing; adverse judicial developments; our ability to successfully enter new lines of business and broaden the scope of our business; potential litigation and regulatory proceedings; changes in our expectations regarding the likelihood, timing or terms of any potential acquisitions described herein; the lack of an established market for the subordinated interest in the receivables that we retain after a securitization is executed; the impact of the Consumer Financial Protection Bureau inquiries and any findings or regulations it issues as related to us, our industries, or products in general; our dependence on a small number of key personnel; our exposure to underwriting risk; our access to personally identifiable confidential information of current and prospective customers and the improper use or failure to protect that information; our computer systems being subject to security and privacy breaches; the public disclosure of the identities of structured settlement holders; our business model being susceptible to litigation; the insolvency of a material number of structured settlement issuers; infringement of our trademarks or service marks; our ability to integrate the Home Lending business, and the costs associated with such integration; adverse changes in the residential mortgage market; our ability to maintain sufficient capital to meet the financing requirements of our business; our ability to grow our loan originations volume; changes in prevailing interest rates and our ability to mitigate interest rate risk through hedging strategies; increases in delinquencies and defaults for the loans we service, especially in geographic areas where our loans are concentrated; changes in prepayments rates; changes in, and our ability to comply with, federal, state and local laws and regulations governing us; change in the guidelines of government-sponsored entities or any discontinuation of, or significant reduction in, the operation of government-sponsored entities; our ability to maintain our state licenses or obtain new licenses in new markets; our ability to originate and/or acquire additional mortgage servicing rights; the accuracy of the estimates and assumptions of our financial models; our ability to recapture loans from borrowers who refinance; potential misrepresentations by borrowers, counterparties and other third-parties; costs and potential liabilities resulting from state or federal examinations, legal proceedings, enforcement actions and foreclosure proceedings; changes in government mortgage modification programs; our ability to obtain adequate insurance; indemnification obligations to mortgage loan purchasers; our ability to timely recover servicing advances; illiquidity in our portfolio; challenges to the MERS system; technology failures; our ability to satisfy our financial covenants with our lenders; and our ability to successfully compete in the mortgage industry and real estate services business.

Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly revise any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

   
Schedule A
The J.G. Wentworth Company
Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)
September 30, December 31,
2015   2014
(Unaudited)
ASSETS
Cash and cash equivalents $ 35,697 $ 41,648
Restricted cash and investments 198,374 198,206
VIE finance receivables, at fair market value 4,521,327 4,422,033
Other finance receivables, at fair market value 33,800 101,802
VIE finance receivables, net of allowances for losses of $8,560 and $7,674, respectively 106,513 113,489
Other finance receivables, net of allowances for losses of $2,539 and $2,454, respectively 11,725 17,803
Other receivables, net of allowances for losses of $273 and $204, respectively 16,124 14,165
Mortgage loans held for sale, at fair value 130,189 -
Mortgage servicing rights, at fair value 28,186 -
Premises and equipment, net of accumulated depreciation of $7,274 and $5,976, respectively 5,860 3,758
Intangible assets, net of accumulated amortization of $21,556 and $20,273, respectively 32,292 45,436
Goodwill 98,008 84,993
Marketable securities 85,879 103,419
Deferred tax assets, net

-
2,170
Other assets   75,192       33,787  
Total Assets $ 5,379,166     $ 5,182,709  
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and account payables $ 30,497 $ 19,256
Accrued interest 21,416 17,416
Term loan payable 439,431 437,183
VIE derivative liabilities, at fair market value 74,687 75,706
VIE borrowings under revolving credit facilities and other similar borrowings 82,987 19,339
Other borrowings under revolving credit facilities and other similar borrowings 126,494

-
VIE long-term debt 201,464 181,558
VIE long-term debt issued by securitization and permanent financing trusts, at fair value 4,074,210 4,031,864
Other liabilities 59,585 6,677
Deferred tax liabilities, net 18,788 36,656
Installment obligations payable   85,879       103,419  
Total Liabilities 5,215,438 4,929,074
Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized, 15,972,555 and 15,430,483 issued and outstanding as of September 30, 2015, respectively, 15,021,147 and 14,420,392 issued and outstanding as of December 31, 2014, respectively

 

-

 

-
Class B common stock, par value $0.00001 per share; 500,000,000 shares authorized, 8,997,232 issued and outstanding as of September 30, 2015, 9,963,750 issued and outstanding as of December 31, 2014, respectively

-

-
Class C common stock, par value $0.00001 per share; 500,000,000 shares authorized, 0 issued and outstanding as of September 30, 2015 and December 31, 2014, respectively

-

-
Additional paid-in-capital 104,575 95,453
Retained earnings (accumulated deficit)   (15,791 )     25,634  
88,784 121,087
Less: treasury stock at cost, 542,072 and 600,755 shares as of September 30, 2015 and December 31, 2014, respectively   (2,138 )     (2,443 )
Total stockholders' equity, The J.G. Wentworth Company 86,646 118,644
Non-controlling interests   77,082       134,991  
Total Stockholders' Equity   163,728       253,635  
Total Liabilities and Stockholders' Equity $ 5,379,166     $ 5,182,709  
 
 

Schedule B
The J.G. Wentworth Company
Condensed Consolidated Statements of Operations - Unaudited

(In thousands, except share and per share data)
 
       

 
 
Three Months Ended Nine Months Ended
September 30, September 30,

2015

2014

2015

2014
REVENUES
Interest income $ 50,170 $ 44,644 $ 140,129 $ 139,104
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives

7,556

63,731

62,559

221,359
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs

8,946

-

8,946

-
Changes in mortgage servicing rights, net 548

-
548

-
Loss on swap terminations, net

-
(54 ) (275 ) (628 )
Servicing, broker, and other fees, net of direct costs 2,144 1,049 4,153 3,221
Loan origination fees 1,032

-
1,032

-
Realized and unrealized (losses) gains on marketable securities, net (6,871 ) (2,615 ) (5,957 ) 1,741
Realized gain on notes receivable, at fair value

-

-

-
2,098
Gain on extinguishment of debt

-
270 593 270
Other   (3 )   (1 )   (11 )   (63 )
Total Revenues $ 63,522   $ 107,024   $ 211,717   $ 367,102  

EXPENSES
Advertising $ 16,946 $ 18,416 $ 49,728 $ 52,341
Interest expense 55,606 48,813 154,509 150,743
Compensation and benefits 14,210 11,096 36,426 30,865
General and administrative 5,307 4,858 14,679 13,941
Professional and consulting 6,542 4,520 15,841 13,482
Debt issuance 2,220 2,936 5,092 5,956
Securitization debt maintenance 1,463 1,551 4,453 4,672
Provision for losses 1,653 1,055 4,610 3,273
Depreciation and amortization 966 961 2,961 3,163
Impairment charges 29,860

-
29,860

-
Installment obligations (income) expense, net   (6,372 )   (2,047 )   (4,300 )   3,567  
Total Expenses $ 128,401   $ 92,159   $ 313,859   $ 282,003  
(Loss) income before income taxes (64,879 ) 14,865 (102,142 ) 85,099
(Benefit) provision for income taxes   (7,252 )   2,176     (12,422 )   16,169  
Net (Loss) Income $ (57,627 ) $ 12,689 $ (89,720 ) $ 68,930
Less net (loss) income attributable to non-controlling interests   (30,930

)
  8,597     (49,382 )   49,548  
Net (loss) income attributable to The J.G. Wentworth Company

$
(26,697

)
$ 4,092   $ (40,338 ) $ 19,382  
 
Three Months Ended Nine Months Ended
September 30, September 30,

2015

2014

2015

2014

Weighted average shares of Class A common stock outstanding:

Basic

14,918,415

13,095,194

14,437,117

12,438,143

Diluted

14,918,415

13,098,995

14,437,117

12,440,327

Net (loss) income per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company

 

Basic

$

(1.79

)

$

0.31

$

(2.79

)

$

1.56

Diluted

$

(1.79

)

$

0.31

$

(2.79

)

$

1.56

 

 

 

 

 

 

ANI Bridge - Unaudited

The J.G. Wentworth Company and Subsidiaries

Reconciliation of Net (Loss) Income to Adjusted Net Income and other Non-GAAP Measures Used in this Release and the Related Presentation

We use Adjusted Net Income (a non-GAAP financial measure) as a measure of our results from operations, which we define as our net income (loss) under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes and for our Structured Settlement and Annuity Purchasing segment amounts related to the consolidation of the securitization and permanent financing trusts we use to finance the segment's business. We use Adjusted Net Income (Loss) to measure our overall performance because we believe it represents the best measure of our operating performance, as the operations of the associated variable interest entities do not impact the Structured Settlement and Annuity Purchasing segment's performance. In addition, the add-backs described above are consistent with adjustments permitted under our Term Loan agreement.

We also use the non-GAAP measures of Total Adjusted Revenue and adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the loss on swap termination, net ("Spread Revenue"), as measures of our revenues, which we define as those measures under U.S. GAAP before the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our business. We use these measures to measure our revenues because we believe they represent better measures of our revenues, as the operations of these variable interest entities do not impact business performance.

You should not consider Adjusted Net Income, Total Adjusted Revenue or Spread Revenue in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because not all companies use identical calculations, our presentation of Adjusted Net Income, Total Adjusted Revenue and Spread Revenue may not be comparable to other similarly titled measures of other companies.

A reconciliation of Net Income (Loss) to Adjusted Net Income, which includes line items for Total Adjusted Revenue and Spread Revenue, for the three and nine months ended September 30, 2015 and 2014, respectively, is provided below.
 

Schedule C
The J.G. Wentworth Company
Consolidated Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) - Unaudited

(In thousands)
   
Three Months Ended Nine Months Ended
September 30, September 30,

2015
 

2014

2015
 

2014

 

Net income (loss) attributable to J.G. Wentworth, LLC

$

(57,627

)

$

12,689

$

(89,720

)

$

68,930
 

Elimination of unrealized gain (loss) on finance receivables, long- term debt and derivatives from post securitization due to changes in interest rates
35,063 (12,392 ) 67,254 (59,649 )
Elimination of interest income from securitized finance receivables (45,823 ) (40,188 ) (127,059 ) (125,532 )
Interest income on retained interests in finance receivables 5,436 5,168 15,869 15,138
Servicing income on securitized finance receivables 1,336 1,323 3,967 3,823
Elimination of interest expense on long-term debt related to securitization and permanent financing trusts

40,036

34,162

109,923

107,660
Professional fees relating to securitizations 1,464 1,551 4,453 4,672
Share based compensation 273 431 1,389 1,731
Income tax provision (benefit) (7,252 ) 2,176 (12,422 ) 16,169
Impact of prefundings on unsecuritized finance receivables (24 )

-
1,594

-
Impairment charges 29,860

-
29,860

-
Other non-recurring expenses 792

-
792 (1,401 )
Severance and M&A expenses   1,664     2,296     5,228     2,971  
Adjusted Net Income $ 5,198     $ 7,216     $ 11,128     $ 34,512  
 
       

 

 
Three Months Ended Nine Months Ended
September 30, September 30,

Other Data:
Securitized Product Total Receivables Balance (TRB) Purchases (1) $ 211,876 $ 228,915 $ 678,502 $ 704,966
Life Contingent Purchases 28,537 28,471 74,843 86,483
Pre-settlement Fundings

-
    5,910     10,764     20,134
 
 

Total TRB Purchases

$

240,413

$

263,296

$

764,109

$

811,583
Consolidated Adjusted Net Income (Loss) 5,198 7,216 11,128 34,512
Consolidated Adjusted Net Income Margin (2) 2.2% 2.7% 1.5% 4.3%
 
 
Company Retained interests in finance receivables at fair market value

$

269,221

$

304,022
 

(1) Securitized product TRB purchases includes purchases during the period of assets that are expected to be securitized (guaranteed structured settlements, annuities, and lottery payment streams).

(2) Adjusted Net Income (Loss) TRB Margin is Adjusted Net Income (Loss) divided by Total TRB Purchases during the period.

     
Schedule D

The J.G. Wentworth Company

Consolidated Reconciliation of Net (Loss) Income to Adjusted Net Income - Unaudited

(In thousands)
 
    Adjustments to Impact of Interest        

 
   
Q3 2015 reflect Prefundings Income Share Severance

Reclassification
Other Q3 2015
GAAP deconsolidation on on Based Income and Impairment

Associated with
Nonrecurring Adjusted
Results of Unsecuritized Retained Compensation Tax M&A Charges

Installment
Items Results
securitizations Finance Interests Expenses

Obligation Payable
      Receivables                  
REVENUES
 
Interest income $ 50,170 $ (45,823 )

$

-
$ 5,436

$

-

$

-

$

-

$

-

$

(499

)

-
$ 9,284
 
Unrealized gains on VIE and other finance receivables, long- term debt and derivatives 7,556 35,063 (24 )

-

-

-

-

-

-

-
42,595
 
Servicing, broker, and other Fees, net of direct costs

2,144

1,336

-

-

-

-

-

-

-

-
3,480
Other (3 )

-

-

-

-

-

-

-

-

-
(3 )
 
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs

8,946

-

-

-

-

-

-

-

-
8,946
 
Changes in mortgage servicing rights, net 548 548
 
Loan origination fees 1,032

-

-

-

-

-

-

-

-

-
1,032
 
Realized and unrealized losses on marketable securities, net   (6,871 )  

-
   

-
   

-
 

-
   

-
 

-
   

-
   

6,871
   

-
   

-
 
Total Revenues $ 63,522   $ (9,424 ) $ (24 ) $ 5,436

$

-
 

$

-

$

-
 

$

-
    6,372   $

-
 

$
65,882  
 
EXPENSES
 
Advertising $ 16,946

-

-

-

$

-

$

-

$

-

$

-

$

-

-

16,946
Interest expense 55,606 (40,036 )

-

-

-

-

-

-

$

-

-
15,570
Compensation and benefits 14,210

-

-

-
(273 )

-

-

-

-

-
13,937
General and administrative 5,307

-

-

-

-

-

(5
)

-

-

-
5,302
Professional and consulting 6,542

-

-

-

-

-
(1,659 )

-

-

(792
) 4,091
Debt issuance 2,220

-

-

-

-

-

-

-

-
2,220
Securitization debt maintenance 1,463 (1,464 )

-

-

-

-

-

-

-
(1 )
Provision for losses on finance receivables 1,653

-

-

-

-

-

-

-

-

-
1,653
Depreciation and amortization 966

-

-

-

-

-

-

-

-

-
966

 
Impairment charges 29,860

-

-

-

-

-

-
(29,860 )

-

-

-
Installment obligations income, net   (6,372 )  

-
   

-
   

-
 

-
   

-
   

-
   

-
   

6,372
   

-
   

-
 
Total Expenses $ 128,401   $ (41,500 ) $ 0   $ 0 $ (273 ) $ 0   $ (1,664 )

$

(29,860

)

$

6,372
  $ (792 ) $ 60,684  
 
Income before taxes $ (64,879 ) $ 32,076 $ (24 ) $ 5,436 $ 273

$

-
$ 1,664

$

29,860

$

-
$ 792 $ 5,198
Benefit for income taxes   (7,252 )

-
 

-
   

-
 

-
    7,252    

-
   

-
   

-
 

-
   

-
 
Net Loss $ (57,627 ) $ 32,076   $ (24 ) $ 5,436 $ 273   $ (7,252 ) $ 1,664  

$

29,860
 

$

-
$ 792   $ 5,198  
 
                 
Schedule E

The J.G. Wentworth Company

Consolidated Reconciliation of Net Income to Adjusted Net Income - Unaudited

(In thousands)
 

 
Q3 2014 Adjustments Interest Share

Severance and
Reclassification Other Q3 2014
GAAP to reflect Income on Based

Income

M&A
Associated with Nonrecurring Adjusted
Results deconsolidation Retained Compensation

Tax

Expenses
Installment Items Results
  of securitizations Interests         Obligation Payable    

REVENUES
 
Interest income $ 44,644 ($40,188 ) $ 5,168

$

-

$

-

$

-
($568 )

$

-
$ 9,056
 
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 63,731

(12,392

)

-

-

-

-

-

-
51,339
 
Loss on swap terminations, net

(54

)

-

-

-

-

-

-

-

(54

)
 
Servicing, broker, and other 1,049 1,323

-

-

-

-

-

-
2,372
 
Realized and unrealized losses on marketable securities, net

(2,615

)

-

-

-

-

-
2,615

-

-
 
Realized gain on notes receivable

-

-

-

-

-

-

-

-

-
 
Gain on debt extinguishment $ 270

$

-

$

-

$

-

$

-

$

-

$

-

$

-
270
 
Other   ($1 )

$

-
 

$

-

$

-
 

$

-
 

$

-

$

-
 

$

-
 

(1

)
Total Revenues $ 107,024     ($51,257 ) $ 5,168

$

-
 

$

-
 

$

-
$ 2,047  

$

-
$ 62,982
 

EXPENSES
 
Advertising $ 18,416

$

-

$

-

$

-

$

-

$

-

$

-

$

-
$ 18,416
Interest expense 48,813

(34,162

)

-

-

-

-

-

-
14,651
 
Compensation and benefits 11,096

-

-

(431

)

-

(1,787

)

-

-
8,878
 
General and administrative 4,858

-

-

-

-

(320

)

-

-
4,538
 
Professional and consulting 4,520

-

-

-

-

(189

)

-
4,331
Debt issuance 2,936

-

-

-

-

-

-

-
2,936
Securitization debt maintenance 1,551

(1,551

)

-

-

-

-

-

-

-
 
Provision for losses on finance receivables 1,055

-

-

-

-

-

-

-
1,055
 
Depreciation and amortization 961

-

-

-

-

-

-

-
961
 
Installment obligations expense, net  

(2,047

)
 

-
   

-
 

-
   

-
   

-
    2,047    

-
 

-
Total Expenses $ 92,159     ($35,713 ) $ 0   ($431 ) $ 0     ($2,296 ) $ 2,047  

$

-
$ 55,766
 
Income before income taxes $ 14,865 ($15,544 ) $ 5,168 $ 431

$

-
$ 2,296

$

-

$

-
$ 7,216
 
Provision for income taxes   2,176    

-
   

-
 

-
   

(2,176

)
 

-
   

-
   

-
 

-
Net Income $ 12,689     ($15,544 ) $ 5,168 $ 431   $ 2,176   $ 2,296  

$

-
 

$

-
$ 7,216
 
 

Schedule F

The J.G. Wentworth Company

Consolidated Reconciliation of Net Income to Adjusted Net Income - Unaudited

(In thousands)
                     
Impact of Interest
YTD 2015 Adjustments Prefundings Income Share Severance Reclassification Other YTD 2015
GAAP to reflect on on Based Income and Impairment Associated with Nonrecurring Adjusted
Results deconsolidation Unsecuritized Retained Compensation Tax M&A Installment Items Results
of securitizations Finance Interests Expenses Obligation Payable
    receivables                

REVENUES
 
Interest income $ 140,129 ($127,059 )

$

-
$ 15,869

$

-

$

-

$

-

$

-
($1,657 )

$

-
$ 27,282
 

Unrealized gains on VIE and other finance receivables, long-term debt and derivatives
62,559 67,254 1,594

-

-

-

-

-

-

-
131,407
 
Loss on swap terminations, net

(275

)

-

-

-

-

-

-

-

-

-

(275

)

Servicing, broker, and other Fees, net of direct costs
4,153 3,967

-

-

-

-

-

-

-

-
8,120
 
Realized and unrealized losses on marketable securities, net

(5,957

)

-

-

-

-

-

-

-
5,957

-

-
 
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 8,946

-

-

-

-

-

-

-

-

-
8,946
 
Gain on extinguishment on debt 593

-

-

-

-

-

-

-

-

-
593
Change in mortgage servicing rights, net 548

-

-

-

-

-

-

-

-

-
548
Loan origination fees 1,032

-

-

-

-

-

-

-

-

-
1,032
Other  

(11

)
 

-
   

-
 

-
 

-
   

-
   

-
   

-
   

-
   

-
   

(11

)

Total Revenues
$ 211,717     ($55,838 ) $ 1,594 $ 15,869

$

-
 

$

-
 

$

-
 

$

-
  $ 4,300  

$

-
  $ 177,642  
 
 

EXPENSES
Advertising $ 49,728

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-
$ 49,728
Interest expense 154,509

(109,923

)

-

-

-

-

-

-

-

-
44,586
 
Compensation and benefits 36,426

-

-

(1,389

)

-

(2,272

)

-

-

-
32,765
 
General and administrative 14,679

-

-

-

-

-

(18

)

-

-

-
14,661
 
Professional and consulting 15,841

-

-

-

-

-

(2,938

)

-

-

(792

)
12,111
Debt issuance 5,092

-

-

-

-

-

-

-

-

-
5,092
 
Securitization debt maintenance 4,453

(4,453

)

-

-

-

-

-

-

-

-

-
Provision for losses on finance receivables 4,610

-

-

-

-

-

-

-

-
4,610
 
Depreciation and amortization 2,961

-

-

-

-

-

-

-

-

-
2,961
Impairment charges 29,860

-

-

-

-

-

-

(29,860

)

-

-

-
Installment obligations income, net  

(4,300

)
 

-
   

-
 

-
 

-
   

-
   

-
   

-
    4,300    

-
   

-
 

Total Expenses
$ 313,859     ($114,376 )

$

-

$

-
  ($1,389 )

$

-
    ($5,228 )   ($29,860 ) $ 4,300     ($792 ) $ 166,514  
 
 
Loss before income taxes ($102,142 ) $ 58,538 $ 1,594 $ 15,869 $ 1,389

$

-
$ 5,228 $ 29,860

$

-
$ 792 $ 11,128
Benefit for income taxes  

(12,422

)
   

-
     

-
   

-
   

-
      12,422      

-
     

-
   

-
 

-
 

-
 

Net Loss
  ($89,720 )   $ 58,538     $ 1,594   $ 15,869   $ 1,389       ($12,422 )   $ 5,228     $ 29,860  

$

-
$ 792 $ 11,128  
 
                 

Schedule G

The J.G. Wentworth Company

Consolidated Reconciliation of Net Income to Adjusted Net Income - Unaudited

(In thousands)
 
YTD 2014 Adjustments Interest Share Severance and Reclassification Other YTD
GAAP to reflect Income on Based Income M&A Associated with Nonrecurring 2014
Results deconsolidation Retained Compensation Tax Expenses Installment Items Adjusted
  of securitizations Interests       Obligation Payable   Results
REVENUES
Interest income $ 139,104 ($125,532 ) $ 15,138

$

-

$

-

$

-
($1,826 ) $ 6 $ 26,890
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 221,359

(59,649

)

-

-

-

-

-

-
161,710
 
Loss on swap terminations, net

(628

)

-

-

-

-

-

-

-

(628

)
 
Servicing, broker, and other 3,221 3,823

-

-

-

-

-

-
7,044
 
Realized and unrealized gains on marketable securities, net 1,741

-

-

-

-

-

(1,741

)

-

-
 
Realized gain on notes receivable, at fair value 2,098

-

-

-

-

-

-

(2,098

)

-
 
Gain on debt extinguishment 270

-

-

-

-

-

-

-
270
 
Other  

(63

)
 

-
   

-
 

-
   

-
   

-
   

-
   

-
   

(63

)
Total Revenues $ 367,102     ($181,358 ) $ 15,138

$

-
 

$

-
 

$

-
    ($3,567 )   ($2,092 ) $ 195,223  
 
EXPENSES
 
Advertising $ 52,341

$

-

$

-

$

-

$

-

$

-

$

-

$

-
$ 52,341
Interest expense 150,743

(107,660

)

-

-

-

-

-

-
43,083
 
Compensation and benefits 30,865

-

-

(1,731

)

-

(1,900

)

-

-
27,234
 
General and administrative 13,941

-

-

-

-

(234

)

-

-
13,707
 
Professional and consulting 13,482

-

-

-

-

(837

)

-

(691

)
11,954
Debt issuance 5,956 5,956
 
Securitization debt maintenance 4,672

(4,672

)

-

-

-

-

-

-

-
Provision for losses on finance receivables 3,273

-

-

-

-

-

-

-
3,273
 
Depreciation and amortization 3,163

-

-

-

-

-

-

-
3,163
Installment obligations expense, net   3,567    

-
   

-
 

-
   

-
   

-
   

(3,567

)
 

-
   

-
 
Total Expenses $ 282,003     ($112,332 )

$

-
  ($1,731 )

$

-
    ($2,971 )   ($3,567 )   ($691 ) $ 160,711  
 
Income before income taxes $ 85,099 ($69,026 ) $ 15,138 $ 1,731

$

-
$ 2,971

$

-
($1,401 ) $ 34,512
 
Provision for income taxes   16,169    

-
   

-
 

-
   

(16,169

)
 

-
   

-
   

-
   

-
 
Net Income $ 68,930     ($69,026 ) $ 15,138 $ 1,731   $ 16,169   $ 2,971  

$

-
    ($1,401 ) $ 34,512  
 
 

Schedule H
The J.G. Wentworth Company
Consolidated Selected Quarterly Data - Unaudited

(In thousands, except share and per share data)
             
Q1 2014   Q2 2014   Q3 2014   Q4 2014   Q1 2015 Q2 2015 Q3 2015
Structured Settlements TRB:
Securitized Product Total Receivables Balance (TRB) Purchases (1)

$

223,507

$

252,544

$

228,915

$

234,084

$

234,972

$

231,654

$

211,876
Life Contingent Purchases 29,827 28,185 28,471 25,107 19,499 26,807 28,537
Pre-settlement Fundings   7,247       6,977       5,910       7,021       6,360     4,404    

-
 
Total TRB Purchases $ 260,581     $ 287,706     $ 263,296     $ 266,212     $ 260,830   $ 262,865   $ 240,413  

Home Lending Originations (2 Months) :
$ 353,583  
 

ANI Basis:
Total Revenue $ 63,131 $ 69,110 $ 62,982 $ 63,774 $ 62,423 $ 49,336 $ 65,882
Total Expenses $ 53,010     $ 51,935     $ 55,766     $ 54,693     $ 54,177   $ 51,652   $ 60,684  
ANI $ 10,121     $ 17,175     $ 7,216     $ 9,081     $ 8,246   $ (2,316 ) $ 5,198  
ANI Margin (2) 16.0 % 24.9 % 11.5 % 14.2 % 13.2 % (4.7 )% 7.9 %
ANI TRB Margin (3) 3.9 % 6.0 % 2.7 % 3.4 % 3.2 % (0.9 )% 2.2 %
 
Spread Revenue (4)

$

51,846

$

57,951

$

51,285

$

52,471

$

50,547

$

37,989

$

42,595
TRB Spread Margin (5) 20.5 % 20.6 % 19.9 % 20.2 % 19.9 % 14.7 % 17.7 %
 

GAAP Basis:
Revenue $ 136,590 $ 123,488 $ 107,024 $ 127,274 $ 86,830 $ 61,363 $ 63,522
Expenses (6) $ 102,057     $ 101,780     $ 94,335     $ 99,591     $ 92,290   $ 87,996   $ 121,149  
Net (Loss) Income $ 34,533     $ 21,708     $ 12,689     $ 27,683     $ (5,460 ) $ (26,633 ) $ (57,627 )
Net (loss) income attributable to The J.G. Wentworth Company

$

9,022
   

$

6,268
   

$

4,092
   

$

11,829
   

$

(1,345

)

$

(12,296

)

$

(26,697

)
 

 

Weighted Average Diluted Shares

 

11,642,283

 

12,562,042

 

13,098,995

 

14,640,860

 

14,271,842

 

14,113,990

 

14,918,415
All-in Shares (7) 29,555,639 29,510,029 29,335,338 29,019,913 28,597,051 28,033,035 28,296,734
 

Diluted EPS

$

0.77

$

0.50

$

0.31

$

0.81

$

(0.09

)

$

(0.87

)

$

(1.79

)
ANI EPS (8) $ 0.34 $ 0.58 $ 0.25 $ 0.31 $ 0.29 $ (0.08 ) $ 0.18
 

Residual Asset Balance

$

280,208

$

294,637

$

304,022

$

331,395

$

318,493

$

299,412

$

269,221
Residual Loan Balance $ 67,989 $ 107,540 $ 107,329 $ 107,043 $ 106,748 $ 106,465 $ 131,096
 

10-Year Swap Rate

2.84

%

2.63

%

2.64

%

2.28

%

2.02

%

2.46

%

2.02

%
 

Term Loan Interest Expense

$

9,917

$

10,020

$

10,082

$

10,182

$

9,932

$

10,019

$

10,200
ANI Interest Expense $ 13,945 $ 14,487 $ 14,651 $ 14,808 $ 14,627 $ 14,389 $ 15,570
 

(1) Securitized product TRB purchases includes purchases during the period of assets that are expected to be securitized (guaranteed structured settlements, annuities, and lottery payment streams)

(2) ANI Margin is defined as ANI / ANI Total Revenue

(3) ANI TRB Margin is defined as ANI / Total TRB Purchases

(4) Spread Revenue is defined as adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the loss on swap terminations

(5) TRB Spread Margin is defined as Spread Revenue / (the sum of Securitized Product TRB Purchases + Life Contingent Purchases)

(6) Includes provision (benefit) for income taxes

(7) Represents the weighted average number of outstanding shares of Class A common stock if all Common Interests in The J.G. Wentworth Company, LLC were exchanged. Calculated as the sum of: (a) the weighted average number of Common Interests outstanding and (b) the impact of dilutive potential common shares.

(8) ANI EPS is defined as ANI / All-in Shares

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