The J.G. Wentworth Company® ("J.G. Wentworth" or the "Company") (NYSE:JGW), a diversified financial services company, today reports financial results for the fourth quarter and full year 2015. "Although we made significant advances in diversifying the company, the fourth quarter results were disappointing. We doubled our efforts to reduce costs and realign the Structured Settlements Payments business, while positioning Home Lending for growth. The actions taken should yield improvement to the Structured Settlement Payments business, and Home Lending is scaling in line with our expectations. Certain business indicators confirm that we are making progress, including an already achieved run rate cost savings of $20 million to be recognized in 2016," said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®.

The following are highlights from the fourth quarter and full year results:

GAAP Fourth Quarter 2015 Results:
  • Consolidated Revenues were $84.3 million, a decrease of $43.0 million from the $127.3 million reported in the fourth quarter 2014. The decrease was due to a $57.6 million decline in the Structured Settlements & Annuity Purchasing segment's ("Structured Settlements") revenue that was primarily the result of a decline in unrealized gains on VIE and other finance receivables, long-term debt and derivatives. The decline was partially offset by $14.7 million in revenue generated by the Home Lending segment ("Home Lending") that was acquired on July 31, 2015.
    • The Company had $4.4 billion in VIE and other finance receivables, at fair value and $3.9 billion in VIE long-term debt issued by securitization and permanent financing trusts, at fair value as of December 31, 2015.
  • Consolidated Net Loss was $107.4 million compared to Consolidated Net Income of $27.7 million in the fourth quarter 2014. The $135.1 million unfavorable change was principally due to a $145.9 million decline in Structured Settlement's pre-tax income due to: (i) a $57.6 million decline in revenue and (ii) a $91.7 million non-cash impairment charge in the fourth quarter of 2015 to write-down goodwill and intangible assets related to a prior year acquisition to their respective fair values. Partially offsetting the decline in Structured Settlement's pre-tax income was a $10.4 million favorable change in our consolidated provision (benefit) for income taxes.

Adjusted Non-GAAP* Fourth Quarter 2015 Results:
  • Consolidated Adjusted Total Revenues* were $52.2 million, a decrease of $11.6 million from $63.8 million in the fourth quarter 2014. The decrease was primarily due to a $26.2 million decline in Structured Settlement's Adjusted Total Revenues* that was attributable to a $26.8 million decline in Spread Revenue* (i.e., Adjusted realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives, net of the gain (loss) on swap terminations) resulting from a decrease in Total Receivable Balances ("TRB") purchases and a combination of changes in cost of funds and purchase yields. The $26.8 million decline in Spread Revenue* was comprised of a $31.8 million decline in Adjusted unrealized gains* partially offset by a $5.0 million increase in Adjusted realized gains*. Partially offsetting the decline in Structured Settlement's Adjusted Total Revenues* was $14.7 million in revenue generated by Home Lending.
    • Structured Settlement's TRB purchases were $224.2 million in the fourth quarter of 2015, a $42.0 million decrease from TRB purchases of $266.2 million in the fourth quarter of 2014.
    • Home Lending achieved mortgage lock volume of $705.2 million and closed loan volume of $490.3 million in the fourth quarter of 2015.
  • Consolidated Adjusted Net Income ("ANI")* was a loss of $10.5 million compared to ANI* of $9.1 million in the fourth quarter 2014. The $19.6 million unfavorable change was due to a $19.6 million decline in Structured Settlement's ANI* that was principally the result of the $26.8 million decline in Spread Revenue*.
    • Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"* was $3.0 million for the fourth quarter of 2015 compared to $23.0 million for the fourth quarter of 2014.

GAAP Full Year 2015 Results:
  • Consolidated Revenues were $296.4 million, a decrease of $198.0 million from the $494.4 million for the full year 2014. The decrease was primarily due to a $224.7 million decline in Structured Settlement's revenue partially offset by $26.7 million in revenue generated by Home Lending. The decline in Structured Settlement's revenue was primarily due to a decline in unrealized gains on VIE and other finance receivables, long-term debt and derivatives that was principally the result of: (i) an unfavorable movement in the fair value interest rate used to value residual interest cash flows and (ii) a combination of changes in cost of funds and purchase yields.
  • Consolidated Net Loss was $197.1 million, compared to Consolidated Net Income of $96.6 million for the full year 2014. The $293.7 million unfavorable change was principally due to a $335.1 million decline in Structured Settlement's pre-tax income due to: (i) a $224.7 million decline in revenues and (ii) $121.6 million in non-cash impairment charges in 2015 to write-down goodwill and intangible assets to their respective fair values. Partially offsetting the decline in Structured Settlement's pre-tax income was $2.0 million in pre-tax income generated by Home Lending from the date of acquisition and a $39.4 million favorable change in the consolidated provision (benefit) for income taxes.

Adjusted Non-GAAP* Full Year 2015 Results:
  • Consolidated Adjusted Total Revenues* were $230.2 million, a decrease of $28.8 million from the $259.0 million in 2014. The decrease was due primarily to a $57.1 million decline in Structured Settlement's Spread Revenue* that was attributable to a decline in TRB purchases and a combination of changes in cost of funds and purchase yields. Partially offsetting this decrease was $26.7 million in revenue generated by Home Lending.
    • Structured Settlement's TRB purchases were $987.6 million in 2015, a $90.2 million decrease from TRB purchases of $1,077.8 million for the full year of 2014.
    • Home Lending had mortgage lock volume of $1,290.6 million and closed loan volume of $843.2 million in 2015 from the July 31, 2015 acquisition date.
  • Consolidated ANI* was $0.6 million compared to Consolidated ANI* of $43.6 million for the full-year 2014. The $43.0 million decline was due to a $45.0 million decline in Structured Settlement's ANI* that was principally the result of the $56.7 million decrease in Spread Revenue* partially offset by an $8.5 million decline in advertising expense and a $1.9 million decline in debt issuance costs. Home Lending generated $2.0 million in ANI* from the date we acquired the business line.
    • Consolidated Adjusted EBITDA* was $52.3 million for the full year 2015 compared to $96.7 million for the full year 2014.

Scott Stevens, J.G. Wentworth's Chief Financial Officer, said, "We have implemented aggressive actions across the operations to support revenue growth and improve the profitability of the enterprise. Despite volatile market conditions, we continue to access the capital market allowing us to generate cash and diversify our funding sources."

Operating Highlights

  • For the year ended December 31, 2015, the Company generated Adjusted EBITDA* of $52.3 million and as of December 31, 2015 had cash of $57.3 million.
  • The following actions have been implemented to improve the Structured Settlements segment:
    • Transitioned to a more cost effective digital marketing strategy;
    • Improved operating efficiency and productivity through a strategic reorganization that specializes operations around key disciplines: lead management, contact center, payment purchasing, and overall transactional process;
    • Increased the expense reduction plan from the initial $12 - $15 million objective that was conveyed in conjunction with our third quarter earnings release to a target of $25 - $30 million in 2016; and
    • Severance payments of $1- $1.5 million are planned for actions taken in 2016.
  • Implementing initiatives to profitably grow Home Lending, including the addition of a direct-to-consumer channel.
  • Continue to maintain adequate liquidity through a keen focus on cash management, tightly managing expenses and diversifying the funding platforms.

* 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 twelve month periods ended December 31, 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 financial services company that specializes in providing solutions to consumers in need of cash. Our direct-to-consumer businesses use the internet, television, direct mailing, and other channels to offer a variety of solutions including structured settlement payment purchasing, mortgage origination (both purchase and refinancing), prepaid cards, and access to personal lending. We warehouse, securitize, sell or otherwise finance the financial assets that we purchase in transactions that are structured to ultimately generate cash proceeds to us that exceed the purchase price we paid for those assets. For more information about The J.G. Wentworth Company, visit www.jgw.com or use the contact information provided below.

Conference Call and Webcast

Management will host a webcast to discuss the fourth quarter and fiscal year 2015 financial results today, March 8, 2016, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth's Chief Executive Officer, Stewart Stockdale, and Executive Vice President & 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 listed below.

The J.G. Wentworth Company® Fourth Quarter and Fiscal Year 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® Fourth Quarter and Fiscal Year 2015 Webcast , may dial the Participant conference number: (877) 201-0168, Conference ID: 24125258.

A playback will be available through Tuesday, March 15th, 2016. To participate, utilize the dial-in information listed below:

Playback conference number: (855) 859-2056, Conference ID: 24125258. 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, 2015, these risks and uncertainties include, among other things: our ability to execute on our business strategy; our ability to successfully compete in the industries in which we operate; our dependence on the effectiveness of direct response marketing; our ability to retain and attract qualified senior management; any improper use of or failure to protect the personally identifiable information of past, current and prospective customers to which we have access; our ability to upgrade and integrate our operational and financial information systems, maintain uninterrupted access to such systems and adapt to technological changes in the industries in which we operate; our dependence on third parties, including our ability to maintain relationships with such third parties and our potential exposure to liability for the actions of such third parties; damage to our reputation and increased regulation of our industries which could result from unfavorable press reports about our business model; the accuracy of the estimates and assumptions of our financial models; infringement of our trademarks or service marks; our ability to maintain our state licenses or obtain new licenses in new markets; changes in, and our ability to comply with, federal, state and local laws and regulations governing us; our business model being susceptible to litigation; our ability to continue to purchase structured settlement payments and other financial assets; the public disclosure of the identities of structured settlement holders maintained in our proprietary database; our dependence on the opinions of certain credit rating agencies of the credit quality of our securitizations; our ability to complete future securitizations or other financings on favorable terms; the insolvency of a material number of structured settlement issuers; adverse changes in the residential mortgage lending and real estate markets, including any increases in defaults or delinquencies, especially in geographic areas where our loans are concentrated; our ability to grow our loan origination volume, acquire MSRs and recapture loans that are refinanced; changes in the guidelines of government-sponsored entities, or GSEs, or any discontinuation of, or significant reduction in, the operation of GSEs; potential misrepresentations by borrowers, counterparties and other third-parties; changes in prevailing interest rates and our ability to mitigate interest rate risk through hedging strategies; our ability to obtain sufficient working capital at attractive rates; and our ability to remain in compliance with the terms of our substantial indebtedness.

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
Consolidated Balance Sheets- Unaudited

(Dollars in thousands, except per share data)
 
December 31, December 31,
2015   2014
 
ASSETS
Cash and cash equivalents $ 57,322 $ 41,648
Restricted cash and investments 136,780 198,206
VIE finance receivables, at fair value 4,376,458 4,422,033
Other finance receivables, at fair value 9,689 101,802
VIE finance receivables, net of allowances for losses of $8,659 and $7,674, respectively 99,874 113,489
Other finance receivables, net of allowances for losses of $1,707 and $2,454, respectively 10,468 17,803
Other receivables, net of allowances for losses of $273 and $204, respectively 16,285 14,165
Mortgage loans held for sale, at fair value 124,508

-
Mortgage servicing rights, at fair value 29,287

-
Premises and equipment, net of accumulated depreciation of $7,961 and $5,976, respectively 5,674 3,758
Intangible assets, net of accumulated amortization of $22,521 and $20,273, respectively 30,429 45,436
Goodwill 8,369 84,993
Marketable securities 84,994 103,419
Deferred tax assets, net 2,250 2,170
Other assets 82,577   33,787  
Total Assets $ 5,074,964   $ 5,182,709  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and accounts payable $ 21,548 $ 19,256
Accrued interest 22,380 17,416
Term loan payable 440,181 437,183
VIE derivative liabilities, at fair value 66,519 75,706
VIE borrowings under revolving credit facilities and other similar borrowings 48,828 19,339
Other borrowings under revolving credit facilities and other similar borrowings 122,243

-
VIE long-term debt 199,363 181,558
VIE long-term debt issued by securitization and permanent financing trusts, at fair value 3,928,818 4,031,864
Other liabilities 65,106 6,677
Deferred tax liabilities, net 18,825 36,656
Installment obligations payable 84,994   103,419  
Total Liabilities 5,018,805   4,929,074  
 
Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized, 16,076,444 and 15,534,372 issued and outstanding as of December 31, 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, 8,908,698 issued and outstanding as of December 31, 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 December 31, 2015 and December 31, 2014, respectively

-

-
Additional paid-in-capital 104,713 95,453
(Accumulated deficit) retained earnings (70,765 ) 25,634  
33,948 121,087
Less: treasury stock at cost, 542,072 and 600,755 shares as of December 31, 2015 and 2014, respectively (2,138 ) (2,443 )
Total stockholders' equity, The J.G. Wentworth Company 31,810 118,644
Non-controlling interests 24,349   134,991  
Total Stockholders' Equity 56,159   253,635  
Total Liabilities and Stockholders' Equity $ 5,074,964   $ 5,182,709  
 
   

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

(Dollars in thousands, except per share data)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2015   2014 2015   2014
REVENUES    
Interest income $ 50,074 $ 47,854 $ 190,203 $ 186,958
Realized and unrealized gains on VIE and other finance receivables, long-term debt, and derivatives 17,061 79,343 79,620 300,702
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 9,645

-
18,590

-
Changes in mortgage servicing rights, net 1,101 1,649
Gain (loss) on swap terminations, net 85

-
(190 ) (628 )
Servicing, broker, and other fees 3,526 928 8,016 4,149
Loan origination fees 1,511

-
2,543

-
Realized and unrealized gains (losses) on marketable securities, net 1,316 (853 ) (4,641 ) 888
Realized gain on notes receivable, at fair value

-

-

-
2,098
Gain on extinguishment of debt, net

-

-
593 270
Other (3 )   2   (16 )   (61 )
Total Revenues 84,316     127,274   296,367     494,376  
 
EXPENSES
Advertising 14,092 16,148 63,820 68,489
Interest expense 54,036 50,055 208,545 200,798
Compensation and benefits 16,233 10,243 52,656 41,108
General and administrative 6,377 4,626 21,057 18,567
Professional and consulting 5,644 4,970 21,486 18,452
Debt issuance 1,649 2,727 6,741 8,683
Securitization debt maintenance 1,459 1,489 5,912 6,161
Provision for losses 965 1,533 5,576 4,806
Direct subservicing costs 612

-
948

-
Depreciation and amortization 1,652 1,005 4,613 4,168
Installment obligations expense (income), net 3,076 1,755 (1,225 ) 5,322
Impairment charges and loss on disposal of assets 91,734     69   121,594     69  
Total Expenses 197,529 94,620 511,723 376,623
(Loss) income before income taxes (113,213 ) 32,654 (215,356 ) 117,753
(Benefit) provision for income taxes (5,793 )   4,971   (18,216 )   21,140  
Net (loss) income (107,420 ) 27,683 (197,140 ) 96,613
Less: Net (loss) income attributable to non-controlling interests (52,446 )   15,854   (101,828 )   65,402  
Net (loss) income attributable to The J.G. Wentworth Company $ (54,974 )   $ 11,829   $ (95,312 )   $ 31,211  
 
Weighted average shares of Class A common stock outstanding:
Basic 15,443,362 14,636,520 14,690,746 12,986,058
Diluted 15,443,362 14,640,860 14,690,746 12,988,781
 
Net (loss) income per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company
Basic $ (3.56 ) $ 0.81 $ (6.49 ) $ 2.40
Diluted $ (3.56 ) $ 0.81 $ (6.49 ) $ 2.40
 

Schedule C

Unaudited

The J.G. Wentworth Company

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

We use the Non-GAAP financial measures of Adjusted (Loss) Net Income ("ANI") and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") as measures of our results from operations. We define ANI as our net (loss) income 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 ("Structured Settlements") segment, amounts related to the consolidation of the securitization and permanent financing trusts we use to finance the segment's business. We define Adjusted EBTIDA as ANI before term loan interest expense, debt issuance costs and depreciation and amortization. The Company believes ANI and Adjusted EBTIDA are useful to investors and management as measures of our operating performance, as the operations of the associated variable interest entities do not impact the Structured Settlements 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 Structured Settlements business. We use these measures to measure our revenues because we believe they represent useful measures of our revenues, as the operations of these variable interest entities also do not impact business performance.

You should not consider Adjusted Net (Loss) Income, Adjusted EBITDA, 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 (Loss) Income, Adjusted EBITDA, Total Adjusted Revenue and Spread Revenue may not be comparable to other similarly titled measures of other companies.

A reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA, which includes line items for Total Adjusted Revenue and Spread Revenue for the three and twelve months ended December 31, 2015 and 2014 is provided below. Certain prior period numbers have been reclassified to conform with current period's presentation.

   

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

(In thousands)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2015   2014 2015   2014
           
Net (loss) income $ (107,420 )   $ 27,683   $ (197,140 )   $ 96,613  
   
Adjustments to reflect deconsolidation of securitizations:
Elimination of unrealized gain/loss on finance receivables, long-term debt and derivatives from post securitization due to changes in interest rates 8,548 (25,306 ) 75,802 (84,955 )
Elimination of interest income from securitized finance receivables permanent financing trusts (44,714 ) (41,356 ) (171,773 ) (166,888 )
Interest income on retained interests in finance receivables 5,783 5,177 21,652 20,315
Servicing income on securitized finance receivables 1,317 1,306 5,284 5,129
Elimination of interest expense on long-term debt related to securitization and permanent financing trusts 37,800 35,247 147,723 142,907
Professional fees relating to securitizations 1,459 1,489 5,913 6,161
Other adjustments:
Share based compensation (98 ) 653 1,291 2,384
Income tax (benefit) provision (5,793 ) 4,971 (18,216 ) 21,140
Impact of 2014-3 prefunding on unsecuritized finance receivables 24 (1,566 ) 1,618 (1,566 )
Severance, mergers and acquisitions, and consulting expenses 813 765 6,041 3,736
Impairment charges and loss on disposal of assets 91,734 121,594
Other adjustments 25     18   817     (1,383 )
Adjusted Net (Loss) Income $ (10,522 )   $ 9,081   $ 606     $ 43,593  
 
Term loan interest expense 10,193 10,209 40,386 40,281
Debt issuance 1,649 2,727 6,741 8,683
Depreciation & amortization 1,652     1,005   4,613     4,168  
Adjusted EBITDA $ 2,972     $ 23,022   $ 52,346     $ 96,725  
 
                           

Schedule D
 
The J.G. Wentworth Company
Consolidated
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA - Unaudited
For the Three Months Ended December 31, 2015
(In thousands)
 
Impact of Reclassification
Prefunding on Interest Severance for Term
Deconsolidation Unsecuritized Income on Share M&A Installment Loan Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable ANI   Expense   Costs   Amortization   EBITDA
 
REVENUES
Interest income $ 50,074 $ (44,714 ) $

-
$ 5,783 $

-
$

-
$

-
$

-
$ (1,760 ) $ 9,383 $

-
$

-
$

-
$ 9,383
Realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives 17,061 8,548 24 25,633 25,633
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 9,645 9,645 9,645
Changes in mortgage servicing rights, net 1,101 1,101 1,101
Gain on swap terminations, net 85 85 85
Servicing, broker, and other fees 3,526 1,317 4,843 4,843
Loan origination fees 1,511 1,511 1,511
Realized and unrealized gains on marketable securities, net 1,316 (1,316 )

-

-
Other (3 )                 (3 )               (3 )
Total Revenues $ 84,316   $ (34,849 ) $ 24   $ 5,783   $

-
  $

-
  $

-
  $

-
  $ (3,076 ) $ 52,198     $

-
    $

-
    $

-
    $ 52,198  
 
EXPENSES
Advertising $ 14,092 $ 14,092 $ 14,092
Interest expense 54,036 (37,800 ) 16,236 (10,193 ) 6,043
Compensation and benefits 16,233 98 16,331 16,331
General and administrative 6,377 (5 ) 6,372 6,372
Professional and consulting 5,644 (808 ) 4,836 4,836
Debt issuance 1,649 1,649 (1,649 )

-
Securitization debt maintenance 1,459 (1,459 )

-

-
Provision for losses 965 (25 ) 940 940
Direct subservicing costs 612 612 612
Depreciation and amortization 1,652 1,652 (1,652 )

-
Installment obligations expense, net 3,076 (3,076 )

-

-
Impairment charges and loss on disposal of assets 91,734               (91,734 )  

-
               

-
 
Total Expenses $ 197,529   $ (39,284 ) $

-
  $

-
  $ 98   $

-
  $ (813 ) $ (91,734 ) $ (3,076 ) $ 62,720     $ (10,193 )   $ (1,649 )   $ (1,652 )   $ 49,226  
 
(Loss) Income before income taxes $ (113,213 ) $ 4,435 $ 24 $ 5,783 $ (98 ) $

-
$ 813 $ 91,734 $

-
$ (10,522 ) $ 10,193 $ 1,649 $ 1,652 $ 2,972
(Benefit) Provision for income taxes (5,793 )         5,793        

-
               

-
 
Net (Loss) Income $ (107,420 ) $ 4,435   $ 24   $ 5,783   $ (98 ) $ (5,793 ) $ 813   $ 91,734   $

-
  $ (10,522 )   $ 10,193     $ 1,649     $ 1,652     $ 2,972  
 
                           

Schedule E

 
The J.G. Wentworth Company
Structured Settlement and Annuity Purchasing Segment
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA - Unaudited
For the Three Months Ended December 31, 2015

(In thousands)
 
Impact of Reclassification
Prefunding on Interest Severance for Term
Deconsolidation Unsecuritized Income on Share M&A Installment Loan Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable ANI   Expense   Costs   Amortization   EBITDA
 
REVENUES
Interest income $ 49,641 $ (44,714 ) $

-
$ 5,783 $

-
$

-
$

-
$

-
$ (1,760 ) $ 8,950 $

-
$

-
$

-
$ 8,950
Realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives 17,061 8,548 24 25,633 25,633
Gain on swap terminations, net 85 85 85
Servicing, broker, and other fees 1,566 1,317 2,883 2,883
Loan origination fees

-

-
Realized and unrealized gains on marketable securities, net 1,316 (1,316 )

-

-
Other (3 )                 (3 )               (3 )
Total Revenues $ 69,666   $ (34,849 ) $ 24   $ 5,783   $

-
  $

-
  $

-
  $

-
  $ (3,076 ) $ 37,548     $

-
    $

-
    $

-
    $ 37,548  
 
EXPENSES
Advertising $ 12,162 $ 12,162 $ 12,162
Interest expense 53,124 (37,800 ) 15,324 (10,193 ) 5,131
Compensation and benefits 8,092 98 8,190 8,190
General and administrative 4,976 (5 ) 4,971 4,971
Professional and consulting 5,310 (808 ) 4,502 4,502
Debt issuance 1,649 1,649 (1,649 )

-
Securitization debt maintenance 1,459 (1,459 )

-

-
Provision for losses 377 (25 ) 352 352
Depreciation and amortization 961 961 (961 )

-
Installment obligations expense, net 3,076 (3,076 )

-

-
Impairment charges and loss on disposal of assets 91,734               (91,734 )  

-
               

-
 
Total Expenses $ 182,920   $ (39,284 ) $

-
  $

-
  $ 98   $

-
  $ (813 ) $ (91,734 ) $ (3,076 ) $ 48,111     $ (10,193 )   $ (1,649 )   $ (961 )   $ 35,308  
 
(Loss) Income before income taxes $ (113,254 ) $ 4,435 $ 24 $ 5,783 $ (98 ) $

-
$ 813 $ 91,734 $

-
$ (10,563 ) $ 10,193 $ 1,649 $ 961 $ 2,240
(Benefit) Provision for income taxes (5,465 )         5,465        

-
               

-
 
Net (Loss) Income $ (107,789 ) $ 4,435   $ 24   $ 5,783   $ (98 ) $ (5,465 ) $ 813   $ 91,734   $

-
  $ (10,563 )   $ 10,193     $ 1,649     $ 961     $ 2,240  
 
                           

Schedule F
 
The J.G. Wentworth Company
Home Lending Segment
Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA - Unaudited

For the Three Months Ended December 31, 2015

(In thousands)
 
Impact of Reclassification
Prefunding on Interest Severance for Term
Deconsolidation Unsecuritized Income on Share M&A Installment Loan Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable ANI   Expense   Costs   Amortization   EBITDA
 
REVENUES
Interest income $ 433 $

-
$

-
$

-
$

-
$

-
$

-
$

-
$

-
$ 433 $

-
$

-
$

-
$ 433
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 9,645 9,645 9,645
Changes in mortgage servicing rights, net 1,101 1,101 1,101
Servicing, broker, and other fees 1,960

-
1,960 1,960
Loan origination fees 1,511                   1,511                 1,511
Total Revenues $ 14,650   $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $ 14,650     $

-
    $

-
    $

-
    $ 14,650
 
EXPENSES
Advertising $ 1,930 $ 1,930 $ 1,930
Interest expense 912 912 912
Compensation and benefits 8,141 8,141 8,141
General and administrative 1,401 1,401 1,401
Professional and consulting 334 334 334
Provision for losses 588 588 588
Direct subservicing costs 612 612 612
Depreciation and amortization 691                   691             (691 )  

-
Total Expenses $ 14,609   $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $ 14,609     $

-
    $

-
    $ (691 )   $ 13,918
 
Income before income taxes $ 41 $

-
$

-
$

-
$

-
$

-
$

-
$

-
$

-
$ 41 $

-
$

-
$ 691 $ 732
(Benefit) Provision for income taxes (328 )         328        

-
               

-
Net Income $ 369   $

-
  $

-
  $

-
  $

-
  $

(328
) $

-
  $

-
  $

-
  $ 41     $

-
    $

-
    $ 691     $ 732
 
                           

Schedule G
 
The J.G. Wentworth Company
Consolidated
Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA - Unaudited
For the Three Months Ended December 31, 2014

(In thousands)
 
Adjustments Impact of Reclassification
to reflect Prefunding on Interest Severance Associated with
deconsolidation Unsecuritized Income on Share M&A Installment Debt
GAAP of Finance Retained Based Income and Obligation Other Interest Issuance Depreciation & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Payable Adjustments ANI   Expense   Cost   Amortization   EBITDA
 
REVENUES
Interest income $ 47,854 $ (41,356 ) $

-
$ 5,177 $

-
$

-
$

-
$ (2,608 ) $

-
$ 9,067 $

-
$

-
$

-
$ 9,067
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 79,343 (25,306 ) (1,566 ) 52,471 52,471
Servicing, broker, and other fees 928 1,306 2,234 2,234
Realized and unrealized losses on marketable securities, net (853 ) 853

-

-
Other 2                   2                 2
Total Revenues $ 127,274   $ (65,356 ) $ (1,566 ) $ 5,177   $

-
  $

-
  $

-
  $ (1,755 ) $

-
  $ 63,774     $

-
    $

-
    $

-
    $ 63,774
 
EXPENSES
Advertising $ 16,148 $ 16,148 $ 16,148
Interest expense 50,055 (35,247 ) 14,808 (10,209 ) 4,599
Compensation and benefits 10,243 (653 ) (62 ) 9,528 9,528
General and administrative 4,626 (18 ) 4,608 4,608
Professional and consulting 4,970 (703 ) 4,267 4,267
Debt issuance 2,727 2,727 (2,727 )

-
Securitization debt maintenance 1,489 (1,489 )

-

-
Provision for losses 1,533 1,533 1,533
Depreciation and amortization 1,005 1,005 (1,005 )

-
Installment obligations expense, net 1,755 (1,755 )

-

-
Impairment charges and loss on disposal of assets 69                   69                 69
Total Expenses $ 94,620   $ (36,736 ) $

-
  $

-
  $ (653 ) $

-
  $ (765 ) $ (1,755 ) $ (18 ) $ 54,693     $ (10,209 )   $ (2,727 )   $ (1,005 )   $ 40,752
 
Income before income taxes $ 32,654 $ (28,620 ) $ (1,566 ) $ 5,177 $ 653 $ 765 $

-
$ 18 $ 9,081 $ 10,209 $ 2,727 $ 1,005 $ 23,022
Provision for income taxes 4,971           (4,971 )      

-
               

-
Net Income $ 27,683   $ (28,620 ) $ (1,566 ) $ 5,177   $ 653   $ 4,971   $ 765   $

-
  $ 18   $ 9,081     $ 10,209     $ 2,727     $ 1,005     $ 23,022
 
                             

Schedule H
 
The J.G. Wentworth Company
Consolidated
Reconciliation of Net (Loss) Income to Adjusted Net Income and Adjusted EBITDA - Unaudited
For the Twelve Months Ended December 31, 2015

(In thousands)
 
Adjustments Impact of Reclassification
to reflect Prefunding on Interest Severance Associated with
deconsolidation Unsecuritized Income on Share M&A Installment Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Other Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable Adjustments ANI   Expense   Cost   Amortization   EBITDA
 
REVENUES
Interest income $ 190,203 $ (171,773 ) $

-
$ 21,652 $

-
$

-
$

-
$

-
$ (3,416 ) $

-
$ 36,666 $

-
$

-
$

-
$ 36,666
Realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives 79,620 75,802 1,618 157,040 157,040
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 18,590 18,590 18,590
Changes in mortgage servicing rights, net 1,649 1,649 1,649
Loss on swap terminations, net (190 ) (190 ) (190 )
Servicing, broker, and other fees 8,016 5,284 13,300   13,300
Loan origination fees 2,543 2,543   2,543
Realized and unrealized losses on marketable securities, net (4,641 ) 4,641

-
 

-
Gain on extinguishment of debt, net 593 593   593
Other (16 )                   (16 )               (16 )
Total Revenues $ 296,367   $ (90,687 ) $ 1,618   $ 21,652   $

-
  $

-
  $

-
  $

-
  $ 1,225   $

-
  $ 230,175     $

-
    $

-
    $

-
    $ 230,175  
 
EXPENSES
Advertising $ 63,820 $ 63,820 $ 63,820
Interest expense 208,545 (147,723 ) 60,822 (40,386 ) 20,436
Compensation and benefits 52,656 (1,291 ) (2,272 ) 49,093 49,093
General and administrative 21,057 (23 ) 21,034 21,034
Professional and consulting 21,486 (3,746 ) (792 ) 16,948 16,948
Debt issuance 6,741 6,741 (6,741 )

-
Securitization debt maintenance 5,912 (5,913 ) (1 ) (1 )
Provision for losses 5,576 (25 ) 5,551 5,551
Direct subservicing costs 948 948 948
Depreciation and amortization 4,613 4,613 (4,613 )

-
Installment obligations (income), net (1,225 ) 1,225

-

-
Impairment charges and loss on disposal of assets 121,594               (121,594 )    

-
               

-
 
Total Expenses $ 511,723   $ (153,661 ) $

-
  $

-
  $ (1,291 ) $

-
  $ (6,041 ) $ (121,594 ) $ 1,225   $ (792 ) $ 229,569     $ (40,386 )   $ (6,741 )   $ (4,613 )   $ 177,829  
 
(Loss) Income before income taxes $ (215,356 ) $ 62,974 $ 1,618 $ 21,652 $ 1,291 $ 6,041 $ 121,594 $ 792 $ 606 $ 40,386 $ 6,741 $ 4,613 $ 52,346
(Benefit) Provision for income taxes (18,216 )         18,216          

-
               

-
 
Net (Loss) Income $ (197,140 ) $ 62,974   $ 1,618   $ 21,652   $ 1,291   $ (18,216 ) $ 6,041   $ 121,594   $

-
  $ 792   $ 606     $ 40,386     $ 6,741     $ 4,613     $ 52,346  
 
                             

Schedule I
 

The J.G. Wentworth Company
Structured Settlement and Annuity Purchasing Segment
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA - Unaudited
For the Twelve Months Ended December 31, 2015

(In thousands)
 
Adjustments Impact of Reclassification
to reflect Prefunding on Interest Severance Associated with
deconsolidation Unsecuritized Income on Share M&A Installment Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Other Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable Adjustments ANI   Expense   Cost   Amortization   EBITDA
 
REVENUES
Interest income $ 189,394 $ (171,773 ) $

-
$ 21,652 $

-
$

-
$

-
$

-
$ (3,416 ) $

-
$ 35,857 $

-
$

-
$

-
$ 35,857
Realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives 79,620 75,802 1,618 157,040 157,040
Loss on swap terminations, net (190 ) (190 ) (190 )
Servicing, broker, and other fees 4,875 5,284 10,159   10,159
Realized and unrealized losses on marketable securities, net (4,641 ) 4,641

-
 

-
Gain on extinguishment of debt, net 593 593   593
Other (16 )                   (16 )               (16 )
Total Revenues $ 269,635   $ (90,687 ) $ 1,618   $ 21,652   $

-
  $

-
  $

-
  $

-
  $ 1,225   $

-
  $ 203,443     $

-
    $

-
    $

-
    $ 203,443  
 
EXPENSES
Advertising $ 59,961 $ 59,961 $ 59,961
Interest expense 207,099 (147,723 ) 59,376 (40,386 ) 18,990
Compensation and benefits 38,997 (1,291 ) (2,272 ) 35,434 35,434
General and administrative 18,679 (23 ) 18,656 18,656
Professional and consulting 20,801 (3,746 ) (792 ) 16,263 16,263
Debt issuance 6,741 6,741 (6,741 )

-
Securitization debt maintenance 5,912 (5,913 ) (1 ) (1 )
Provision for losses 4,546 (25 ) 4,521 4,521
Depreciation and amortization 3,878 3,878 (3,878 )

-
Installment obligations (income), net (1,225 ) 1,225

-

-
Impairment charges and loss on disposal of assets 121,594               (121,594 )    

-
               

-
 
Total Expenses $ 486,983   $ (153,661 ) $

-
  $

-
  $ (1,291 ) $

-
  $ (6,041 ) $ (121,594 ) $ 1,225   $ (792 ) $ 204,829     $ (40,386 )   $ (6,741 )   $ (3,878 )   $ 153,824  
 
(Loss) Income before income taxes $ (217,348 ) $ 62,974 $ 1,618 $ 21,652 $ 1,291 $

-
$ 6,041 $ 121,594 $

-
$ 792 $ (1,386 ) $ 40,386 $ 6,741 $ 3,878 $ 49,619
(Benefit) Provision for income taxes (18,614 )         18,614          

-
               

-
 
Net (Loss) Income $ (198,734 ) $ 62,974   $ 1,618   $ 21,652   $ 1,291   $ (18,614 ) $ 6,041   $ 121,594   $

-
  $ 792   $ (1,386 )   $ 40,386     $ 6,741     $ 3,878     $ 49,619  
 
                           

Schedule J
 
The J.G. Wentworth Company
Home Lending Segment
Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA - Unaudited
For the Twelve Months Ended December 31, 2015

(In thousands)
 
Adjustments Impact of Reclassification
to reflect Prefunding on Interest Severance Associated with
deconsolidation Unsecuritized Income on Share M&A Installment Debt Depreciation
GAAP of Finance Retained Based Income and Impairment Obligation Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Charges Payable ANI   Expense   Cost   Amortization   EBITDA
 
REVENUES
Interest income $ 809 $

-
$

-
$

-
$

-
$

-
$

-
$

-
$

-
$ 809 $

-
$

-
$

-
$ 809
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs 18,590 18,590 18,590
Changes in mortgage servicing rights, net 1,649 1,649 1,649
Servicing, broker, and other fees 3,141 3,141   3,141
Loan origination fees 2,543                   2,543                 2,543
Total Revenues $ 26,732   $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $ 26,732     $

-
    $

-
    $

-
    $ 26,732
 
EXPENSES
Advertising $ 3,859 $ 3,859 $ 3,859
Interest expense 1,446 1,446 1,446
Compensation and benefits 13,659 13,659 13,659
General and administrative 2,378 2,378 2,378
Professional and consulting 685 685 685
Provision for losses 1,030 1,030 1,030
Direct subservicing costs 948 948 948
Depreciation and amortization 735                   735             (735 )  

-
Total Expenses $ 24,740   $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $

-
  $ 24,740     $

-
    $

-
    $ (735 )   $ 24,005
 
Income before income taxes $ 1,992 $

-
$

-
$

-
$

-
$

-
$

-
$

-
$

-
$ 1,992 $

-
$

-
$ 735 $ 2,727
Provision for income taxes 398           (398 )      

-
               

-
Net Income $ 1,594   $

-
  $

-
  $

-
  $

-
  $ 398   $

-
  $

-
  $

-
  $ 1,992     $

-
    $

-
    $ 735     $ 2,727
 
                           

Schedule K
 
The J.G. Wentworth Company
Consolidated
Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA - Unaudited
For the Twelve Months Ended December 31, 2014

(In thousands)
 
Impact of
Adjustments 2014-3 Reclassification
to reflect Prefunding on Interest Severance Associated with
deconsolidation Unsecuritized Income on Share M&A Installment Debt Depreciation
GAAP of Finance Retained Based Income and Obligation Other Interest Issuance & Adjusted
Results securitizations Receivables Interests Compensation Tax Consulting Payable Adjustments ANI   Expense   Cost   Amortization   EBITDA
 
REVENUES
Interest income $ 186,958 $ (166,888 ) $

-
$ 20,315 $

-
$

-
$

-
$ (4,434 ) $ 6 $ 35,957 $

-
$

-
$

-
$ 35,957
Realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives 300,702 (84,955 ) (1,566 ) 214,181 214,181
Loss on swap terminations, net (628 ) (628 ) (628 )
Servicing, broker, and other fees 4,149 5,129 9,278 9,278
Realized and unrealized gains on marketable securities, net 888 (888 )

-

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

-

-
Gain on debt extinguishment 270 270 270
Other (61 )                 (61 )               (61 )
Total Revenues $ 494,376   $ (246,714 ) $ (1,566 ) $ 20,315   $

-
  $

-
  $

-
  $ (5,322 ) $ (2,092 ) $ 258,997    

-
   

-
   

-
    $ 258,997  
 
EXPENSES
Advertising $ 68,489 $ 68,489 $ 68,489
Interest expense 200,798 (142,907 ) 57,891 (40,281 ) 17,610
Compensation and benefits 41,108 (2,384 ) (1,962 ) 36,762 36,762
General and administrative 18,567 (234 ) (18 ) 18,315 18,315
Professional and consulting 18,452 (1,540 ) (691 ) 16,221 16,221
Debt issuance 8,683 8,683 (8,683 )

-
Securitization debt maintenance 6,161 (6,161 )

-

-
Provision for losses 4,806 4,806 4,806
Depreciation and amortization 4,168 4,168 (4,168 )

-
Installment obligations expense, net 5,322 (5,322 )

-

-
Impairment charges and loss on disposal of assets 69                   69                 69  
Total Expenses $ 376,623   $ (149,068 ) $

-
  $

-
  $ (2,384 ) $

-
  $ (3,736 ) $ (5,322 ) $ (709 ) $ 215,404     (40,281 )   (8,683 )   (4,168 )   $ 162,272  
 
Income before income taxes $ 117,753 $ (97,646 ) $ (1,566 ) $ 20,315 $ 2,384 $

-
$ 3,736 $

-
$ (1,383 ) $ 43,593 40,281 8,683 4,168 $ 96,725
Provision for income taxes 21,140           (21,140 )      

-
               

-
 
Net Income $ 96,613   $ (97,646 ) $ (1,566 ) $ 20,315   $ 2,384   $ 21,140   $ 3,736   $

-
  $ (1,383 ) $ 43,593     40,281     8,683     4,168     $ 96,725  
   

Schedule L
 
The J.G. Wentworth Company
Consolidated Key Metrics Statistics
Unaudited

(In thousands, except shares and per share data)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2015   2014 2015   2014

Consolidated
   
 
Net Income (Loss) $ (107,420 ) $ 27,683 $ (197,140 ) $ 96,613
Net Income (Loss) Attributable to The J.G. Wentworth Company $ (54,974 ) $ 11,829 $ (95,312 ) $ 31,211
ANI $ (10,522 ) $ 9,081 $ 606 $ 43,593
 
Weighted Average Diluted Shares 15,443,362 14,640,860 14,690,746 12,988,781
 
All-in Shares (1) 28,742,707 29,019,913 28,422,016 29,347,498
 
Diluted EPS $ (3.56 ) $ 0.81 $ (6.49 ) $ 2.40
ANI EPS (2) $ (0.37 ) $ 0.31 $ 0.02 $ 1.49
 

Structured Settlement and Annuity Purchasing Segment
Total Receivables Balance (TRB) Purchases
Guaranteed structured settlements, annuities and lotteries $ 200,708 $ 234,084 $ 879,159 $ 939,050
Life contingent structured settlements and annuities 23,499 25,107 97,696 111,590
Pre-settlement fundings

-
    7,021   10,763     27,155
Total TRB Purchases $ 224,207     $ 266,212   $ 987,618     $ 1,077,795
 

Home Lending segment
Locked - Units 2,751 N/A 5,085 N/A
Locked - Loan Volume $ 705,189 N/A $ 1,290,587 N/A
 
Closed - Units 1,887 N/A 3,291 N/A
Closed - Loan Volume $ 490,285 N/A $ 843,208 N/A
 

(1) 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.

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

N/A Not applicable

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