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The J.G. Wentworth Company® Reports Second Quarter 2015 Results
Recently Closed Mortgage Acquisition Expected to be Accretive to Future Earnings
Company Launches a Full Marketplace Platform as Part of Diversification Strategy

RADNOR, Pa.-(BUSINESS WIRE)-08.05.15 – 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 loan options through a marketplace platform, today reported financial results for the second quarter of 2015. “From an operating perspective the business produced another consistent quarter with TRB purchases of $263 million, in-line with the previous three quarters. We are disappointed with the bottom line results that were heavily impacted by the interest rate environment which led to a rapid increase in our cost of funds for the quarter. Price actions have been enacted to mitigate our increased cost of funds,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®. “Our operating model remains sound, and we are delivering on our diversification strategy with the completed acquisition of WestStar Mortgage, Inc., the addition of leading lending relationships and the upcoming launch of our prepaid cards program.”

The following are highlights from the second quarter:

GAAP Results

  • Revenues were $61.4 million, a decrease of 50.3% as compared to revenues of $123.5 million in the second quarter of 2014, due primarily to: (i) an increase in our cost of funds during Q2 2015 as compared to Q2 2014 and the resulting impact on unrealized gains on VIE and other finance receivables, long term debt and derivatives primarily from our $4.4 billion of previously securitized finance receivables, and (ii) to a lesser extent, the impact of a decrease in purchase yield on fundings and in Total Receivables Balance (“TRB”) purchases in Q2 2015 as compared to Q2 2014.
  • Net income decreased to a loss of $26.6 million, as compared to net income of $21.7 million in the second quarter of 2014, due primarily to: (i) an increase in our cost of funds during Q2 2015 as compared to Q2 2014 and the resulting impact on unrealized gains on VIE and other finance receivables, long term debt and derivatives primarily from our $4.4 billion of previously securitized finance receivables, and (ii) to a lesser extent, the impact of a decrease in purchase yield on fundings and in TRB purchases in Q2 2015 as compared to Q2 2014.

Non GAAP Operating Results*

  • TRB purchases were $262.9 million, as compared to $287.7 million in the second quarter of 2014 and $260.8 million in the first quarter of 2015.
  • Adjusted Net Income*, or ANI, decreased to a loss of $2.3 million, as compared to income of $17.2 million in the second quarter of 2014 and $8.2 million in the first quarter of 2015.
  • The leading driver in the decrease in ANI was an increase in the cost of funds.  To a lesser extent, the size and duration mix on fundings and decrease in purchase yield also contributed to the decrease in ANI.  The second quarter 2014 TRB purchases and ANI reflect results higher than Company averages over the more recent quarters.
  • Spread Revenue* (Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations) decreased to $38.0 million, as compared to $58.0 million in the second quarter of 2014 and $50.5 million in the first quarter of 2015, primarily as a result of increasing cost of funds, and to a lesser extent, the size and duration mix on fundings and decrease in purchase yield.

Subsequent Highlights

  • Successfully closed the WestStar Mortgage, Inc. (“WestStar”) acquisition on July 31, 2015 for a purchase price of $66.7 million. For the second quarter 2015, WestStar originated approximately $630 million in new loans and reported $6.5 million in net income which represented a year over year increase of 72% and 41%, respectively. For the first half of 2015 WestStar originated approximately $1.2 billion in new loans resulting in $11.1 million of net income.**
  • Launched new transactional website www.jgwentworth.com to enable full marketplace platform of multi-products for customers including structured settlements, personal and business lending, prepaid cards and mortgage loans.
  • Completed the 2015-2 securitization, which consisted of $158,476,000 Fixed Asset Backed Notes. The issue comprised of two classes of placed notes: $142,126,000 Class A Fixed Rate Asset Backed Notes that will pay 3.87%, and $16,350,000 Class B Fixed Rate Asset Backed Notes that will pay 4.83%. The notes are rated AAA (DBRS) and Aaa (Moody’s); and BBB (DBRS) and Baa2 (Moody’s), respectively.

John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “We are implementing operational strategies to increase pricing to alleviate an increasing cost of funds environment and the possibility of future rising interest rates. As we launch our new products we continue to instill expense discipline within the organization to focus on improving profitability. Furthermore, after the WestStar acquisition the Company remains well positioned from a liquidity standpoint to manage day-to-day operations and continue to execute on our diversification strategy.”

* 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 six month periods ended June 30, 2015 and 2014, as well as our reconciliation of non-GAAP measures and historic financial information from 2013 to the present, are included in the accompanying financial information.

** WestStar results have not been finalized, are subject to change, and were provided by WestStar Mortgage, Inc.

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 and business lending, structured settlement payment purchasing, and prepaid cards.

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 second quarter 2015 financial results tomorrow, August 6, 2015, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth’s Chief Executive Officer, Stewart Stockdale, and Chief Financial Officer, John Schwab.

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® Second 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® Second Quarter 2015 Webcast, may dial Participant conference number: (877) 201-0168, Conference ID: 85833614.

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

A playback will be available through Thursday, August 13th, 2015. To participate, utilize the dial-in information listed below:

Playback conference number: (855) 859-2056, Conference ID: 85833614.  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, these risks and uncertainties include, among other things:  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 inquiry 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; and infringement of our trademarks or service marks.

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.

Investor Relations:
Erik Hartwell, VP Investor Relations
866-386-3853
investor@jgwentworth.com

or

Media Inquiries:
Makovsky for The J.G. Wentworth Company®
Michael Goodwin
212-508-9639
mgoodwin@makovsky.com

Schedule A

The J.G. Wentworth Company
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

  June 30,

2015

  December 31,

2014

  (Unaudited)    
ASSETS      
Cash and cash equivalents $ 56,091     $ 41,648  
Restricted cash and investments 130,604     198,206  
VIE finance receivables, at fair market value 4,402,887     4,422,033  
Other finance receivables, at fair market value 66,753     101,802  
VIE finance receivables, net of allowances for losses of $8,494 and $7,674, respectively 112,152     113,489  
Other finance receivables, net of allowances for losses of $2,474 and $2,454, respectively 13,541     17,803  
Other receivables, net of allowances for losses of $273 and $204, respectively 13,979     14,165  
Fixed assets, net of accumulated depreciation of $7,076 and $5,976, respectively 4,375     3,758  
Intangible assets, net of accumulated amortization of $21,168 and $20,273, respectively 44,541     45,436  
Goodwill 84,993     84,993  
Marketable securities 96,649     103,419  
Deferred tax assets, net     2,170  
Other assets 30,235     33,787  
Total Assets $ 5,056,800     $ 5,182,709  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Accounts payable $ 8,952     $ 5,301  
Accrued expenses 18,367     13,955  
Accrued interest 19,815     17,416  
VIE derivative liabilities, at fair market value 68,251     75,706  
VIE borrowings under revolving credit facilities and other similar borrowings 41,672     19,339  
VIE long-term debt 178,619     181,558  
VIE long-term debt issued by securitization and permanent financing trusts, at fair market value 3,938,740     4,031,864  
Term loan payable 438,682     437,183  
Other liabilities 7,717     6,677  
Deferred tax liabilities, net 28,541     36,656  
Installment obligations payable 96,649     103,419  
Total Liabilities 4,846,005     4,929,074  
       
Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized, 15,928,585 and 14,103,501 issued and outstanding as of June 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, 9,042,349 issued and outstanding as of June 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 June 30, 2015 and December 31, 2014, respectively.      
Additional paid-in-capital 104,109     95,453  
Retained earnings 11,993     25,634  
  116,102     121,087  
Less: treasury stock at cost, 1,825,084 and 600,755 shares as of June 30, 2015 and December 31, 2014, respectively. (8,453 )   (2,443 )
Total stockholders’ equity, The J.G. Wentworth Company 107,649     118,644  
Non-controlling interests 103,146     134,991  
Total Stockholders’ Equity 210,795     253,635  
Total Liabilities and Stockholders’ Equity $ 5,056,800     $ 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

June 30,

  Six Months Ended
June 30,
  2015   2014   2015   2014
REVENUES              
Interest income $ 45,568     $ 46,638     $ 89,960     $ 94,460  
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 15,581     70,317     55,002     157,628  
Loss on swap terminations, net         (275 )   (574 )
Servicing, broker, and other 1,130     968     1,999     2,110  
Realized and unrealized (losses) gains on marketable securities, net (916 )   3,467     914     4,356  
Realized gain on notes receivable, at fair value     2,098         2,098  
Gain on extinguishment of debt         593      
Total Revenues $ 61,363     $ 123,488     $ 148,193     $ 260,078  
               
EXPENSES              
Advertising $ 16,942     $ 16,432     $ 32,782     $ 33,925  
Interest expense 50,068     50,700     98,903     101,930  
Compensation and benefits 9,418     10,483     22,216     19,769  
General and administrative 4,733     4,613     9,372     9,083  
Professional and consulting 4,861     5,518     9,299     8,962  
Debt issuance 123     19     2,872     3,020  
Securitization debt maintenance 1,494     1,564     2,990     3,121  
Provision for losses on finance receivables 1,618     1,127     2,957     2,218  
Depreciation and amortization 1,004     1,121     1,995     2,202  
Installment obligations (income) expense, net (249 )   4,122     2,071     5,614  
Total Expenses $ 90,012     $ 95,699     $ 185,457     $ 189,844  
(Loss) income before income taxes (28,649 )   27,789     (37,264 )   70,234  
(Benefit) provision for income taxes (2,016 )   6,081     (5,171 )   13,993  
Net (Loss) Income $ (26,633 )   $ 21,708     $ (32,093 )   $ 56,241  
Less net (loss) income attributable to non-controlling interests (14,337 )   15,440     (18,452 )   40,951  
Net (loss) income attributable to The J.G. Wentworth Company $ (12,296 )   $ 6,268     $ (13,641 )   $ 15,290  
               
Weighted average shares of Class A common stock outstanding:              
Basic 14,113,990     12,559,957     14,192,480     12,104,172  
Diluted 14,113,990     12,562,042     14,192,480     12,105,548  
               
Net (loss) income per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company              
Basic $ (0.87 )   $ 0.50     $ (0.96 )   $ 1.26  
Diluted $ (0.87 )   $ 0.50     $ (0.96 )   $ 1.26  

ANI Bridge – Unaudited

The J.G. Wentworth Company and Subsidiaries

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

We use Adjusted Net Income (Loss) (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 the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our 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 these variable interest entities do not impact business 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 (Loss), 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 (Loss), which includes line items for Total Adjusted Revenue and Spread Revenue, for the three and six months ended June 30, 2015 and 2014, respectively, is provided below.

Schedule C

The J.G. Wentworth Company
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) – Unaudited
(In thousands)

  Three Months Ended

June 30,

  Six Months Ended

June 30,

  2015   2014   2015   2014
               
Net (Loss) Income $ (26,633 )   $ 21,708     $ (32,093 )   $ 56,241  
               
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 23,062     (12,366 )   32,191     (47,257 )
Elimination of interest income from securitized finance receivables (41,267 )   (42,041 )   (81,236 )   (85,344 )
Interest income on retained interests in finance receivables 5,267     5,001     10,433     9,970  
Servicing income on securitized finance receivables 1,316     1,242     2,631     2,500  
Elimination of interest expense on long-term debt related to securitization and permanent financing trusts 35,679     36,213     69,887     73,498  
Professional fees relating to securitizations 1,494     1,564     2,990     3,121  
Other adjustments:              
Share based compensation 706     798     1,116     1,300  
Income tax (benefit) provision (2,016 )   6,081     (5,171 )   13,993  
Impact of prefunding on unsecuritized finance receivables (654 )       1,618      
Severance and M&A expenses 730     376     3,564     675  
Other nonrecurring items     (1,401 )       (1,401 )
Adjusted Net (Loss) Income $ (2,316 )   $ 17,175     $ 5,930     $ 27,296  
               
Other Data:              
Securitized Product Total Receivables Balance (TRB) Purchases (1) $ 231,654     $ 252,544     $ 466,626     $ 476,051  
Life Contingent Purchases 26,807     28,185     46,306     58,012  
Presettlement Fundings 4,404     6,977     10,763     14,224  
Total TRB Purchases $ 262,865     $ 287,706     $ 523,695     $ 548,287  
Adjusted Net (Loss) Income $ (2,316 )   $ 17,175     $ 5,930     $ 27,296  
Adjusted Net (Loss) Income TRB Margin (2) (0.88 )%   5.97 %   1.13 %   4.98 %
               
Company retained interests in finance receivables at fair market value $ 299,412     $ 294,637          

(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
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income – Unaudited
(In thousands)

  Q2 2015

GAAP

Results

  Adjustments

to reflect

deconsolidation

of securitizations

  Impact of Prefundings on Unsecuritized Finance Receivables   Interest

Income on

Retained

Interests

  Share

Based

Compensation

  Income

Tax

  Severance and
M&A
Expenses
  Reclassification

Associated with

Installment

Obligation Payable

  Q2 2015

Adjusted

Results

                                   
REVENUES                                  
Interest income $ 45,568     $ (41,267 )   $     $ 5,267     $     $     $     $ (667 )   $ 8,901  
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 15,581     23,062     (654 )                       37,989  
Servicing, broker, and other 1,130     1,316                             2,446  
Realized and unrealized (losses) on marketable securities, net (916 )                           916      
Total Revenues $ 61,363     $ (16,889 )   $ (654 )   $ 5,267     $     $     $     $ 249     $ 49,336  
                                   
EXPENSES                                  
Advertising $ 16,942     $     $     $     $     $     $     $     $ 16,942  
Interest expense 50,068     (35,679 )                           14,389  
Compensation and benefits 9,418                 (706 )       (35 )       8,677  
General and administrative 4,733                         (10 )       4,723  
Professional and consulting 4,861                         (685 )       4,176  
Debt issuance 123                                 123  
Securitization debt maintenance 1,494     (1,494 )                            
Provision for losses on finance receivables 1,618                                 1,618  
Depreciation and amortization 1,004                                 1,004  
Installment obligations income, net (249 )                           249      
Total Expenses $ 90,012     $ (37,173 )   $     $     $ (706 )   $     $ (730 )   $ 249     $ 51,652  
                                   
Loss before income taxes $ (28,649 )   $ 20,284     $ (654 )   $ 5,267     $ 706     $     $ 730     $     $ (2,316 )
Benefit for income taxes (2,016 )                   2,016              
Net Loss $ (26,633 )   $ 20,284     $ (654 )   $ 5,267     $ 706     $ (2,016 )   $ 730     $     $ (2,316 )

Schedule E

The J.G. Wentworth Company
Reconciliation of Net Income to Adjusted Net Income – Unaudited
(In thousands)

  Q2 2014

GAAP

Results

  Adjustments

to reflect

deconsolidation

of securitizations

  Interest

Income on

Retained

Interests

  Share

Based

Compensation

  Income

Tax

  Severance and

M&A

Expenses

  Reclassification
Associated with
Installment
Obligation Payable
  Other

Nonrecurring

Items

  Q2 2014

Adjusted

Results

                                   
REVENUES                                  
Interest income $ 46,638     $ (42,041 )   $ 5,001     $     $     $     $ (655 )   $ 6     $ 8,949  
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 70,317     (12,366 )                           57,951  
Servicing, broker, and other 968     1,242                             2,210  
Realized and unrealized gains on marketable securities, net 3,467                         (3,467 )        
Realized gain on notes receivable 2,098                             (2,098 )    
Total Revenues $ 123,488     $ (53,165 )   $ 5,001     $     $     $     $ (4,122 )   $ (2,092 )   $ 69,110  
                                   
EXPENSES                                  
Advertising $ 16,432     $     $     $     $     $     $     $     $ 16,432  
Interest expense 50,700     (36,213 )                           14,487  
Compensation and benefits 10,483             (798 )       (86 )           9,599  
General and administrative 4,613                     86             4,699  
Professional and consulting 5,518                     (376 )       (691 )   4,451  
Debt issuance 19                                 19  
Securitization debt maintenance 1,564     (1,564 )                            
Provision for losses on finance receivables 1,127                                 1,127  
Depreciation and amortization 1,121                                 1,121  
Installment obligations expense, net 4,122                         (4,122 )        
Total Expenses $ 95,699     $ (37,777 )   $     $ (798 )   $     $ (376 )   $ (4,122 )   $ (691 )   $ 51,935  
                                   
Income before income taxes $ 27,789     $ (15,388 )   $ 5,001     $ 798     $     $ 376     $     $ (1,401 )   $ 17,175  
Provision for income taxes 6,081                 (6,081 )                
Net Income $ 21,708     $ (15,388 )   $ 5,001     $ 798     $ 6,081     $ 376     $     $ (1,401 )   $ 17,175  

Schedule F

The J.G. Wentworth Company
Reconciliation of Net Income to Adjusted Net Income – Unaudited
(In thousands)

  YTD 2015

GAAP

Results

  Adjustments

to reflect

deconsolidation

of securitizations

  Impact of Prefundings on Unsecuritized Finance receivables   Interest

Income on

Retained

Interests

  Share

Based

Compensation

  Income

Tax

  Severance and

M&A

Expenses

  Reclassification
Associated with
Installment
Obligation Payable
  YTD 2015

Adjusted

Results

                                   
REVENUES                                  
Interest income $ 89,960     $ (81,236 )   $     $ 10,433     $     $     $     $ (1,157 )   $ 18,000  
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 55,002     32,191     1,618                         88,811  
Loss on swap terminations, net (275 )                               (275 )
Servicing, broker, and other 1,999     2,631                             4,630  
Realized and unrealized gains on marketable securities, net 914                             (914 )    
Gain on debt extinguishment 593                                 593  
Total Revenues $ 148,193     $ (46,414 )   $ 1,618     $ 10,433     $     $     $     $ (2,071 )   $ 111,759  
                                   
EXPENSES                                  
Advertising $ 32,782     $     $     $     $     $     $     $     $ 32,782  
Interest expense 98,903     (69,887 )                           29,016  
Compensation and benefits 22,216                 (1,116 )       (2,272 )       18,828  
General and administrative 9,372                         (13 )       9,359  
Professional and consulting 9,299                         (1,279 )       8,020  
Debt issuance 2,872                                 2,872  
Securitization debt maintenance 2,990     (2,990 )                            
Provision for losses on finance receivables 2,957                                 2,957  
Depreciation and amortization 1,995                                 1,995  
Installment obligations expense, net 2,071                             (2,071 )    
Total Expenses $ 185,457     $ (72,877 )   $     $     $ (1,116 )   $     $ (3,564 )   $ (2,071 )   $ 105,829  
                                   
(Loss) income before income taxes $ (37,264 )   $ 26,463     $ 1,618     $ 10,433     $ 1,116     $     $ 3,564     $     $ 5,930  
Benefit for income taxes (5,171 )                   5,171              
Net (Loss) Income $ (32,093 )   $ 26,463     $ 1,618     $ 10,433     $ 1,116     $ (5,171 )   $ 3,564     $     $ 5,930  

Schedule G

The J.G. Wentworth Company
Reconciliation of Net Income to Adjusted Net Income – Unaudited
(In thousands)

  YTD 2014

GAAP

Results

  Adjustments

to reflect

deconsolidation

of securitizations

  Interest

Income on

Retained

Interests

  Share

Based

Compensation

  Income

Tax

  Severance and

M&A

Expenses

  Reclassification
Associated with
Installment
Obligation Payable
  Other

Nonrecurring

Items

  YTD 2014

Adjusted

Results

                                   
REVENUES                                  
Interest income $ 94,460     $ (85,344 )   $ 9,970     $     $     $     $ (1,258 )   $ 6     $ 17,834  
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives 157,628     (47,257 )                           110,371  
Loss on swap terminations, net (574 )                               (574 )
Servicing, broker, and other 2,110     2,500                             4,610  
Realized and unrealized gains on marketable securities, net 4,356                         (4,356 )        
Realized gain on notes receivable 2,098                             (2,098 )    
Total Revenues $ 260,078     $ (130,101 )   $ 9,970     $     $     $     $ (5,614 )   $ (2,092 )   $ 132,241  
                                   
EXPENSES                                  
Advertising $ 33,925     $     $     $     $     $     $     $     $ 33,925  
Interest expense 101,930     (73,498 )                           28,432  
Compensation and benefits 19,769             (1,300 )       (113 )           18,356  
General and administrative 9,083                     86             9,169  
Professional and consulting 8,962                     (648 )       (691 )   7,623  
Debt issuance 3,020                                 3,020  
Securitization debt maintenance 3,121     (3,121 )                            
Provision for losses on finance receivables 2,218                                 2,218  
Depreciation and amortization 2,202                                 2,202  
Installment obligations expense, net 5,614                         (5,614 )        
Total Expenses $ 189,844     $ (76,619 )   $     $ (1,300 )   $     $ (675 )   $ (5,614 )   $ (691 )   $ 104,945  
                                   
Income before income taxes $ 70,234     $ (53,482 )   $ 9,970     $ 1,300     $     $ 675     $     $ (1,401 )   $ 27,296  
Provision for income taxes 13,993                 (13,993 )                
Net Income $ 56,241     $ (53,482 )   $ 9,970     $ 1,300     $ 13,993     $ 675     $     $ (1,401 )   $ 27,296  

Schedule H

The J.G. Wentworth Company
Selected Quarterly Data – Unaudited
(In thousands, except share and per share data)

  Q4 2013   Q1 2014   Q2 2014   Q3 2014   Q4 2014   Q1 2015   Q2 2015
TRB:                          
Securitized Product Total Receivables Balance (TRB) Purchases (1) $ 214,437     $ 223,507     $ 252,544     $ 228,915     $ 234,084     $ 234,972     $ 231,654  
Life Contingent Purchases 39,054     29,827     28,185     28,471     25,107     19,499     26,807  
Presettlement Fundings 6,997     7,247     6,977     5,910     7,021     6,360     4,404  
Total TRB Purchases $ 260,488     $ 260,581     $ 287,706     $ 263,296     $ 266,212     $ 260,830     $ 262,865  
                           
ANI Basis:                          
Total Revenue $ 71,603     $ 63,131     $ 69,110     $ 62,982     $ 63,774     $ 62,423     $ 49,336  
Total Expenses $ 60,439     $ 53,010     $ 51,935     $ 55,766     $ 54,693     $ 54,177     $ 51,652  
ANI $ 11,164     $ 10,121     $ 17,175     $ 7,216     $ 9,081     $ 8,246     $ (2,316 )
ANI Margin (2) 15.6 %   16.0 %   24.9 %   11.5 %   14.2 %   13.2 %   (4.7 )%
ANI TRB Margin (3) 4.3 %   3.9 %   6.0 %   2.7 %   3.4 %   3.2 %   (0.9 )%
                           
Spread Revenue (4) $ 44,637     $ 51,846     $ 57,951     $ 51,285     $ 52,471     $ 50,547     $ 37,989  
TRB Spread Margin (5) 17.6 %   20.5 %   20.6 %   19.9 %   20.2 %   19.9 %   14.7 %
                           
GAAP Basis:                          
Revenue $ 106,556     $ 136,590     $ 123,488     $ 107,024     $ 127,274     $ 86,830     $ 61,363  
Expenses (6) $ 111,918     $ 102,057     $ 101,780     $ 94,335     $ 99,591     $ 92,290     $ 87,996  
Net (Loss) Income $ (5,362 )   $ 34,533     $ 21,708     $ 12,689     $ 27,683     $ (5,460 )   $ (26,633 )
Net (loss) income attributable to The J.G. Wentworth Company $ (5,577 )   $ 9,022     $ 6,268     $ 4,092     $ 11,829     $ (1,345 )   $ (12,296 )
                           
Weighted Average Diluted Shares 10,395,574     11,642,283     12,562,042     13,098,995     14,640,860     14,271,842     14,113,990  
All-in Shares (7) 17,476,995     29,555,639     29,510,029     29,335,338     29,019,913     28,597,051     28,033,035  
                           
Diluted EPS $ (0.54 )   $ 0.77     $ 0.50     $ 0.31     $ 0.81     $ (0.09 )   $ (0.87 )
ANI EPS (8) $ 0.64     $ 0.34     $ 0.58     $ 0.25     $ 0.31     $ 0.29     $ (0.08 )
                           
Residual Asset Balance $ 239,591     $ 280,208     $ 294,637     $ 304,022     $ 331,395     $ 318,493     $ 299,412  
Residual Loan Balance $ 68,785     $ 67,989     $ 107,540     $ 107,329     $ 107,043     $ 106,748     $ 106,465  
                           
10-Year Swap Rate 3.09 %   2.84 %   2.63 %   2.64 %   2.28 %   2.02 %   2.46 %
                           
Term Loan Interest Expense $ 13,457     $ 9,917     $ 10,020     $ 10,082     $ 10,182     $ 9,932     $ 10,019  
ANI Interest Expense $ 18,298     $ 13,945     $ 14,487     $ 14,651     $ 14,808     $ 14,627     $ 14,389  
  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