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    Walter Investment Management Corp. Announces Full Year and Fourth Quarter 2016 Highlights and Financial Results
    - Reported fourth quarter 2016 GAAP net loss of $22.2 million, or ($0.61) per share
    - Reported 2016 GAAP net loss of $529.2 million, or ($14.71) per share
    - New Chief Executive Officer adds leaders to bolster Servicing, Compliance and Human Resources areas
    - Multiple initiatives underway to address current performance, grow core businesses and eliminate non-strategic operations

    TAMPA, Fla., March 14, 2017 /PRNewswire/ -- Walter Investment Management Corp. (NYSE: WAC) today reported a GAAP net loss for the year ended December 31, 2016 of $529.2 million, or ($14.71) per share, as compared to a GAAP net loss of $263.2 million, or ($7.00) per share for the year ended December 31, 2015. The 2016 net loss includes goodwill and intangible assets impairment charges of $202.3 million after tax, or ($5.62) per share, and non-cash charges of $140.7 million after tax, or ($3.91) per share, resulting from fair value changes due to changes in valuation inputs and other assumptions. Adjusted EBITDA ("AEBITDA") for the year was $322.9 million and Adjusted Loss was $81.4 million after tax, or ($2.26) per share. The goodwill impairment charges incurred in the current year within the Servicing segment were driven by lower than expected operating results due to elevated expense levels in Servicing and lack of new business in ARM. The intangible assets impairment occurred in the Reverse Mortgage segment and was driven by the shift in strategic direction and reduced profitability expectations for the business.

    GAAP net loss for the quarter ended December 31, 2016 was $22.2 million, or ($0.61) per share, as compared to a GAAP net loss of $117.1 million, or ($3.16) per share for the quarter ended December 31, 2015. The 2016 net loss includes goodwill impairment charges of $8.2 million after tax, or ($0.22) per share, and non-cash benefit of $97.0 million after tax, or $2.67 per share, resulting primarily from fair value changes due to changes in valuation inputs and other assumptions. AEBITDA for the current quarter was $43.3 million and Adjusted Loss was $40.1 million after tax, or ($1.10) per share. Factors contributing to the fourth quarter adjusted loss and AEBITDA include a reduction in servicing revenue and higher G&A expenses offset by lower salaries and benefits costs.

    "The performance we saw during fourth quarter 2016 and full-year 2016, is not acceptable to myself, our leadership team, our associates and the Walter Board of Directors. Since joining Walter in September, my focus has been on putting together a plan to reduce our cost structure and improve efficiency, with a strong emphasis on performance management and controls. We also restructured our leadership team by adding key leaders to drive the way forward. I am excited to be a part of this organization and we are ready to face the challenges ahead, confident that the changes underway will put Walter in the best position to succeed but it will take time to implement and realize the benefits of these changes," concluded Mr. Renzi.

    Full Year and Fourth Quarter 2016 Financial and Operating Overview

    Total revenue for the year ended December 31, 2016 was $1.0 billion, a decrease of $278.5 million as compared to the year ended December 31, 2015, primarily due to $153.3 million lower net servicing revenue and fees, $44.4 million lower net gains on sale of loans and $28.7 million in lower interest income on loans. The decrease in net servicing revenue resulted from $78.5 million higher fair value losses on mortgage servicing rights primarily due to changes in interest rates and forward projections of the interest rate curve during the first half of 2016, $47.4 million lower incentive and performance fees driven by lower real estate management fees and lower HAMP fees and $28.5 million lower servicing fees primarily due to a combination of runoff of our third-party servicing portfolio, a shift in the portfolio from servicing to subservicing resulting from the sale of servicing rights to NRM, and an overall increase in delinquencies. Total expenses for the year ended December 31, 2016 were $1.8 billion, an increase of $80.4 million as compared to the year ended December 31, 2015, reflecting $118.7 million of higher goodwill and intangible assets impairment charges in the Servicing and Reverse Mortgage segments and $45.7 million in higher general and administrative expenses due in part to additional costs to support efficiency and technology-related initiatives, higher severance and consulting costs associated with process improvement initiatives, and elevated advance provisions and other costs resulting from operational challenges within default servicing, partially offset by savings from cost reduction efforts. These higher expenses were also offset in part by $56.5 million in lower salaries and benefits primarily due to a decrease in compensation, benefits, commissions and incentives resulting from a lower average headcount driven by site closures and reorganization and lower originations volume, and $17.8 million in lower interest expense. Cash and cash equivalents for the year ended December 31, 2016 was $224.6 million, an increase of $21.8 million as compared to the prior year. This increase was primarily driven by the proceeds from the sale of servicing rights, partially offset by lower warehouse borrowing and increased payments for HMBS related obligations.

    Total revenue for the fourth quarter of 2016 was $444.1 million, an increase of $112.6 million as compared to the prior year quarter, primarily due to $122.0 million higher net servicing revenue and fees partially offset by $10.5 million lower fair value gains on reverse loans and related HMBS obligations. The increase in net servicing revenue resulted from $168.6 million higher fair value gains on mortgage servicing rights primarily due to an increase in interest rates and forward projections of the interest rate curve. Offsetting this increase was $28.1 million of lower servicing fees primarily due to a combination of runoff of our third-party servicing portfolio, a shift in the portfolio from servicing to subservicing resulting from the sale of servicing rights to NRM, and an overall increase in delinquencies, and $11.8 million lower incentive and performance fees driven by a change in incentive programs that resulted in a one-time incentive payment in the fourth quarter of 2015. Total expenses for the fourth quarter of 2016 were $417.2 million, a decrease of $131.0 million as compared to the prior year quarter, primarily resulting from a $137.9 million decrease in goodwill impairment charges.

    Fourth Quarter 2016 Segment Results

    Results for the Company's segments are presented below.

    Servicing

    Our subsidiary, Ditech, serviced 1.9 million accounts, with a UPB of $225.8 billion as of December 31, 2016. During the three months ended December 31, 2016, the Company experienced a net disappearance rate of 16.8%, an increase of 3.5% as compared to the prior year quarter.

    The Servicing segment reported $83.5 million of pre-tax income for the fourth quarter of 2016 as compared to a pre-tax loss of $148.6 million in the prior year quarter. During the fourth quarter of 2016, the segment generated revenue of $338.5 million, a $118.2 million increase as compared to the fourth quarter of 2015. This increase was primarily the result of $168.6 million higher fair value gains on our mortgage servicing rights, partially offset by $28.4 million lower servicing fees primarily due to a combination of runoff of our third-party servicing portfolio, a shift in the portfolio from servicing to subservicing resulting from the sale of servicing rights to NRM, and an overall increase in delinquencies, and $11.0 million lower incentive and performance fees.

    Total expenses for the Servicing segment were $254.0 million, a decrease of $115.6 million as compared to the prior year quarter, reflecting a $137.9 million decline in goodwill impairment charges and a decrease in salaries and benefits of $11.6 million resulting primarily from lower average headcount driven by site closures and reorganization. This was partially offset by $27.4 million higher G&A expenses driven by $22.1 million higher advance loss provision attributable to additional reserves established on contested foreclosure, collectability of certain non-assessed items and additional reserves on rejected and aged items, and $9.5 million in costs related to NRM transactions. In addition, there was $17.6 million in higher severance and consulting costs associated with process improvement initiatives. Current quarter expenses also included $15.0 million of interest expense and $10.6 million of depreciation and amortization.

    The segment reported Adjusted Loss of $47.3 million and AEBITDA of $23.1 million and a decline of $54.8 million and $67.3 million respectively, as compared to the prior year quarter. These declines were primarily due to lower servicing fees and incentive and performance fees coupled with higher G&A expenses.

    Originations

    Ditech generated total pull-through adjusted locked volume for the fourth quarter of $4.9 billion. Total pull-through adjusted locked volumes declined $0.6 billion as compared to the prior year quarter, primarily due to a decline in the correspondent lending channel. Funded loans in the current quarter totaled $5.3 billion, a decrease of $0.3 billion from the prior year quarter, driven by declines in the correspondent lending channel. The combined direct margin for the current quarter was 99 bps, consisting of a weighted average of 171 bps direct margin in the consumer lending channel and 42 bps direct margin in the correspondent channel. The increase in combined direct margin of 36 bps from the prior year quarter resulted primarily from a slight shift in mix from lower margin correspondent channel to higher margin consumer channel. The Originations business delivered a recapture rate of 19% for the current quarter.

    The Originations segment reported $21.4 million of pre-tax income for the three months ended December 31, 2016, an increase of $9.2 million over the prior year quarter. The segment generated revenue of $105.5 million in the fourth quarter of 2016, an increase of $2.7 million over the prior year quarter. Net gains on sales of loans improved $9.0 million as compared to the prior year quarter, primarily due to strong margins driven by a channel mix shift to the higher margin consumer channel, partially offset by $5.5 million lower originations fee income resulted from there having been no closing cost incentives offered in the consumer lending channel in the fourth quarter of 2016.

    Expenses for the Originations segment of $84.1 million declined $6.5 million compared to the prior year quarter, driven by an $8.0 million decrease in salaries and benefits resulting from lower average headcount and a $3.5 million decrease in advertising expense. Expenses for the quarter also included $9.3 million of interest expense and $2.0 million of depreciation and amortization.

    The segment generated Adjusted Earnings of $32.4 million and AEBITDA of $35.5 million for the fourth quarter of 2016, an increase of $16.0 million and $15.1 million, respectively, as compared to the prior year quarter, driven by lower G&A and salaries and benefits expenses.

    Reverse Mortgage

    The Reverse Mortgage business grew its servicing portfolio by 3% since December 31, 2015 to $20.7 billion of UPB at December 31, 2016. During the year, the business securitized $868.0 million of HECM loans.

    The Reverse Mortgage segment reported $39.6 million of pre-tax loss in the current quarter, as compared to $30.5 million of pre-tax loss in the prior year quarter. The segment generated revenue of $8.5 million for the quarter, a decline of $9.6 million as compared to the prior year quarter primarily due to $10.5 million of lower net fair value gains on reverse loans and related HMBS obligations largely resulting from higher interest rates in 2016 as compared to 2015. Current quarter revenues included $10.0 million in net servicing revenue and fees, $2.5 million in net fair value losses on reverse loans and related HMBS obligations and $1.0 million of other revenues. Total expenses for the fourth quarter of $47.5 million were consistent with the prior year quarter.

    The segment reported an Adjusted Loss of $15.2 million and AEBITDA of ($13.4) million for the fourth quarter of 2016, a decline of $3.9 million and $4.4 million, respectively, as compared to the prior year period, related to increases in the curtailment liability primarily due to revisions to assumptions for this estimate.

    Other Non-Reportable Segment

    The Other Non-Reportable segment reported $38.5 million of pre-tax loss for the fourth quarter of 2016, an improvement of $2.9 million as compared to the prior year quarter, primarily due to a decline in expenses offset by lower gains in the current quarter. The segment reported nominal revenue in both the current and prior year quarters. Total expenses of $40.5 million in the current quarter decreased $9.2 million as compared to the prior year quarter, driven by non-recurring costs incurred during 2015 related to the Investment Management business and a lower provision for advances related to the Non-Residual Trusts during 2016.

    The Other non-reportable segment had an Adjusted Loss of $34.7 million and AEBITDA of ($1.9) million for the fourth quarter of 2016 as compared to an Adjusted Loss of $33.6 million and AEBITDA of ($0.7) million in the fourth quarter of 2015.

    Debt Restructuring Initiative

    We are a highly leveraged company, in relation to our ability to service our debt and on a relative basis in comparison to our peers. We depend upon ongoing access to the loan markets and the capital markets on commercially satisfactory terms to finance our business on a daily basis, and we would also need access to those markets to refinance our corporate debt. We have engaged Weil, Gotshal & Manges LLP and Houlihan Lokey to assist us in reviewing a number of potential actions we may take to reduce our leverage.

    About Walter Investment Management Corp.

    Walter Investment Management Corp. is a leading independent servicer and originator of mortgage loans and servicer of reverse mortgage loans. Based in Tampa, FL, the Company has approximately 4,900 employees and services a diverse loan portfolio. For more information about Walter Investment Management Corp., please visit the Company's website at www.walterinvestment.com. The information on our website is not a part of this release.

    This press release and the accompanying reconciliations include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the reconciliations as well as "Non-GAAP Financial Measures" at the end of this press release.

    Disclaimer and Cautionary Note Regarding Forward-Looking Statements

    Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "projects," "estimates," "assumes," "may," "should," "will," "seeks," "targets," or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, and our actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance, nor should any conclusions be drawn or assumptions be made as to any potential outcome of any strategic review we conduct. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described below and in more detail in Item 1A. Risk Factors in our annual and quarterly reports filed with the SEC.

    In particular (but not by way of limitation), the following important factors, risks and uncertainties could affect our future results, performance and achievements and could cause actual results, performance and achievements to differ materially from those expressed in the forward-looking statements:

    • our ability to operate our business in compliance with existing and future laws, rules, regulations and contractual commitments affecting our business, including those relating to the origination and servicing of residential loans, foreclosure practices, the management of third-party assets and the insurance industry (including lender-placed insurance), and changes to, and/or more stringent enforcement of, such laws, rules, regulations and contracts;
    • scrutiny of our industry by, and potential enforcement actions by, federal and state authorities;
    • the substantial resources (including senior management time and attention) we devote to, and the significant compliance costs we incur in connection with, regulatory compliance and regulatory examinations and inquiries, and any consumer redress, fines, penalties or similar payments we make in connection with resolving such matters;
    • uncertainties relating to interest curtailment obligations and any related financial and litigation exposure (including exposure relating to false claims);
    • potential costs and uncertainties, including the effect on future revenues, associated with and arising from litigation, regulatory investigations and other legal proceedings, and uncertainties relating to the reaction of our key counterparties to the announcement of any such matters;
    • our dependence on U.S. government-sponsored entities and agencies (especially Fannie Mae, Freddie Mac and Ginnie Mae) and their residential loan programs and our ability to maintain relationships with, and remain qualified to participate in programs sponsored by, such entities, our ability to satisfy various existing or future GSE, agency and other capital, net worth, liquidity and other financial requirements applicable to our business, and our ability to remain qualified as a GSE and agency approved seller, servicer or component servicer, including the ability to continue to comply with the GSEs' and agencies' respective residential loan selling and servicing guides;
    • uncertainties relating to the status and future role of GSEs and agencies, and the effects of any changes to the origination and/or servicing requirements of the GSEs, agencies or various regulatory authorities or the servicing compensation structure for mortgage servicers pursuant to programs of GSEs, agencies or various regulatory authorities;
    • our ability to maintain our loan servicing, loan origination or collection agency licenses, or any other licenses necessary to operate our businesses, or changes to, or our ability to comply with, our licensing requirements;
    • our ability to comply with the terms of the stipulated order resolving allegations arising from an FTC and CFPB investigation of Ditech Financial and a CFPB investigation of RMS;
    • operational risks inherent in the mortgage servicing and mortgage originations businesses, including our ability to comply with the various contracts to which we are a party, and reputational risks;
    • risks related to the significant amount of senior management turnover and employee reductions recently experienced by the Company;
    • risks related to our substantial levels of indebtedness, including our ability to comply with covenants contained in our debt agreements or obtain any necessary waivers or amendments, generate sufficient cash to service such indebtedness and refinance such indebtedness on favorable terms, or at all, as well as our ability to incur substantially more debt;
    • our ability to renew advance financing facilities or warehouse facilities and maintain adequate borrowing capacity under such facilities;
    • our ability to maintain or grow our residential loan servicing business and our mortgage loan originations business;
    • our ability to achieve our strategic initiatives, particularly our ability to: increase the mix of our fee-for-service business, including by entering into new subservicing arrangements; improve servicing performance; successfully develop our originations capabilities in the consumer and wholesale lending channels; reduce our debt; and execute and realize planned operational improvements and efficiencies, including those relating to our non-core assets;
    • the success of our business strategy in returning us to profitability;
    • changes in prepayment rates and delinquency rates on the loans we service or subservice;
    • the ability of Fannie Mae, Freddie Mac and Ginnie Mae, as well as our other clients and credit owners, to transfer or otherwise terminate our servicing or subservicing rights, with or without cause;
    • a downgrade of, or other adverse change relating to, our servicer ratings or credit ratings;
    • our ability to collect reimbursements for servicing advances and earn and timely receive incentive payments and ancillary fees on our servicing portfolio;
    • our ability to collect indemnification payments and enforce repurchase obligations relating to mortgage loans we purchase from our correspondent clients and our ability to collect in a timely manner indemnification payments relating to servicing rights we purchase from prior servicers;
    • local, regional, national and global economic trends and developments in general, and local, regional and national real estate and residential mortgage market trends in particular, including the volume and pricing of home sales and uncertainty regarding the levels of mortgage originations and prepayments;
    • uncertainty as to the volume of originations activity we will benefit from prior to, and following, the expiration of HARP, which is scheduled to occur on September 30, 2017, including uncertainty as to the number of "in-the-money" accounts we may be able to refinance and uncertainty as to what type of product or government program will be introduced, if any, to replace HARP;
    • risks associated with the reverse mortgage business, including changes to reverse mortgage programs operated by FHA, HUD or Ginnie Mae, our ability to accurately estimate interest curtailment liabilities, our ability to fund HECM repurchase obligations, our ability to fund principal additions on our HECM loans, and our ability to securitize our HECM loans and tails;
    • our ability to realize all anticipated benefits of past, pending or potential future acquisitions or joint venture investments;
    • the effects of competition on our existing and potential future business, including the impact of competitors with greater financial resources and broader scopes of operation;
    • changes in interest rates and the effectiveness of any hedge we may employ against such changes;
    • risks and potential costs associated with technology and cybersecurity, including: the risks of technology failures and of cyber-attacks against us or our vendors; our ability to adequately respond to actual or alleged cyber-attacks; and our ability to implement adequate internal security measures and protect confidential borrower information;
    • risks and potential costs associated with the implementation of new or more current technology, such as MSP, the use of vendors (including offshore vendors) or the transfer of our servers or other infrastructure to new data center facilities;
    • our ability to comply with evolving and complex accounting rules, many of which involve significant judgment and assumptions;
    • risks related to our deferred tax asset, including the risk of an "ownership change" under Section 382 of the Code, changes to existing tax rates or any additional valuation allowance;
    • uncertainties regarding impairment charges relating to our goodwill or other intangible assets;
    • risks associated with a material weakness in our internal controls over financial reporting, including the timing and effectiveness of our remediation plan;
    • our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures;
    • our ability to manage potential conflicts of interest relating to our relationship with WCO; and
    • risks related to our relationship with Walter Energy and uncertainties arising from or relating to its bankruptcy filings and liquidation proceedings, including potential liability for any taxes, interest and/or penalties owed by the Walter Energy consolidated group for the full or partial tax years during which certain of the Company's former subsidiaries were a part of such consolidated group and certain other tax risks allocated to us in connection with our spin-off from Walter Energy.

    All of the above factors, risks and uncertainties are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors, risks and uncertainties emerge from time to time, and it is not possible for our management to predict all such factors, risks and uncertainties.

    Although we believe that the assumptions underlying the forward-looking statements (including those relating to our outlook) contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under the federal securities laws. If we were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that we would make additional updates or corrections thereafter except as otherwise required under the federal securities laws.

    In addition, this press release may contain statements of opinion or belief concerning market conditions and similar matters. In certain instances, those opinions and beliefs could be based upon general observations by members of our management, anecdotal evidence and/or our experience in the conduct of our business, without specific investigation or statistical analyses. Therefore, while such statements reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views and such views may not be shared by all who are involved in those industries or markets.

     

    Walter Investment Management Corp. and Subsidiaries

    Consolidated Statements of Comprehensive Loss

    (in thousands, except per share data)




    For the Years Ended December 31,



    2016


    2015


    2014

    REVENUES







    Net servicing revenue and fees


    $

    340,991



    $

    494,267



    $

    601,510


    Net gains on sales of loans


    409,448



    453,840



    462,172


    Net fair value gains on reverse loans and related HMBS obligations


    59,022



    98,265



    109,972


    Interest income on loans


    45,700



    74,365



    134,555


    Insurance revenue


    41,968



    47,201



    71,010


    Other revenues


    98,588



    106,321



    107,934


    Total revenues


    995,717



    1,274,259



    1,487,153









    EXPENSES







    General and administrative


    619,772



    574,091



    577,506


    Salaries and benefits


    520,357



    576,817



    578,627


    Goodwill and intangible assets impairment


    326,286



    207,557



    82,269


    Interest expense


    255,781



    273,606



    303,103


    Depreciation and amortization


    59,426



    69,128



    72,721


    Other expenses, net


    10,530



    10,557



    10,803


    Total expenses


    1,792,152



    1,711,756



    1,625,029









    OTHER GAINS (LOSSES)







    Net gains on extinguishment


    14,662



    4,660




    Other net fair value gains (losses)


    (4,234)



    7,398



    19,280


    Other


    (3,811)



    21,013



    (744)


    Total other gains


    6,617



    33,071



    18,536









    Loss before income taxes


    (789,818)



    (404,426)



    (119,340)


    Income tax benefit


    (260,660)



    (141,236)



    (9,012)


    Net loss


    $

    (529,158)



    $

    (263,190)



    $

    (110,328)









    OTHER COMPREHENSIVE INCOME (LOSS) BEFORE TAXES







    Change in postretirement benefits liability


    $

    100



    $

    193



    $

    138


    Amortization of realized losses on closed hedges






    (145)


    Unrealized gain on available-for-sale security in other assets


    75



    503



    77


    Other comprehensive income before taxes


    175



    696



    70


    Income tax expense for other comprehensive income items


    55



    278



    173


    Other comprehensive income (loss)


    120



    418



    (103)


    Total comprehensive loss


    $

    (529,038)



    $

    (262,772)



    $

    (110,431)









    Net loss


    $

    (529,158)



    $

    (263,190)



    $

    (110,328)


    Basic and diluted loss per common and common equivalent share


    $

    (14.71)



    $

    (7.00)



    $

    (2.93)


    Weighted-average common and common equivalent shares outstanding — 
         basic and diluted


    35,973



    37,578



    37,631


     

     

    Walter Investment Management Corp. and Subsidiaries

    Consolidated Balance Sheets

    (in thousands, except share and per share data)




    December 31,



    2016


    2015

    ASSETS





    Cash and cash equivalents


    $

    224,598



    $

    202,828


    Restricted cash and cash equivalents


    204,463



    708,099


    Residential loans at amortized cost, net (includes $5,167 and $4,457 in allowance for loan 
         losses at December 31, 2016 and 2015, respectively)


    665,209



    541,406


    Residential loans at fair value


    12,416,542



    12,673,439


    Receivables, net (includes $15,033 and $16,542 at fair value at December 31, 2016 and 
         2015, respectively)


    267,962



    137,190


    Servicer and protective advances, net (includes $146,781 and $120,338 in allowance for 
         uncollectible advances at December 31, 2016 and 2015, respectively)


    1,195,380



    1,631,065


    Servicing rights, net (includes $949,593 and $1,682,016 at fair value at December 31, 2016 
         and 2015, respectively)


    1,029,719



    1,788,576


    Goodwill


    47,747



    367,911


    Intangible assets, net


    11,347



    84,038


    Premises and equipment, net


    82,628



    106,481


    Deferred tax assets, net


    299,926



    108,050


    Assets held for sale


    71,085




    Other assets (includes $87,937 and $58,512 at fair value at December 31, 2016 and 2015, 
         respectively)


    242,290



    200,364


    Total assets


    $

    16,758,896



    $

    18,549,447







    LIABILITIES AND STOCKHOLDERS' EQUITY





    Payables and accrued liabilities (includes $11,804 and $6,475 at fair value at December 31, 
         2016 and 2015, respectively)


    $

    759,011



    $

    597,926


    Servicer payables


    146,332



    603,692


    Servicing advance liabilities


    783,229



    1,229,280


    Warehouse borrowings


    1,203,355



    1,340,388


    Servicing rights related liabilities at fair value


    1,902



    117,000


    Corporate debt


    2,129,000



    2,157,424


    Mortgage-backed debt (includes $514,025 and $582,340 at fair value at December 31, 
         2016 and 2015, respectively)


    943,956



    1,051,679


    HMBS related obligations at fair value


    10,509,449



    10,647,382


    Liabilities held for sale


    2,402




    Total liabilities


    16,478,636



    17,744,771







    Commitments and contingencies










    Stockholders' equity:





    Preferred stock, $0.01 par value per share:





    Authorized - 10,000,000 shares





    Issued and outstanding - 0 shares at December 31, 2016 and 2015





    Common stock, $0.01 par value per share:





    Authorized - 90,000,000 shares





    Issued and outstanding - 36,391,129 and 35,573,405 shares at December 31, 2016 
         and 2015, respectively


    364



    355


    Additional paid-in capital


    596,067



    591,454


    Retained earnings (accumulated deficit)


    (317,104)



    212,054


    Accumulated other comprehensive income


    933



    813


    Total stockholders' equity


    280,260



    804,676


    Total liabilities and stockholders' equity


    $

    16,758,896



    $

    18,549,447


     

    Non-GAAP Financial Measures

    We manage our Company in three reportable segments: Servicing, Originations and Reverse Mortgage. We evaluate the performance of our business segments through the following measures: income (loss) before income taxes, Adjusted Earnings (Loss), and Adjusted EBITDA. Management considers Adjusted Earnings (Loss) and Adjusted EBITDA, both non-GAAP financial measures, to be important in the evaluation of our business segments and of the Company as a whole, as well as for allocating capital resources to our segments. Adjusted Earnings (Loss) and Adjusted EBITDA are supplemental metrics utilized by management to assess the underlying key drivers and operational performance of the continuing operations of the business. In addition, analysts, investors, and creditors may use these measures when analyzing our operating performance. Adjusted Earnings (Loss) and Adjusted EBITDA are not presentations made in accordance with GAAP and our use of these measures and terms may vary from other companies in our industry.

    Adjusted Earnings (Loss) is defined as income (loss) before income taxes, plus changes in fair value due to changes in valuation inputs and other assumptions; goodwill and intangible assets impairment, if any; a portion of the provision for curtailment expense, net of expected third-party recoveries, if applicable; share-based compensation expense; non-cash interest expense; exit costs; estimated settlements and costs for certain legal and regulatory matters; fair value to cash adjustments for reverse loans; and select other cash and non-cash adjustments primarily including severance; gain or loss on extinguishment of debt; the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs. Adjusted Earnings (Loss) excludes unrealized changes in fair value of MSR that are based on projections of expected future cash flows and prepayments. Adjusted Earnings (Loss) includes both cash and non-cash gains from mortgage loan origination activities. Non-cash gains are net of non-cash charges or reserves provided. Adjusted Earnings (Loss) includes cash generated from reverse mortgage origination activities. Adjusted Earnings (Loss) may from time to time also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors with a supplemental means of evaluating our operating performance.

    The Company revised its method of calculating Adjusted Earnings (Loss) beginning with the Form 10-K for the fiscal year ended December 31, 2016 to eliminate adjustments for the step-up depreciation and amortization adjustment, which represents depreciation and amortization costs related to the increased basis in assets (including servicing rights and subservicing contracts) acquired within business combination transactions.

    Adjusted EBITDA eliminates the effects of financing, income taxes and depreciation and amortization. Adjusted EBITDA is defined as income (loss) before income taxes plus: amortization of servicing rights and other fair value adjustments; interest expense on corporate debt; depreciation and amortization; goodwill and intangible assets impairment, if any; a portion of the provision for curtailment expense, net of expected third-party recoveries, if applicable; share-based compensation expense; exit costs; estimated settlements and costs for certain legal and regulatory matters; fair value to cash adjustments for reverse loans; and select other cash and non-cash adjustments primarily the net provision for the repurchase of loans sold; non-cash interest income; severance; gain or loss on extinguishment of debt; interest income on unrestricted cash and cash equivalents; the net impact of the Non-Residual Trusts; the provision for loan losses; Residual Trust cash flows; transaction and integration costs; servicing fee economics; and certain non-recurring costs. Adjusted EBITDA includes both cash and non-cash gains from mortgage loan origination activities. Adjusted EBITDA excludes the impact of fair value option accounting on certain assets and liabilities and includes cash generated from reverse mortgage origination activities. Adjusted EBITDA may also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors a supplemental means of evaluating our operating performance.

    Adjusted Earnings (Loss) and Adjusted EBITDA should not be considered as alternatives to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determined in accordance with GAAP. Adjusted Earnings (Loss) and Adjusted EBITDA have important limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Some of the limitations of these metrics are:

    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect cash expenditures for long-term assets and other items that have been and will be incurred, future requirements for capital expenditures or contractual commitments;
    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect certain tax payments that represent reductions in cash available to us;
    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future;
    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect non-cash compensation that is and will remain a key element of our overall long-term incentive compensation package;
    • Adjusted Earnings (Loss) and Adjusted EBITDA do not reflect the change in fair value due to changes in valuation inputs and other assumptions;
    • Adjusted EBITDA does not reflect the change in fair value resulting from the realization of expected cash flows; and
    • Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our servicing rights related liabilities and corporate debt, although it does reflect interest expense associated with our servicing advance liabilities, master repurchase agreements, mortgage-backed debt, and HMBS related obligations.

    Because of these limitations, Adjusted Earnings (Loss) and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted Earnings (Loss) and Adjusted EBITDA only as supplements. Users of our financial statements are cautioned not to place undue reliance on Adjusted Earnings (Loss) and Adjusted EBITDA.

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended December 31, 2016

    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES








    Net servicing revenue and fees


    $

    295,958


    $


    $

    9,966


    $


    $

    (2,736)


    $

    303,188


    Net gains on sales of loans


    3,067


    98,919




    795


    102,781


    Net fair value losses on reverse loans and related 
         HMBS obligations




    (2,463)




    (2,463)


    Interest income on loans


    10,336


    12





    10,348


    Insurance revenue


    10,324






    10,324


    Other revenues


    18,835


    6,573


    1,037


    415


    (6,895)


    19,965


    Total revenues


    338,520


    105,504


    8,540


    415


    (8,836)


    444,143


    EXPENSES








    Interest expense


    14,980


    9,283


    2,200


    35,368



    61,831


    Depreciation and amortization


    10,632


    1,954


    1,296


    1



    13,883


    Goodwill impairment


    13,158






    13,158


    Other expenses, net


    215,211


    72,838


    44,009


    5,135


    (8,836)


    328,357


    Total expenses


    253,981


    84,075


    47,505


    40,504


    (8,836)


    417,229


    OTHER GAINS (LOSSES)








    Other net fair value gains (losses)


    (527)




    2,558



    2,031


    Other


    (486)



    (640)


    (979)



    (2,105)


    Total other gains (losses)


    (1,013)



    (640)


    1,579



    (74)


    Income (loss) before income taxes


    83,526


    21,429


    (39,605)


    (38,510)



    26,840


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment


    13,158






    13,158


    Changes in fair value due to changes in valuation 
         inputs and other assumptions


    (176,414)






    (176,414)


    Exit costs


    4,218


    1,035


    4,870


    4,253



    14,376


    Fair value to cash adjustment for reverse loans




    20,008




    20,008


    Non-cash interest expense


    700




    2,603



    3,303


    Legal and regulatory matters


    5,000






    5,000


    Share-based compensation expense (benefit)


    (112)


    429


    (48)


    (1,357)



    (1,088)


    Other


    22,639


    9,528


    (436)


    (1,669)



    30,062


    Total adjustments


    (130,811)


    10,992


    24,394


    3,830



    (91,595)


    Adjusted Earnings (Loss) (1)


    (47,285)


    32,421


    (15,211)


    (34,680)



    (64,755)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value 
         adjustments


    57,146



    415




    57,561


    Interest expense on debt


    965




    32,764



    33,729


    Depreciation and amortization


    10,632


    1,954


    1,296


    1



    13,883


    Other


    1,683


    1,169


    65


    (5)



    2,912


    Total adjustments


    70,426


    3,123


    1,776


    32,760



    108,085


    Adjusted EBITDA


    $

    23,141


    $

    35,544


    $

    (13,435)


    $

    (1,920)


    $


    $

    43,330




    (1)

    We revised our method of calculating Adjusted Earnings (Loss) beginning with the Form 10-K for the fiscal year ended December 31, 2016
    to eliminate adjustments for the step-up depreciation and amortization adjustment, which represents depreciation and amortization costs
    related to the increased basis in assets (including servicing rights and subservicing contracts) acquired within business combination transactions.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended December 31, 2015

    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES








    Net servicing revenue and fees


    $

    176,139


    $


    $

    8,080


    $


    $

    (2,983)


    $

    181,236


    Net gains on sales of loans


    2,281


    89,933




    782


    92,996


    Net fair value gains on reverse loans and related 
         HMBS obligations




    8,032




    8,032


    Interest income on loans


    11,816


    12





    11,828


    Insurance revenue


    12,878






    12,878


    Other revenues


    17,244


    12,872


    2,003


    459


    (7,972)


    24,606


    Total revenues


    220,358


    102,817


    18,115


    459


    (10,173)


    331,576


    EXPENSES








    Interest expense


    18,420


    8,512


    828


    35,582



    63,342


    Depreciation and amortization


    11,115


    2,728


    1,910


    4



    15,757


    Goodwill impairment


    151,018






    151,018


    Other expenses, net


    188,997


    79,322


    45,840


    14,149


    (10,173)


    318,135


    Total expenses


    369,550


    90,562


    48,578


    49,735


    (10,173)


    548,252


    OTHER GAINS








    Net gains on extinguishment





    4,660



    4,660


    Other net fair value gains


    620




    3,205



    3,825


    Total other gains


    620




    7,865



    8,485


    Income (loss) before income taxes


    (148,572)


    12,255


    (30,463)


    (41,411)



    (208,191)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment


    151,018






    151,018


    Changes in fair value due to changes in valuation 
         inputs and other assumptions


    (20,114)






    (20,114)


    Exit costs


    723


    1,623


    667




    3,013


    Fair value to cash adjustment for reverse loans




    9,938




    9,938


    Non-cash interest expense


    (210)




    2,832



    2,622


    Legal and regulatory matters


    18,227



    555




    18,782


    Share-based compensation expense (benefit)


    4,226


    1,820


    646


    (100)



    6,592


    Curtailment expense




    7,407




    7,407


    Other


    2,193


    713


    (107)


    5,077



    7,876


    Total adjustments


    156,063


    4,156


    19,106


    7,809



    187,134


    Adjusted Earnings (Loss) (1)


    7,491


    16,411


    (11,357)


    (33,602)



    (21,057)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value 
         adjustments


    70,921



    477




    71,398


    Interest expense on debt


    1,792




    32,751



    34,543


    Depreciation and amortization


    11,115


    2,728


    1,910


    4



    15,757


    Other


    (916)


    1,334


    (36)


    197



    579


    Total adjustments


    82,912


    4,062


    2,351


    32,952



    122,277


    Adjusted EBITDA


    $

    90,403


    $

    20,473


    $

    (9,006)


    $

    (650)


    $


    $

    101,220




    (1)

    Consistent with the change in 2016, we revised our method of calculating Adjusted Earnings (Loss) which is reflected in the table above.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Year Ended December 31, 2016

    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES








    Net servicing revenue and fees


    $

    321,912


    $


    $

    31,031


    $


    $

    (11,952)


    $

    340,991


    Net gains (losses) on sales of loans


    (4,931)


    410,544




    3,835


    409,448


    Net fair value gains on reverse loans and related 
         HMBS obligations




    59,022




    59,022


    Interest income on loans


    45,651


    49





    45,700


    Insurance revenue


    41,968






    41,968


    Other revenues


    92,351


    38,837


    5,742


    296


    (38,638)


    98,588


    Total revenues


    496,951


    449,430


    95,795


    296


    (46,755)


    995,717


    EXPENSES








    Interest expense


    68,529


    34,012


    9,070


    144,170



    255,781


    Depreciation and amortization


    44,439


    8,888


    6,088


    11



    59,426


    Goodwill and intangible assets impairment


    319,551



    6,735




    326,286


    Other expenses, net


    752,721


    271,413


    156,783


    16,497


    (46,755)


    1,150,659


    Total expenses


    1,185,240


    314,313


    178,676


    160,678


    (46,755)


    1,792,152


    OTHER GAINS (LOSSES)








    Net gains on extinguishment





    14,662



    14,662


    Other net fair value losses


    (945)




    (3,289)



    (4,234)


    Other


    (1,168)



    (1,664)


    (979)



    (3,811)


    Total other gains (losses)


    (2,113)



    (1,664)


    10,394



    6,617


    Income (loss) before income taxes


    (690,402)


    135,117


    (84,545)


    (149,988)



    (789,818)


    ADJUSTED EARNINGS (LOSS)








    Goodwill and intangible assets impairment


    319,551



    6,735




    326,286


    Changes in fair value due to changes in valuation 
         inputs and other assumptions


    209,412






    209,412


    Exit costs


    11,621


    3,118


    5,437


    5,582



    25,758


    Fair value to cash adjustment for reverse loans




    17,501




    17,501


    Non-cash interest expense


    1,518




    11,245



    12,763


    Legal and regulatory matters


    7,196






    7,196


    Share-based compensation expense (benefit)


    5,007


    1,019


    1,032


    (490)



    6,568


    Other


    40,854


    14,531


    3,971


    (6,339)



    53,017


    Total adjustments


    595,159


    18,668


    34,676


    9,998



    658,501


    Adjusted Earnings (Loss) (1)


    (95,243)


    153,785


    (49,869)


    (139,990)



    (131,317)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value 
         adjustments


    256,880



    1,753




    258,633


    Interest expense on debt


    6,469




    132,925



    139,394


    Depreciation and amortization


    44,439


    8,888


    6,088


    11



    59,426


    Other


    (1,634)


    (1,924)


    151


    196



    (3,211)


    Total adjustments


    306,154


    6,964


    7,992


    133,132



    454,242


    Adjusted EBITDA


    $

    210,911


    $

    160,749


    $

    (41,877)


    $

    (6,858)


    $


    $

    322,925




    (1)

    We revised our method of calculating Adjusted Earnings (Loss) beginning with the Form 10-K for the fiscal year ended December 31, 2016 to eliminate
    adjustments for the step-up depreciation and amortization adjustment, which represents depreciation and amortization costs related to the increased
    basis in assets (including servicing rights and subservicing contracts) acquired within business combination transactions.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Year Ended December 31, 2015

    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES








    Net servicing revenue and fees


    $

    462,544


    $


    $

    42,648


    $


    $

    (10,925)


    $

    494,267


    Net gains (losses) on sales of loans


    3,699


    448,533


    (98)



    1,706


    453,840


    Net fair value gains on reverse loans and related 
         HMBS obligations




    98,265




    98,265


    Interest income on loans


    74,303


    62





    74,365


    Insurance revenue


    47,201






    47,201


    Other revenues


    81,756


    45,250


    6,794


    5,345


    (32,824)


    106,321


    Total revenues


    669,503


    493,845


    147,609


    5,345


    (42,043)


    1,274,259


    EXPENSES








    Interest expense


    85,482


    36,470


    3,902


    147,752



    273,606


    Depreciation and amortization


    45,437


    15,811


    7,865


    15



    69,128


    Goodwill impairment


    151,018



    56,539




    207,557


    Other expenses, net


    663,545


    318,028


    191,640


    30,295


    (42,043)


    1,161,465


    Total expenses


    945,482


    370,309


    259,946


    178,062


    (42,043)


    1,711,756


    OTHER GAINS (LOSSES)








    Net gains on extinguishment





    4,660



    4,660


    Other net fair value gains


    75




    7,323



    7,398


    Other


    6,134




    14,879



    21,013


    Total other gains


    6,209




    26,862



    33,071


    Income (loss) before income taxes


    (269,770)


    123,536


    (112,337)


    (145,855)



    (404,426)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment


    151,018



    56,539




    207,557


    Changes in fair value due to changes in valuation 
         inputs and other assumptions


    137,198






    137,198


    Exit costs


    6,462


    2,608


    1,640


    851



    11,561


    Fair value to cash adjustment for reverse loans




    2,291




    2,291


    Non-cash interest expense


    1,283




    10,815



    12,098


    Legal and regulatory matters


    20,445



    5,575




    26,020


    Share-based compensation expense


    12,700


    5,557


    2,395


    285



    20,937


    Curtailment expense




    30,419




    30,419


    Other


    3,776


    1,272


    349


    11,547



    16,944


    Total adjustments


    332,882


    9,437


    99,208


    23,498



    465,025


    Adjusted Earnings (Loss) (1)


    63,112


    132,973


    (13,129)


    (122,357)



    60,599


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value 
         adjustments


    269,504



    2,053




    271,557


    Interest expense on debt


    8,779



    2


    136,938



    145,719


    Depreciation and amortization


    45,437


    15,811


    7,865


    15



    69,128


    Other


    (6,556)


    8,827


    139


    306



    2,716


    Total adjustments


    317,164


    24,638


    10,059


    137,259



    489,120


    Adjusted EBITDA


    $

    380,276


    $

    157,611


    $

    (3,070)


    $

    14,902


    $


    $

    549,719




    (1)

    Consistent with the change in 2016, we revised our method of calculating Adjusted Earnings (Loss) which is reflected in the table above.

     

     

    Reconciliation of GAAP Net Loss to

    Non-GAAP AEBITDA

    (in millions)




    For the Three Months Ended


    For the Year Ended



    December 31,
    2016


    December 31,
    2015


    December 31,
    2016


    December 31,
    2015

    Net loss (1)


    $

    (22.2)



    $

    (117.1)



    $

    (529.2)



    $

    (263.2)


    Adjust for income tax expense (benefit)


    49.0



    (91.1)



    (260.7)



    (141.2)


    Income (loss) before income taxes


    26.8



    (208.2)



    (789.9)



    (404.4)


    Add/(Subtract):









    Amortization of servicing rights and other fair value 
         adjustments (2)


    (118.9)



    51.3



    468.0



    408.8


    Goodwill and intangible assets impairment


    13.2



    151.0



    326.3



    207.6


    Interest expense


    37.0



    37.2



    152.2



    157.8


    Depreciation and amortization


    13.9



    15.8



    59.4



    69.1


    Exit costs (3)


    14.4



    3.0



    25.8



    11.6


    Fair value to cash adjustment for reverse loans (4)


    20.0



    9.9



    17.5



    2.3


    Legal and regulatory matters


    5.0



    18.8



    7.2



    26.0


    Share-based compensation expense (benefit)


    (1.1)



    6.6



    6.6



    20.9


    Curtailment expense




    7.4





    30.4


    Other (5)


    33.0



    8.4



    49.8



    19.6


    Subtotal


    16.5



    309.4



    1,112.8



    954.1











    Adjusted EBITDA


    $

    43.3



    $

    101.2



    $

    322.9



    $

    549.7


    ____________

    (1)

    Included in net loss is $197.0 million of revenue from capitalized servicing rights for the year ended December 31, 2016.

    (2)

    Consists of the change in fair value due to changes in valuation inputs and other assumptions relating to servicing rights, servicing rights related liabilities and charged-off loans as well as the amortization of servicing rights and the realization of expected cash flows relating to servicing rights carried at fair value.

    (3)

    Exit costs include expenses related to the closing of offices and the termination and replacement of certain employees as well as other expenses to institute efficiencies. Exit costs incurred in the year ended December 31, 2016 include those relating to our exit from the consumer retail channel of the Originations segment, our exit from the reverse mortgage originations business, and actions initiated in 2015 and 2016 in connection with our continued efforts to enhance efficiencies and streamline processes of the organization.

    (4)

    Represents the non-cash fair value adjustment to arrive at cash generated from reverse mortgage origination activities.

    (5)

    Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, costs associated with transforming the business, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs, servicing fee economics, and certain non-recurring costs.

     

     

    Reconciliation of GAAP Net Loss to

    Non-GAAP Adjusted Earnings (Loss)
    (in millions, except per share amounts)




    For the Three Months Ended


    For the Year Ended



    December 31,
    2016


    December 31,
    2015


    December 31,
    2016


    December 31,
    2015

    Net loss (1)


    $

    (22.2)



    $

    (117.1)



    $

    (529.2)



    $

    (263.2)


    Adjust for income tax expense (benefit)


    49.0



    (91.1)



    (260.7)



    (141.2)


    Income (loss) before income taxes


    26.8



    (208.2)



    (789.9)



    (404.4)


    Add/(Subtract):









    Goodwill and intangible assets impairment


    13.2



    151.0



    326.3



    207.6


    Changes in fair value due to changes in valuation inputs
    and other assumptions (2)


    (176.4)



    (20.1)



    209.4



    137.2


    Exit costs (3)


    14.4



    3.0



    25.8



    11.6


    Fair value to cash adjustment for reverse loans (4)


    20.0



    9.9



    17.5



    2.3


    Non-cash interest expense


    3.3



    2.6



    12.8



    12.1


    Legal and regulatory matters


    5.0



    18.8



    7.2



    26.0


    Share-based compensation expense (benefit)


    (1.1)



    6.6



    6.6



    20.9


    Curtailment expense




    7.4





    30.4


    Other (5)


    30.1



    7.9



    53.0



    16.9


    Adjusted Earnings (Loss) (6)


    $

    (64.7)



    $

    (21.1)



    $

    (131.3)



    $

    60.6


    Tax expense (benefit) at estimated effective tax rate of 38%


    (24.6)



    (8.0)



    (49.9)



    23.0


    Adjusted Earnings (Loss) after tax


    $

    (40.1)



    $

    (13.1)



    $

    (81.4)



    $

    37.6


    Adjusted Earnings (Loss) after taxes per common and 
         common equivalent share


    $

    (1.10)



    $

    (0.35)



    $

    (2.26)



    $

    1.00


    Weighted-average common and common equivalent shares 
         outstanding — basic and diluted


    36.4



    37.0



    36.0



    37.6


    _____________

    (1)

    Included in net loss is $197.0 million of revenue from capitalized servicing rights for the year ended December 31, 2016.

    (2)

    Consists of the change in fair value due to changes in valuation inputs and other assumptions relating to servicing rights, servicing rights related liabilities and charged-off loans.

    (3)

    Exit costs include expenses related to the closing of offices and the termination and replacement of certain employees as well as other expenses to institute efficiencies. Exit costs incurred in the year ended December 31, 2016 include those relating to our exit from the consumer retail channel of the Originations segment, our exit from the reverse mortgage originations business, and actions initiated in 2015 and 2016 in connection with our continued efforts to enhance efficiencies and streamline processes of the organization.

    (4)

    Represents the non-cash fair value adjustment to arrive at cash generated from reverse mortgage origination activities.

    (5)

    Includes severance, gain on extinguishment of debt, costs associated with transforming the business, the net impact of the Non-Residual Trusts, transaction and integration costs, and certain non-recurring costs.

    (6)

    We revised our method of calculating Adjusted Earnings (Loss) beginning with the Form 10-K for the fiscal year ended December 31, 2016 to eliminate adjustments for the step-up depreciation and amortization adjustment, which represents depreciation and amortization costs related to the increased basis in assets (including servicing rights and subservicing contracts) acquired within business combination transactions. Prior period amounts have also been adjusted to reflect this revision.

     

    To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/walter-investment-management-corp-announces-full-year-and-fourth-quarter-2016-highlights-and-financial-results-300423208.html

    SOURCE Walter Investment Management Corp.

    Kimberly Perez, SVP & Chief Accounting Officer, 813.421.7694, investorrelations@walterinvestment.com

     

     

     

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