ZAIS Group Holdings, Inc. Reports Fourth Quarter and Full Year 2015 Results

10 Mar, 2016, 08:00 ET from ZAIS Group Holdings, Inc.

RED BANK, N.J., March 10, 2016 /PRNewswire/ -- ZAIS Group Holdings, Inc. (NASDAQ: ZAIS) ("ZAIS"), today reported financial results for the three and twelve months ended December 31, 2015. ZAIS conducts substantially all of its operations through ZAIS Group, LLC ("ZAIS Group"). References to the "Company" herein refer to ZAIS, together with its consolidated subsidiaries and affiliates.

Michael F. Szymanski, Chief Executive Officer, said, "2015 was a difficult year in the markets, impacting our results. Looking forward, the structured credit market looks attractive to us given recent market volatility, and we will continue to invest in business development to capitalize on investor interest in our offerings and capabilities.  On the expense front, we concluded that a planned expansion in our capabilities in the residential whole loan market will no longer be part of our strategy, and we identified additional expense reductions.  We expect these initiatives will lead to improved results in 2016." 

CONSOLIDATED GAAP RESULTS

The Company recorded GAAP net loss for the three months ended December 31, 2015 of $(11.8) million compared with GAAP net income of $8.0 million for the three months ended December 31, 2014.  For the full year 2015, GAAP net loss was $(23.9) million compared with GAAP net income of $74.5 million for the full year of 2014.  GAAP net income (loss) includes results of certain investment vehicles managed by ZAIS Group that are required to be consolidated under GAAP (the "Consolidated Funds of ZAIS Group"). In 2015 this impact for both the three and twelve months ended December 31, 2015 was $149 thousand and in 2014, this impact for the three and twelve months ended December 31, 2014 was $(21) thousand and $39.4 million, respectively.  The Company recorded pre-tax GAAP net loss for the three months ended December 31, 2015 of $(7.5) million compared with pre-tax GAAP net income for the three months ended December 31, 2014 of $8.4 million. For the full year 2015, pre-tax GAAP net loss was $(23.7) million compared with pre-tax GAAP net income of $74.8 million for the full year of 2014.  The Company has elected to implement ASU 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02") using the modified retrospective method, which results in an effective date of January 1, 2015, and will not require the restatement of prior period results. As a result, certain ZAIS Managed Entities which were required to be consolidated in periods prior to January 1, 2015 are no longer being consolidated. Accordingly, current period revenues and expenses on a consolidated basis will not be comparable to prior periods presented. ZAIS Group Parent, LLC ("ZGP"), a majority-owned consolidated subsidiary of ZAIS, is the sole member, and owns all of the equity, of ZAIS Group.

The consolidated financial statements include non-controlling interests of the members of ZGP other than ZAIS (the "ZGP Founder Members") which represent Class A Units of ZGP held by the ZGP Founder Members.

As of December 31, 2015, a portion of the proceeds of the business combination ZAIS completed in March 2015 (the "Business Combination") had been committed to expand existing business lines and, consequently, the Company's results for this quarterly period may not be representative of future financial results once the proceeds from the Business Combination are fully deployed. To provide ZAIS Group with the opportunity to continue to expand its corporate CLO business, up to $51 million of equity capital has been committed to a majority owned subsidiary of ZAIS Group which would allow the subsidiary to invest in ZAIS Group managed CLO vehicles and thereby satisfy the risk retention requirements for CLO managers under the Securities Exchange Act of 1934. As of December 31, 2015, $15.4 million had been contributed. ZAIS Group contributed an additional $5.1 million in January 2016.

In addition, we are conducting a strategic review of our business and fund activities with a view towards improving our profitability through organic growth, reduction in expenses, acquisitions, dispositions of assets or the sale or termination of product lines, including our residential whole loan activities, which are currently incurring losses or not otherwise meeting our expectations for contributing to our earnings. To date, we have concluded that a planned expansion in our capabilities in the residential whole loan market will no longer be a part of our future strategy, and we will be exiting those activities in an orderly fashion. In connection with this decision and to reduce expenses related to other infrastructure staffing, on March 8, 2016, the Company commenced a reduction in force which will result in a decrease of 22 employees of ZAIS Group. This includes six employees that will be departing over the next two months. This reduction will result in an annualized run rate savings of approximately $3.5 million in base compensation and benefits. We expect to record total severance charges in the amount of $628,000 during the six months ended June 30, 2016.

CONSOLIDATED NON-GAAP RESULTS

The Company recorded a net loss (excluding Consolidated Funds of ZAIS Group) for the three months ended December 31, 2015 of $(11.9) million, or $(0.68) per diluted weighted average Class A common share outstanding compared with a net income (excluding Consolidated Funds of ZAIS Group) of $8.1 million, or $1.15 per diluted weighted average Class A common share outstanding for the three months ended December 31, 2014. The Company recorded a net loss (excluding Consolidated Funds of ZAIS Group) for the twelve months ended December 31, 2015 of $(24.0) million, or $(1.37) per diluted weighted average Class A common share outstanding compared with a net income (excluding Consolidated Funds of ZAIS Group) of $35.0 million, or $4.47 per diluted weighted average Class A common share outstanding for the twelve months ended December 31, 2014. The Company's earnings per share for all periods prior to the Business Combination was calculated on the basis of 7,000,000 shares of common stock with reference to the equity interests of the ZGP Founder Members.

The decrease in the Company's net income (excluding Consolidated Funds of ZAIS Group) for  both the three and twelve months ended December 31, 2015,  was driven primarily by the liquidation of several private equity style funds in 2014 and 2015, and the reduced performance on ZAIS Group's hedge fund style funds in 2015, which resulted in a $31.1 million and $77.6 million decrease in incentive income for the three months and twelve months ended December 31, 2015 respectively; and a decrease in management fee income of $1.1 million and $12.5 million for the three months and twelve months ended December 31, 2015 respectively.  The quarter ended December 31, 2015 was also impacted by a $2.7 million impairment charge taken on goodwill as a result of a decline in the fair value of ZAIS Group; and a $3.9 million increase in tax expense, primarily the result of a 100% valuation allowance on deferred tax assets, as the Company does not project taxable income in the next several years. There were no comparable US federal or local tax expenses in 2014. These decreases in net income (excluding Consolidated Funds of ZAIS Group) were partially offset by a decrease in expenses of $18.7 million and $35.2 million for the three months and twelve months ended December 31, 2015, respectively, primarily related to lower incentive compensation.

For the three months ended December 31, 2015, the Company reported negative Adjusted EBITDA of $(3.4) million, compared with positive Adjusted EBITDA of $14.8 million for the three months ended December 31, 2014. Adjusted EBITDA for the year ended December 31, 2015 was negative ($14.3) million, compared with Adjusted EBITDA of $41.1 million, for the same period in 2014. 

Additionally, the Company had $5.3 million in gross undistributed, unrecognized incentive income across investment vehicles managed by ZAIS Group as of December 31, 2015. This income has not been recognized in net income (loss) under GAAP or other Non-GAAP measures of income (loss) and remains at risk and subject to reduction or elimination based on the investment performance of the related ZAIS Group managed investment vehicle until the contractual measurement period for incentive fees is reached.   

Please see the discussion of "Non-GAAP Financial Measures", including the definitions of net income (loss) (excluding Consolidating Funds of ZAIS Group), Adjusted EBITDA, and reconciliations of such Non-GAAP financial measures to the respective GAAP net income (loss) and pre-tax GAAP net income (loss) measures for the periods discussed above at the end of this press release.

The Company's GAAP net income (loss) and other Non-GAAP measures of income (loss) may fluctuate materially depending upon the performance of investment vehicles managed by ZAIS Group as well as other factors. Accordingly, the GAAP net income (loss) and other Non-GAAP measures of income (loss) in any particular period should not be expected to be indicative of future results.

LIQUIDITY & CAPITAL RESOURCES

As of December 31, 2015, the Company had cash and cash equivalents of $44.4 million and debt obligations of $1.3 million.

INVESTOR CONFERENCE CALL

Management will host a conference call today, March 10, 2016, at 10:00 a.m. Eastern time to review the Company's financial results.  The number to call for this interactive teleconference is (412) 317-0790. 

A replay of the conference call will be available through Thursday, March 17, 2016, by dialing (412) 317-0088 and entering the confirmation number, 10081798. 

The live broadcast of the ZAIS quarterly conference call will also be available online at ZAIS's website, www.zaisgroupholdings.com on Thursday, March 10, 2016, beginning at 10:00 a.m. Eastern time.  The online replay will follow shortly after the call and will be available for approximately one year.

FOURTH QUARTER 2015 SUPPLEMENTAL INFORMATION 

The Company's Fourth Quarter 2015 Supplemental Information – December 31, 2015, is available on ZAIS's website at www.zaisgroupholdings.com. To access the presentation, go to the "ZAIS Shareholders" section of the website.

USE OF NON-GAAP FINANCIAL INFORMATION

In addition to the results presented in accordance with generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial information, including net income (loss) (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA (and per share measures).  Net income (loss) (excluding Consolidated Funds of ZAIS Group) is a non-GAAP financial measure that the Company defines as GAAP net income (loss) excluding the consolidating effects of the Consolidated Funds of ZAIS Group.  Adjusted EBITDA is a non-GAAP financial measure that the Company defines as GAAP net income (loss), excluding consolidating effects of Consolidated Funds of ZAIS Group, compensation expense related to a portion of net operating income of ZAIS Group payable to certain employees of ZAIS Group, compensation expense related to incentive income in the form of percentage interests being recorded before related incentive income is recognized, equity-based compensation, severance, taxes, interest expense, depreciation and amortization expenses, goodwill impairment, foreign currency and certain other non-cash and non-operating items.

The Company believes that providing investors with this non-GAAP financial information, in addition to the related GAAP measures, gives investors greater transparency to the information used by management in its financial and operational decision-making. However, because net income (loss) (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA are incomplete measures of the Company's financial performance and involve differences from net income (loss) computed in accordance with GAAP, they should be considered along with, but not as alternatives to, the Company's net income (loss) computed in accordance with GAAP as a measure of the Company's financial performance. In addition, because not all companies use identical calculations, the Company's presentation of net income (loss) (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA may not be comparable to other similarly-titled measures of other companies.

The following table presents the reconciliation of the Company's GAAP net income (loss) to its non-GAAP financial measure of net income (loss) (excluding Consolidated Funds of ZAIS Group) for the periods presented in this Earnings Release.

Three Months Ended December 31,

Year Ended December 31,

2015

2014

2015

2014

(Dollars in thousands)

Consolidated net income (loss), net of tax (GAAP Net Income (Loss))

$

(11,771)

$

8,032

$

(23,862)

$

74,451

Addback: Elimination of Management fee income

1,095

9,777

Addback: Elimination of Incentive income

8,062

18,862

Addback: Elimination of Other revenues

2

50

Addback: Elimination of net gain (loss) on investments

154

9

154

1,474

Less: Income of Consolidated Funds

(43,830)

(131,940)

Addback: Expenses of Consolidated Funds

206

12,036

206

111,900

Net (gain) loss on Consolidated Funds' investments

(509)

22,647

(509)

(49,530)

Net income (loss) (excluding Consolidated Funds       of ZAIS Group) – Non-GAAP

$

(11,920)

$

8,053

$

(24,011)

$

35,044

 

The following tables present the reconciliations of the Company's GAAP pre-tax consolidated net income (loss) to its non-GAAP financial measures and Adjusted EBITDA for the periods presented in this Earnings Release.

Three Months Ended December 31,

Year Ended December 31,

2015

2014

2015

2014

(Dollars in thousands)

Adjusted EBITDA  - Non GAAP  

Pre-tax Consolidated Net Income (loss) (GAAP pre-tax net income (loss))

$

(7,504)

$

8,394

$

(23,707)

$

74,832

Addback: Elimination of Management fee income

1,095

9,777

Addback: Elimination of Incentive income

8,062

18,862

Addback: Elimination of Other revenues

2

50

Addback: Elimination of Net gain (loss) on investments

154

9

154

1,474

Less: Income of Consolidated Funds

(43,830)

(131,940)

Addback: Expenses of Consolidated Funds

206

12,036

206

111,900

Net (gain) loss on Consolidated Funds' investments

(509)

22,647

(509)

(49,530)

Addback: Compensation attributable to Income Unit Plan

6,189

198

12,414

Addback: Compensation attributable to equity compensation

1,574

4,862

Addback: Severance costs

29

107

1,116

537

Addback: Impairment of Goodwill

2,655

2,655

Reclassification of incentive compensation

(33)

(25)

(33)

(7,689)

Addback: Depreciation and amortization

77

102

730

460

Adjusted EBITDA – Non-GAAP

$

(3,351)

$

14,788

$

(14,328)

$

41,147

 

 

ZAIS GROUP HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(Dollars in thousands)

December 31, 2015

December 31, 2014

(Unaudited)

Assets

Cash and cash equivalents

$

44,351

$

7,664

Income and fees receivable

2,529

4,283

Investments, at fair value

8,169

Investments in affiliates, at fair value

5,242

104

Due from related parties

748

648

Fixed assets, net

544

1,091

Prepaid expenses

776

1,543

Goodwill

2,655

Other assets

310

655

Assets of Consolidated Funds

Cash and cash equivalents

33

94,212

Restricted cash

30,265

Investments, at fair value

30,509

1,126,737

Investments in affiliated securities, at fair value

31,457

Derivative assets, at fair value

6,648

Other assets

11,577

Total Assets

$

93,211

$

1,319,539

Liabilities, Redeemable Non-controlling Interests and Equity

Liabilities

Notes payable

$

1,255

$

Compensation payable

3,575

6,094

Due to related parties

175

32

Fees payable

756

1,315

Other liabilities

1,546

1,735

Liabilities of Consolidated Funds

Notes payable of consolidated CDOs, at fair value

749,719

Securities sold, not yet purchased

19,308

Derivative liabilities, at fair value

5,785

Due to broker

21,047

Other liabilities

101

32,863

Total Liabilities

7,408

837,898

Commitments and Contingencies

Redeemable Non-controlling Interests

452,925

Equity

Preferred Stock, $0.0001 par value; 2,000,000 shares authorized; 0 shares issued       and outstanding.

Class A Common Stock, $0.0001 par value; 180,000,000 shares authorized;       13,870,917 and 0 shares issued and outstanding at December 31, 2015 and       December 31, 2014, respectively.

1

1

Class B Common Stock, $0.000001 par value; 20,000,000 shares authorized;       20,000,000 and 0 shares issued and outstanding at December 31, 2015 and       December 31, 2014, respectively.

Additional paid-in capital

60,817

Retained earnings (Accumulated deficit)

(13,805)

18,189

Accumulated other comprehensive income (loss)

158

186

          Total stockholders' equity, ZAIS Group Holdings, Inc.

47,171

18,376

Non-controlling interests in ZAIS Group Parent, LLC

23,716

Non-controlling interests in Consolidated Funds

14,916

10,340

Total Equity

85,803

28,716

Total Liabilities, Redeemable Non-controlling Interests and Equity

$

93,211

$

1,319,539

 

 

ZAIS GROUP HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(Dollars in thousands)

Three Months Ended December 31, 2015

Three Months Ended December 31, 2014

Year Ended December 31, 2015

Year Ended December 31, 2014

Revenues

Management fee income

$

3,793

$

3,785

$

15,802

$

18,561

Incentive income

1,140

24,146

7,131

65,889

Other revenues

80

27

298

481

Income of Consolidated Funds

43,830

131,940

Total Revenues

5,013

71,788

23,231

216,871

Expenses

Compensation and benefits

6,552

24,179

26,971

61,779

General, administrative and other

3,593

4,640

17,064

17,726

Depreciation and amortization

77

102

730

460

Expenses of Consolidated Funds

206

11,999

206

111,900

Total Expenses

10,428

40,920

44,971

191,865

Other income (loss)

Net gain (loss) on investments

(2)

81

32

40

Other income (expense)

59

92

147

256

Impairment loss on goodwill

(2,655)

(2,655)

Net gains (losses) of Consolidated Funds' investments

509

(22,647)

509

49,530

Total Other Income (Loss)

(2,089)

(22,474)

(1,967)

49,826

Income (loss) before income taxes

(7,504)

8,394

(23,707)

74,832

Income tax (benefit) expense

4,267

362

155

381

Consolidated net income (loss), net of tax

(11,771)

8,032

(23,862)

74,451

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

(85)

(1,252)

238

(622)

Total Comprehensive Income (Loss)

$

(11,856)

$

6,780

$

(23,624)

$

73,829

Allocation of Consolidated Net Income (Loss), net of tax

Redeemable non-controlling interests

$

$

(395)

$

$

41,040

Non-controlling interests in Consolidated Funds

149

375

149

2,101

Stockholders' equity, ZAIS Group Holdings, Inc.

(9,468)

(13,805)

Non-controlling interests in ZAIS Group Parent, LLC

(2,452)

8,052

 (1)

(10,206)

31,310

 (1)

$

(11,771)

$

8,032

$

(23,862)

$

74,451

Allocation of Total Comprehensive       Income (Loss)

Redeemable non-controlling interests

$

$

(395)

$

$

41,014

Non-controlling interests in Consolidated Funds

149

375

149

2,101

Stockholders' equity, ZAIS Group Holdings, Inc.

(9,525)

(13,647)

Non-controlling interests in ZAIS Group Parent, LLC

(2,480)

6,800

(10,126)

30,714

$

(11,856)

$

6,780

$

(23,624)

$

73,829

Consolidated Net Income (Loss), net of tax per Class A    common share applicable to ZAIS Group Holdings, Inc. –    Basic

$

(0.68)

$

1.15

$

(1.26)

$

4.47

Consolidated Net Income (Loss), net of tax per Class A    common share applicable to ZAIS Group Holdings, Inc. –    Diluted

$

(0.68)

$

1.15

$

(1.37)

$

4.47

Weighted average shares of Class A common stock outstanding:

Basic

13,870,917

7,000,000

(3)

10,982,726

(4)

7,000,000

(3)

Diluted

20,870,917

(2)

7,000,000

17,982,726

(2) (4)

7,000,000

 

(1)

Amount represents the allocation to controlling interests in ZAIS Group Parent, LLC for all periods prior to the Business Combination.  

(2)

Number of diluted shares outstanding for periods after the Business Combination takes into account non-controlling interests in ZAIS Group Parent, LLC that may be exchanged for Class A common stock under certain circumstances.  

(3)

Represents 100% ownership of ZAIS Group prior to the Business Combination.

(4)

Pro-rated based on the portion of the period preceding and following the Business Combination.

 

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds of ZAIS Group on the Company's financial position at December 31, 2015 and December 31, 2014, and results of operations for the three months and years ended December 31, 2015 and December 31, 2014:

December 31, 2015

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in thousands )

Assets

Cash and cash equivalents

$

44,351

$

$

$

44,351

Income and fees receivable

2,529

2,529

Investments, at fair value

8,169

8,169

Investments in affiliates, at fair value

20,767

(15,525)

5,242

Due from related parties

748

748

Fixed assets, net

544

544

Prepaid expenses

776

776

Other assets

310

310

Assets of Consolidated Funds

Cash and cash equivalents

33

33

Investments, at fair value

30,509

30,509

Total Assets

$

78,194

$

30,542

$

(15,525)

$

93,211

Liabilities, Redeemable Non-controlling Interests and Equity

Liabilities

Notes payable

$

1,255

$

$

$

1,255

Compensation payable

3,575

3,575

Due to related parties

175

175

Fees payable

756

756

Other liabilities

1,546

1,546

Liabilities of Consolidated Funds

Other liabilities

101

101

Total Liabilities

7,307

101

7,408

Commitments and Contingencies

Equity

Class A Common Stock

1

1

Class B Common Stock

Additional paid-in-capital

60,817

60,817

Retained earnings (Accumulated deficit)

(13,805)

(13,805)

Accumulated  other comprehensive income (loss)

158

158

Total stockholders' equity, ZAIS Group Holdings, Inc.

47,171

47,171

Non-controlling interests in ZAIS Group Parent, LLC

23,716

23,716

Non-controlling interests in Consolidated Funds

30,441

(15,525)

14,916

Total Equity

70,887

30,441

(15,525)

85,803

Total Liabilities, Redeemable Non-controlling Interests and Equity

$

78,194

$

30,542

$

(15,525)

$

93,211

 

 

December 31, 2014

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in thousands )

Assets

Cash and cash equivalents

$

7,664

$

$

$

7,664

Income and fees receivable

11,223

(6,940)

4,283

Investments in affiliates, at fair value

1,752

(1,648)

104

Due from related parties

968

(320)

648

Fixed assets, net

1,091

1,091

Prepaid expenses

1,543

1,543

Goodwill

2,655

2,655

Other assets

655

655

Assets of Consolidated Funds

Cash and cash equivalents

94,212

94,212

Restricted cash

30,265

30,265

Investments, at fair value

1,126,737

1,126,737

Investments in affiliated securities, at fair value

66,219

(34,762)

31,457

Derivative assets, at fair value

6,648

6,648

Other assets

11,599

(22)

11,577

Total Assets

$

27,551

$

1,335,680

$

(43,692)

$

1,319,539

Liabilities, Redeemable Non-controlling Interests and Equity

Liabilities

Compensation payable

$

6,094

$

$

$

6,094

Due to related parties

32

32

Fees payable

1,315

1,315

Other liabilities

1,735

1,735

Liabilities of Consolidated Funds

Notes payable of consolidated CDOs, at fair value

784,481

(34,762)

749,719

Securities sold, not yet purchased

19,308

19,308

Derivative liabilities, at fair value

5,785

5,785

Due to broker

21,047

21,047

Other liabilities

40,144

(7,281)

32,863

Total Liabilities

9,176

870,765

(42,043)

837,898

Commitments and Contingencies

Redeemable Non-controlling Interests

452,925

452,925

Equity

Class A Common Stock

1

1

Class B Common Stock

Additional paid-in-capital

Retained earnings (Accumulated deficit)

18,188

1,650

(1,649)

18,189

Accumulated  other comprehensive income (loss)

186

186

Total stockholders' equity, ZAIS Group Holdings, Inc.

18,375

1,650

(1,649)

18,376

Non-controlling interests in ZAIS Group Parent, LLC

Non-controlling interests in Consolidated Funds

10,340

10,340

Total Equity

18,375

11,990

(1,649)

28,716

Total Liabilities, Redeemable Non-controlling Interests and Equity

$

27,551

$

1,335,680

$

(43,692)

$

1,319,539

 

 

Three months Ended December 31, 2015

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in Thousands )

Revenues

Management fee income

$

3,793

$

$

$

3,793

Incentive income

1,140

1,140

Other revenues

80

80

Income of Consolidated Funds

        Total Revenues

5,013

5,013

Expenses

Compensation and benefits

6,552

6,552

General, administrative and other

3,593

3,593

Depreciation and amortization

77

77

Expenses of Consolidated Funds

206

206

        Total Expenses

10,222

206

10,428

Other Income (loss)

Net gain (loss) on investments

152

(154)

(2)

Other income (expense)

59

59

Impairment loss on goodwill

(2,655)

(2,655)

Net gains (losses) of Consolidated Funds'       investments

509

509

        Total Other Income (Loss)

(2,444)

509

(154)

(2,089)

Income (loss) before income taxes

(7,653)

303

(154)

(7,504)

Income tax (benefit) expense

4,267

4,267

Consolidated net income (loss) , net of tax     

(11,920)

303

(154)

(11,771)

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustment

(85)

(85)

Total Comprehensive Income (Loss)

$

(12,005)

$

303

$

(154)

$

(11,856)

 

 

Three months Ended December 31, 2014

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in Thousands )

Revenues

Management fee income

$

4,917

$

$

(1,132)

$

3,785

Incentive income

32,208

(8,062)

24,146

Other revenues

29

(2)

27

Income of Consolidated Funds

66,201

(22,371)

43,830

        Total Revenues

37,154

66,201

(31,567)

71,788

Expenses

Compensation and benefits

24,179

24,179

General, administrative and other

4,640

4,640

Depreciation and amortization

102

102

Expenses of Consolidated Funds

18,574

(6,575)

11,999

        Total Expenses

28,921

18,574

(6,575)

40,920

Other Income (loss)

Net gain (loss) on investments

90

(9)

81

Other income (expense)

92

92

Net gains (losses) of Consolidated Funds'       investments

(41,870)

19,223

(22,647)

        Total Other Income (Loss)

182

(41,870)

19,214

(22,474)

Income (loss) before income taxes

8,415

5,757

(5,778)

8,394

Income tax (benefit) expense

362

362

Consolidated net income (loss), net of tax

8,053

5,757

(5,778)

8,032

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustment

(1,252)

(1,252)

Total Comprehensive Income (Loss)

$

6,801

$

5,757

$

(5,778)

$

6,780

 

 

Year Ended December 31, 2015

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in Thousands )

Revenues

Management fee income

$

15,802

$

$

$

15,802

Incentive income

7,131

7,131

Other revenues

298

298

Income of Consolidated Funds

        Total Revenues

23,231

23,231

Expenses

Compensation and benefits

26,971

26,971

General, administrative and other

17,064

17,064

Depreciation and amortization

730

730

Expenses of Consolidated Funds

206

206

        Total Expenses

44,765

206

44,971

Other Income (loss)

Net gain (loss) on investments

186

(154)

32

Other income (expense)

147

147

Impairment loss on goodwill

(2,655)

(2,655)

Net gains (losses) of Consolidated Funds'       investments

509

509

        Total Other Income (Loss)

(2,322)

509

(154)

1,967

Income (loss) before income taxes

(23,856)

303

(154)

(23,707)

Income tax (benefit) expense

155

155

Consolidated net income (loss), net of tax

(24,011)

303

(154)

(23,862)

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustment

238

238

Total Comprehensive Income (Loss)

$

(23,773)

$

303

$

(154)

$

(23,624)

 

 

Year Ended December 31, 2014

ZAIS

Consolidated Funds

Eliminations

Consolidated

( Dollars in Thousands )

Revenues

Management fee income

$

28,338

$

$

(9,777)

$

18,561

Incentive income

84,751

(18,862)

65,889

Other revenues

531

(50)

481

Income of Consolidated Funds

143,556

(11,616)

131,940

        Total Revenues

113,620

143,556

(40,305)

216,871

Expenses

Compensation and benefits

61,779

61,779

General, administrative and other

17,726

17,726

Depreciation and amortization

460

460

Expenses of Consolidated Funds

153,040

(41,140)

111,900

        Total Expenses

79,965

153,040

(41,140)

191,865

Other Income (loss)

Net gain (loss) on investments

1,514

(1,474)

40

Other income (expense)

256

256

Net gains (losses) of Consolidated Funds'       investments

50,634

(1,104)

49,530

        Total Other Income (Loss)

1,770

50,634

(2,578)

49,826

Income (loss) before income taxes

35,425

41,150

(1,743)

74,832

Income tax (benefit) expense

381

381

Consolidated net income (loss), net of tax

35,044

41,150

(1,743)

74,451

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustment

(622)

(622)

Total Comprehensive Income (Loss)

$

34,422

$

41,150

$

(1,743)

$

73,829

 

ABOUT ZAIS GROUP HOLDINGS, INC.

ZAIS (NASDAQ: ZAIS) owns a majority interest in, and is the managing member of ZGP. ZGP is the sole member of ZAIS Group, an investment advisory and asset management firm focused on specialized credit strategies with approximately $4.157 billion of assets under management as of December 31, 2015. Based in Red Bank, New Jersey with operations in London, ZAIS Group employs professionals across investment management, client relations, information technology, analytics, finance, law, compliance, risk management and operations. To learn more, visit www.zaisgroupholdings.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 

This press release contains statements that constitute "forward-looking statements," as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are generally identified by the use of words such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "would," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "pipeline," "comfortable," "assume," "remain," "maintain," "sustain," "achieve" or the negative version of those words or other comparable words.  These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to: the inability of the Company to realize the benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and retain its management and key employees; the ability to rationalize our expense structure and specifically to exit the residential whole loan related businesses in an orderly fashion, or at all; the outcome of any legal proceedings that may be instituted against the Company or others following completion of the Business Combination; the inability to continue to be listed on the NASDAQ Stock Market; the risk that the Business Combination disrupts current plans and operations of the Company; costs related to the Business Combination; changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; the relative and absolute investment performance of advised or sponsored investment products; the availability of suitable investment opportunities; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability and terms of financing; conditions in the market for mortgage-related investments; the impact of capital improvement projects; the impact of future acquisitions or divestitures; the impact, extent and timing of technological changes and the adequacy of intellectual property protection; the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to the Company; terrorist activities and international hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and the Company; the ability to attract and retain highly talented professionals; the impact of changes to tax legislation and, generally, the tax position of the Company; legislative and regulatory changes that could adversely affect the business of the Company; and other factors, including those set forth in the Risk Factors section of the Company's Annual Report on Form 10-K  filed on March 10, 2016 and other reports filed by the Company with the Securities and Exchange Commission (the "SEC"), copies of which are available on the SEC's website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

SOURCE ZAIS Group Holdings, Inc.



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