20. Earnings Per Share

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period.

In accordance with ASC 260, all outstanding unvested share-based payments that contain rights to non-forfeitable dividends and participate in the undistributed earnings with the common stockholders are considered participating securities. The shares of Class B common stock do not share in the earnings of the Company and are therefore not considered participating securities. Accordingly, basic and diluted net earnings per share of Class B common stock have not been presented. Furthermore, EPS for the three months ended March 31, 2013 is not presented since the Company was not a public company.

Stock options granted to certain employees and members of the board of directors in the aggregate of 264,047 were not included in the computation of diluted earnings per common share for the three months ended March 31, 2014 because they were antidilutive under the treasury stock method.

In connection with the IPO and restructuring, Class C Profit Interests of Holdings LLC held by PGHI Corp. were exchanged for a total of 966,434 warrants to purchase shares of the Company’s Class A common stock (Note 18). For the three months ended March 31, 2014, these warrants were not included in the computation of diluted earnings per common share because they were antidilutive under the treasury stock method.

Additionally, as discussed in Note 2, the operating agreement of Holdings LLC gives Common Interestholders the right (subject to the terms of the operating agreement as described therein) to exchange their Common Interests for shares of the Company’s Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. The Company applies the “if-converted” method to the Common Interests and vested restricted Common Interests in Holdings LLC to determine the dilutive weighted average shares of Class A common stock outstanding. The Company applies the treasury stock method to the unvested restricted Common Interests and the “if-converted” method on the resulting number of additional Holdings LLC Common Interests to determine the dilutive weighted average shares of Class A common stock outstanding represented by these interests.

In computing the dilutive effect that the exchange of Common Interests and restricted Common Interests would have on earnings per share, the Company considered that net income available to holders of Class A common stock would increase due to the elimination of non-controlling interests (including any tax impact). Based on these calculations, the 17,128,856 weighted average Common Interest and vested restricted Common Interests outstanding and the 786,488 weighted average unvested restricted Common Interests outstanding for the three months ended March 31, 2014 were antidilutive.

The following table is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations for the three months ended March 31, 2014:

	Three Months Ended
	March 31, 2014
	(Dollars in thousands, except per share data)
Numerator:
Numerator for basic EPS- Net income attributable to holders of JGWPT Holdings Inc. Class A common stock	$	9,022
Effect of dilutive securities:
Holdings LLC Common Interests and vested restricted Common Interests	—
Holdings LLC unvested restricted Common Interests	—
Numerator for diluted EPS- Net income attributable to holders of JGWPT Holdings Inc. Class A common stock	$	9,022

Denominator:
Denominator for basic EPS - Weighted average shares of Class A common stock	11,641,617
Effect of dilutive securities:
Stock options	—
Warrants	—
Restricted common stock	666
Holdings LLC Common Interests and vested restricted Common Interests	—
Holdings LLC unvested restricted Common Interests	—
Dilutive potential common shares	666
Denominator for diluted EPS - Adjusted weighted average shares of Class A common stock	11,642,283

Basic income per share of Class A common stock	$	0.77
Diluted income per share of Class A common stock	$	0.77