Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 18, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NOVATION COMPANIES, INC. | |
Entity Central Index Key | 1,025,953 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 92,748,753 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Current Assets | |||
Cash and cash equivalents | $ 4,585 | $ 5,296 | |
Marketable securities, current | 17,031 | 29,815 | |
Service fee receivable, net of allowance of $91 and $66, respectively | 455 | 729 | |
Other current assets | 2,235 | 1,687 | |
Current assets of discontinued operations | 566 | 649 | |
Total current assets | 24,872 | 38,176 | |
Non-Current Assets | |||
Marketable securities, non-current | 6,833 | 16,012 | |
Property and equipment, net of accumulated depreciation | 6,889 | 5,632 | |
Deferred income tax asset, net | 667 | 968 | |
Other assets | 1,298 | 1,391 | |
Total non-current assets | 15,687 | 24,003 | |
Total assets | 40,559 | 62,179 | |
Current Liabilities | |||
Accounts payable and accrued expenses | 3,508 | 4,388 | |
Deferred income tax liability, net | 667 | 968 | |
Other current liabilities | 241 | 942 | |
Current liabilities of discontinued operations | [1] | 566 | 875 |
Total current liabilities | 4,982 | 7,173 | |
Non-Current Liabilities | |||
Senior notes | 87,798 | 85,937 | |
Other liabilities | 468 | 622 | |
Non-current liabilities of discontinued operations | 1,798 | 1,797 | |
Total non-current liabilities | 90,064 | 88,356 | |
Total liabilities | $ 95,046 | $ 95,529 | |
Commitments and contingencies (Note 9) | |||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized: | |||
Common stock, 92,748,753 shares issued and outstanding | $ 928 | $ 915 | |
Additional paid-in capital | 744,385 | 743,919 | |
Accumulated deficit | (801,680) | (780,803) | |
Accumulated other comprehensive income | 1,880 | 2,619 | |
Total shareholders' deficit | (54,487) | (33,350) | |
Total liabilities and shareholders' deficit | $ 40,559 | $ 62,179 | |
[1] | Excludes amounts due to Novation of approximately $0.7 million as of both September 30, 2015 and December 31, 2014. These amounts are eliminated upon consolidation and, therefore, are not included in the consolidated balance sheets for any periods presented. |
Balance Sheet Parenthetical
Balance Sheet Parenthetical - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Allowance for doubtful accounts, service fee receivable | $ 91 | $ 66 |
Shareholders' deficit: | ||
Capital stock, par value | $ 0.01 | $ 0.01 |
Capital stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 92,748,753 | 91,479,519 |
Common stock, shares outstanding | 92,748,753 | 91,479,519 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income and Revenues: | ||||
Service fee income | $ 877 | $ 588 | $ 2,557 | $ 2,007 |
Service fee income – transition services | 0 | 1,091 | 0 | 2,059 |
Interest income – mortgage securities | 1,379 | 1,986 | 4,585 | 5,382 |
Total | 2,256 | 3,665 | 7,142 | 9,448 |
Costs and Expenses: | ||||
Cost of services | 2,163 | 1,272 | 5,278 | 2,635 |
Cost of services – transition services | 0 | 698 | 0 | 1,306 |
Development | 795 | 266 | 1,561 | 1,160 |
Sales and marketing | 2,230 | 1,649 | 7,144 | 3,176 |
General and administrative | 3,683 | 4,104 | 11,583 | 12,810 |
Total | 8,871 | 7,989 | 25,566 | 21,087 |
Other (expense) income | 20 | 36 | (48) | 102 |
Interest expense | (771) | (764) | (2,407) | (2,358) |
Loss from continuing operations before income taxes | (7,366) | (5,052) | (20,879) | (13,895) |
Income tax expense (benefit), continuing operations | (105) | (421) | 2 | (8,606) |
Net loss from continuing operations | (7,261) | (4,631) | (20,881) | (5,289) |
Income (loss) from discontinued operations, net of income taxes | 22 | (251) | 4 | 41,414 |
Net (loss) income | $ (7,239) | $ (4,882) | $ (20,877) | $ 36,125 |
Earnings Per Share attributable to Novation: | ||||
Basic, in dollars per share | $ (0.08) | $ (0.05) | $ (0.23) | $ 0.40 |
Diluted, in dollars per share | $ (0.08) | $ (0.05) | $ (0.23) | $ 0.40 |
Weighted average basic shares outstanding | 91,187,345 | 90,951,716 | 91,103,880 | 90,895,504 |
Weighted average diluted shares outstanding | 91,187,345 | 90,951,716 | 91,103,880 | 90,895,504 |
Net Income (Loss) Available to Common Stockholders, Basic | $ (7,239) | $ (4,882) | $ (20,877) | $ 36,125 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net (loss) income | $ (7,239) | $ (4,882) | $ (20,877) | $ 36,125 |
Other comprehensive (loss) income: | ||||
Change in unrealized gain on marketable securities – available-for-sale | (57) | (211) | (739) | (387) |
Total comprehensive (loss) income | $ (7,296) | $ (5,093) | $ (21,616) | $ 35,738 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Shareholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Noncontrolling Interest [Member] |
Balance at Dec. 31, 2013 | $ (68,220) | $ 915 | $ 739,468 | $ (811,742) | $ 3,103 | $ 36 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Compensation recognized under stock compensation plans | 611 | 611 | ||||
Distributions to noncontrolling interests | (5) | (5) | ||||
Exchange of membership interests for forgiveness of note payable | 3,921 | 3,814 | 107 | |||
Deconsolidation of subsidiary | (138) | (138) | ||||
Net (loss) income | 36,125 | 36,125 | 0 | |||
Other comprehensive loss | (387) | (387) | ||||
Balance at Sep. 30, 2014 | (28,093) | 915 | 743,893 | (775,617) | 2,716 | 0 |
Balance at Dec. 31, 2014 | (33,350) | 915 | 743,919 | (780,803) | 2,619 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Compensation recognized under stock compensation plans | 479 | 479 | ||||
Issuance of nonvested shares; 1,269,234 shares | 13 | (13) | ||||
Net (loss) income | (20,877) | (20,877) | 0 | |||
Other comprehensive loss | (739) | (739) | ||||
Balance at Sep. 30, 2015 | $ (54,487) | $ 928 | $ 744,385 | $ (801,680) | $ 1,880 | $ 0 |
Shareholders' Deficit Parenthet
Shareholders' Deficit Parentheticals | 9 Months Ended |
Sep. 30, 2015shares | |
Issuance of restricted stock | 1,269,234 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (20,877) | $ 36,125 |
Income (loss) from discontinued operations, net of income taxes | 4 | 41,414 |
Net loss from continuing operations | (20,881) | (5,289) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Accretion of marketable securities | (143) | (478) |
Provision for bad debt | 171 | 76 |
Amortization of deferred debt issuance costs and senior debt discount | 1,861 | 1,651 |
Loss on disposal of fixed assets, net | 25 | 15 |
Compensation recognized under stock compensation plans | 479 | 611 |
Depreciation and amortization expense | 2,087 | 1,130 |
Deferred taxes | (2) | (8,605) |
Eliminations of intercompany activity with discontinued operations | 3 | 3,057 |
Changes in: | ||
Due from discontinued operations | 31 | 5,703 |
Service fee receivable | 213 | (628) |
Other current assets and liabilities, net | (1,172) | (183) |
Other noncurrent assets and liabilities, net | (175) | (32) |
Accounts payable and accrued expenses | (880) | (328) |
Net cash used in operating activities of continuing operations | (18,383) | (3,300) |
Net cash used in operating activities of discontinued operations | (297) | (5,005) |
Net cash used in operating activities | (18,680) | (8,305) |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of marketable securities | 23,603 | 3,484 |
Proceeds from sale of subsidiary | 0 | 54,748 |
Purchases of available-for-sale securities | (2,236) | (39,256) |
Purchase of cost method investment | 0 | (600) |
Purchases of property and equipment | (3,251) | (2,411) |
Net cash provided by investing activities of continuing operations | 18,116 | 15,965 |
Net cash provided by investing activities of discontinued operations | 0 | 455 |
Net cash provided by investing activities | 18,116 | 16,420 |
Cash flows from financing activities: | ||
Cash payments for contributions of capital to discontinued operations | (255) | (2,510) |
Cash receipts from distributions of earnings from discontinued operations | 0 | 774 |
Principal payments under capital leases | (189) | (202) |
Net cash used in financing activities of continuing operations | (444) | (1,938) |
Net cash provided by financing activities of discontinued operations | 255 | 1,659 |
Net cash used in financing activities | (189) | (279) |
Net (decrease) increase in cash and cash equivalents of continuing operations | (711) | 10,727 |
Cash and cash equivalents, beginning of period | 5,296 | 5,768 |
Cash and cash equivalents, end of period | 4,585 | 16,495 |
Net decrease in cash and cash equivalents of discontinued operations | (42) | (2,891) |
Cash and cash equivalents, beginning of period | 358 | 3,499 |
Cash and cash equivalents, end of period | 316 | 608 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | 663 | 776 |
Cash (paid for) received from income taxes, net | (753) | 39 |
Cash received on mortgage securities – available-for-sale with no cost basis | 4,176 | 4,813 |
Non-cash investing and financing activities: | ||
Assets acquired under capital lease | $ 154 | $ 167 |
Financial Statement Presentatio
Financial Statement Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation Description of Operations – Novation Companies, Inc. (the “Company,” "Novation," "we,” “us,” or "our") owns 100% of Corvisa LLC ("Corvisa"). Corvisa sells cloud-based communication software under the CorvisaOne® brand, telecommunications services, and implementation consulting services for its own customers as well as customers of a leading customer relationship management (CRM) software provider. This business was formerly known as CorvisaCloud, LLC, but was rebranded to Corvisa during the first quarter of 2015. On December 21, 2015, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Corvisa Services LLC ("Corvisa Services"), a wholly owned subsidiary of the Company, and ShoreTel, Inc. ("ShoreTel"). Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase all of the membership interests of Corvisa. See Note 3 to the condensed consolidated financial statements for additional information regarding this transaction. On April 16, 2014, the Company and the non-controlling members of StreetLinks LLC ("StreetLinks"), a national residential appraisal and mortgage real estate valuation management services company, entered into a purchase and sale agreement with Assurant Services, LLC, a subsidiary of Assurant, Inc. ("Assurant"), pursuant to which Assurant purchased 100% of the outstanding membership units of StreetLinks. See Note 5 to the condensed consolidated financial statements for additional information regarding this transaction. The operations of StreetLinks have been classified as discontinued operations for all periods presented. On August 18, 2014, the Company sold certain intellectual property, software, and customer data of its other operating subsidiary, Advent Financial Services, LLC (“Advent”), to Santa Barbara Tax Products Group, LLC, and announced that it would be conducting an orderly winding-down of the remaining business and operations of Advent; a financial settlement services provider for professional tax preparers nationwide. As discussed in Note 5 , the operations of Advent have been classified as discontinued operations for all periods presented. Prior to 2008, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company acquired mortgage securities that continue to be a source of its earnings and cash flow. See Note 6 and Note 10 to the condensed consolidated financial statements for additional information regarding these securities and the valuation thereof. Also as a result of those activities, the Company may, from time to time, receive indemnification and loan repurchase demands related to past sales of loans to securitization trusts and other third parties. See Note 9 to the condensed consolidated financial statements for additional information regarding these demands. Financial Statement Presentation – The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the period. The Company uses estimates and judgments in establishing the fair value of its mortgage securities, assessing the recoverability of its long-lived assets, and accounting for income taxes, including the determination of the timing of the establishment or release of the valuation allowance related to the deferred tax asset balances and reserves for uncertain tax positions. While the condensed consolidated financial statements and footnotes reflect the best estimates and judgments of management at the time, actual results could differ significantly from those estimates. Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. The condensed consolidated financial statements of the Company include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments have been made, which were of a normal and recurring nature, for a fair presentation of the condensed consolidated financial statements. The Company's condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 , as amended (the "2014 Form 10-K"). Comparability. As noted in the 2014 Form 10-K, during the fourth quarter of 2014 the Company elected to update the presentation of its consolidated statement of operations to be more consistent with industry practice and allow for enhanced comparability between Corvisa and its peers. This update involved moving from the Company's historical presentation of only two categories of operating expenses to the revised presentation, which presents four categories of operating expenses: Cost of services; Development; Sales and marketing; and General and administrative. As a result, operating results for the nine and three months ended September 30, 2014 have been reclassified to conform to the revised presentation. |
Liquidity (Notes)
Liquidity (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Liquidity [Abstract] | |
Liquidity Disclosure | The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. Since the sale of StreetLinks, the Company has incurred significant and recurring operating losses and negative cash flows from operations. Given the early stage nature of Corvisa, the Company would expect these trends to continue for the foreseeable future without the addition of significant new customers or a significant reduction of expenses. As of September 30, 2015, the Company’s existing cash resources alone no longer appear to be sufficient to cover the ongoing operating cash needs of Corvisa or the Company as a whole at their current run rate. Further, the Company has limited ability to raise additional capital through the issuance of additional equity securities and is unable to secure additional debt funding due to restrictions set forth in the indentures governing the Senior Notes as discussed further in Note 8 to the financial statements. As such, these matters raised substantial doubt about the Company’s ability to continue as a going concern as of September 30, 2015. The Company considered several strategic alternatives with regard to the Corvisa business including, but not limited to, identifying a potential buyer for Corvisa, identifying potential outside investors to provide additional capital directly for Corvisa, and/or implementing significant cost-cutting measures. As detailed further in Note 3 to the condensed consolidated financial statements, on December 21, 2015, the Company entered into the Purchase Agreement with Corvisa Services and ShoreTel. Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase all of the membership interests of Corvisa. While the transaction is subject to certain closing conditions, the Company believes that its agreement to sell Corvisa alleviates the substantial doubt about the Company’s ability to continue as a going concern that existed as of September 30, 2015, as the sale would eliminate the Company's share of Corvisa's future net operating losses and ongoing operating cash needs. With the sale of Corvisa, subject to the terms and conditions under the Purchase Agreement, the Company intends to continue its strategy of seeking to acquire operating businesses or make other investments that generate taxable earnings. Because the Company has large net operating losses, the Company has the ability to operate in a tax-efficient manner. As of September 30, 2015, Novation had approximately $674.9 million in federal net operating losses which may be carried forward to offset future taxable income. Recent performance has not allowed Novation to capitalize on this significant strategic advantage. As of the date the financial statements included in this report are issued, the Company has not yet identified any specific acquisition targets. The Company acknowledges that the identification of an acquisition target and the negotiation of a purchase agreement could take an extended period of time, however, based on current projections and subject to the completion of the Company's sale of Corvisa, the Company believes its existing liquid assets and the ongoing cash flows from its mortgage securities portfolio will be sufficient to sustain the Company for a period of at least twelve months and enable the Company to effectively implement this strategy. While the Company acknowledges that cash flows from its mortgage securities portfolio can be volatile in nature, the recent performance of these securities would suggest that these securities will continue to be a source of cash flows for the foreseeable future. The Company's liquid assets and contractual obligations as of September 30, 2015 are detailed further below. As of September 30, 2015 , the Company had approximately $4.6 million in unrestricted cash and cash equivalents and $0.7 million of restricted cash, portions of which are included in the other current assets and other assets line items on the condensed consolidated balance sheet. In addition, the Company held approximately $21.4 million in corporate notes and bonds with average remaining maturities between six months and 20 months as of September 30, 2015 , and approximately $2.5 million in mortgage securities, which have contributed approximately $4.7 million in cash flows for the nine months ended September 30, 2015. These securities are classified as available-for-sale as of September 30, 2015 and are included in the current and non-current marketable securities line items on the condensed consolidated balance sheet. For additional information regarding the Company's marketable securities, see Note 6 to the condensed consolidated financial statements. The Company's ongoing contractual obligations subsequent to the sale of Corvisa would consist primarily of its Senior Notes, which are detailed further in Note 8 to the condensed consolidated financial statements, and certain operating lease agreements. At September 30, 2015, the total future minimum lease commitments under these leases totaled approximately $2.3 million . These leases expire between June 2018 and October 2019. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | On December 21, 2015, the Company entered into the Purchase Agreement with Corvisa Services and ShoreTel. Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase 100% of the membership interests of Corvisa for $8.5 million in cash, subject to potential working capital adjustments, of which amount the parties will deposit in escrow at closing (i) approximately $1.0 million for a period of twelve months to secure certain indemnification obligations of the Company and (ii) $0.35 million to secure certain obligations of the Company in connection with the post-closing working capital adjustment. Of the approximately $7.1 million of cash consideration not held in escrow, approximately $0.3 million will be used to make certain earned bonus payments to Corvisa executives, while approximately $1.0 million will be used to pay transaction-related expenses. Under the Purchase Agreement, the Company agreed not to do, cause or permit certain actions to be taken prior to closing without ShoreTel’s prior written consent. The obligations of ShoreTel to consummate the transaction are subject to certain closing conditions, including but not limited to: (i) the representations and warranties of the Company under the Purchase Agreement deemed to be fundamental to the transaction are true and correct in all respects; (ii) the Company’s receipt of third party consents under specified existing contracts; and (iii) the acceptance by key employees of the Company and certain of the Company’s other employees, as specified in the Purchase Agreement, of offers of employment from ShoreTel. The Purchase Agreement also contains other representations, warranties, covenants, indemnifications by the Company and related parties, and closing conditions customary for transactions of this type. The Purchase Agreement is subject to customary termination provisions. Additionally, the Purchase Agreement may be terminated by any party if closing has not occurred on or before February 4, 2016. At ShoreTel’s request, prior to the Corvisa transaction, the Company disposed of Corvisa’s third-party software implementation consulting business. The Company sold the assets related exclusively to this business, including but not limited to customer contracts, computer hardware and marketing materials, to Canpango LLC (“Canpango”), which agreed to hire certain employees of the business, to assume Corvisa’s obligations under the customer contracts, and to pay to the Company a portion of the business’s existing accounts receivable collected in the next nine months, less associated collection costs. Canpango is led by a former employee of Corvisa, and certain current and former employees of Corvisa have financial interests in Canpango. The sales price, assets and operations related exclusively to this business were not material to the Company’s financial statements when taken as a whole. In connection with the transaction, the Company and ShoreTel also agreed to enter into a Transition Services Agreement pursuant to which each of the Company and ShoreTel would provide the other with specified services for a transition period following the closing. The Company anticipates that it will incur approximately $0.8 million in severance and related termination costs related to this transaction. In addition, upon closing this transaction will trigger the acceleration of approximately $0.2 million in stock-based compensation expense. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In January 2015, the FASB issued ASU 2015-1, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates from GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under this ASU, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. Entities may apply the guidance prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted if the guidance is applied as of the beginning of the annual period of adoption. The Company does not expect this guidance to have a significant impact on the Company’s financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. This new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” This ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company does not expect this guidance to have a significant impact on the Company’s financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This ASU applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. Compared with current GAAP, this ASU also requires significantly expanded disclosures about revenue recognition. On July 9, 2015 the FASB voted to defer the effective date of this ASU by one year. Early adoption is permitted. However, entities are not allowed to adopt this ASU before the original effective date (that is, annual periods beginning after December 15, 2016). The Company is evaluating the impact of ASU 2014-09 on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its ongoing financial reporting. In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation in ASC 205-20 and requires entities to provide additional disclosures about discontinued operations as well as disposal transactions that do not meet the discontinued-operations criteria. The FASB issued this ASU to provide more decision-useful information and to make it more difficult for a disposal transaction to qualify as a discontinued operation. This ASU is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. The impact of the adoption of ASU 2014-08 did not have a significant impact on the Company's financial statements. |
Divestitures (Notes)
Divestitures (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Advent Financial Services, LLC (Financial Intermediary Segment) On August 18, 2014, Advent sold certain intellectual property, software, and customer data to Santa Barbara Tax Products Group, LLC, for cash consideration of $1.0 million paid at closing. The transaction resulted in a gain of approximately $0.8 million , which is included in income (loss) from discontinued operations, net of taxes for the nine and three months ended September 30, 2014 . Also on August 18, 2014, the Company announced that it was conducting an orderly winding-down of Advent’s remaining business and operations. As the run-off operations are substantially complete, and as the Company will not have any significant continuing involvement in Advent, the operations of Advent have been classified as discontinued operations for all periods presented. StreetLinks LLC (Appraisal Management Segment) Prior to 2013, the Company entered into a Membership Interest Purchase Agreement (the "Unit Purchase Agreement") with its Chief Operating Officer, Mr. Steve Haslam, pursuant to which Mr. Haslam sold 1,927 units in StreetLinks to the Company in exchange for a total purchase price of $6.1 million , payable in quarterly installments. At the time of the original transaction, Mr. Haslam's units represented approximately 5% of the outstanding StreetLinks membership units. On April 16, 2014, the Company and Mr. Haslam agreed to terminate the Unit Purchase Agreement. In full satisfaction of the Company's outstanding obligations under the Unit Purchase Agreement, the Company transferred back to Mr. Haslam 1,218 StreetLinks membership units (approximately 3% of StreetLinks), which represents the portion of the membership units attributable to the $3.9 million in unpaid installment payments and $0.2 million in interest remaining under the Unit Purchase Agreement. The termination of the Unit Purchase Agreement and simultaneous transfer of 1,218 StreetLinks membership units to Mr. Haslam reduced the Company's ownership interest to approximately 88% as of April 16, 2014. On April 16, 2014, the Company and non-controlling members of StreetLinks (the "Sellers") entered into a purchase and sale agreement with Assurant, pursuant to which Assurant purchased 100% of the outstanding membership units of StreetLinks in exchange for $60.0 million paid in cash at closing and up to $12.0 million in post-closing consideration contingent upon the total revenue of StreetLinks in fiscal years 2015 and 2016. The Company received approximately $53.9 million in cash proceeds at closing, of which $1.0 million was used to make certain earned bonus payments to three StreetLinks executives. Subsequent to closing, the Company received an additional $0.8 million relating to adjustments for working capital. The transaction resulted in a gain of approximately $48.2 million for the nine months ended September 30, 2014, which is included in the income (loss) from discontinued operations, net of income taxes line item on the condensed consolidated statement of operations. Also included in the income (loss) from discontinued operations, net of income taxes line for the nine months ended September 30, 2014 are approximately $1.8 million of transaction-related expenses, such as legal and consulting fees. The post-closing consideration provides for payment if (1) the total revenue of StreetLinks is $184 million or more for calendar year 2015, Assurant shall pay to the Sellers an aggregate of $12.0 million ; but if not, then (2) if the total revenue of StreetLinks is greater than $167.5 million for the calendar year 2016, Assurant shall pay to Sellers up to an aggregate of $12.0 million , based on a linear scale where full payment of the $12.0 million would occur at total revenue of $184 million . The post-closing consideration will be reduced for certain earned bonus payments to three StreetLinks executives of $2.0 million if the maximum post-closing consideration is earned and otherwise prorated based on the same linear scale. There can be no assurance that the Company will receive any post-closing consideration. Assurant has agreed to act in good faith in conducting the business of StreetLinks and to keep separate records, but generally the Company does not control how Assurant may operate the business of StreetLinks. In accordance with the relevant accounting guidance, the post-closing consideration will be treated as a gain contingency. As such, no post-closing consideration will be recognized in earnings until the contingency is resolved. As of September 30, 2015, the Company does not expect StreetLinks to meet the revenue target set for calendar year 2015, and therefore does not anticipate the resolution of this contingency during 2015. In connection with the sale, the Company and Assurant also entered into a transition services agreement, pursuant to which the Company provided ongoing information technology, human resources management and accounting services to StreetLinks. The cash flows related to these services were not significant to StreetLinks. The Company has had no significant continuing involvement with StreetLinks beyond these services. The agreed-upon professional services were substantially complete as of December 31, 2014. Professional service fees earned by the Company under the transition services agreement for the nine and three months ended September 30, 2014 are included in the service fee income – transition services line item on the consolidated statement of operations, while the related costs are included in cost of services – transition services. The Company has also executed a Non-Competition, Non-Solicitation and Non-Disclosure Agreement with StreetLinks providing that Novation is prohibited from competing in the real estate appraisal management or valuation services business through April 2018. Results of Discontinued Operations For the nine and three months ended September 30, 2014 , net income (loss) from discontinued operations consists of the net operating income and losses of the disposed entities and any necessary eliminations and income tax expense. For the nine and three months ended September 30, 2015 the net income from discontinued operations consists primarily of settlements of miscellaneous Advent liabilities. The results of the Company's discontinued operations are summarized below (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Service fee income $ — $ 37,840 $ — $ 493 Income (loss) from discontinued operations before income taxes $ 6 $ 50,057 $ 24 $ (390 ) Income tax expense (benefit) 2 8,643 2 (139 ) Income (loss) from discontinued operations, net of income taxes $ 4 $ 41,414 $ 22 $ (251 ) The assets and liabilities of discontinued operations as of September 30, 2015 and December 31, 2014 relate entirely to Advent. As of September 30, 2015 , the current liabilities of discontinued operations were comprised primarily of unclaimed funds and fees withheld from Advent's business partners for various violations of Advent's compliance program. Unclaimed funds will be escheated to the applicable state in accordance with unclaimed property laws. Obligations relating to fees withheld from business partners will be resolved when claims are received or when the statute of limitations for the related contractual obligation expires. Noncurrent liabilities of discontinued operations consist entirely of fees withheld from business partners for various violations of Advent's compliance program. The classification of these fees held as current versus noncurrent is dependent on the nature of the compliance violation and the tax year during which the violation occurred. The major classes of assets and liabilities of discontinued operations as of September 30, 2015 and December 31, 2014 are detailed below (dollars in thousands). September 30, December 31, Assets Current Assets Cash and cash equivalents $ 316 $ 358 Other current assets 250 291 Total current assets $ 566 $ 649 Liabilities Current Liabilities Accounts payable and accrued expenses $ 566 $ 875 Total current liabilities (A) 566 875 Non-Current Liabilities Other liabilities 1,798 1,797 Total non-current liabilities 1,798 1,797 Total liabilities (A) $ 2,364 $ 2,672 (A) Excludes amounts due to Novation of approximately $0.7 million as of both September 30, 2015 and December 31, 2014 . These amounts are eliminated upon consolidation and, therefore, are not included in the consolidated balance sheets for any periods presented. |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities The following table presents certain information on the Company's portfolio of available-for-sale securities as of September 30, 2015 and December 31, 2014 (dollars in thousands): As of September 30, 2015 Description of Securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 14,541 $ 1 $ (6 ) $ 14,536 Mortgage securities 598 1,897 — 2,495 Total 15,139 1,898 (6 ) 17,031 Marketable securities, non-current Corporate notes and bonds 6,843 — (10 ) 6,833 Total $ 6,843 $ — $ (10 ) $ 6,833 As of December 31, 2014 Description of Securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 24,462 $ — $ (26 ) $ 24,436 Commercial paper 1,998 — — 1,998 Mortgage securities 682 2,699 — 3,381 Total 27,142 2,699 (26 ) 29,815 Marketable securities, non-current Corporate notes and bonds 15,066 — (52 ) 15,014 Agency securities 1,000 — (2 ) 998 Total $ 16,066 $ — $ (54 ) $ 16,012 Prior to 2008, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company acquired mortgage securities that continue to be a source of its earnings and cash flow. As of September 30, 2015 and December 31, 2014 , these mortgage securities consisted entirely of the Company's investment in the residual securities issued by securitization trusts sponsored by the Company. Residual securities consist of interest-only, prepayment penalty and overcollateralization bonds. There were no other-than-temporary impairments relating to available-for-sale securities for the nine and three months ended September 30, 2015 and 2014 . The average remaining maturities of the Company’s short-term and long-term available-for-sale investments at September 30, 2015 were approximately six months and 20 months, respectively. Maturities of mortgage securities owned by the Company depend on repayment characteristics and experience of the underlying financial instruments. See Note 10 to the condensed consolidated financial statements for details on the Company's fair value methodology. The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (dollars in thousands): Size/Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(C) Year to Date Loss on Sale Year to Date Cash Flows (D) September 30, 2015 $ 3,716,116 $ 2,495 $ — $ 2,495 $ — $ 4,669 December 31, 2014 4,062,068 3,381 — 3,381 — 5,298 (A) Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust. (B) Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item on the condensed consolidated balance sheets. (C) The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust. (D) Year to date cash flows are for the nine months ended September 30, 2015 and 2014 , respectively. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net All of the Company's property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of the Company's property and equipment are the lesser of 5 years or remaining lease term for leasehold improvements, 5 years for furniture and fixtures, 3 to 5 years for office and computer equipment, and 1 to 3 years for software. Maintenance and repairs are charged to expense. Major renewals and improvements are capitalized. Gains and losses on dispositions are credited or charged to earnings as incurred. Depreciation and amortization expense relating to property and equipment was $2.1 million and $1.0 million for the nine and three months ended September 30, 2015 , respectively, and $1.1 million and $0.7 million for the nine and three months ended September 30, 2014 , respectively. As discussed in Note 2 to the condensed consolidated financial statements, certain conditions and events raised substantial doubt about the Company's ability to continue as a going concern as of September 30, 2015. As a result of these conditions and events, the Company determined that a triggering event had occurred during the third quarter of 2015, which required the Company to assess the recoverability of its long-lived assets to be held and used. No long-lived assets were deemed to be impaired as a result of this assessment. The following table shows the Company's property and equipment, net as of September 30, 2015 and December 31, 2014 (dollars in thousands): September 30, December 31, Software $ 6,010 $ 4,384 Hardware and computer equipment 5,013 3,388 Leasehold improvements 905 905 Furniture, fixtures and office equipment 753 756 Total Cost 12,681 9,433 Less: Accumulated depreciation and amortization (5,792 ) (3,801 ) Property and equipment, net $ 6,889 $ 5,632 The hardware and computer equipment amount above includes gross assets under capital leases of $1.1 million and $0.9 million as of September 30, 2015 and December 31, 2014 , respectively. Accumulated depreciation and amortization of leased assets totaled approximately $0.8 million and $0.6 million as of September 30, 2015 and December 31, 2014 , respectively. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2015 | |
Borrowings [Abstract] | |
Borrowings | Borrowings Senior Notes – The Company has outstanding unsecured senior notes pursuant to three indentures (collectively, the “Senior Notes”) with an aggregate principal balance of $85.9 million . The Senior Notes were created through an exchange of the Company's previously outstanding junior subordinated notes that occurred prior to 2012. This exchange was considered a modification of a debt instrument for accounting purposes, therefore the Company uses the effective interest method to accrete from the existing balance as of the modification date to $87.8 million and $85.9 million as of September 30, 2015 and December 31, 2014 , respectively. Under the effective interest method, significant changes in the rate at which a debt instrument accrues interest over its term can result in a recorded balance in excess of the aggregate principal balance of the debt instrument. The Senior Notes accrue interest at a rate of 1.0% per annum until the earlier of (1) the completion of an equity offering by the Company or its subsidiaries that results in proceeds of $40 million or more or (2) January 1, 2016. Thereafter, the Senior Notes will accrue interest at a rate of three-month LIBOR plus 3.5% per annum (the “Full Rate”). Interest on the Senior Notes is paid on a quarterly basis and no principal payments are due until maturity on March 30, 2033. The indentures governing the Senior Notes (the “Indentures”) contain certain restrictive covenants (the “Negative Covenants”) subject to certain exceptions in the Indentures, including written consent of the holders of the Senior Notes. The Negative Covenants prohibit the Company and its subsidiaries, from among other things, incurring debt, permitting any lien upon any of its property or assets, making any cash dividend or distribution or liquidation payment, acquiring shares of the Company or its subsidiaries, making payment on debt securities of the Company that rank pari passu or junior to the Senior Notes, or disposing of any equity interest in certain subsidiaries or all or substantially all of the assets of certain subsidiaries unless certain conditions are met. The Negative Covenants remain in effect until both of the following conditions are met: (i) the Senior Notes begin accruing interest at the Full Rate, and (ii) the Company satisfies certain financial covenants (the “Financial Covenants”). Satisfaction of the Financial Covenants requires the Company to demonstrate on a consolidated basis that (1) its Tangible Net Worth is equal to or greater than $40 million , and (2) either (a) the Interest Coverage Ratio is equal to or greater than 1.35 x, or (b) the Leverage Ratio is not greater than 95% (each such term as defined in the Indentures). As the Senior Notes were not accruing interest at the Full Rate, the Negative Covenants, as defined above, were still in effect as of September 30, 2015 and December 31, 2014 . Compliance with the Financial Covenants is required only when the Company seeks to take action prohibited by the Negative Covenants that has not been approved by the holders of the Senior Notes. With respect to the Company's recent divestiture activity, which is discussed further in Note 3 and Note 5 to the condensed consolidated financial statements, the sale of a subsidiary is not prohibited by the Negative Covenants provided that the sale is at fair market value and the proceeds are reinvested in the Company. As such, the Company was in compliance with the Negative Covenants as of September 30, 2015 and December 31, 2014 , and therefore the Company was under no obligation to comply with the Financial Covenants during these periods. Capital Leases – The Company leases hardware and computer equipment under capital leases. These capital leases are payable in 36 monthly installments and mature between October 2015 and July 2018 . Current maturities of obligations under capital leases were approximately $0.2 million and $0.3 million as of September 30, 2015 and December 31, 2014 , respectively, while noncurrent maturities of obligations under capital leases were approximately $0.1 million as of both September 30, 2015 and December 31, 2014 . Due to the immaterial nature of these obligations with regard to the Company's financial statements as a whole, current maturities and noncurrent maturities of capital leases are included in the other current liabilities and other liabilities line items, respectively, in the Company's condensed consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies – Prior to 2008, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. The Company has received indemnification and loan repurchase demands with respect to alleged violations of representations and warranties (“defects”) and with respect to other alleged misrepresentations and contractual commitments made in loan sale and securitization agreements. These demands have been received substantially beginning in 2006 and have continued into 2015. Prior to the Company ceasing the origination of loans in its mortgage lending business, it sold loans to securitization trusts and other third parties and agreed to repurchase loans with material defects and to otherwise indemnify parties to these transactions. Beginning in 1997 and ending in 2007, affiliates of the Company sold loans to securitization trusts and third parties with the potential of such obligations. The aggregate original principal balance of these loans was $43.1 billion at the time of sale or securitization. The remaining principal balance of these loans is not available as these loans are serviced by third parties and may have been refinanced, sold or liquidated. Claims to repurchase loans or to indemnify under securitization documents have not been acknowledged as valid by the Company. In some cases, claims were made against affiliates of the Company that have ceased operations and have no or limited assets. The Company has not repurchased any loans or made any such indemnification payments since 2010. Historically, repurchases of loans or indemnification of losses where a loan defect has been alleged have been insignificant and any future losses for alleged loan defects have not been deemed to be probable or reasonably estimable; therefore, the Company has recorded no reserves related to these claims. The Company does not use internal groupings for purposes of determining the status of these loans. The Company is unable to develop an estimate of the maximum potential amount of future payments related to repurchase demands because the Company does not have access to information relating to loans sold and securitized and the number or amount of claims deemed probable of assertion is not known nor is it reasonably estimable. Further, the validity of claims received remains questionable. Also, considering that the Company completed its last sale or securitization of loans during 2007, the Company believes that it will be difficult for a claimant to successfully validate any additional repurchase demands. Management does not expect that the potential impact of claims will be material to the Company's financial statements. Legal Proceedings – The Company is a party to various legal proceedings. Except as set forth below, these proceedings are of an ordinary and routine nature. Any legal fees associated with these proceedings are expensed as incurred. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than the active proceedings described in detail below, proceedings and actions against the Company should not, individually, or in the aggregate, have a material effect on the Company's financial condition, operations or liquidity. Furthermore, due to the uncertainty of any potential loss as a result of pending litigation and due to the Company's belief that an adverse ruling is not probable, the Company has not accrued a loss contingency related to the following matters in its consolidated financial statements. However, a material outcome in one or more of the active proceedings described below could have a material impact on the results of operations in a particular quarter or fiscal year. On May 21, 2008, a purported class action case was filed in the Supreme Court of the State of New York, New York County, by the New Jersey Carpenters' Health Fund, on behalf of itself and all others similarly situated. Defendants in the case included NovaStar Mortgage Funding Corporation (“NMFC”), a wholly-owned subsidiary of the Company, and its individual directors, several securitization trusts sponsored by the Company (“affiliated defendants”) and several unaffiliated investment banks and credit rating agencies. The case was removed to the United States District Court for the Southern District of New York. On June 16, 2009, the plaintiff filed an amended complaint. The plaintiff seeks monetary damages, alleging that the defendants violated sections 11, 12 and 15 of the Securities Act of 1933, as amended, by making allegedly false statements regarding mortgage loans that served as collateral for securities purchased by the plaintiff and the purported class members. On August 31, 2009, the Company filed a motion to dismiss the plaintiff's claims, which the court granted on March 31, 2011, with leave to amend. The plaintiff filed a second amended complaint on May 16, 2011, and the Company again filed a motion to dismiss. On March 29, 2012, the court dismissed the plaintiff's second amended complaint with prejudice and without leave to replead. The plaintiff filed an appeal. On March 1, 2013, the appellate court reversed the judgment of the lower court, which had dismissed the case. Also, the appellate court vacated the judgment of the lower court which had held that the plaintiff lacked standing, even as a class representative, to sue on behalf of investors in securities in which plaintiff had not invested, and the appellate court remanded the case back to the lower court for further proceedings. On April 23, 2013 the plaintiff filed its memorandum with the lower court seeking a reconsideration of the earlier dismissal of plaintiff's claims as to five offerings in which plaintiff was not invested, and on February 5, 2015 the lower court granted plaintiff's motion for reconsideration and vacated its earlier dismissal. Given the stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes that the affiliated defendants have meritorious defenses to the case and expects them to defend the case vigorously. On June 20, 2011, the National Credit Union Administration Board, as liquidating agent of U.S. Central Federal Credit Union, filed an action against NMFC and numerous other defendants in the United States District Court for the District of Kansas, claiming that the defendants issued or underwrote residential mortgage-backed securities pursuant to allegedly false or misleading registration statements, prospectuses, and/or prospectus supplements. On August 24, 2012, the plaintiff filed an amended complaint making essentially the same claims against NMFC. NMFC filed a motion to dismiss the amended complaint which was denied on September 12, 2013. The defendants had claimed that the case should be dismissed based upon a statute of limitations and sought an appeal of the court's denial of this defense. An interlocutory appeal of this issue was allowed, and on August 27, 2013, the Tenth Circuit affirmed the lower court’s denial of defendants’ motion to dismiss the plaintiff’s claims as being time barred; the appellate court held that the Extender Statute, 12 U.S.C. §1787(b)(14) applied to plaintiff’s claims. On June 16, 2014, the United States Supreme Court granted a petition of NMFC and its co-defendants for certiorari, vacated the ruling of the Tenth Circuit, and remanded the case back to that court for further consideration in light of the Supreme Court’s decision in CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014). On August 19, 2014, the Tenth Circuit reaffirmed its prior decision, and on October 2, 2014 the defendants filed a petition for writ of certiorari with the Supreme Court, which was denied. Given the stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes that NMFC has meritorious defenses to the case and expects it to defend the case vigorously. On February 28, 2013 the Federal Housing Finance Agency, as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac) and on behalf of the Trustee of the NovaStar Mortgage Funding Trust, Series 2007-1 (the “Trust”), a securitization trust in which the Company retains a residual interest, filed a summons with notice in the Supreme Court of the State of New York, County of New York against the Company and NovaStar Mortgage, Inc. (“NMI”), a wholly-owned subsidiary of the Company. The notice provides that this is a breach of contract action with respect to certain, unspecified mortgage loans and defendant's failure to repurchase such loans under the applicable agreements. Plaintiff alleges that defendants, from the closing date of the transaction that created the Trust, were aware of the breach of the representations and warranties made and failed to notice and cure such breaches, and due to the failure of defendants to cure any breach, notice to defendants would have been futile. The summons with notice was not served until June 28, 2013. By letter dated June 24, 2013, the Trustee of the Trust forwarded a notice from Freddie Mac alleging breaches of representations and warranties with respect to 43 loans, as more fully set forth in included documentation. The 43 loans had an aggregate, original principal balance of about $6.5 million. On August 19, 2013, Deutsche Bank National Trust Company, as Trustee, filed a complaint identifying alleged breaches of representations and warranties with respect to seven loans that were included in the earlier list of 43 loans. Plaintiff also generally alleged a trust-wide breach of representations and warranties by defendants with respect to loans sold and transferred to the trust. Plaintiff seeks specific performance of repurchase obligations; compensatory, consequential, recessionary and equitable damages for breach of contract; specific performance and damages for anticipatory breach of contract; and indemnification (indemnification against NMI only). On October 9, 2013, the Company and NMI filed a motion to dismiss plaintiff’s complaint. This motion to dismiss was withdrawn after plaintiff filed an amended complaint on January 28, 2014, and on March 4, 2014 the Company and NMI filed a motion to dismiss the amended complaint. Given the stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes that it has meritorious defenses to the case and expects to defend the case vigorously. |
Fair Value Accounting
Fair Value Accounting | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Accounting | Fair Value Accounting Fair Value Measurements The Company's valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: • Level 1 – Valuations based on quoted prices in active markets for identical assets and liabilities. • Level 2 – Valuations based on observable inputs in active markets for similar assets and liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates. • Level 3 – Valuations based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies based on internal cash flow forecasts. The following tables present for each of the fair value hierarchy levels, the Company's assets which are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 (dollars in thousands): Fair Value Measurements at Reporting Date Using Description Fair Value at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Cash 1,693 $ 1,693 $ — $ — Money market funds 2,892 2,892 — — Marketable securities, current: Corporate notes and bonds 14,536 — 14,536 — Mortgage securities 2,495 — — 2,495 Marketable securities, non-current: Corporate notes and bonds 6,833 — 6,833 — Total $ 28,449 $ 4,585 $ 21,369 $ 2,495 Fair Value Measurements at Reporting Date Using Description Fair Value at December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Cash $ 2,701 $ 2,701 $ — $ — Money market funds 2,595 2,595 — — Marketable securities, current: Corporate notes and bonds 24,436 — 24,436 — Commercial paper 1,998 — 1,998 — Mortgage securities 3,381 — — 3,381 Marketable securities, non-current: Corporate notes and bonds 15,014 — 15,014 — Agency securities 998 — 998 — Total $ 51,123 $ 5,296 $ 42,446 $ 3,381 Valuation Methods and Processes The Company determines the fair value of its cash equivalents and marketable securities based on pricing from our service provider and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's mortgage securities, the Company estimates fair value using present value techniques and generally does not have the option to choose other valuation methods for these securities. The methods and processes used to estimate the fair value of the Company's mortgage securities are discussed further below. There have been no significant changes to the Company's valuation techniques during the nine months ended September 30, 2015 . Accordingly, there have been no material changes to the financial statements resulting from changes to our valuation techniques during the nine months ended September 30, 2015 . The Company's marketable securities are classified as available-for-sale and are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent that the cost basis of the Company's marketable securities exceeds the fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The specific identification method is used in computing realized gains or losses. Mortgage securities - available-for-sale . As discussed above and in Note 6 to the condensed consolidated financial statements, the Company's mortgage securities – available-for-sale, are measured at fair value. These securities are valued at each reporting date using significant unobservable inputs (Level 3) by discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The Company uses the discount rate methodology for determining the fair value of its residual securities. The fair value of the residual securities is estimated based on the present value of future expected cash flows to be received. Management's best estimate of key assumptions, including credit losses, prepayment speeds, forward yield curves and discount rates commensurate with the risks involved, are used in estimating future cash flows. An independent entity has been engaged to prepare projected future cash flows of the Company's mortgage securities for each reporting period (quarterly) used by management to estimate fair value. The Company's internal finance and accounting staff reviews and monitors the work of the independent entity, including an analysis of the assumptions used, retrospective review of prior period assumptions, and preparation of an overall conclusion regarding the value and valuation process. All other fair value analysis, consisting of simple cash flow estimates and discounting techniques, is conducted internally by the Company's internal financial staff. The Company's fair value process is conducted under the supervision of the Chief Financial Officer. The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Description Valuation Techniques Significant Unobservable Inputs Range Assets: Mortgage securities – available-for-sale Present value analysis Prepayment rates 8.0% – 11.5% Weighted average life (years) 2.0 The significant unobservable inputs used in the fair value measurement of mortgage securities – available-for-sale are prepayment rates and the weighted average life for the underlying mortgage loan collateral. Using a faster (higher) estimated prepayment rate would decrease the value of the securities. The Company uses a weighted average life of 2 years from the reporting date for the expected future estimated cash flows. The future cash flows are highly-dependent upon the performance of the underlying collateral of mortgage loans. The nonperformance risk associated with the collateral is the key reason the Company utilizes such a short weighted average life in its calculation. Assuming a shorter weighted average life would decrease the estimated value of the mortgage securities. Alternatively, assuming a longer weighted average life would increase the estimated value of the mortgage securities. The following table provides a reconciliation of the beginning and ending balances for the Company's mortgage securities – available-for-sale, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine and three months ended September 30, 2015 and 2014 (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Balance, beginning of period $ 3,381 $ 3,728 $ 2,570 $ 3,552 Increases (decreases) to mortgage securities – available-for-sale: Accretion of income (A) 409 568 132 183 Proceeds from paydowns of securities (A) (493 ) (484 ) (142 ) (99 ) Mark-to-market value adjustment (802 ) (351 ) (65 ) (175 ) Net (decrease) increase to mortgage securities – available-for-sale (886 ) (267 ) (75 ) (91 ) Balance, end of period $ 2,495 $ 3,461 $ 2,495 $ 3,461 (A) Cash received on mortgage securities with no cost basis was $4.2 million and $1.2 million for the nine and three months ended September 30, 2015 , respectively, and $4.8 million and $1.8 million for the nine and three months ended September 30, 2014 , respectively. Adjustments to assets and liabilities measured at fair value on a recurring and nonrecurring basis did not have a material impact on the earnings of continuing operations for any period presented. The following disclosure of the estimated fair value of financial instruments presents amounts that have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimation methodologies could have a material impact on the estimated fair value amounts. The fair value of short-term financial assets and liabilities, such as service fees receivable, notes receivable, and accounts payable and accrued expenses are not included in the following table as their carrying value approximates their fair value. The estimated fair values of the Company's financial instruments are as follows as of September 30, 2015 and December 31, 2014 (dollars in thousands): As of September 30, 2015 As of December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Restricted cash $ 692 $ 552 $ 597 $ 450 Marketable securities 23,864 23,864 45,827 45,827 Financial liabilities: Senior notes $ 87,798 $ 16,584 $ 85,937 $ 15,189 For the items in the table above not measured at fair value in the statement of financial position but for which the fair value is disclosed, the fair value has been estimated using Level 3 methodologies, based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow calculations based on internal cash flow forecasts. No assets or liabilities have been transferred between levels during any period presented. Restricted cash – The fair value of restricted cash was estimated by discounting estimated future releases of the cash from restriction. Restricted cash is included in the other current assets and other assets line items in the Company's condensed consolidated balance sheets. Senior notes – The fair value is estimated by discounting future projected cash flows using a discount rate commensurate with the risks involved. The value of the Senior Notes was calculated assuming that the Company would be required to pay interest at a rate of 1.0% per annum until January 2016, at which time the Company would be required to start paying the Full Rate of three-month LIBOR plus 3.5% per annum until maturity in March 2033. The three-month LIBOR used in the analysis was projected using a forward interest rate curve. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended September 30, 2015 , the Company recorded an income tax benefit from continuing operations of approximately $0.1 million . This benefit relates to a reduction of unrecognized tax benefits due to the lapse of the related statute of limitations. Income tax expense for nine months ended September 30, 2015 was not material. For the nine and three months ended September 30, 2014 , the Company recorded an income tax benefit of $8.6 million and $0.4 million , respectively. The income tax benefit for these periods relates primarily to operating losses from continuing operations and the utilization of a portion of the Company's deferred tax assets to offset the income tax expense from discontinued operations arising from the gain on the sale of StreetLinks during the second quarter of 2014. For the nine and three months ended September 30, 2015 , income tax expense from discontinued operations was not material. For the nine months ended September 30, 2014 , the Company recorded income tax expense from discontinued operations of $8.6 million , which relates to the income from discontinued operations for the period arising primarily from the gain on the sale of StreetLinks. The Company recorded an income tax benefit from discontinued operations of $0.1 million for the three months ended September 30, 2014 , which arises due to the loss on discontinued operations for the period. The consolidated income tax expense (benefit) was not material for the nine and three months ended September 30, 2015 , as the Company's effective tax rate is expected to be close to 0% due to the valuation allowance against the Company's deferred tax assets, which is discussed further below. The consolidated income tax expense was not material for the nine months ended September 30, 2014 , while the consolidated income tax benefit of $0.5 million for the three months ended September 30, 2014 arises due to the losses from both continuing and discontinued operations for the period. Prior to 2014, the Company determined that it was no longer more likely than not that it will recognize a portion of its deferred tax assets. Therefore, as of both September 30, 2015 and December 31, 2014 , the Company maintained a full valuation allowance against its deferred tax assets of $276.9 million and $268.6 million , respectively. The Company's determination of the extent to which its deferred tax assets will be realized requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of September 30, 2015 and December 31, 2014 , the total gross amount of unrecognized tax benefits was $0.4 million . and $0.5 million , respectively. These amounts also represent the total amount of unrecognized tax benefits that would impact the effective tax rate in the respective periods. The Company does not anticipate a material reduction of the unrecognized tax benefits due to the lapse of the related statute of limitations in the next twelve months. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting During the nine months ended September 30, 2015, the Company operated as a single, consolidated operating segment, which encompasses the development, marketing, and support of Corvisa's cloud-based communication software and related services. Accordingly, as of September 30, 2015, the Company determined that it had only one operating segment, and therefore, one reportable segment. As discussed in Note 3 to the condensed consolidated financial statements, on December 21, 2015, the Company entered into the Purchase Agreement with Corvisa Services and ShoreTel. Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase all of the membership interests of Corvisa. With the sale of Corvisa, subject to the terms and conditions under the Purchase Agreement, the Company intends to continue its strategy of seeking to acquire operating businesses or make other investments that generate taxable earnings, which is discussed further in Note 2 to the condensed consolidated financial statements. The Company's service fee income from external customers is comprised of the following products and services (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Professional services $ 1,380 $ 1,187 $ 426 $ 271 Communications services 1,177 820 451 317 Transition services — 2,059 — 1,091 Total net service fee income $ 2,557 $ 4,066 $ 877 $ 1,679 Reconciliation to Financial Statements Prior to 2008, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. The Company incurred significant debt to finance these legacy operations, which, though modified as discussed in Note 8 , remains outstanding as of September 30, 2015 . For the nine and three months ended September 30, 2015 , the Company incurred interest expense on its Senior Notes of approximately $2.5 million and $0.8 million , respectively, compared to $2.3 million and $0.8 million for the nine and three months ended September 30, 2014 , respectively. Also as a result of the Company's legacy mortgage lending activities, the Company acquired mortgage securities that continue to be a source of its earnings and cash flow. Through September 30, 2015, the interest and cash flows received from these securities were used to fund the Company's cloud-based communication software operations described above. For the nine and three months ended September 30, 2015 , the Company earned interest income on these securities of approximately $4.6 million and $1.4 million , respectively. For the nine and three months ended September 30, 2014 , the Company earned approximately $5.4 million and $2.0 million from these securities, respectively. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and nonvested shares. The computations of basic and diluted earnings per share for the nine and three months ended September 30, 2015 and 2014 (dollars in thousands, except share and per share amounts) are as follows: For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Numerator: Net loss from continuing operations $ (20,881 ) $ (5,289 ) $ (7,261 ) $ (4,631 ) Net income (loss) from discontinued operations 4 41,414 22 (251 ) Net (loss) income available to common shareholders (20,877 ) 36,125 (7,239 ) (4,882 ) Denominator: Weighted average common shares outstanding – basic 91,103,880 90,895,504 91,187,345 90,951,716 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 91,103,880 90,895,504 91,187,345 90,951,716 Stock options — — — — Nonvested shares — — — — Weighted average common shares outstanding – dilutive 91,103,880 90,895,504 91,187,345 90,951,716 Basic earnings per share: Net loss from continuing operations $ (0.23 ) $ (0.06 ) $ (0.08 ) $ (0.04 ) Net income (loss) from discontinued operations — 0.46 — (0.01 ) Net (loss) income available to common shareholders (0.23 ) 0.40 (0.08 ) (0.05 ) Diluted earnings per share: Net loss from continuing operations $ (0.23 ) $ (0.06 ) $ (0.08 ) $ (0.04 ) Net income (loss) from discontinued operations — 0.46 — (0.01 ) Net (loss) income available to common shareholders (0.23 ) 0.40 (0.08 ) (0.05 ) The following weighted-average options to purchase shares of common stock were outstanding during each period presented, but were not included in the computation of diluted earnings per share because the calculated number of shares assumed to be repurchased was greater than the number of shares to be obtained upon exercise, therefore, the effect would be antidilutive (in thousands, except exercise prices): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Number of stock options 10,379 9,622 10,832 11,486 Weighted average exercise price of stock options $ 0.62 $ 0.66 $ 0.62 $ 0.64 During the nine months ended September 30, 2015, the Company granted approximately 1.4 million options to purchase shares of common stock at a weighted average exercise price of $0.51 . Approximately 0.7 million of these options were granted during the three months ended September 30, 2015 at a weighted average exercise price of $0.51 . The weighted average impact of 0.5 million and 1.1 million of the current year option grants are included in the table above for the nine and three months ended September 30, 2015 , respectively. During the nine months ended September 30, 2014 , the Company granted 3.3 million options to purchase shares of common stock at a weighted average exercise price of $0.51 . Approximately 0.3 million of these options were granted during the three months ended September 30, 2014 at a weighted average exercise price of $0.51 . The weighted average impact of 1.1 million and 3.0 million of the options granted during 2014 are included in the table above for the nine and three months ended September 30, 2014 , respectively. During the third quarter of 2015 the Company granted approximately 1.3 million nonvested shares to its non-employee directors. These shares vest one year from the date of grant. The weighted average impact of approximately 0.2 million and 0.7 million of the nonvested shares granted during the current year were not included in the calculation of earnings per share for the nine and three months ended September 30, 2015 , respectively, because they were anti-dilutive. As of September 30, 2015 and September 30, 2014 , respectively, the Company had approximately 1.5 million and 0.5 million nonvested shares outstanding. While the nonvested shares granted during the third quarter of 2015 vest one year from the date of grant, the nonvested shares granted in prior years vest ratably over their original term of six years. The weighted average impact of approximately 0.6 million and 1.0 million nonvested shares were not included in the calculation of earnings per share for the nine and three months ended September 30, 2015 , respectively, because they were anti-dilutive. Approximately 0.6 million and 0.5 million nonvested shares were not included in the calculation of earnings per share for the nine and three months ended September 30, 2014 , respectively. |
Financial Statement Presentat22
Financial Statement Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Consolidation, Policy | The condensed consolidated financial statements of the Company include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments have been made, which were of a normal and recurring nature, for a fair presentation of the condensed consolidated financial statements. The Company's condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 , as amended (the "2014 Form 10-K"). |
Cash and Cash Equivalents, Policy | Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. |
Property and Equipment, Net | All of the Company's property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of the Company's property and equipment are the lesser of 5 years or remaining lease term for leasehold improvements, 5 years for furniture and fixtures, 3 to 5 years for office and computer equipment, and 1 to 3 years for software. Maintenance and repairs are charged to expense. Major renewals and improvements are capitalized. Gains and losses on dispositions are credited or charged to earnings as incurred. |
Valuation Methods and Processes | The Company determines the fair value of its cash equivalents and marketable securities based on pricing from our service provider and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's mortgage securities, the Company estimates fair value using present value techniques and generally does not have the option to choose other valuation methods for these securities. The methods and processes used to estimate the fair value of the Company's mortgage securities are discussed further below. There have been no significant changes to the Company's valuation techniques during the nine months ended September 30, 2015 . Accordingly, there have been no material changes to the financial statements resulting from changes to our valuation techniques during the nine months ended September 30, 2015 . The Company's marketable securities are classified as available-for-sale and are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent that the cost basis of the Company's marketable securities exceeds the fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The specific identification method is used in computing realized gains or losses. Mortgage securities - available-for-sale . As discussed above and in Note 6 to the condensed consolidated financial statements, the Company's mortgage securities – available-for-sale, are measured at fair value. These securities are valued at each reporting date using significant unobservable inputs (Level 3) by discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The Company uses the discount rate methodology for determining the fair value of its residual securities. The fair value of the residual securities is estimated based on the present value of future expected cash flows to be received. Management's best estimate of key assumptions, including credit losses, prepayment speeds, forward yield curves and discount rates commensurate with the risks involved, are used in estimating future cash flows. |
Earnings per Share | Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and nonvested shares. |
Liquidity Disclosure | The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. Since the sale of StreetLinks, the Company has incurred significant and recurring operating losses and negative cash flows from operations. Given the early stage nature of Corvisa, the Company would expect these trends to continue for the foreseeable future without the addition of significant new customers or a significant reduction of expenses. As of September 30, 2015, the Company’s existing cash resources alone no longer appear to be sufficient to cover the ongoing operating cash needs of Corvisa or the Company as a whole at their current run rate. Further, the Company has limited ability to raise additional capital through the issuance of additional equity securities and is unable to secure additional debt funding due to restrictions set forth in the indentures governing the Senior Notes as discussed further in Note 8 to the financial statements. As such, these matters raised substantial doubt about the Company’s ability to continue as a going concern as of September 30, 2015. The Company considered several strategic alternatives with regard to the Corvisa business including, but not limited to, identifying a potential buyer for Corvisa, identifying potential outside investors to provide additional capital directly for Corvisa, and/or implementing significant cost-cutting measures. As detailed further in Note 3 to the condensed consolidated financial statements, on December 21, 2015, the Company entered into the Purchase Agreement with Corvisa Services and ShoreTel. Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase all of the membership interests of Corvisa. While the transaction is subject to certain closing conditions, the Company believes that its agreement to sell Corvisa alleviates the substantial doubt about the Company’s ability to continue as a going concern that existed as of September 30, 2015, as the sale would eliminate the Company's share of Corvisa's future net operating losses and ongoing operating cash needs. With the sale of Corvisa, subject to the terms and conditions under the Purchase Agreement, the Company intends to continue its strategy of seeking to acquire operating businesses or make other investments that generate taxable earnings. Because the Company has large net operating losses, the Company has the ability to operate in a tax-efficient manner. As of September 30, 2015, Novation had approximately $674.9 million in federal net operating losses which may be carried forward to offset future taxable income. Recent performance has not allowed Novation to capitalize on this significant strategic advantage. As of the date the financial statements included in this report are issued, the Company has not yet identified any specific acquisition targets. The Company acknowledges that the identification of an acquisition target and the negotiation of a purchase agreement could take an extended period of time, however, based on current projections and subject to the completion of the Company's sale of Corvisa, the Company believes its existing liquid assets and the ongoing cash flows from its mortgage securities portfolio will be sufficient to sustain the Company for a period of at least twelve months and enable the Company to effectively implement this strategy. While the Company acknowledges that cash flows from its mortgage securities portfolio can be volatile in nature, the recent performance of these securities would suggest that these securities will continue to be a source of cash flows for the foreseeable future. The Company's liquid assets and contractual obligations as of September 30, 2015 are detailed further below. As of September 30, 2015 , the Company had approximately $4.6 million in unrestricted cash and cash equivalents and $0.7 million of restricted cash, portions of which are included in the other current assets and other assets line items on the condensed consolidated balance sheet. In addition, the Company held approximately $21.4 million in corporate notes and bonds with average remaining maturities between six months and 20 months as of September 30, 2015 , and approximately $2.5 million in mortgage securities, which have contributed approximately $4.7 million in cash flows for the nine months ended September 30, 2015. These securities are classified as available-for-sale as of September 30, 2015 and are included in the current and non-current marketable securities line items on the condensed consolidated balance sheet. For additional information regarding the Company's marketable securities, see Note 6 to the condensed consolidated financial statements. The Company's ongoing contractual obligations subsequent to the sale of Corvisa would consist primarily of its Senior Notes, which are detailed further in Note 8 to the condensed consolidated financial statements, and certain operating lease agreements. At September 30, 2015, the total future minimum lease commitments under these leases totaled approximately $2.3 million . These leases expire between June 2018 and October 2019. |
Divestitures (Tables)
Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Income Statement by Disposal Groups, Including Discontinued Operations [Table Text Block] | The results of the Company's discontinued operations are summarized below (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Service fee income $ — $ 37,840 $ — $ 493 Income (loss) from discontinued operations before income taxes $ 6 $ 50,057 $ 24 $ (390 ) Income tax expense (benefit) 2 8,643 2 (139 ) Income (loss) from discontinued operations, net of income taxes $ 4 $ 41,414 $ 22 $ (251 ) |
Balance Sheet by Disposal Groups, Including Discontinued Operations [Table Text Block] | The major classes of assets and liabilities of discontinued operations as of September 30, 2015 and December 31, 2014 are detailed below (dollars in thousands). September 30, December 31, Assets Current Assets Cash and cash equivalents $ 316 $ 358 Other current assets 250 291 Total current assets $ 566 $ 649 Liabilities Current Liabilities Accounts payable and accrued expenses $ 566 $ 875 Total current liabilities (A) 566 875 Non-Current Liabilities Other liabilities 1,798 1,797 Total non-current liabilities 1,798 1,797 Total liabilities (A) $ 2,364 $ 2,672 (A) Excludes amounts due to Novation of approximately $0.7 million as of both September 30, 2015 and December 31, 2014 . These amounts are eliminated upon consolidation and, therefore, are not included in the consolidated balance sheets for any periods presented. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale Securities | The following table presents certain information on the Company's portfolio of available-for-sale securities as of September 30, 2015 and December 31, 2014 (dollars in thousands): As of September 30, 2015 Description of Securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 14,541 $ 1 $ (6 ) $ 14,536 Mortgage securities 598 1,897 — 2,495 Total 15,139 1,898 (6 ) 17,031 Marketable securities, non-current Corporate notes and bonds 6,843 — (10 ) 6,833 Total $ 6,843 $ — $ (10 ) $ 6,833 As of December 31, 2014 Description of Securities Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 24,462 $ — $ (26 ) $ 24,436 Commercial paper 1,998 — — 1,998 Mortgage securities 682 2,699 — 3,381 Total 27,142 2,699 (26 ) 29,815 Marketable securities, non-current Corporate notes and bonds 15,066 — (52 ) 15,014 Agency securities 1,000 — (2 ) 998 Total $ 16,066 $ — $ (54 ) $ 16,012 |
Schedule of Securitization Trust | The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (dollars in thousands): Size/Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(C) Year to Date Loss on Sale Year to Date Cash Flows (D) September 30, 2015 $ 3,716,116 $ 2,495 $ — $ 2,495 $ — $ 4,669 December 31, 2014 4,062,068 3,381 — 3,381 — 5,298 (A) Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust. (B) Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item on the condensed consolidated balance sheets. (C) The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust. (D) Year to date cash flows are for the nine months ended September 30, 2015 and 2014 , respectively. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | The following table shows the Company's property and equipment, net as of September 30, 2015 and December 31, 2014 (dollars in thousands): September 30, December 31, Software $ 6,010 $ 4,384 Hardware and computer equipment 5,013 3,388 Leasehold improvements 905 905 Furniture, fixtures and office equipment 753 756 Total Cost 12,681 9,433 Less: Accumulated depreciation and amortization (5,792 ) (3,801 ) Property and equipment, net $ 6,889 $ 5,632 |
Fair Value Accounting (Tables)
Fair Value Accounting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following tables present for each of the fair value hierarchy levels, the Company's assets which are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 (dollars in thousands): Fair Value Measurements at Reporting Date Using Description Fair Value at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Cash 1,693 $ 1,693 $ — $ — Money market funds 2,892 2,892 — — Marketable securities, current: Corporate notes and bonds 14,536 — 14,536 — Mortgage securities 2,495 — — 2,495 Marketable securities, non-current: Corporate notes and bonds 6,833 — 6,833 — Total $ 28,449 $ 4,585 $ 21,369 $ 2,495 Fair Value Measurements at Reporting Date Using Description Fair Value at December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Cash $ 2,701 $ 2,701 $ — $ — Money market funds 2,595 2,595 — — Marketable securities, current: Corporate notes and bonds 24,436 — 24,436 — Commercial paper 1,998 — 1,998 — Mortgage securities 3,381 — — 3,381 Marketable securities, non-current: Corporate notes and bonds 15,014 — 15,014 — Agency securities 998 — 998 — Total $ 51,123 $ 5,296 $ 42,446 $ 3,381 |
Fair Value Inputs, Assets and Liabilities, Quantitative Information | The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Description Valuation Techniques Significant Unobservable Inputs Range Assets: Mortgage securities – available-for-sale Present value analysis Prepayment rates 8.0% – 11.5% Weighted average life (years) 2.0 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the Company's mortgage securities – available-for-sale, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine and three months ended September 30, 2015 and 2014 (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Balance, beginning of period $ 3,381 $ 3,728 $ 2,570 $ 3,552 Increases (decreases) to mortgage securities – available-for-sale: Accretion of income (A) 409 568 132 183 Proceeds from paydowns of securities (A) (493 ) (484 ) (142 ) (99 ) Mark-to-market value adjustment (802 ) (351 ) (65 ) (175 ) Net (decrease) increase to mortgage securities – available-for-sale (886 ) (267 ) (75 ) (91 ) Balance, end of period $ 2,495 $ 3,461 $ 2,495 $ 3,461 (A) Cash received on mortgage securities with no cost basis was $4.2 million and $1.2 million for the nine and three months ended September 30, 2015 , respectively, and $4.8 million and $1.8 million for the nine and three months ended September 30, 2014 , respectively. |
Fair Value, Measured on Recurring and Nonrecurring Basis, Gain (Loss) Included in Earnings | Adjustments to assets and liabilities measured at fair value on a recurring and nonrecurring basis did not have a material impact on the earnings of continuing operations for any period presented. |
Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company's financial instruments are as follows as of September 30, 2015 and December 31, 2014 (dollars in thousands): As of September 30, 2015 As of December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Restricted cash $ 692 $ 552 $ 597 $ 450 Marketable securities 23,864 23,864 45,827 45,827 Financial liabilities: Senior notes $ 87,798 $ 16,584 $ 85,937 $ 15,189 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Products and Services [Table Text Block] | The Company's service fee income from external customers is comprised of the following products and services (dollars in thousands): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Professional services $ 1,380 $ 1,187 $ 426 $ 271 Communications services 1,177 820 451 317 Transition services — 2,059 — 1,091 Total net service fee income $ 2,557 $ 4,066 $ 877 $ 1,679 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per share for the nine and three months ended September 30, 2015 and 2014 (dollars in thousands, except share and per share amounts) are as follows: For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Numerator: Net loss from continuing operations $ (20,881 ) $ (5,289 ) $ (7,261 ) $ (4,631 ) Net income (loss) from discontinued operations 4 41,414 22 (251 ) Net (loss) income available to common shareholders (20,877 ) 36,125 (7,239 ) (4,882 ) Denominator: Weighted average common shares outstanding – basic 91,103,880 90,895,504 91,187,345 90,951,716 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 91,103,880 90,895,504 91,187,345 90,951,716 Stock options — — — — Nonvested shares — — — — Weighted average common shares outstanding – dilutive 91,103,880 90,895,504 91,187,345 90,951,716 Basic earnings per share: Net loss from continuing operations $ (0.23 ) $ (0.06 ) $ (0.08 ) $ (0.04 ) Net income (loss) from discontinued operations — 0.46 — (0.01 ) Net (loss) income available to common shareholders (0.23 ) 0.40 (0.08 ) (0.05 ) Diluted earnings per share: Net loss from continuing operations $ (0.23 ) $ (0.06 ) $ (0.08 ) $ (0.04 ) Net income (loss) from discontinued operations — 0.46 — (0.01 ) Net (loss) income available to common shareholders (0.23 ) 0.40 (0.08 ) (0.05 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average options to purchase shares of common stock were outstanding during each period presented, but were not included in the computation of diluted earnings per share because the calculated number of shares assumed to be repurchased was greater than the number of shares to be obtained upon exercise, therefore, the effect would be antidilutive (in thousands, except exercise prices): For the Nine Months Ended For the Three Months Ended 2015 2014 2015 2014 Number of stock options 10,379 9,622 10,832 11,486 Weighted average exercise price of stock options $ 0.62 $ 0.66 $ 0.62 $ 0.64 |
Financial Statement Presentat29
Financial Statement Presentation (Details) | Sep. 30, 2015 |
Corvisa LLC [Member] | |
Operations [Line Items] | |
Ownership percentage | 100.00% |
Liquidity - Cash and Cash Equiv
Liquidity - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 4,585 | $ 5,296 | $ 16,495 | $ 5,768 |
Restricted cash and cash equivalents | $ 700 |
Liquidity - Marketable Securiti
Liquidity - Marketable Securities (Details) $ in Millions | Sep. 30, 2015USD ($) |
Corporate notes and bonds | |
Schedule of Available-for-sale Securities [Line Items] | |
Marketable securities | $ 21.4 |
Mortgage securities | |
Schedule of Available-for-sale Securities [Line Items] | |
Marketable securities | $ 2.5 |
Liquidity - Commitments (Detail
Liquidity - Commitments (Details) $ in Millions | Sep. 30, 2015USD ($) |
Liquidity [Abstract] | |
Operating Leases, Future Minimum Payments Due | $ 2.3 |
Liquidity - Narrative (Details)
Liquidity - Narrative (Details) $ in Millions | Sep. 30, 2015USD ($) |
Internal Revenue Service (IRS) [Member] | |
Operating Loss Carryforwards [Line Items] | |
Operating Loss Carryforwards | $ 674.9 |
Subsequent Events (Details)
Subsequent Events (Details) - Corvisa LLC [Member] - Subsequent Event [Member] $ in Thousands | Dec. 21, 2015USD ($) |
Subsequent Event [Line Items] | |
Bonus payments to employees | $ 300 |
Transaction-related costs | 1,000 |
Estimated severance costs | 800 |
ShoreTel, Inc. [Member] | Membership Interest Purchase Agreement [Member] | |
Subsequent Event [Line Items] | |
Divestiture of business, total consideration | 8,500 |
Cash received at closing, including portion attributable to noncontrolling interests | 7,100 |
Consideration held in escrow to secure indemnification obligations | 1,000 |
Consideration held in escrow to secure obligations related to working capital adjustment | 350 |
Stock Options [Member] | |
Subsequent Event [Line Items] | |
Accelerated stock-based compensation cost | $ 200 |
Divestitures - Income Statement
Divestitures - Income Statement of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Service fee income | $ 0 | $ 493 | $ 0 | $ 37,840 |
Income (loss) from discontinued operations before income taxes | 24 | (390) | 6 | 50,057 |
Income tax expense (benefit) from discontinued operations | 2 | (139) | 2 | 8,643 |
Income (loss) from discontinued operations, net of income taxes | $ 22 | $ (251) | $ 4 | $ 41,414 |
Divestitures - Balance Sheet of
Divestitures - Balance Sheet of Discontinued Operations (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Discontinued Operations and Disposal Groups [Abstract] | |||||
Due to Novation | [1] | $ 700 | $ 700 | ||
Assets | |||||
Cash and cash equivalents | 316 | 358 | $ 608 | $ 3,499 | |
Other current assets | 250 | 291 | |||
Total current assets | 566 | 649 | |||
Current Liabilities | |||||
Accounts payable and accrued expenses | 566 | 875 | |||
Total current liabilities (A) | [1] | 566 | 875 | ||
Non-Current Liabilities | |||||
Other liabilities | 1,798 | 1,797 | |||
Total non-current liabilities | 1,798 | 1,797 | |||
Total liabilities (A) | [1] | $ 2,364 | $ 2,672 | ||
[1] | Excludes amounts due to Novation of approximately $0.7 million as of both September 30, 2015 and December 31, 2014. These amounts are eliminated upon consolidation and, therefore, are not included in the consolidated balance sheets for any periods presented. |
Divestitures - Narrative (Detai
Divestitures - Narrative (Details) - USD ($) $ in Thousands | Aug. 18, 2014 | Apr. 16, 2014 | Mar. 08, 2012 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Divestitures Narrative | ||||||
Proceeds from sale of subsidiary | $ 0 | $ 54,748 | ||||
Advent Financial Services LLC [Member] | ||||||
Divestitures Narrative | ||||||
Proceeds from Sale of Intangible Assets | $ 1,000 | |||||
Gain (Loss) on Disposition of Intangible Assets | $ 800 | |||||
StreetLinks LLC [Member] | ||||||
Divestitures Narrative | ||||||
Bonus payments to employees | $ 1,000 | |||||
Gain on sale of subsidiary before taxes | $ 48,200 | |||||
Transaction-related costs | 1,800 | |||||
Assurant Services, LLC [Member] | Purchase and Sale Agreement [Member] | StreetLinks LLC [Member] | ||||||
Divestitures Narrative | ||||||
Cash received at closing, including portion attributable to noncontrolling interests | 60,000 | |||||
Proceeds from sale of subsidiary | 53,900 | |||||
Proceeds from sale of subsidiary, adjustments for working capital | $ 800 | |||||
Contingent Consideration Receivable [Member] | Assurant Services, LLC [Member] | Purchase and Sale Agreement [Member] | StreetLinks LLC [Member] | ||||||
Divestitures Narrative | ||||||
Post-closing consideration, maximum | 12,000 | |||||
Minimum [Member] | 2015 [Member] | Contingent Consideration Receivable [Member] | Purchase and Sale Agreement [Member] | ||||||
Divestitures Narrative | ||||||
Post-closing consideration, total revenue requirement | 184,000 | |||||
Minimum [Member] | 2016 [Member] | Contingent Consideration Receivable [Member] | Purchase and Sale Agreement [Member] | ||||||
Divestitures Narrative | ||||||
Post-closing consideration, total revenue requirement | 167,500 | |||||
Potential Bonus Payments to StreetLinks Employees [Member] | ||||||
Divestitures Narrative | ||||||
Potential reduction of proceeds, maximum | $ 2,000 | |||||
StreetLinks LLC [Member] | ||||||
Divestitures Narrative | ||||||
Increase in ownership percentage | 5.00% | |||||
Decrease in ownership percentage | 3.00% | |||||
Ownership percentage | 88.00% | |||||
StreetLinks LLC [Member] | Unit Purchase Agreement [Member] | ||||||
Divestitures Narrative | ||||||
Membership units purchased | 1,927 | |||||
Purchase price | $ 6,100 | |||||
Membership units transferred | 1,218 | |||||
Remaining obligation, principal | $ 3,900 | |||||
Remaining obligation, interest | $ 200 |
Marketable Securities - Availab
Marketable Securities - Available-for-Sale (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | $ 15,139 | $ 27,142 |
Accumulated gross unrealized gains, current | 1,898 | 2,699 |
Accumulated gross unrealized losses, current | (6) | (26) |
Fair value, current | $ 17,031 | 29,815 |
Average remaining maturity | 6 months | |
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | $ 6,843 | 16,066 |
Accumulated gross unrealized gains, non-current | 0 | 0 |
Accumulated gross unrealized losses, non-current | (10) | (54) |
Fair value, non-current | $ 6,833 | 16,012 |
Average remaining maturity | 20 months | |
Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | $ 14,541 | 24,462 |
Accumulated gross unrealized gains, current | 1 | 0 |
Accumulated gross unrealized losses, current | (6) | (26) |
Fair value, current | 14,536 | 24,436 |
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | 6,843 | 15,066 |
Accumulated gross unrealized gains, non-current | 0 | 0 |
Accumulated gross unrealized losses, non-current | (10) | (52) |
Fair value, non-current | 6,833 | 15,014 |
Agency securities | ||
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | 1,000 | |
Accumulated gross unrealized gains, non-current | 0 | |
Accumulated gross unrealized losses, non-current | (2) | |
Fair value, non-current | 998 | |
Commercial paper | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 1,998 | |
Accumulated gross unrealized gains, current | 0 | |
Accumulated gross unrealized losses, current | 0 | |
Fair value, current | 1,998 | |
Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 598 | 682 |
Accumulated gross unrealized gains, current | 1,897 | 2,699 |
Accumulated gross unrealized losses, current | 0 | 0 |
Fair value, current | $ 2,495 | $ 3,381 |
Marketable Securities - Securit
Marketable Securities - Securitization Trusts (Details) - Securitization Trust, Primary Beneficiary [Member] - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | ||
Securitization Trust [Line Items] | ||||
Size/Principal outstanding | [1] | $ 3,716,116 | $ 4,062,068 | |
Assets on Balance Sheet | [2] | 2,495 | 3,381 | |
Liabilities on Balance Sheet | 0 | 0 | ||
Maximum exposure to loss | [3] | 2,495 | 3,381 | |
Year to date loss on sale | 0 | $ 0 | ||
Year to date cash flows | [4] | $ 4,669 | $ 5,298 | |
[1] | Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust. | |||
[2] | Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item on the condensed consolidated balance sheets. | |||
[3] | The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust. | |||
[4] | Year to date cash flows are for the nine months ended September 30, 2015 and 2014, respectively. |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization expense | $ 1 | $ 0.7 | $ 2.1 | $ 1.1 |
Leasehold Improvements [Member] | Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 5 years | |||
Furniture and Fixtures [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 5 years | |||
Office and Computer Equipment [Member] | Minimum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 3 years | |||
Office and Computer Equipment [Member] | Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 5 years | |||
Software [Member] | Minimum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 1 year | |||
Software [Member] | Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful life of property and equipment | 3 years |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 12,681 | $ 9,433 |
Less: Accumulated depreciation and amortization | (5,792) | (3,801) |
Property and equipment, net | 6,889 | 5,632 |
Furniture, Fixtures and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 753 | 756 |
Hardware and Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,013 | 3,388 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 6,010 | 4,384 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 905 | $ 905 |
Property and Equipment, Net - C
Property and Equipment, Net - Capital Leases (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Capital Leased Assets [Line Items] | ||
Capital Leased Assets, Gross | $ 1.1 | $ 0.9 |
Capital Leased Assets, Accumulated Depreciation | $ 0.8 | $ 0.6 |
Borrowings - Senior Notes (Deta
Borrowings - Senior Notes (Details) $ in Thousands | Mar. 22, 2011USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | |||
Senior notes | $ 87,798 | $ 85,937 | |
Post-Modification Notes [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 87,800 | $ 85,900 | |
Senior Notes [Member] | Post-Modification Notes [Member] | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 85,900 | ||
Senior Notes [Member] | Post-Modification Notes [Member] | Interest Rate, Pre-Trigger [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.00% | ||
Senior Notes [Member] | Post-Modification Notes [Member] | Modification Trigger, One [Member] | |||
Debt Instrument [Line Items] | |||
Proceeds from equity offering, minimum | $ 40,000 | ||
Senior Notes [Member] | Post-Modification Notes [Member] | Interest Rate, Post-Trigger [Member] | |||
Debt Instrument [Line Items] | |||
Variable rate, description | three-month LIBOR | ||
Basis spread on variable rate | 3.50% | ||
Restriction Release Trigger, One [Member] | Senior Notes [Member] | Post-Modification Notes [Member] | |||
Debt Instrument [Line Items] | |||
Tangible net worth, minimum | $ 40,000 | ||
Restriction Release Trigger, Two [Member] | Senior Notes [Member] | Post-Modification Notes [Member] | |||
Debt Instrument [Line Items] | |||
Interest coverage ratio, minimum | 1.35 | ||
Leverage ratio, maximum | 95.00% |
Borrowings - Capital Leases (De
Borrowings - Capital Leases (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Capital Leases, Maturity Date Range, Start | Oct. 20, 2015 | |
Capital Leases, Maturity Date Range, End | Jul. 20, 2018 | |
Capital Lease Obligations, Current | $ 0.2 | $ 0.3 |
Capital Lease Obligations, Noncurrent | $ 0.1 | $ 0.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Billions | Dec. 31, 2007USD ($) |
Claims to Repurchase Securitized Loans [Member] | |
Loss Contingencies [Line Items] | |
Principal Amount Outstanding on Loans Securitized or Asset-backed Financing Arrangement | $ 43.1 |
Fair Value Accounting - Recurri
Fair Value Accounting - Recurring Basis (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Marketable Securities, Current [Abstract] | ||
Fair value, current | $ 17,031,000 | $ 29,815,000 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 6,833,000 | 16,012,000 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 28,449,000 | 51,123,000 |
Commercial paper | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,998,000 | |
Commercial paper | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,998,000 | |
Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 14,536,000 | 24,436,000 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 6,833,000 | 15,014,000 |
Corporate notes and bonds | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 14,536,000 | 24,436,000 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 6,833,000 | 15,014,000 |
Agency securities | ||
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 998,000 | |
Agency securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 998,000 | |
Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 2,495,000 | 3,381,000 |
Mortgage securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 2,495,000 | 3,381,000 |
Cash | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 1,693,000 | 2,701,000 |
Money market funds | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2,892,000 | 2,595,000 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 4,585,000 | 5,296,000 |
Fair Value, Inputs, Level 1 [Member] | Commercial paper | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Fair Value, Inputs, Level 1 [Member] | Corporate notes and bonds | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Agency securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | |
Fair Value, Inputs, Level 1 [Member] | Mortgage securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Cash | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 1,693,000 | 2,701,000 |
Fair Value, Inputs, Level 1 [Member] | Money market funds | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2,892,000 | 2,595,000 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 21,369,000 | 42,446,000 |
Fair Value, Inputs, Level 2 [Member] | Commercial paper | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,998,000 | |
Fair Value, Inputs, Level 2 [Member] | Corporate notes and bonds | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 14,536,000 | 24,436,000 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 6,833,000 | 15,014,000 |
Fair Value, Inputs, Level 2 [Member] | Agency securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 998,000 | |
Fair Value, Inputs, Level 2 [Member] | Mortgage securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Cash | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Money market funds | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 2,495,000 | 3,381,000 |
Fair Value, Inputs, Level 3 [Member] | Commercial paper | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Fair Value, Inputs, Level 3 [Member] | Corporate notes and bonds | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Agency securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | |
Fair Value, Inputs, Level 3 [Member] | Mortgage securities | Fair Value, Measurements, Recurring [Member] | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 2,495,000 | 3,381,000 |
Fair Value, Inputs, Level 3 [Member] | Cash | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Money market funds | Fair Value, Measurements, Recurring [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 0 | $ 0 |
Fair Value Accounting - Signifi
Fair Value Accounting - Significant Unobservable Inputs (Details) - Mortgage securities - Present Value Analysis [Member] - Fair Value, Inputs, Level 3 [Member] | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Fair value inputs, weighted average life, in years | 2 years |
Minimum [Member] | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Fair value inputs, prepayment rates | 8.00% |
Maximum [Member] | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Fair value inputs, prepayment rates | 11.50% |
Fair Value Accounting - Reconci
Fair Value Accounting - Reconciliation of Changes in Level 3 Balances (Details) - Available-for-sale Securities [Member] - Mortgage securities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance, beginning of period | $ 2,570 | $ 3,552 | $ 3,381 | $ 3,728 | |
Accretion of income | [1] | 132 | 183 | 409 | 568 |
Proceeds from paydowns of securities | [1] | (142) | (99) | (493) | (484) |
Mark-to-market value adjustment | (65) | (175) | (802) | (351) | |
Net increases (decreases) to mortgage securities - available-for-sale | (75) | (91) | (886) | (267) | |
Balance, end of period | 2,495 | 3,461 | 2,495 | 3,461 | |
Cash received on mortgage securities with no cost basis | $ 1,200 | $ 1,800 | $ 4,200 | $ 4,800 | |
[1] | Cash received on mortgage securities with no cost basis was $4.2 million and $1.2 million for the nine and three months ended September 30, 2015, respectively, and $4.8 million and $1.8 million for the nine and three months ended September 30, 2014, respectively. |
Fair Value Accounting - Carryin
Fair Value Accounting - Carrying Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash and cash equivalents | $ 700 | |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash and cash equivalents | 692 | |
Restricted cash | $ 597 | |
Marketable securities | 23,864 | 45,827 |
Senior notes | 87,798 | 85,937 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | 552 | 450 |
Marketable securities | 23,864 | 45,827 |
Senior notes | $ 16,584 | $ 15,189 |
Fair Value Accounting - Narrati
Fair Value Accounting - Narrative (Details) - Post-Modification Notes [Member] - Senior Notes [Member] | Mar. 22, 2011 |
Interest Rate, Pre-Trigger [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 1.00% |
Interest Rate, Post-Trigger [Member] | |
Debt Instrument [Line Items] | |
Variable rate, description | three-month LIBOR |
Basis spread on variable rate | 3.50% |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Loss Carryforwards [Line Items] | ||||
Income tax expense (benefit), continuing operations | $ (105) | $ (421) | $ 2 | $ (8,606) |
Income tax expense (benefit) from discontinued operations | $ 2 | (139) | $ 2 | $ 8,643 |
Effective Income Tax Rate Reconciliation, Percent | 0.00% | |||
Income Tax Expense (Benefit), Intraperiod Tax Allocation | $ (500) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Valuation Allowance | $ 276.9 | $ 268.6 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Income Tax Contingency [Line Items] | ||
Unrecognized Tax Benefits | $ 0.4 | $ 0.5 |
Segment Reporting - Revenues fr
Segment Reporting - Revenues from External Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Service fee income | $ 877 | $ 588 | $ 2,557 | $ 2,007 |
Service fee income – transition services | 0 | 1,091 | 0 | 2,059 |
Sales Revenue, Services, Total | 877 | 1,679 | 2,557 | 4,066 |
Professional Services [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Service fee income | 426 | 271 | 1,380 | 1,187 |
Service fee income – transition services | 0 | 1,091 | 0 | 2,059 |
Communications Services [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Service fee income | $ 451 | $ 317 | $ 1,177 | $ 820 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segments | Sep. 30, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||||
Interest income – mortgage securities | $ 1,379 | $ 1,986 | $ 4,585 | $ 5,382 |
Number of company reporting segments | segments | 1 | |||
Segment Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Interest expense, debt | 800 | 800 | $ 2,500 | 2,300 |
Interest income – mortgage securities | $ 1,400 | $ 2,000 | $ 4,600 | $ 5,400 |
Earnings per Share - Computatio
Earnings per Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator: | ||||
Net loss from continuing operations | $ (7,261) | $ (4,631) | $ (20,881) | $ (5,289) |
Income (loss) from discontinued operations, net of income taxes | 22 | (251) | 4 | 41,414 |
Net (loss) income available to common shareholders | $ (7,239) | $ (4,882) | $ (20,877) | $ 36,125 |
Denominator: | ||||
Weighted average common shares outstanding – basic | 91,187,345 | 90,951,716 | 91,103,880 | 90,895,504 |
Weighted average common shares outstanding - diluted | 91,187,345 | 90,951,716 | 91,103,880 | 90,895,504 |
Basic earnings per share: | ||||
Net loss from continuing operations | $ (0.08) | $ (0.04) | $ (0.23) | $ (0.06) |
Net income (loss) from discontinued operations | 0 | (0.01) | 0 | 0.46 |
Net (loss) income available to common shareholders | (0.08) | (0.05) | (0.23) | 0.40 |
Diluted earnings per share: | ||||
Net loss from continuing operations | (0.08) | (0.04) | (0.23) | (0.06) |
Net income (loss) from discontinued operations | 0 | (0.01) | 0 | 0.46 |
Net (loss) income available to common shareholders | $ (0.08) | $ (0.05) | $ (0.23) | $ 0.40 |
Stock Options [Member] | ||||
Denominator: | ||||
Incremental shares related to share-based compensation | 0 | 0 | 0 | 0 |
Nonvested Shares [Member] | ||||
Denominator: | ||||
Incremental shares related to share-based compensation | 0 | 0 | 0 | 0 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities (Details) - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 10,832 | 11,486 | 10,379 | 9,622 |
Weighted average exercise price of stock otions | $ 0.62 | $ 0.64 | $ 0.62 | $ 0.66 |
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 1,000 | 500 | 600 | 600 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Options [Member] | ||||
Class of Stock [Line Items] | ||||
Grants in period | 700 | 300 | 1,400 | 3,300 |
Grants in period, weighted average exercise price | $ 0.51 | $ 0.51 | $ 0.51 | $ 0.51 |
Antidilutive securities excluded from computation of earnings per share | 10,832 | 11,486 | 10,379 | 9,622 |
Antidilutive securities excluded from computation of earnings per share, grants in period | 1,100 | 3,000 | 500 | 1,100 |
Restricted Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Nonvested shares oustanding | 1,500 | 500 | 1,500 | 500 |
Antidilutive securities excluded from computation of earnings per share | 1,000 | 500 | 600 | 600 |
Antidilutive securities excluded from computation of earnings per share, grants in period | 700 | 200 | ||
Grants in period | 1,300 |