Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 09, 2016 | |
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, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 92,844,907 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 14,917 | $ 2,826 |
Marketable securities, current | 17,388 | 17,500 |
Other current assets | 809 | 1,119 |
Current assets of discontinued operations | 448 | 1,843 |
Total current assets | 33,562 | 23,288 |
Non-Current Assets | ||
Marketable securities, non-current | 802 | 1,397 |
Property and equipment, net of accumulated depreciation | 142 | 358 |
Other assets | 314 | 481 |
Non-current assets of discontinued operations | 0 | 6,415 |
Total non-current assets | 1,258 | 8,651 |
Total assets | 34,820 | 31,939 |
Current Liabilities | ||
Accounts payable and accrued expenses | 573 | 1,453 |
Current liabilities of discontinued operations | 0 | 2,470 |
Total current liabilities | 573 | 3,923 |
Non-Current Liabilities | ||
Senior notes | 0 | 88,385 |
Other liabilities | 75 | 391 |
Non-current liabilities of discontinued operations | 0 | 1,833 |
Total non-current liabilities | 75 | 90,609 |
Total liabilities not subject to compromise | 648 | 94,532 |
Liabilities subject to compromise | 91,394 | 0 |
Total liabilities | 92,042 | 94,532 |
Commitments and contingencies | ||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized: | ||
Common stock, 92,844,907 and 92,748,753 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 928 | 928 |
Additional paid-in capital | 744,863 | 744,575 |
Accumulated deficit | (808,657) | (809,532) |
Accumulated other comprehensive income | 5,644 | 1,436 |
Total shareholders' deficit | (57,222) | (62,593) |
Total liabilities and shareholders' deficit | $ 34,820 | $ 31,939 |
Balance Sheet Parenthetical
Balance Sheet Parenthetical - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Shareholders' deficit: | ||
Capital stock, par value | $ 0.01 | $ 0.01 |
Capital stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 92,844,907 | 92,748,753 |
Common stock, shares outstanding | 92,844,907 | 92,748,753 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income and Revenues: | ||||
Interest income – mortgage securities | $ 1,435 | $ 1,379 | $ 3,635 | $ 4,585 |
Total | 1,435 | 1,379 | 3,635 | 4,585 |
Costs and Expenses: | ||||
General and administrative expenses | 708 | 1,450 | 3,563 | 4,627 |
Total | 708 | 1,450 | 3,563 | 4,627 |
Other income (loss) | 539 | 32 | 1,449 | (31) |
Reorganization items, net | 1,326 | 0 | 1,326 | 0 |
Interest expense | (181) | (773) | (1,914) | (2,414) |
Income (loss) from continuing operations before income taxes | 2,411 | (812) | 933 | (2,487) |
Income tax (benefit) expense, continuing operations | (34) | (105) | (19) | 2 |
Net income (loss) from continuing operations | 2,445 | (707) | 952 | (2,489) |
Loss from discontinued operations, net of income taxes | 0 | (6,532) | (77) | (18,388) |
Net income (loss) | $ 2,445 | $ (7,239) | $ 875 | $ (20,877) |
Earnings Per Share attributable to Novation: | ||||
Basic, in dollars per share | $ 0.03 | $ (0.08) | $ 0.01 | $ (0.23) |
Diluted, in dollars per share | $ 0.03 | $ (0.08) | $ 0.01 | $ (0.23) |
Weighted average basic shares outstanding | 92,180,484 | 91,187,345 | 91,345,504 | 91,103,880 |
Weighted average diluted shares outstanding | 92,465,111 | 91,187,345 | 92,185,518 | 91,103,880 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net income (loss) | $ 2,445 | $ (7,239) | $ 875 | $ (20,877) |
Other comprehensive income (loss): | ||||
Unrealized gains realized upon the sale of securities | 0 | 0 | (100) | 0 |
Change in unrealized gain on marketable securities – available-for-sale | 1,084 | (57) | 4,308 | (739) |
Total other comprehensive income (loss) | 1,084 | (57) | 4,208 | (739) |
Total comprehensive income (loss) | $ 3,529 | $ (7,296) | $ 5,083 | $ (21,616) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Shareholders' Deficit - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] |
Balance at Dec. 31, 2014 | $ (33,350) | $ 915 | $ 743,919 | $ (780,803) | $ 2,619 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Compensation recognized under stock compensation plans | 479 | 479 | |||
Issuance of nonvested shares | 0 | 13 | (13) | ||
Net income (loss) | (20,877) | (20,877) | |||
Other comprehensive income (loss) | (739) | (739) | |||
Balance at Sep. 30, 2015 | (54,487) | 928 | 744,385 | (801,680) | 1,880 |
Balance at Dec. 31, 2015 | (62,593) | 928 | 744,575 | (809,532) | 1,436 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Compensation recognized under stock compensation plans | 288 | 288 | |||
Net income (loss) | 875 | 875 | |||
Other comprehensive income (loss) | 4,208 | 4,208 | |||
Balance at Sep. 30, 2016 | $ (57,222) | $ 928 | $ 744,863 | $ (808,657) | $ 5,644 |
Shareholders' Deficit Parenthet
Shareholders' Deficit Parentheticals - shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Issuance of nonvested shares, number of shares | 0 | 1,269,234 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 875 | $ (20,877) |
Loss from discontinued operations, net of income taxes | (77) | (18,388) |
Net income (loss) from continuing operations | 952 | (2,489) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Amortization of marketable securities, net | 25 | 244 |
Amortization of deferred debt issuance costs and senior debt premium | (2,399) | 1,861 |
Adjustment to deferred debt issuance costs and senior debt premium | (48) | 0 |
Deferred taxes | 0 | (2) |
Provision for bad debt, net | 0 | 110 |
Loss on disposal and impairments of fixed assets | 111 | 0 |
Realized gain on sale of marketable securities | (100) | 0 |
Compensation recognized under stock compensation plans | 264 | 479 |
Depreciation and amortization expense | 86 | 113 |
Changes in: | ||
Due from discontinued operations | (30) | (1,544) |
Other current assets and liabilities, net | 260 | (774) |
Other noncurrent assets and liabilities, net | (201) | (66) |
Accounts payable and accrued expenses | 2,052 | (920) |
Net cash from (used in) operating activities of continuing operations | 972 | (2,988) |
Net cash used in operating activities of discontinued operations | (1,919) | (15,283) |
Net cash used in operating activities | (947) | (18,271) |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of marketable securities | 17,697 | 21,994 |
Proceeds from paydowns of notes receivable | 21 | 0 |
Proceeds from sale of subsidiary, net | 7,643 | 0 |
Purchases of marketable securities | (12,707) | 0 |
Proceeds from restricted cash | 368 | 0 |
Proceeds from sales of property and equipment | 19 | 0 |
Purchases of property and equipment | 0 | (4) |
Net cash provided by investing activities of continuing operations | 13,041 | 21,990 |
Net cash used in investing activities of discontinued operations | (159) | (4,283) |
Net cash provided by investing activities | 12,882 | 17,707 |
Cash flows from financing activities: | ||
Cash payments for contributions of capital to discontinued operations | (205) | (18,080) |
Net cash used in financing activities of continuing operations | (205) | (18,080) |
Net cash provided by financing activities of discontinued operations | 205 | 17,891 |
Net cash used in financing activities | 0 | (189) |
Cash and cash equivalents, including discontinued operations: | ||
Net increase (decrease) | 11,935 | (753) |
Beginning of period | 3,178 | 5,654 |
End of period | 15,113 | 4,901 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for reorganization items | 426 | 0 |
Cash paid for interest | 0 | 663 |
Cash income taxes paid (received), net | $ (12) | $ 753 |
Financial Statement Presentatio
Financial Statement Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation Description of Operations – Novation Companies, Inc. (the “Company” or “Novation” or “we” or “us”) is in the process of implementing its strategy to acquire operating businesses or making other investments that generate taxable earnings. As of the date of these condensed consolidated financial statements, the Company has not yet identified any specific acquisition targets. Prior to 2016, Novation owned 100% of Corvisa LLC ("Corvisa"). 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. This transaction closed on January 6, 2016. The operations of Corvisa have been classified as discontinued operations for all periods presented. Prior to 2015, the Company disposed of its ownership interests in StreetLinks LLC ("StreetLinks"), a national residential appraisal and mortgage real estate valuation management services company. Also prior to 2015, the Company sold a portion of the assets and conducted an orderly wind-down of Advent Financial Services LLC ("Advent"), a financial settlement services provider for professional tax preparers nationwide. See Note 4 to the condensed consolidated financial statements for additional information regarding the Company's divestiture activity. 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 holds mortgage securities that continue to be a source of its earnings and cash flow. See Note 5 and Note 9 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 8 to the condensed consolidated financial statements for additional information regarding these demands. Liquidity and Going Concern – As of September 30, 2016 , the Company had approximately $14.9 million in unrestricted cash and cash equivalents and $0.2 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 $18.2 million in marketable securities, which consist of $0.8 million in corporate notes and bonds with a weighted average remaining maturity of 19 months as of September 30, 2016 , $15.9 million of equity securities and $1.5 million in mortgage securities. The Company's marketable securities are classified as available-for-sale as of September 30, 2016 and are included in the current and non-current marketable securities line items on the condensed consolidated balance sheet as of September 30, 2016 . For additional information regarding the Company's marketable securities, see the condensed consolidated statements of cash flow and Note 5 to the condensed consolidated financial statements. As discussed in Note 7 , the Company did not make the quarterly interest payments due on March 30, June 30 and September 30, 2016, totaling $2.7 million , as required under the Company's three series of Senior Notes and three related Indentures (each as defined in Note 7 ). These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payment constituting events of default under the Indentures. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding Senior Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), may declare the principal amount of all of the Senior Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 Senior Notes and the Series 2 Senior Notes declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 Senior Notes. Because the Senior Notes are expected to be impacted by the bankruptcy reorganization process, the Company discontinued accrued interest on the notes after the date of the Bankruptcy Petitions (as defined below). As of September 30, 2016 the aggregate outstanding principal under the Senior Notes was $85.9 million , and the recorded aggregate interest liability was $2.0 million . The Company's available cash and other liquid assets are not sufficient to meet the demands of the holders of the Senior Notes. As discussed in Note 2 to the condensed consolidated financial statements, the Company and three of its subsidiaries filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland (the “Bankruptcy Court”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to reorganize and exit the Chapter 11 proceedings and will actively pursue negotiation with the holders to modify or restructure the Senior Notes. However, there can be no assurance that these efforts will be successful. The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. 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. Financial statements for the period following the Chapter 11 filing through the confirmation of a plan of reorganization distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, revenue, expenses, realized gains and losses and provision for losses directly associated with the reorganization or restructuring of the business are reported separately as Reorganization items, net, in the condensed consolidated statement of operations. The condensed consolidated balance sheet distinguishes pre-petition liabilities subject to compromise, pre-petition liabilities that are not subject to compromise and post-petition liabilities. Liabilities subject to comprise are reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. In addition, cash used for reorganization items is disclosed separately in the condensed consolidated statements of cash flows. For the nine months ended September 30, 2015, the Company's condensed consolidated statement of cash flows includes a reclassification correction of $0.4 million from accretion of marketable securities to proceeds from sales and maturities of marketable securities. The reclassification was made to correct an error in that statement as previously presented. 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, 2015 (the "2015 Form 10-K"). |
Financial Statement Presentat10
Financial Statement Presentation - Going Concern (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Going Concern [Abstract] | |
Substantial Doubt about Going Concern | As discussed in Note 7 , the Company did not make the quarterly interest payments due on March 30, June 30 and September 30, 2016, totaling $2.7 million , as required under the Company's three series of Senior Notes and three related Indentures (each as defined in Note 7 ). These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payment constituting events of default under the Indentures. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding Senior Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), may declare the principal amount of all of the Senior Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 Senior Notes and the Series 2 Senior Notes declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 Senior Notes. Because the Senior Notes are expected to be impacted by the bankruptcy reorganization process, the Company discontinued accrued interest on the notes after the date of the Bankruptcy Petitions (as defined below). As of September 30, 2016 the aggregate outstanding principal under the Senior Notes was $85.9 million , and the recorded aggregate interest liability was $2.0 million . The Company's available cash and other liquid assets are not sufficient to meet the demands of the holders of the Senior Notes. As discussed in Note 2 to the condensed consolidated financial statements, the Company and three of its subsidiaries filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland (the “Bankruptcy Court”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to reorganize and exit the Chapter 11 proceedings and will actively pursue negotiation with the holders to modify or restructure the Senior Notes. However, there can be no assurance that these efforts will be successful. The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. |
Reorganization (Notes)
Reorganization (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Reorganizations [Abstract] | |
Reorganization under Chapter 11 of US Bankruptcy Code | Reorganization On July 20, 2016 , Novation and three of its subsidiaries, NovaStar Mortgage LLC, NovaStar Mortgage Funding Corporation and 2114 Central LLC (collectively, the “Debtors”), filed the Bankruptcy Petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the case Novation Companies, Inc., et al, No. 16-19745-DER. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Beginning with the quarterly period ended September 30, 2016, the Company accounts for the bankruptcy in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, “Reorganizations.” Pursuant to orders granted by the Bankruptcy Court, the Company obtained approval to, among other things, pay employee wages and benefits and continue with its existing cash management practices. The Company can conduct normal business activities and pay all associated obligations for the period following its bankruptcy filing, and is also authorized to pay and has paid pre-petition employee wages and benefits. During the Chapter 11 Cases, all transactions outside the ordinary course of business require the prior approval of the Bankruptcy Court. Generally, under the Bankruptcy Code, the filing of the Bankruptcy Petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the date of the Bankruptcy Petitions. Accordingly, creditors are generally stayed from taking any actions against the Debtors. Absent an order of the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to discharge under the Bankruptcy Code. Under the priority requirements established by the Bankruptcy Code, unless creditors agree otherwise, pre-petition liabilities to creditors and post-petition liabilities must be satisfied in full before the holders of the Company’s existing common stock are entitled to receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and shareholders, if any, will not be determined until confirmation and implementation of a plan of reorganization or an alternative transaction. While the Company will seek to implement a plan of reorganization, the outcome of the Chapter 11 Cases remains uncertain and, as a result, the Company cannot accurately estimate the amounts or value of distributions that creditors and shareholders may receive. For the duration of the Company’s Chapter 11 proceedings, the Company’s operations and ability to develop and execute its business plan are subject to the risks and uncertainties associated with the Chapter 11 process. As a result of these risks and uncertainties, the number of the Company’s outstanding shares and shareholders, assets, liabilities, officers and directors could be significantly different following the outcome of the Chapter 11 Cases, and the description of the Company’s operations, assets and plans included herein may not accurately reflect its operations, assets and plans following the Chapter 11 process. Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtors’ estate for such damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under the executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors in the interim financial statements, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed (i) an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto, (ii) a waiver of any rights, claims, actions or defenses that the Company may have in respect of any given executory contract or unexpired leases or (iii) an affirmation by the Company to assume any given executory contract or unexpired lease. There can be no assurances regarding the Company’s ability to successfully develop, confirm and consummate a plan of reorganization or any other plans of reorganization or alternative restructuring transactions. On August 1, 2016, the United States Trustee for the District of Maryland appointed an official committee for unsecured creditors of all of the Debtors (the “UCC”). On August 23, 2016, the Debtors filed with the Bankruptcy Court a Schedule of Assets and Liabilities and Statement of Financial Affairs (collectively, the “Schedules and Statements”) setting forth, among other things, the assets and liabilities of the Debtors, subject to the assumptions filed in connection therewith. The Schedules and Statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims are required to file proofs of claim by the deadline for filing certain proofs of claims in the Debtors’ Chapter 11 Cases, which deadline is November 15, 2016, for pre-petition general unsecured claims and January 17, 2017, for governmental claims. Differences between amounts scheduled by the Debtors and claims by creditors will be investigated and resolved in connection with the claims resolution process. The ultimate number and amount of allowed claims is not presently known, nor can the ultimate recovery with respect to allowed claims be presently ascertained. Under the Bankruptcy Code, we have the exclusive right to file a plan of reorganization under Chapter 11 through and including November 17, 2016, and to solicit acceptances of such plan through January 16, 2017. On October 19, 2016, the Company filed a motion to extend their exclusive right to file a plan(s) for an additional ninety days, through and including February 15, 2017 and solicit acceptances thereof through and including April 17, 2017, subject to the right to seek further extensions. The UCC filed an objection to the motion to extend the exclusive periods. At a hearing held on November 9, 2016, the Bankruptcy Court granted the Company’s motion and extended the exclusive periods for an additional ninety days. We plan to emerge from our Chapter 11 Cases after we obtain approval from the Bankruptcy Court for a Chapter 11 plan of reorganization. Among other things, a Chapter 11 plan of reorganization will determine the rights and satisfy the claims of our creditors and security holders. The terms and conditions of a Chapter 11 plan of reorganization will be determined through negotiations with our stakeholders and, possibly, decisions by the Bankruptcy Court. Under the absolute priority scheme established by the Bankruptcy Code, unless our creditors agree otherwise, all of our pre-petition liabilities and post-petition liabilities must be satisfied in full before the holders of our existing common stock can receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or shareholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. We can give no assurance that any recovery or distribution of any amount will be made to any of our creditors or shareholders. Our plan of reorganization could result in any of the holders of our liabilities and/or securities, including our common stock, receiving no distribution on account of their interests and cancellation of their holdings. Moreover, a plan of reorganization can be confirmed, under the Bankruptcy Code, even if the holders of our common stock vote against the plan and even if the plan provides that the holders of our common stock receive no distribution on account of their equity interests. The condensed consolidated financial statements presented here include amounts classified as “liabilities subject to compromise.” This amount represents estimates of known or potential pre-petition claims expected to be resolved in connection with our Chapter 11 proceedings. Additional amounts may be included in liabilities subject to compromise in future periods if we elect to reject executory contracts and unexpired leases as part of our Chapter 11 Cases. Due to the uncertain nature of many of the potential claims, the magnitude of potential claims is not reasonably estimable at this time. Potential claims not currently included with liabilities subject to compromise in our consolidated balance sheets may be material. Differences between amounts we are reporting as liabilities subject to compromise in this Quarterly Report on Form 10-Q and the amounts attributable to such matters claimed by our creditors or approved by the Bankruptcy Court may be material. We will continue to evaluate our liabilities throughout the Chapter 11 process and may make adjustments in future periods as necessary and appropriate. These adjustments may be material. Under the Bankruptcy Code, we may assume, assign, or reject executory contracts and unexpired leases, subject to the approval of the Bankruptcy Court and other conditions. If we reject a contract or lease, such rejection generally is treated as a pre-petition breach of the contract or lease, subject to exceptions, relieves the Debtors of performing their future obligations under such contract or lease and entitles the counterparty thereto to a pre-petition general unsecured claim for damages caused by the breach. If we assume an executory contract or unexpired lease, we are generally required to cure any existing monetary defaults under the contract or lease and provide adequate assurance of future performance to the counterparty. Accordingly, any description of an executory contract or unexpired lease in this Quarterly Report on Form 10-Q, including any quantification of our obligations under any such contract or lease, is wholly qualified by the rejection rights we have under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and we expressly preserve all of our rights with respect thereto. As of September 30, 2016, liabilities subject to compromise include (in thousands): Obligations under the Senior Notes (see Note 7), including accrued interest through the petition date $ 87,918 Liabilities associated with the discontinued operations of Advent 2,236 Claims and other liabilities related to operating leases 658 Income tax liabilities 300 Other 282 Liabilities subject to compromise $ 91,394 To the best of our knowledge, we have notified all of our known current or potential creditors that the Debtors have filed Chapter 11 Cases. In addition, on August 23, 2016, each of the Debtors filed the Schedules and Statements with the Bankruptcy Court. These documents set forth, among other things, the assets and liabilities of each of the Debtors, including executory contracts to which each of the Debtors is a party. The Schedules and Statements are subject to the qualifications and assumptions included therein, and are subject to amendment or modification as our Chapter 11 Cases proceed. Many of the claims identified in the Schedules and Statements are listed as disputed, contingent or unliquidated. In addition, there may be differences between the amounts for certain claims listed in the Schedules and Statements and the amounts claimed by our creditors. These differences will be investigated and resolved as part of our claims resolution process in our Chapter 11 Cases. Pursuant to the Federal Rules of Bankruptcy Procedure, creditors who wish to assert pre-petition claims against us and whose claim (i) is not listed in the Schedules and Statements or (ii) is listed in the Schedules and Statements as disputed, contingent, or unliquidated, must file a proof of claim with the Bankruptcy Court prior to the bar date set by the court. The bar dates are November 15, 2016 , for non-governmental creditors, and January 17, 2017 , for governmental creditors. As of November 9, 2016, approximately $228.7 million in claims have been filed with the Bankruptcy Court against the Debtors by 9 claimants. We expect additional claims to be filed prior to the bar dates. In addition, creditors who have already filed claims may amend or modify their claims in ways we cannot now predict. The amounts of additional claims may be material. Similarly, amendments or modifications to claims already filed may be material. We will investigate and evaluate all claims in connection with our plan of reorganization. As part of the process, we will work to resolve differences in amounts scheduled by the Debtors and the amounts of claims filed by creditors, including through the filing of objections with the Bankruptcy Court where appropriate. We have substantial tax net operating loss carryforwards and other tax attributes. Under the U.S. Internal Revenue Code (the "Code"), our ability to use these net operating losses and other tax attributes may be limited if we experience a change of control, as determined under the Code. Accordingly, we obtained an order from the Bankruptcy Court that is intended to protect our ability to use our tax attributes by imposing certain notice procedures and transfer restrictions on the trading of the Company’s common stock. In general, the order applies to any person or entity that, directly or indirectly, beneficially owns (or would beneficially own as a result of a proposed transfer) at least 4.5% of the Company’s common stock. Such persons are required to notify us and the Bankruptcy Court before effecting a transaction that might result in us losing the ability to use our tax attributes, and we have the right to seek an injunction to prevent the transaction if it might adversely affect our ability to use our tax attributes. Any purchase, sale or other transfer of our equity securities in violation of the restrictions of the order is null and void ab initio as an act in violation of a Bankruptcy Court order and would therefore confer no rights on a proposed transferee. We have incurred and will continue to incur significant costs associated with our reorganization and the Chapter 11 proceedings. We expect these costs, which are being expensed as incurred, will significantly affect our results of operations. In addition, a non-cash charge to write-off the unamortized debt issuance costs related to our Senior Notes is included in “Reorganization items, net” as these debt instruments are expected to be impacted by the bankruptcy reorganization process. For the three and nine months ended September 30, 2016 reorganization items include (in thousands): Adjustments to deferred debt issuance costs and senior debt premium $ 2,399 Professional fees (763 ) Adjustments to other liabilities for claims made or rejected contracts (293 ) Other (17 ) Reorganization items, net $ 1,326 |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements On August 26, 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15, which amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the ASU is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The ASU’s amendments add or clarify guidance on eight cash flow issues: • Debt prepayment or debt extinguishment costs. • Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing. • Contingent consideration payments made after a business combination. • Proceeds from the settlement of insurance claims. • Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies. • Distributions received from equity method investees. • Beneficial interests in securitization transactions. • Separately identifiable cash flows and application of the predominance principle. For the Company, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Management has not determined if this guidance will have a significant impact on its financial statements. In February 2016, the FASB issued ASU 2016-02 Leases, a new standard on accounting for leases. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). Furthermore, this ASU addresses other concerns related to the current leases model. For example, this ASU eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The new model represents a wholesale change to lease accounting. As a result, entities will face significant implementation challenges during the transition period and beyond, such as those related to: • Applying judgment and estimating. • Managing the complexities of data collection, storage, and maintenance. • Enhancing information technology systems to ensure their ability to perform the calculations necessary for compliance with reporting requirements. • Refining internal controls and other business processes related to leases. • Determining whether debt covenants are likely to be affected and, if so, working with lenders to avoid violations; and • Addressing any income tax implications. For the Company, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has not yet determined if this guidance will have a significant impact on its consolidated financial statements. On January 5, 2016, the FASB issued ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the guidance in GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. This ASU also amends certain disclosure requirements associated with the fair value of financial instruments. For Novation, the new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Management has not yet determined if this guidance will have a significant impact on its consolidated financial statements. |
Divestitures (Notes)
Divestitures (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Corvisa LLC (Cloud SaaS Segment) On December 21, 2015, the Company entered into the Purchase Agreement with ShoreTel. Subject to the terms and conditions under the Purchase Agreement, ShoreTel agreed to purchase 100% of the membership interests of Corvisa from Corvisa Services, a wholly-owned subsidiary of the Company. The transaction closed on January 6, 2016. The aggregate consideration for the transaction was $8.4 million in cash, subject to a potential post-closing working capital adjustment. At closing $7.0 million was paid and the following was deposited in escrow: (i) $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. In connection with the transaction, the Company and ShoreTel also entered 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. Cash flows associated with these services are not significant. Other than finalizing the post-closing conditions as provided above, the Company will have no continuing involvement with Corvisa beyond the transition services. During 2015, the Company incurred approximately $0.8 million in severance and related one-time termination benefits associated with this transaction. Approximately $0.1 million of this expense was included in current liabilities of discontinued operations at December 31, 2015. Also during 2015, the Company incurred $0.5 million of legal and audit fees related to this transaction. Due to the timing of the sale, no portion of these costs is reflected in the net loss from discontinued operations for the three and nine months ended September 30, 2015. The Company recognized a gain on the transaction of $1.4 million during the first quarter of 2016, which is reflected in the loss from discontinued operations. The gain includes $0.7 million related to the post-closing working capital adjustment, which includes the release of the $0.35 million held in escrow and $0.3 million for the working capital adjustment, as calculated in accordance with the terms of the Purchase Agreement. Also included in discontinued operations during the first quarter of 2016 are transaction-related costs that were contingent upon the closing of the sale. These costs include approximately $0.3 million of earned bonus payments to a Corvisa executive, $1.0 million of advisory fees and $0.1 million of other transaction-related costs. At ShoreTel’s request, the Company disposed of Corvisa’s third-party software implementation consulting business in December 2015. 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 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. Prior to 2015, the Company disposed of its ownership interests in StreetLinks. Also prior to 2015, the Company sold a portion of the assets and conducted an orderly wind-down of Advent. Results of Discontinued Operations For the three and nine months ended September 30, 2015, net loss from discontinued operations consists primarily of the net operating losses of Corvisa and any necessary eliminations and income tax expense. For the three and nine months ended September 30, 2016 the net loss from discontinued operations consists of the gain on the sale of Corvisa, offset by transaction-related costs. The results of the Company's discontinued operations are summarized below (in thousands): For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Service fee income $ — $ 2,557 $ — $ 877 Income (loss) from discontinued operations before income taxes $ (77 ) $ (18,388 ) $ — $ (6,532 ) Income tax expense (benefit) — — — — Income (loss) from discontinued operations, net of income taxes $ (77 ) $ (18,388 ) $ — $ (6,532 ) The assets and liabilities of discontinued operations as of September 30, 2016 relate entirely to Advent. As of September 30, 2016 , the current liabilities of discontinued operations were comprised 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 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 assets and liabilities of discontinued operations as of December 31, 2015 include the assets and liabilities of Advent and Corvisa. Because the obligations of the discontinued operations arose prior to the Company's Bankruptcy Petitions, the obligations of discontinued operations are classified as liabilities subject to compromise subsequent to the petition date. The major classes of assets and liabilities of discontinued operations as of September 30, 2016 and December 31, 2015 are detailed below (dollars in thousands). September 30, 2016 (unaudited) December 31, Assets Current Assets Cash and cash equivalents $ 196 $ 352 Service fee receivable, net — 282 Other 252 1,209 Total current assets 448 1,843 Non-Current Assets Property and equipment, net of accumulated depreciation — 5,708 Other — 707 Total non-current assets — 6,415 Total assets $ 448 $ 8,258 Liabilities Current liabilities $ — $ 2,470 Non-current liabilities — 1,833 Liabilities subject to compromise 2,236 — Total liabilities $ 2,236 $ 4,303 |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2016 | |
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 at September 30, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 (unaudited) Gross Unrealized Description of Securities Amortized Cost Gains Losses Estimated Fair Value Marketable securities, current Equity securities $ 11,851 $ 4,045 $ (7 ) $ 15,889 Mortgage securities 441 1,058 — 1,499 Total $ 12,292 $ 5,103 $ (7 ) $ 17,388 Marketable securities, non-current Corporate notes and bonds $ 254 $ 548 $ — $ 802 Total $ 254 $ 548 $ — $ 802 As of December 31, 2015 Gross Unrealized Description of Securities Amortized Cost Gains Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 15,517 $ — $ (28 ) $ 15,489 Mortgage securities 525 1,486 — 2,011 Total $ 16,042 $ 1,486 $ (28 ) $ 17,500 Marketable securities, non-current Corporate notes and bonds $ 1,419 $ — $ (22 ) $ 1,397 Total $ 1,419 $ — $ (22 ) $ 1,397 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 holds mortgage securities that continue to be a source of its earnings and cash flow. As of September 30, 2016 and December 31, 2015 , 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 three months ended September 30, 2016 and 2015 . The weighted average remaining maturity of the Company’s short-term and long-term corporate notes and bonds at September 30, 2016 was 19 months. Maturities of mortgage securities owned by the Company depend on repayment characteristics and experience of the underlying financial instruments. See Note 9 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 (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, 2016 $ 3,287,616 $ 1,499 $ — $ 1,499 $ — $ 3,719 December 31, 2015 3,601,468 2,011 — 2,011 — 6,287 (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, 2016 and 2015 , respectively. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2016 | |
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. Depreciation is 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 expense for property and equipment is not material. Office furniture with a carrying value of $94,000 was written down to its fair value of $20,000 on June 30, 2016, resulting in an impairment charge of $74,000 . The following table shows the Company's property and equipment (in thousands): September 30, 2016 (unaudited) December 31, Furniture, fixtures and office equipment $ 73 $ 314 Leasehold improvement 317 402 Hardware and computer equipment 71 157 Software — 547 Total Cost 461 1,420 Less: Accumulated depreciation and amortization (319 ) (1,062 ) Property and equipment, net $ 142 $ 358 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2016 | |
Borrowings [Abstract] | |
Borrowings | Borrowings Senior Notes. The Company has outstanding three series of unsecured senior notes (collectively, the "Senior Notes") pursuant to three separate indentures (collectively, the “Indentures”) 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 2015. This exchange was considered a modification of a debt instrument for accounting purposes. Through the Bankruptcy Petition date, the Company used the effective interest method to accrete from the principal balance as of the modification date to the carrying balance as of any reporting date. 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. As of the Bankruptcy Petition date, the Company charged off the entire difference between the contractual principal amount of the Senior Notes and their carrying value as these notes are expected to be impacted by the bankruptcy reorganization process. The Senior Notes accrued interest at a rate of 1.0% per annum until January 1, 2016 and since then have accrued interest at a rate of three-month LIBOR plus 3.5% per annum (the “Full Rate”). Interest on the Senior Notes was payable on a quarterly basis and no principal payments were due until maturity on March 30, 2033. However, the Company did not make the quarterly interest payments due on March 30, June 30 and September 30, 2016 totaling $2.7 million . These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payments constituting events of default under the Indentures. As a result, the Senior Notes have been classified as current liabilities in the September 30, 2016 balance sheet. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding Senior Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), may declare the principal amount of all the Senior Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 Senior Notes and the Series 2 Senior Notes, declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 Senior Notes. Because the Senior Notes are expected to be impacted by the bankruptcy reorganization process, the Company discontinued accrued interest on the notes after the Bankruptcy Petition date. The aggregate outstanding principal under the Senior Notes is $85.9 million and the aggregate recorded interest liability is $2.0 million . The principal and recorded unpaid interest are classified as liabilities subject to compromise in the Company's condensed consolidated balance sheet. Had the Company continued the accrual of interest on the Senior Notes, interest expense and accounts payable and accrued expenses would have been higher and net income lower by $0.7 million during the three and nine months periods ended September 30, 2016. 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 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). The Negative Covenants, as defined above, were in effect as of September 30, 2016 and December 31, 2015 . 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 4 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. The Company was in compliance with the Negative Covenants as of September 30, 2016 and December 31, 2015 , and therefore the Company was under no obligation to comply with the Financial Covenants during these periods. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
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 2016. 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. See Note 2 to condensed consolidated financial statements for a description of the impact of the Company’s Chapter 11 Cases on these proceedings. The automatic stay provided by the Bankruptcy Code is currently in effect as to the defendants in these proceedings that are Debtors in the Chapter 11 Cases. 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) and NovaStar Mortgage, Inc. (NMI), wholly-owned subsidiaries of the Company, and NMFC's 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. On March 22, 2016, NMFC filed motions for summary judgment and plaintiff filed a motion for partial summary judgment. Those motions remain pending. 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 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. That motion remains pending. 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, 2016 | |
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, 2016 and December 31, 2015 (dollars in thousands): Fair Value Measurements at Reporting Date Using Description Fair Value as of 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 $ 1,832 $ 1,832 $ — $ — Money market funds 13,085 13,085 — — Marketable securities, current: Equity securities 15,889 15,889 — — Mortgage securities 1,499 — — 1,499 Marketable securities, non-current: Corporate notes and bonds 802 802 — — Total $ 33,107 $ 31,608 $ — $ 1,499 Fair Value Measurements at Reporting Date Using Description Fair Value as of December 31, 2015 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 $ 1,674 $ 1,674 $ — $ — Money market funds 1,152 1,152 — — Marketable securities, current: Corporate notes and bonds 15,489 — 15,489 — Mortgage securities 2,011 — — 2,011 Marketable securities, non-current: Corporate notes and bonds 1,397 — 1,397 — Total $ 21,723 $ 2,826 $ 16,886 $ 2,011 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, 2016 . Accordingly, there have been no material changes to the condensed consolidated financial statements resulting from changes to our valuation techniques during the nine months ended September 30, 2016 . 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 5 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. An independent entity has been engaged to prepare projected cash flows and values of the Company's mortgage securities for each quarterly reporting period. Estimates, made by the Company's provider, for key assumptions, most notably the expected life of the security, are used in estimating future cash flows. The most critical assumption used in estimating the value of the mortgage securities is the length of time the security will continue to provide cash flow. The loan servicer for the underlying mortgage loans, an independent party, retains the right to call our mortgage securities and therefore the decision to call the securitization is beyond the Company's control. In the event that were to occur, the mortgage securities would discontinue generating cash flows. For purposes of valuing the mortgage securities, the independent entity we have engaged to prepare the mortgage security valuations uses a 2 -year time frame, after which it is assumed that the securities have been called. Given the long-term nature of the underlying mortgages, if the mortgage security is not called by the servicer, the cash flows could extend for many years, which would indicate a significantly higher value than the Company has recorded. In addition to owning mortgage securities that represent excess interest, the Company also owns overcollateralization (OC) classes of various securities. These OC bonds represent the difference in the principal of the underlying mortgage loans compared to the bonds sold to third parties. This extra collateral serves as a cushion for losses that has and may occur in the underlying mortgage pool. The OC bonds may receive cash if and when it is determined that actual losses are less than expectations. As of September 30, 2016 , the aggregate overcollateralization was $27.0 million . The timing and amount of cash to be generated by the OC bonds is contingent upon the performance of the underlying mortgage loan collateral. The independent loan servicer controls and manages the individual mortgage loans and therefore the Company has no control over the loan performance. Because of these uncertainties, the Company maintains no value for the OC bonds. The Company may in the future place a value on the OC 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 months ended September 30, 2016 and 2015 (dollars in thousands): For the Nine Months Ended 2016 2015 Balance, beginning of period $ 2,011 $ 3,381 Increases (decreases) to mortgage securities – available-for-sale: Total proceeds from paydowns of securities (A) (84 ) (84 ) Market value adjustment (428 ) (802 ) Net decrease to mortgage securities – available-for-sale (512 ) (886 ) Balance, end of period $ 1,499 $ 2,495 (A) Cash received on mortgage securities with no cost basis was $3.3 million and $4.2 million for the nine months ended September 30, 2016 and 2015 , 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, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 (unaudited) As of December 31, 2015 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Restricted cash $ 112 $ 112 $ 598 $ 435 Marketable securities 18,190 18,190 18,897 18,897 Financial liabilities: Senior notes $ 85,900 $ 18,629 $ 88,385 $ 18,331 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 . As of September 30, 2016 , the fair value of restricted cash is not material to the financial statements taken as a whole and the fair value is assumed to be equal to carrying value. As of December 31, 2015 , 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, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Prior to 2015, 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 September 30, 2016 and December 31, 2015 , the Company maintained a full valuation allowance against its deferred tax assets of $279.9 million and $281.5 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. Because of the full valuation allowance, the Company's effective tax rate is expected to be near 0% and therefore the consolidated income tax expense is not material for any period presented. As of September 30, 2016 and December 31, 2015 , the total gross amount of unrecognized tax benefits was $0.3 million and $0.4 million , respectively. This amount also represents 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. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2016 | |
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 three and nine months ended September 30, 2016 and 2015 (in thousands, except share and per share amounts) are as follows: For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Numerator: Net income (loss) from continuing operations $ 952 $ (2,489 ) $ 2,445 $ (707 ) Net loss from discontinued operations (77 ) (18,388 ) — (6,532 ) Net income (loss) available to common shareholders $ 875 $ (20,877 ) $ 2,445 $ (7,239 ) Denominator: Weighted average common shares outstanding – basic 91,345,504 91,103,880 92,180,484 91,187,345 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 91,345,504 91,103,880 92,180,484 91,187,345 Stock options — — — — Nonvested shares 840,014 — 284,627 — Weighted average common shares outstanding – dilutive 92,185,518 91,103,880 92,465,111 91,187,345 Basic earnings (loss) per share: Net income (loss) from continuing operations $ 0.01 $ (0.03 ) $ 0.03 $ (0.01 ) Net loss from discontinued operations — (0.20 ) — (0.07 ) Net income (loss) available to common shareholders $ 0.01 $ (0.23 ) $ 0.03 $ (0.08 ) Diluted earnings (loss) per share: Net income (loss) from continuing operations $ 0.01 $ (0.03 ) $ 0.03 $ (0.01 ) Net loss from discontinued operations — (0.20 ) — (0.07 ) Net income (loss) available to common shareholders $ 0.01 $ (0.23 ) $ 0.03 $ (0.08 ) 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 anti-dilutive (in thousands, except exercise prices): For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Number of stock options 4,613 10,379 4,443 10,832 Weighted average exercise price of stock options $ 0.71 $ 0.62 $ 0.70 $ 0.62 There were no options granted during the nine months ended September 30, 2016 . Option grants for the nine months ended September 30, 2015 were not significant. As of September 30, 2016 , the Company had no nonvested shares outstanding. As of September 30, 2015 there were 1.5 million nonvested shares outstanding. While the nonvested shares granted during 2016 and 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. |
Financial Statement Presentat21
Financial Statement Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2015 (the "2015 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. Depreciation is 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, 2016 . Accordingly, there have been no material changes to the condensed consolidated financial statements resulting from changes to our valuation techniques during the nine months ended September 30, 2016 . 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 5 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. An independent entity has been engaged to prepare projected cash flows and values of the Company's mortgage securities for each quarterly reporting period. Estimates, made by the Company's provider, for key assumptions, most notably the expected life of the security, 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. |
Reorganization (Tables)
Reorganization (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Reorganizations [Abstract] | |
Liabilities Subject to Compromise | As of September 30, 2016, liabilities subject to compromise include (in thousands): Obligations under the Senior Notes (see Note 7), including accrued interest through the petition date $ 87,918 Liabilities associated with the discontinued operations of Advent 2,236 Claims and other liabilities related to operating leases 658 Income tax liabilities 300 Other 282 Liabilities subject to compromise $ 91,394 |
Reorganization Items | For the three and nine months ended September 30, 2016 reorganization items include (in thousands): Adjustments to deferred debt issuance costs and senior debt premium $ 2,399 Professional fees (763 ) Adjustments to other liabilities for claims made or rejected contracts (293 ) Other (17 ) Reorganization items, net $ 1,326 |
Divestitures (Tables)
Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 (in thousands): For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Service fee income $ — $ 2,557 $ — $ 877 Income (loss) from discontinued operations before income taxes $ (77 ) $ (18,388 ) $ — $ (6,532 ) Income tax expense (benefit) — — — — Income (loss) from discontinued operations, net of income taxes $ (77 ) $ (18,388 ) $ — $ (6,532 ) |
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, 2016 and December 31, 2015 are detailed below (dollars in thousands). September 30, 2016 (unaudited) December 31, Assets Current Assets Cash and cash equivalents $ 196 $ 352 Service fee receivable, net — 282 Other 252 1,209 Total current assets 448 1,843 Non-Current Assets Property and equipment, net of accumulated depreciation — 5,708 Other — 707 Total non-current assets — 6,415 Total assets $ 448 $ 8,258 Liabilities Current liabilities $ — $ 2,470 Non-current liabilities — 1,833 Liabilities subject to compromise 2,236 — Total liabilities $ 2,236 $ 4,303 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 at September 30, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 (unaudited) Gross Unrealized Description of Securities Amortized Cost Gains Losses Estimated Fair Value Marketable securities, current Equity securities $ 11,851 $ 4,045 $ (7 ) $ 15,889 Mortgage securities 441 1,058 — 1,499 Total $ 12,292 $ 5,103 $ (7 ) $ 17,388 Marketable securities, non-current Corporate notes and bonds $ 254 $ 548 $ — $ 802 Total $ 254 $ 548 $ — $ 802 As of December 31, 2015 Gross Unrealized Description of Securities Amortized Cost Gains Losses Estimated Fair Value Marketable securities, current Corporate notes and bonds $ 15,517 $ — $ (28 ) $ 15,489 Mortgage securities 525 1,486 — 2,011 Total $ 16,042 $ 1,486 $ (28 ) $ 17,500 Marketable securities, non-current Corporate notes and bonds $ 1,419 $ — $ (22 ) $ 1,397 Total $ 1,419 $ — $ (22 ) $ 1,397 |
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 (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, 2016 $ 3,287,616 $ 1,499 $ — $ 1,499 $ — $ 3,719 December 31, 2015 3,601,468 2,011 — 2,011 — 6,287 (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, 2016 and 2015 , respectively. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | The following table shows the Company's property and equipment (in thousands): September 30, 2016 (unaudited) December 31, Furniture, fixtures and office equipment $ 73 $ 314 Leasehold improvement 317 402 Hardware and computer equipment 71 157 Software — 547 Total Cost 461 1,420 Less: Accumulated depreciation and amortization (319 ) (1,062 ) Property and equipment, net $ 142 $ 358 |
Fair Value Accounting (Tables)
Fair Value Accounting (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 and December 31, 2015 (dollars in thousands): Fair Value Measurements at Reporting Date Using Description Fair Value as of 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 $ 1,832 $ 1,832 $ — $ — Money market funds 13,085 13,085 — — Marketable securities, current: Equity securities 15,889 15,889 — — Mortgage securities 1,499 — — 1,499 Marketable securities, non-current: Corporate notes and bonds 802 802 — — Total $ 33,107 $ 31,608 $ — $ 1,499 Fair Value Measurements at Reporting Date Using Description Fair Value as of December 31, 2015 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 $ 1,674 $ 1,674 $ — $ — Money market funds 1,152 1,152 — — Marketable securities, current: Corporate notes and bonds 15,489 — 15,489 — Mortgage securities 2,011 — — 2,011 Marketable securities, non-current: Corporate notes and bonds 1,397 — 1,397 — Total $ 21,723 $ 2,826 $ 16,886 $ 2,011 |
Fair Value Inputs, Assets and Liabilities, Quantitative Information | The most critical assumption used in estimating the value of the mortgage securities is the length of time the security will continue to provide cash flow. The loan servicer for the underlying mortgage loans, an independent party, retains the right to call our mortgage securities and therefore the decision to call the securitization is beyond the Company's control. In the event that were to occur, the mortgage securities would discontinue generating cash flows. For purposes of valuing the mortgage securities, the independent entity we have engaged to prepare the mortgage security valuations uses a 2 -year time frame, after which it is assumed that the securities have been called. Given the long-term nature of the underlying mortgages, if the mortgage security is not called by the servicer, the cash flows could extend for many years, which would indicate a significantly higher value than the Company has recorded. |
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 months ended September 30, 2016 and 2015 (dollars in thousands): For the Nine Months Ended 2016 2015 Balance, beginning of period $ 2,011 $ 3,381 Increases (decreases) to mortgage securities – available-for-sale: Total proceeds from paydowns of securities (A) (84 ) (84 ) Market value adjustment (428 ) (802 ) Net decrease to mortgage securities – available-for-sale (512 ) (886 ) Balance, end of period $ 1,499 $ 2,495 (A) Cash received on mortgage securities with no cost basis was $3.3 million and $4.2 million for the nine months ended September 30, 2016 and 2015 , 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, 2016 and December 31, 2015 (in thousands): As of September 30, 2016 (unaudited) As of December 31, 2015 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Restricted cash $ 112 $ 112 $ 598 $ 435 Marketable securities 18,190 18,190 18,897 18,897 Financial liabilities: Senior notes $ 85,900 $ 18,629 $ 88,385 $ 18,331 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015 (in thousands, except share and per share amounts) are as follows: For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Numerator: Net income (loss) from continuing operations $ 952 $ (2,489 ) $ 2,445 $ (707 ) Net loss from discontinued operations (77 ) (18,388 ) — (6,532 ) Net income (loss) available to common shareholders $ 875 $ (20,877 ) $ 2,445 $ (7,239 ) Denominator: Weighted average common shares outstanding – basic 91,345,504 91,103,880 92,180,484 91,187,345 Weighted average common shares outstanding – dilutive: Weighted average common shares outstanding – basic 91,345,504 91,103,880 92,180,484 91,187,345 Stock options — — — — Nonvested shares 840,014 — 284,627 — Weighted average common shares outstanding – dilutive 92,185,518 91,103,880 92,465,111 91,187,345 Basic earnings (loss) per share: Net income (loss) from continuing operations $ 0.01 $ (0.03 ) $ 0.03 $ (0.01 ) Net loss from discontinued operations — (0.20 ) — (0.07 ) Net income (loss) available to common shareholders $ 0.01 $ (0.23 ) $ 0.03 $ (0.08 ) Diluted earnings (loss) per share: Net income (loss) from continuing operations $ 0.01 $ (0.03 ) $ 0.03 $ (0.01 ) Net loss from discontinued operations — (0.20 ) — (0.07 ) Net income (loss) available to common shareholders $ 0.01 $ (0.23 ) $ 0.03 $ (0.08 ) |
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 anti-dilutive (in thousands, except exercise prices): For the Nine Months Ended For the Three Months Ended 2016 2015 2016 2015 Number of stock options 4,613 10,379 4,443 10,832 Weighted average exercise price of stock options $ 0.71 $ 0.62 $ 0.70 $ 0.62 |
Financial Statement Presentat28
Financial Statement Presentation (Details) - USD ($) $ in Millions | Jul. 20, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Operations [Line Items] | ||||
Bankruptcy proceedings, court where petition was filed | United States Bankruptcy Court for the District of Maryland | |||
Cash | ||||
Operations [Line Items] | ||||
Restricted cash and cash equivalents | $ 0.2 | |||
Mortgage securities | ||||
Operations [Line Items] | ||||
Marketable securities | 1.5 | |||
Corporate notes and bonds | ||||
Operations [Line Items] | ||||
Marketable securities | $ 0.8 | |||
Average remaining maturity | 19 months | |||
Equity securities | ||||
Operations [Line Items] | ||||
Marketable securities | $ 15.9 | |||
Corvisa LLC [Member] | ||||
Operations [Line Items] | ||||
Ownership percentage | 100.00% | |||
Post-Modification Notes [Member] | ||||
Operations [Line Items] | ||||
Outstanding principal | 85.9 | |||
Aggregate recorded interest liability | 2 | |||
Due and unpaid interest | $ 2.7 | |||
Prior Period Adjustments, Reclassification Adjustment [Domain] | ||||
Operations [Line Items] | ||||
Reclassification from accretion of mortgage securities to proceeds from sale of securities | $ 0.4 |
Reorganization - Bankruptcy Pro
Reorganization - Bankruptcy Proceedings and Claims (Details) $ in Millions | Jul. 20, 2016 | Sep. 30, 2016USD ($) |
Reorganizations [Abstract] | ||
Bankruptcy Proceedings, Date Petition for Bankruptcy Filed | Jul. 20, 2016 | |
Bankruptcy Claims, Last Date to File Claims with Bankruptcy Courts | Nov. 15, 2016 | |
Bankruptcy Claims, Last Date to File Claims with Bankruptcy Courts, Governmental Creditors | Jan. 17, 2017 | |
Bankruptcy Claims, Amount of Claims Filed | $ 228.7 | |
Bankruptcy Claims, Number Claims Filed | 9 |
Reorganization - Liabilities Su
Reorganization - Liabilities Subject to Compromise (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | $ 91,394 | $ 0 |
Debt and Accrued Interest [Member] | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 87,918 | |
Retained Obligations of Discontinued Operations [Member] | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 2,236 | |
Lease Obligations [Member] | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 658 | |
Income Tax Liabilities [Member] | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | 300 | |
Other Liabilities Subject to Compromise [Member] | ||
Liabilities Subject to Compromise [Line Items] | ||
Liabilities subject to compromise | $ 282 |
Reorganization - Reorganization
Reorganization - Reorganization Items (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Reorganization Items [Line Items] | ||||
Reorganization items, net | $ 1,326 | $ 0 | $ 1,326 | $ 0 |
Adjustments to Debt Discount and Debt Issuance Costs [Member] | ||||
Reorganization Items [Line Items] | ||||
Reorganization items, net | 2,399 | |||
Professional Services [Member] | ||||
Reorganization Items [Line Items] | ||||
Reorganization items, net | (763) | |||
Adjustments for Claims Made or Rejected Contracts [Member] | ||||
Reorganization Items [Line Items] | ||||
Reorganization items, net | (293) | |||
Other Reorganization Items [Member] | ||||
Reorganization Items [Line Items] | ||||
Reorganization items, net | $ (17) |
Divestitures - Income Statement
Divestitures - Income Statement of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Service fee income | $ 0 | $ 877 | $ 0 | $ 2,557 |
Income (loss) from discontinued operations before income taxes | 0 | (6,532) | (77) | (18,388) |
Income tax expense (benefit) from discontinued operations | 0 | 0 | 0 | 0 |
Income (loss) from discontinued operations, net of income taxes | $ 0 | $ (6,532) | $ (77) | $ (18,388) |
Divestitures - Balance Sheet of
Divestitures - Balance Sheet of Discontinued Operations (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 196 | $ 352 |
Service fee receivable, net | 0 | 282 |
Other | 252 | 1,209 |
Total current assets | 448 | 1,843 |
Property and equipment, net of accumulated depreciation | 0 | 5,708 |
Other | 0 | 707 |
Non-current assets of discontinued operations | 0 | 6,415 |
Total assets | 448 | 8,258 |
Liabilities: | ||
Current liabilities of discontinued operations | 0 | 2,470 |
Non-current liabilities of discontinued operations | 0 | 1,833 |
Liabilities subject to compromise, discontinued operations | 2,236 | 0 |
Total liabilities | $ 2,236 | $ 4,303 |
Divestitures - Narrative (Detai
Divestitures - Narrative (Details) - Corvisa LLC [Member] - USD ($) $ in Thousands | Jan. 06, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Divestitures Narrative | |||
Severance costs | $ 800 | ||
Gain on sale of subsidiary before taxes | $ 1,400 | ||
Total post-closing consideration | 700 | ||
Proceeds from adjustments for working capital | 300 | ||
Release of consideration held in escrow, working capital adjustment | $ 350 | ||
Bonus payments to employees | $ 300 | ||
Transaction-related costs | 1,000 | 500 | |
Other transaction costs | 100 | ||
Employee Severance [Member] | |||
Divestitures Narrative | |||
Accrued severance | $ 100 | ||
Membership Interest Purchase Agreement [Member] | ShoreTel, Inc. [Member] | |||
Divestitures Narrative | |||
Aggregate consideration | 8,400 | ||
Cash received at closing | 7,000 | ||
Consideration held in escrow, indemnification obligations | 1,000 | ||
Consideration held in escrow, working capital adjustment | $ 350 |
Marketable Securities - Availab
Marketable Securities - Available-for-Sale (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | $ 12,292 | $ 16,042 |
Accumulated gross unrealized gains, current | 5,103 | 1,486 |
Accumulated gross unrealized losses, current | (7) | (28) |
Fair value, current | 17,388 | 17,500 |
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | 254 | 1,419 |
Accumulated gross unrealized gains, non-current | 548 | 0 |
Accumulated gross unrealized losses, non-current | 0 | (22) |
Fair value, non-current | 802 | 1,397 |
Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 11,851 | |
Accumulated gross unrealized gains, current | 4,045 | |
Accumulated gross unrealized losses, current | (7) | |
Fair value, current | $ 15,889 | |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Average remaining maturity | 19 months | |
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 15,517 | |
Accumulated gross unrealized gains, current | 0 | |
Accumulated gross unrealized losses, current | (28) | |
Fair value, current | 15,489 | |
Marketable Securities, Noncurrent [Abstract] | ||
Amortized cost basis, non-current | $ 254 | 1,419 |
Accumulated gross unrealized gains, non-current | 548 | 0 |
Accumulated gross unrealized losses, non-current | 0 | (22) |
Fair value, non-current | 802 | 1,397 |
Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Amortized cost basis, current | 441 | 525 |
Accumulated gross unrealized gains, current | 1,058 | 1,486 |
Accumulated gross unrealized losses, current | 0 | 0 |
Fair value, current | $ 1,499 | $ 2,011 |
Marketable Securities - Securit
Marketable Securities - Securitization Trusts (Details) - Securitization Trust, Primary Beneficiary [Member] - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | ||
Securitization Trust [Line Items] | ||||
Size/Principal outstanding | [1] | $ 3,287,616 | $ 3,601,468 | |
Assets on Balance Sheet | [2] | 1,499 | 2,011 | |
Liabilities on Balance Sheet | 0 | 0 | ||
Maximum exposure to loss | [3] | 1,499 | 2,011 | |
Year to date loss on sale | 0 | $ 0 | ||
Year to date cash flows | [4] | $ 3,719 | $ 6,287 | |
[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, 2016 and 2015, respectively. |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
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 |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Impaired Long-Lived Assets Held and Used, Carrying Value | $ 94,000 |
Impaired Long-Lived Assets Held and Used, Fair Value | 20,000 |
Impairment of Long-Lived Assets Held-for-use | $ 74,000 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 461 | $ 1,420 |
Less: Accumulated depreciation and amortization | (319) | (1,062) |
Property and equipment, net | 142 | 358 |
Furniture, Fixtures and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 73 | 314 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 317 | 402 |
Hardware and Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 71 | 157 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 0 | $ 547 |
Borrowings - Senior Notes (Deta
Borrowings - Senior Notes (Details) $ in Thousands | May 09, 2016 | Mar. 22, 2011USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Interest expense not accrued due to reorganization | $ 700 | $ 700 | |||
Post-Modification Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior Notes | $ 88,367 | ||||
Description of event of default | These interest payments were not made within 30 days after they became due and payable, and remain unpaid, such non-payments constituting events of default under the Indentures. | ||||
Description of notice of default | As a result, the Senior Notes have been classified as current liabilities in the September 30, 2016 balance sheet. The trustee under any Indenture or the holders of not less than 25% of the aggregate principal amount of the outstanding Senior Notes issued pursuant to such Indenture, by notice in writing to the Company (and to the trustee if given by the holders), may declare the principal amount of all the Senior Notes issued under such Indenture to be due and payable immediately. On May 9, 2016, the Company received a notice of acceleration with respect to the Series 1 Senior Notes and the Series 2 Senior Notes, declaring all principal and unpaid interest immediately due and payable. A similar acceleration notice was received on June 6, 2016 with respect to the Series 3 Senior Notes. | ||||
Outstanding principal | 85,900 | $ 85,900 | |||
Due and unpaid interest | 2,700 | 2,700 | |||
Aggregate recorded interest liability | $ 2,000 | $ 2,000 | |||
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] | 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% |
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 ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Marketable Securities, Current [Abstract] | ||
Fair value, current | $ 17,388 | $ 17,500 |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 802 | 1,397 |
Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,889 | |
Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,489 | |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 802 | 1,397 |
Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,499 | 2,011 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 33,107 | 21,723 |
Fair Value, Measurements, Recurring [Member] | Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,889 | |
Fair Value, Measurements, Recurring [Member] | Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,489 | |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 802 | 1,397 |
Fair Value, Measurements, Recurring [Member] | Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,499 | 2,011 |
Fair Value, Measurements, Recurring [Member] | Cash | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 1,832 | 1,674 |
Fair Value, Measurements, Recurring [Member] | Money market funds | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 13,085 | 1,152 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 31,608 | 2,826 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,889 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 802 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Cash | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 1,832 | 1,674 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Money market funds | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 13,085 | 1,152 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 0 | 16,886 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 15,489 | |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | 1,397 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Cash | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Money market funds | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Disclosure | 1,499 | 2,011 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Equity securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate notes and bonds | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 0 | |
Marketable Securities, Noncurrent [Abstract] | ||
Fair value, non-current | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage securities | ||
Marketable Securities, Current [Abstract] | ||
Fair value, current | 1,499 | 2,011 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Cash | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Money market funds | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 0 | $ 0 |
Fair Value Accounting - Signifi
Fair Value Accounting - Significant Unobservable Inputs (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Aggregate Overcollateralization on Overcollateralization Bonds Held | $ 27,000,000 |
Mortgage securities | Present Value Analysis [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Fair value inputs, weighted average life, in years | 2 years |
Fair Value, Measurements, Recurring [Member] | Overcollateralization Bonds [Member] | |
Fair Value Inputs, Quantitative Information [Line Items] | |
Overcollateralization Bonds, Fair Value Disclosure | $ 0 |
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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance, beginning of period | $ 2,011 | $ 3,381 | |
Proceeds from paydowns of securities | [1] | (84) | (84) |
Mark-to-market value adjustment | (428) | (802) | |
Net decrease to mortgage securities – available-for-sale | (512) | (886) | |
Balance, end of period | 1,499 | 2,495 | |
Cash received on mortgage securities with no cost basis | $ 3,300 | $ 4,200 | |
[1] | Cash received on mortgage securities with no cost basis was $3.3 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively. |
Fair Value Accounting - Carryin
Fair Value Accounting - Carrying Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | $ 112 | $ 598 |
Marketable securities | 18,190 | 18,897 |
Senior notes | 85,900 | 88,385 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Restricted cash | 112 | 435 |
Marketable securities | 18,190 | 18,897 |
Senior notes | $ 18,629 | $ 18,331 |
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 - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Valuation Allowance | $ 279.9 | $ 281.5 |
Effective Income Tax Rate Reconciliation, Percent | 0.00% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Income Tax Contingency [Line Items] | ||
Unrecognized Tax Benefits | $ 0.3 | $ 0.4 |
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, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator: | ||||
Net income (loss) from continuing operations | $ 2,445 | $ (707) | $ 952 | $ (2,489) |
Loss from discontinued operations, net of income taxes | 0 | (6,532) | (77) | (18,388) |
Net income (loss) available to common shareholders | $ 2,445 | $ (7,239) | $ 875 | $ (20,877) |
Denominator: | ||||
Weighted average common shares outstanding – basic | 92,180,484 | 91,187,345 | 91,345,504 | 91,103,880 |
Weighted average common shares outstanding - diluted | 92,465,111 | 91,187,345 | 92,185,518 | 91,103,880 |
Basic earnings per share: | ||||
Net income (loss) from continuing operations | $ 0.03 | $ (0.01) | $ 0.01 | $ (0.03) |
Net loss from discontinued operations | 0 | (0.07) | 0 | (0.20) |
Net income (loss) available to common shareholders | 0.03 | (0.08) | 0.01 | (0.23) |
Diluted earnings per share: | ||||
Net income (loss) from continuing operations | 0.03 | (0.01) | 0.01 | (0.03) |
Net loss from discontinued operations | 0 | (0.07) | 0 | (0.20) |
Net income (loss) available to common shareholders | $ 0.03 | $ (0.08) | $ 0.01 | $ (0.23) |
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 | 284,627 | 0 | 840,014 | 0 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities (Details) - Stock Options [Member] - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 4,443 | 10,832 | 4,613 | 10,379 |
Weighted average exercise price of stock otions | $ 0.70 | $ 0.62 | $ 0.71 | $ 0.62 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - shares | Sep. 30, 2016 | Dec. 31, 2015 |
Restricted Stock [Member] | ||
Class of Stock [Line Items] | ||
Nonvested shares oustanding | 0 | 1,500,000 |