Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Jul. 19, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Altisource Portfolio Solutions S.A. | ' |
Entity Central Index Key | '0001462418 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 21,835,823 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $127,884 | $130,429 |
Accounts receivable, net | 125,047 | 104,787 |
Prepaid expenses and other current assets | 16,022 | 10,891 |
Deferred tax assets, net | 2,837 | 2,837 |
Total current assets | 271,790 | 248,944 |
Premises and equipment, net | 100,962 | 87,252 |
Deferred tax assets, net | 160 | 622 |
Intangible assets, net | 256,889 | 276,162 |
Goodwill | 61,941 | 99,414 |
Other assets | 19,258 | 17,658 |
Total assets | 711,000 | 730,052 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 102,686 | 84,706 |
Current portion of long-term debt | 3,975 | 3,975 |
Deferred revenue | 21,785 | 36,742 |
Other current liabilities | 8,957 | 10,131 |
Total current liabilities | 137,403 | 135,554 |
Long-term debt, less current portion | 389,385 | 391,281 |
Other non-current liabilities | 11,733 | 45,476 |
Commitments, contingencies and regulatory matters (Note 18) | ' | ' |
Equity: | ' | ' |
Common stock ($1.00 par value; 100,000 shares authorized; 25,413 issued and 21,941 outstanding as of June 30, 2014; 25,413 issued and 22,629 outstanding as of December 31, 2013) | 25,413 | 25,413 |
Additional paid-in capital | 90,403 | 89,273 |
Retained earnings | 330,361 | 239,561 |
Treasury stock, at cost (3,472 shares as of June 30, 2014 and 2,784 shares as of December 31, 2013) | -274,679 | -197,548 |
Altisource equity | 171,498 | 156,699 |
Non-controlling interests | 981 | 1,042 |
Total equity | 172,479 | 157,741 |
Total liabilities and equity | $711,000 | $730,052 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Common stock, par value (in dollars per share) | $1 | $1 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 25,413 | 25,413 |
Common stock, shares outstanding | 21,941 | 22,629 |
Treasury stock, shares | 3,472 | 2,784 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Revenue | $296,072 | $186,110 | $535,341 | $334,937 |
Cost of revenue | 183,999 | 116,972 | 331,804 | 213,934 |
Gross profit | 112,073 | 69,138 | 203,537 | 121,003 |
Selling, general and administrative expenses | 49,021 | 29,828 | 92,555 | 48,508 |
Income from operations | 63,052 | 39,310 | 110,982 | 72,495 |
Other income (expense), net: | ' | ' | ' | ' |
Interest expense | -4,784 | -4,902 | -9,560 | -8,114 |
Other income (expense), net | -43 | 77 | 4 | 782 |
Total other income (expense), net | -4,827 | -4,825 | -9,556 | -7,332 |
Income before income taxes and non-controlling interests | 58,225 | 34,485 | 101,426 | 65,163 |
Income tax provision | -3,493 | -2,417 | -6,548 | -4,568 |
Net income | 54,732 | 32,068 | 94,878 | 60,595 |
Net income attributable to non-controlling interests | -631 | -1,137 | -1,146 | -2,146 |
Net income attributable to Altisource | 54,101 | 30,931 | 93,732 | 58,449 |
Earnings per share: | ' | ' | ' | ' |
Basic (in dollars per share) | $2.45 | $1.34 | $4.20 | $2.51 |
Diluted (in dollars per share) | $2.24 | $1.25 | $3.84 | $2.34 |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic (in shares) | 22,089 | 23,161 | 22,301 | 23,267 |
Diluted (in shares) | 24,166 | 24,823 | 24,415 | 24,940 |
Transactions with related parties included above: | ' | ' | ' | ' |
Revenue | 179,027 | 121,234 | 324,585 | 211,332 |
Cost of revenue | 9,554 | 5,087 | 16,842 | 8,914 |
Selling, general and administrative expenses | -489 | -30 | -731 | -284 |
Other income | ' | ' | ' | $773 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (USD $) | Total | Common stock | Additional paid-in capital | Retained earnings | Treasury stock, at cost | Non-controlling interests |
In Thousands, unless otherwise specified | ||||||
Balance at Dec. 31, 2012 | $159,829 | $25,413 | $86,873 | $124,127 | ($77,954) | $1,370 |
Balance (in shares) at Dec. 31, 2012 | ' | 25,413 | ' | ' | ' | ' |
Increase (Decrease) in Equity | ' | ' | ' | ' | ' | ' |
Net income | 60,595 | ' | ' | 58,449 | ' | 2,146 |
Contributions from non-controlling interest holders | 15 | ' | ' | ' | ' | 15 |
Distributions to non-controlling interest holders | -1,889 | ' | ' | ' | ' | -1,889 |
Share-based compensation expense | 1,519 | ' | 1,519 | ' | ' | ' |
Exercise of stock options | 2,914 | ' | ' | -3,639 | 6,553 | ' |
Repurchase of shares | -51,573 | ' | ' | ' | -51,573 | ' |
Balance at Jun. 30, 2013 | 171,410 | 25,413 | 88,392 | 178,937 | -122,974 | 1,642 |
Balance (in shares) at Jun. 30, 2013 | ' | 25,413 | ' | ' | ' | ' |
Balance at Dec. 31, 2013 | 157,741 | 25,413 | 89,273 | 239,561 | -197,548 | 1,042 |
Balance (in shares) at Dec. 31, 2013 | ' | 25,413 | ' | ' | ' | ' |
Increase (Decrease) in Equity | ' | ' | ' | ' | ' | ' |
Net income | 94,878 | ' | ' | 93,732 | ' | 1,146 |
Distributions to non-controlling interest holders | -1,207 | ' | ' | ' | ' | -1,207 |
Share-based compensation expense | 1,130 | ' | 1,130 | ' | ' | ' |
Exercise of stock options | 639 | ' | ' | -2,932 | 3,571 | ' |
Repurchase of shares | -80,702 | ' | ' | ' | -80,702 | ' |
Balance at Jun. 30, 2014 | $172,479 | $25,413 | $90,403 | $330,361 | ($274,679) | $981 |
Balance (in shares) at Jun. 30, 2014 | ' | 25,413 | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $94,878 | $60,595 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 13,375 | 9,306 |
Amortization of intangible assets | 19,573 | 10,237 |
Change in the fair value of Equator Earn Out | -37,924 | ' |
Goodwill impairment | 37,473 | ' |
Share-based compensation expense | 1,130 | 1,519 |
Equity in losses of investment in affiliate | ' | 122 |
Bad debt expense | 4,250 | 452 |
Amortization of debt discount | 90 | 152 |
Amortization of debt issuance costs | 483 | 451 |
Deferred income taxes | 462 | ' |
Loss on disposal of fixed assets | 98 | 926 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ' | ' |
Accounts receivable | -24,510 | -10,813 |
Prepaid expenses and other current assets | -5,131 | -3,009 |
Other assets | -2,089 | -1,440 |
Accounts payable and accrued expenses | 21,319 | 917 |
Other current and non-current liabilities | -11,950 | -1,947 |
Net cash provided by operating activities | 111,527 | 67,468 |
Cash flows from investing activities: | ' | ' |
Additions to premises and equipment | -30,522 | -13,397 |
Acquisition of businesses, net of cash acquired | ' | -215,700 |
Proceeds from loan to Ocwen | ' | 75,000 |
Proceeds from sale of equity affiliate | ' | 12,648 |
Other investing activities | -294 | -50 |
Net cash used in investing activities | -30,816 | -141,499 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of long-term debt | ' | 201,000 |
Repayment of long-term debt and payments on capital lease obligations | -1,986 | -1,733 |
Debt issuance costs | ' | -2,400 |
Proceeds from stock option exercises | 639 | 2,914 |
Purchase of treasury stock | -80,702 | -51,573 |
Contributions from non-controlling interests | ' | 15 |
Distributions to non-controlling interests | -1,207 | -1,889 |
Net cash (used in) provided by financing activities | -83,256 | 146,334 |
Net (decrease) increase in cash and cash equivalents | -2,545 | 72,303 |
Cash and cash equivalents at the beginning of the period | 130,429 | 105,502 |
Cash and cash equivalents at the end of the period | 127,884 | 177,805 |
Supplemental cash flow information: | ' | ' |
Interest paid | 9,074 | 7,562 |
Income taxes paid, net | 1,561 | 1,165 |
Non-cash investing and financing activities: | ' | ' |
(Decrease) increase in payables for purchases of premises and equipment | -3,339 | 891 |
(Decrease) increase in acquisition of businesses from subsequent working capital true-ups | ($3,711) | $11,133 |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2014 | |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION | |
Description of Business | |
Altisource Portfolio Solutions S.A., together with its subsidiaries (which may be referred to as “Altisource,” the “Company,” “we,” “us” or “our”), is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. We leverage proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants. | |
We are incorporated under the laws of Luxembourg and are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.” | |
Altisource® operations are conducted through three reporting segments: Mortgage Services, Financial Services and Technology Services. In addition, we report our corporate-related expenditures and eliminations separately (see Note 19 for a description of our business segments). | |
Basis of Presentation | |
The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Intercompany and inter-segment transactions and accounts are eliminated in consolidation. | |
The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource, serves as the manager of Best Partners Mortgage Cooperative, Inc. doing business as Lenders One Mortgage Cooperative (“Lenders One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025. The management agreement between MPA and Lenders One® members, pursuant to which MPA is the management company of Lenders One, represents a variable interest in a variable interest entity. MPA is the primary beneficiary of Lenders One as it has the power to direct the activities that most significantly impact Lenders One’s economic performance and the obligation to absorb losses or the right to receive benefits from Lenders One. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis with the interests of the members reflected as non-controlling interests. As of June 30, 2014, Lenders One had total assets of $5.8 million and total liabilities of $4.9 million. As of December 31, 2013, Lenders One had total assets of $4.6 million and total liabilities of $3.5 million. | |
These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Form 10-K for the year ended December 31, 2013, filed with the SEC on February 13, 2014, which contains a summary of our significant accounting policies. Certain footnote detail in the Form 10-K is omitted from the information included herein. | |
Correction of Immaterial Errors | |
During the second quarter of 2014, we determined that while we properly identified our related parties in previously issued financial statements, disclosures of certain immaterial related party expenses were omitted. We have corrected the previously presented disclosures of related party expenses in Note 2 — Transactions with Related Parties and on the face of the condensed consolidated statements of operations for the three and six months ended June 30, 2013. The impact of correcting these items in the notes to the condensed consolidated financial statements had the effect of increasing the amounts disclosed as related party cost of revenue from Ocwen Financial Corporation, together with its subsidiaries (“Ocwen”), by $8.9 million for the six months ended June 30, 2013 ($5.1 million for the second quarter of 2013), increasing the amounts disclosed as selling, general and administrative expenses from Ocwen billings to Altisource by $0.2 million for the six months ended June 30, 2013 ($0.1 million for the second quarter of 2013), decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Ocwen by $0.1 million for the six months ended June 30, 2013 ($0.1 million for the second quarter of 2013) and decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Altisource Asset Management Corporation (“AAMC”) by $0.2 million ($0.1 million for the second quarter of 2013). Correcting these items on the face of the condensed consolidated statements of operations resulted in the disclosure of related party cost of revenue of $8.9 million for the six months ended June 30, 2013 ($5.1 million for the second quarter of 2013) and a decrease in previously disclosed related party selling, general and administrative expenses by $1.7 million for the six months ended June 30, 2013 ($0.8 million for the second quarter of 2013). | |
In accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, the Company evaluated the effect of the disclosure and presentation errors on its previously issued annual and quarterly financial statements, both qualitatively and quantitatively, and concluded that the related party disclosures in the Company’s previously issued annual and quarterly financial statements are not materially misstated. | |
Future Adoption of a New Accounting Pronouncement | |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the new standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently evaluating the impact this new guidance may have on its results of operations and financial position. | |
Fair Value of Financial Instruments | |
ASC Topic 820, Fair Value Measurement, established a three-level hierarchy that prioritizes the inputs used to measure fair value as follows: | |
Level 1 — Quoted prices in active markets for identical assets and liabilities | |
Level 2 — Observable inputs other than quoted prices included in Level 1 | |
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. | |
Our financial assets and liabilities primarily include cash and cash equivalents, restricted cash, long-term debt and acquisition-related contingent consideration. Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair value due to the short-term nature of these instruments. The fair value for cash and cash equivalents and restricted cash was measured using level 1 inputs. The carrying amount of long-term debt approximates fair value due to the variable interest rate and consistent credit rating of the Company. The fair value of long-term debt was measured using level 2 inputs. The carrying amount of acquisition-related contingent consideration is equal to its fair value. The fair value of acquisition-related contingent consideration was measured using level 3 inputs, which included sensitivities pertaining to discount rates and financial projections. See Note 3 for further discussion of the change in fair value of contingent consideration. |
TRANSACTIONS_WITH_RELATED_PART
TRANSACTIONS WITH RELATED PARTIES | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||||
NOTE 2 — TRANSACTIONS WITH RELATED PARTIES | ||||||||||
Ocwen® | ||||||||||
Ocwen is our largest customer. Our Chairman is also the Executive Chairman of Ocwen. | ||||||||||
Revenue | ||||||||||
Ocwen purchases certain mortgage services and technology services from us under the terms of master services agreements and amendments to the master services agreements (collectively, the “Service Agreements”) with terms extending through August 2025. The Service Agreements, among other things, contain a “most favored nations” provision and the parties to the Service Agreements have the right to renegotiate pricing. In connection with our March 29, 2013 acquisition from Ocwen of the fee-based businesses of Homeward Residential, Inc. (“Homeward”) and the April 12, 2013 transaction with Ocwen related to the fee-based businesses of Residential Capital, LLC (“ResCap”) (see Note 3), our Service Agreements with Ocwen were amended to extend the term from 2020 to 2025. Further, as part of the amendments, Ocwen agreed not to establish similar fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward and ResCap businesses. We settle amounts with Ocwen on a daily, weekly or monthly basis depending upon the nature of the service and when the service is provided. | ||||||||||
Related party revenue consists of revenue earned directly from Ocwen and revenue earned from the loans serviced by Ocwen when Ocwen designates us as the service provider. We earn additional revenue on the portfolios serviced by Ocwen that are not considered related party revenue when a party other than Ocwen selects Altisource as the service provider. Related party revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: | ||||||||||
Three months ended | Six months ended | |||||||||
June 30, | June 30, | |||||||||
2014 | 2013 | 2014 | 2013 | |||||||
Mortgage Services | 65 | % | 70 | % | 67 | % | 69 | % | ||
Financial Services | 28 | % | 29 | % | 27 | % | 17 | % | ||
Technology Services | 40 | % | 54 | % | 38 | % | 52 | % | ||
Consolidated revenue | 59 | % | 65 | % | 60 | % | 63 | % | ||
We record revenue we earn from Ocwen under the Service Agreements at rates we believe to be market rates as we believe they are consistent with the fees we charge to other customers for comparable services and/or fees charged by our competitors. | ||||||||||
Cost of Revenue | ||||||||||
At times, we use Ocwen’s contractors and/or employees to support Altisource related services. Ocwen bills us for these contractors and/or employees based on their fully-allocated cost. Additionally, we purchase certain data relating to Ocwen’s servicing portfolio in connection with a Data Access and Services Agreement. The Data Access and Services Agreement may be renegotiated and may be cancelled by either Altisource or Ocwen with 90 days prior written notice. Ocwen bills us a per asset fee for this data. For the six months ended June 30, 2014 and 2013, Ocwen billed us $16.8 million and $8.9 million, respectively ($9.6 million and $5.1 million for the second quarter of 2014 and 2013, respectively). These amounts are reflected as a component of cost of revenue in the condensed consolidated statements of operations. | ||||||||||
Selling, general and administrative expenses | ||||||||||
We provide certain other services to Ocwen and Ocwen provides certain other services to us. These services include such areas as human resources, vendor management, vendor oversight, corporate services, operational effectiveness, quality assurance, quantitative analytics and treasury. Billings for these services are based on the fully-allocated cost of providing the service based on an estimate of the time and expense of providing the service or estimates thereof. For the six months ended June 30, 2014 and 2013, we billed Ocwen $2.2 million and $1.3 million, respectively ($1.2 million and $0.6 million for the second quarter of 2014 and 2013, respectively), and Ocwen billed us $2.4 million and $1.6 million, respectively ($1.2 million and $0.9 million for the second quarter of 2014 and 2013, respectively). These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. | ||||||||||
Unsecured Term Loan | ||||||||||
On December 27, 2012, we entered into a senior unsecured term loan agreement with Ocwen under which we loaned $75.0 million to Ocwen. Payments of interest were due quarterly at a rate per annum equal to the Eurodollar Rate (as defined in the agreement) plus 6.75%, provided that the Eurodollar Rate is not less than 1.50%. On February 15, 2013, Ocwen repaid the outstanding principal amount of this loan and all accrued and unpaid interest and the term loan was terminated. Interest income related to this loan was $0.8 million for the six months ended June 30, 2013, all of which was recognized in the first quarter of 2013. | ||||||||||
Transactions Related to Fee-Based Businesses | ||||||||||
On January 31, 2013, we entered into non-binding letters of intent with Ocwen to acquire certain fee-based businesses associated with Ocwen’s acquisitions of the Homeward and ResCap servicing portfolios. Ocwen acquired the Homeward servicing portfolio on December 27, 2012 and the ResCap servicing portfolio on February 15, 2013. Altisource acquired the Homeward fee-based businesses from Ocwen on March 29, 2013 (see Note 3). Altisource entered into an agreement with Ocwen on April 12, 2013 to establish additional terms related to our services in connection with the ResCap fee-based businesses (see Note 3). | ||||||||||
Correspondent One® and HLSS™ | ||||||||||
In July 2011, we acquired an equity interest in Correspondent One S.A. (“Correspondent One”). Correspondent One purchased closed conforming and government guaranteed residential mortgages from approved mortgage bankers. On March 31, 2013, we sold our 49% interest in Correspondent One to Ocwen for $12.6 million. Prior to the sale to Ocwen, we provided Correspondent One certain finance, human resources, legal support, facilities, technology, vendor management and risk management services under a support services agreement. For the six months ended June 30, 2013, we billed Correspondent One $0.1 million (no comparative amounts for 2014 and the second quarter of 2013). This amount was reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. We also provided certain origination related services to Correspondent One. We earned revenue of $0.1 million for the six months ended June 30, 2013 for these services (no comparative amounts for 2014 and the second quarter of 2013). | ||||||||||
Home Loan Servicing Solutions, Ltd. (“HLSS”) is a publicly traded company whose primary objective is the acquisition of mortgage servicing rights and advances. Our Chairman is also the Chairman of HLSS. Under a support services agreement, we provide HLSS certain finance, human resources and legal support services. We billed HLSS $0.4 million and $0.3 million for the six months ended June 30, 2014 and 2013, respectively ($0.2 million in each period for the second quarter of 2014 and 2013). These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. | ||||||||||
Residential and AAMC | ||||||||||
Altisource Residential Corporation (“Residential”) and AAMC were established, capitalized and their equity was distributed to our shareholders on December 21, 2012 and they are each separate publicly traded companies. Residential is focused on acquiring and managing single family rental properties by acquiring portfolios of sub-performing and non-performing residential mortgage loans throughout the United States. AAMC is an asset management company providing portfolio management and corporate governance services to Residential. Our Chairman is also the Chairman of Residential and AAMC. | ||||||||||
For purposes of governing certain ongoing relationships between Altisource, Residential and AAMC, we entered into certain agreements with Residential and AAMC. We have agreements to provide Residential with renovation management, lease management and property management services. In addition, we have agreements with Residential and AAMC to provide support services such as finance, human resources, legal support, facilities, technology, vendor management and risk management. Further, we have separate agreements for certain services related to income tax matters, trademark licenses and technology products and services. | ||||||||||
For the six months ended June 30, 2014 and 2013, we billed Residential $4.7 million and $0.4 million, respectively ($3.9 million and $0.2 million for the second quarter of 2014 and 2013, respectively). For the six months ended June 30, 2014 and 2013, we billed AAMC less than $0.1 million in each period (less than $0.1 million in each period for the second quarter of 2014 and 2013) under the services agreements. These amounts are reflected in revenue in the condensed consolidated statements of operations. In addition, for the six months ended June 30, 2014 and 2013, we billed AAMC $0.5 million and $0.2 million, respectively ($0.3 million and $0.1 million for the second quarter of 2014 and 2013, respectively), under the support services agreements. These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended | ||||||||||
Jun. 30, 2014 | |||||||||||
ACQUISITIONS | ' | ||||||||||
ACQUISITIONS | ' | ||||||||||
NOTE 3— ACQUISITIONS | |||||||||||
Homeward Fee-Based Businesses | |||||||||||
On March 29, 2013, we acquired certain fee-based businesses associated with Ocwen’s acquisition of Homeward. As part of the acquisition, Ocwen agreed not to develop similar fee-based businesses that would directly or indirectly compete with services provided by Altisource relative to the Homeward servicing portfolio. Additionally, the terms of our Service Agreements with Ocwen were amended to extend the term from 2020 to 2025 (see Note 2). We paid $75.8 million, after a working capital and pre-acquisition net income adjustment payment by Ocwen of $11.1 million, which we received in September 2013. | |||||||||||
Since the acquisition date, management adjusted the purchase price allocation and assigned associated asset lives based upon information that has become available. In addition to the working capital adjustment, we also reduced premises and equipment by $1.2 million based on a post-acquisition detailed analysis of software licenses received and increased current liabilities by $2.0 million based on a subsequent detailed analysis of obligations payable as of the closing date. Consequently, the Company retrospectively adjusted the fair value of the assets acquired and liabilities assumed in the condensed consolidated balance sheet as of December 31, 2013 as well as disclosed the corresponding amount of non-cash investing and financing activities in the condensed consolidated statement of cash flows for the six months ended June 30, 2013. | |||||||||||
The final adjusted allocation of the purchase price is as follows: | |||||||||||
(in thousands) | |||||||||||
Premises and equipment | $ | 1,559 | |||||||||
Customer relationship | 75,609 | ||||||||||
Goodwill | 2,039 | ||||||||||
79,207 | |||||||||||
Accounts payable and accrued expenses | (3,390 | ) | |||||||||
Purchase price | $ | 75,817 | |||||||||
Estimated life | |||||||||||
(in years) | |||||||||||
Premises and equipment | 5-Mar | ||||||||||
Customer relationship | 7 | ||||||||||
ResCap Fee-Based Businesses | |||||||||||
On April 12, 2013, we entered into an agreement with Ocwen to establish additional terms related to the existing servicing arrangements between Altisource and Ocwen in connection with certain mortgage servicing platform assets of ResCap (the “ResCap Business”). The agreement provides that (i) Altisource will be a provider to Ocwen of certain services related to the ResCap Business, (ii) Ocwen will not establish similar fee-based businesses that would directly or indirectly compete with Altisource’s services as they relate to the ResCap Business and (iii) Ocwen will market and promote the utilization of Altisource’s services to their various third party relationships. Additionally, the parties agreed to use commercially reasonable best efforts to ensure that the loans associated with the ResCap Business are boarded onto Altisource’s mortgage servicing platform. We paid $128.8 million to Ocwen in connection with the ResCap fee-based businesses agreement. | |||||||||||
We acquired no tangible assets and assumed no liabilities in connection with the ResCap transaction. However, certain employees as well as practices and processes developed to support the ResCap servicing portfolio were components of the transaction. We accounted for this transaction as a business combination in accordance with ASC Topic 805, Business Combinations. | |||||||||||
Management prepared a final purchase price allocation and assigned associated asset lives based upon available information at the time of the agreement and until finalized as of December 31, 2013. The agreement consideration of $128.8 million was fully allocated to the customer relationship intangible asset with an estimated average useful life of 7 years. | |||||||||||
Equator® Acquisition | |||||||||||
On November 15, 2013, we completed the acquisition of all of the outstanding limited liability company interests of Equator, LLC (“Equator”) pursuant to a Purchase and Sale Agreement dated as of August 19, 2013 (the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement, we paid $63.4 million at closing in cash (net of closing working capital adjustments), subject to certain post-closing adjustments based on current assets and current liabilities of Equator at closing. After the acquisition date, management adjusted the purchase price allocation based upon information that has subsequently become available relating to acquisition date working capital, resulting in an obligation of the Company to pay the sellers an additional $3.7 million. Consequently, the Company retrospectively adjusted the fair value of the assets acquired and liabilities assumed in the condensed consolidated balance sheet as of December 31, 2013 as well as disclosed the corresponding amount of non-cash investing and financing activities in the condensed consolidated statement of cash flows for the six months ended June 30, 2014. | |||||||||||
The Purchase Agreement also provides for the payment of up to $80 million in potential additional consideration (the “Earn Out”). The Earn Out is determined based on Equator’s Adjusted EBITA (as defined in the Purchase Agreement) in the three consecutive 12-month periods following closing. Up to $22.5 million of the Earn Out can be earned in each of the first two 12-month periods, and up to $35.0 million can be earned in the third 12-month period. Any amounts earned upon the achievement of Adjusted EBITA thresholds are payable through 2017. We may, in our discretion, pay up to 20% of each payment of any Earn Out in shares of Company restricted stock, with the balance to be paid in cash. As of the closing date, we estimated the fair value of the Earn Out to be $46.0 million, determined based on the present value of future estimated Earn Out payments at such date, which has subsequently been adjusted as further described below. The acquisition date fair value of the Earn Out is included as a component of the purchase price of Equator. | |||||||||||
The preliminary adjusted allocation of the purchase price is as follows: | |||||||||||
(in thousands) | Initial purchase | Adjustments | Adjusted purchase | ||||||||
price allocation | price allocation | ||||||||||
Cash and cash equivalents | $ | — | $ | 105 | $ | 105 | |||||
Accounts receivable | 9,293 | 3,490 | 12,783 | ||||||||
Prepaid expenses and other current assets | 954 | (498 | ) | 456 | |||||||
Premises and equipment | 16,974 | — | 16,974 | ||||||||
Customer relationships and trade names | 43,393 | — | 43,393 | ||||||||
Goodwill | 82,460 | — | 82,460 | ||||||||
Other non-current assets | 242 | 78 | 320 | ||||||||
Assets acquired | 153,316 | 3,175 | 156,491 | ||||||||
Accounts payable and accrued expenses | (7,232 | ) | 536 | (6,696 | ) | ||||||
Deferred revenue | (36,689 | ) | — | (36,689 | ) | ||||||
Liabilities assumed | (43,921 | ) | 536 | (43,385 | ) | ||||||
Purchase price | $ | 109,395 | $ | 3,711 | $ | 113,106 | |||||
Estimated life | |||||||||||
(in years) | |||||||||||
Premises and equipment (excluding internally developed software) | 5-Mar | ||||||||||
Internally developed software (included in premises and equipment) | 7 | ||||||||||
Customer relationships | 15-Jul | ||||||||||
Trade names | 4 | ||||||||||
In accordance with ASC 805, Business Combinations, the liability for Earn Out payments is remeasured to fair value each period until the contingency is resolved with the change in fair value recognized in earnings. As of the closing date, December 31, 2013 and March 31, 2014, we estimated the fair value of the Earn Out to be $46.0 million, determined based on the present value of future estimated Earn Out payments. As of June 30, 2014, we estimate the fair value of the Earn Out to be $8.1 million, determined based on the present value of future estimated Earn Out payments. The lower fair value of the Earn Out is based on management’s current estimates that expected earnings of Equator will be lower than projected at the time of acquisition. The change in fair value of $37.9 million is reflected as a reduction of selling, general and administrative expenses in the condensed consolidated statements of operations. | |||||||||||
As a result of the decline in fair value of the Earn Out, management evaluated and determined that Equator goodwill should be tested for impairment. Consequently, we initiated a quantitative two-step goodwill impairment test by comparing the carrying value of the net assets of Equator to its fair value based on a discounted cash flow analysis. We determined, based on a preliminary assessment, that the fair value of Equator was less than its carrying value. Based on this preliminary assessment, management has estimated that the Equator goodwill impairment is approximately $37.5 million, which is reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations (see Note 15). This assessment is preliminary due to the timing of revisions to forecasted results of operations and cash flows and the volatility of the markets in which Equator’s customers operate. The Company expects to complete its Equator goodwill impairment assessment in the third quarter of 2014. | |||||||||||
The following table presents the impact of the change in the fair value of the Equator Earn Out and Equator goodwill impairment for the second quarter of 2014 and for the six months ended June 30, 2014, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations: | |||||||||||
(in thousands) | |||||||||||
Change in the fair value of Equator Earn Out | $ | (37,924 | ) | ||||||||
Goodwill impairment | 37,473 | ||||||||||
$ | (451 | ) | |||||||||
The final determination of any further post-closing purchase price adjustments is in process. | |||||||||||
The following tables present the unaudited pro forma consolidated results of operations as if the Homeward, ResCap Business and Equator transactions had occurred at the beginning of the period presented: | |||||||||||
Three months ended | |||||||||||
June 30, 2013 | |||||||||||
(in thousands, except per share amounts) | As reported | Pro forma | |||||||||
Revenue | $ | 186,110 | $ | 201,039 | |||||||
Net income attributable to Altisource | 30,931 | 29,064 | |||||||||
Earnings per share - Diluted | 1.25 | 1.17 | |||||||||
Six months ended | |||||||||||
June 30, 2013 | |||||||||||
(in thousands, except per share amounts) | As reported | Pro forma | |||||||||
Revenue | $ | 334,937 | $ | 398,285 | |||||||
Net income attributable to Altisource | 58,449 | 61,708 | |||||||||
Earnings per share - Diluted | 2.34 | 2.47 | |||||||||
The unaudited pro forma information presents the combined operating results of Altisource and the Homeward, ResCap Business and Equator transactions. The Homeward, ResCap Business and Equator operating results were derived from their historical financial statements for the most comparable periods available. The results prior to the acquisition dates have been adjusted to include the pro forma impact of the adjustment of amortization of the acquired intangible assets based on the purchase price allocations, the adjustment of interest expense reflecting the portion of our senior secured term loan used in the Homeward, ResCap Business and Equator transactions and to reflect the impact of income taxes on the pro forma adjustments utilizing Altisource’s effective income tax rate. | |||||||||||
The unaudited pro forma results are presented for illustrative purposes only and do not reflect additional revenue opportunities, the realization of any potential cost savings and any related integration costs. Certain revenue opportunities and cost savings may result from the transactions and the conversion to the Altisource model; however, there can be no assurance that these revenue opportunities and cost savings will be achieved. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the transactions occurred as of the beginning of the period presented, nor is the pro forma data intended to be a projection of results that may be obtained in the future. |
ACCOUNTS_RECEIVABLE_NET
ACCOUNTS RECEIVABLE, NET | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
ACCOUNTS RECEIVABLE, NET | ' | |||||||
ACCOUNTS RECEIVABLE, NET | ' | |||||||
NOTE 4 — ACCOUNTS RECEIVABLE, NET | ||||||||
Accounts receivable, net consists of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Billed | ||||||||
Non-related parties | $ | 41,533 | $ | 41,011 | ||||
Ocwen | 28,137 | 11,658 | ||||||
HLSS | 194 | 83 | ||||||
AAMC | 195 | 1,347 | ||||||
Residential | 4,247 | 547 | ||||||
Other receivables | 786 | 1,643 | ||||||
75,092 | 56,289 | |||||||
Unbilled | ||||||||
Non-related parties | 53,911 | 44,102 | ||||||
Ocwen | 5,730 | 10,027 | ||||||
134,733 | 110,418 | |||||||
Less: allowance for doubtful accounts | (9,686 | ) | (5,631 | ) | ||||
Total | $ | 125,047 | $ | 104,787 | ||||
(1) December 31, 2013 accounts receivable has been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. | ||||||||
Unbilled receivables consist primarily of asset management and default management services for which we recognize revenues over the service delivery period but bill following completion of the service. |
PREPAID_EXPENSES_AND_OTHER_CUR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | |||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | |||||||
NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||||||||
Prepaid expenses and other current assets consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Maintenance agreements, current portion | $ | 7,047 | $ | 4,600 | ||||
Income taxes receivable | 2,553 | 1,645 | ||||||
Prepaid expenses | 4,212 | 3,672 | ||||||
Other current assets | 2,210 | 974 | ||||||
Total | $ | 16,022 | $ | 10,891 | ||||
(1) December 31, 2013 prepaid expenses and other current assets have been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. |
PREMISES_AND_EQUIPMENT_NET
PREMISES AND EQUIPMENT, NET | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
PREMISES AND EQUIPMENT, NET | ' | |||||||
PREMISES AND EQUIPMENT, NET | ' | |||||||
NOTE 6 — PREMISES AND EQUIPMENT, NET | ||||||||
Premises and equipment, net consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Computer hardware and software | $ | 122,072 | $ | 103,400 | ||||
Office equipment and other | 31,627 | 28,057 | ||||||
Furniture and fixtures | 9,844 | 8,391 | ||||||
Leasehold improvements | 20,224 | 17,574 | ||||||
183,767 | 157,422 | |||||||
Less: accumulated depreciation and amortization | (82,805 | ) | (70,170 | ) | ||||
Total | $ | 100,962 | $ | 87,252 | ||||
Depreciation and amortization expense, inclusive of capital leases, amounted to $13.4 million and $9.3 million for the six months ended June 30, 2014 and 2013, respectively ($7.2 million and $4.6 million for the second quarter of 2014 and 2013, respectively), and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying condensed consolidated statements of operations. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS, NET | 6 Months Ended | |||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | ' | |||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | ' | |||||||||||||||||||||
NOTE 7 — GOODWILL AND INTANGIBLE ASSETS, NET | ||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||
The following is a summary of goodwill by segment: | ||||||||||||||||||||||
Mortgage | Financial | Technology | ||||||||||||||||||||
(in thousands) | Services(1) | Services | Services | Total | ||||||||||||||||||
Balance, December 31, 2013 | $ | 12,958 | $ | 2,378 | $ | 84,078 | $ | 99,414 | ||||||||||||||
Impairment of Equator goodwill(2) | — | — | (37,473 | ) | (37,473 | ) | ||||||||||||||||
Balance, June 30, 2014 | $ | 12,958 | $ | 2,378 | $ | 46,605 | $ | 61,941 | ||||||||||||||
(1) December 31, 2013 goodwill has been revised to reflect a purchase accounting measurement period adjustment related to the Homeward acquisition. See Note 3. | ||||||||||||||||||||||
(2) See Note 3 for a discussion of the Equator goodwill impairment. | ||||||||||||||||||||||
Intangible Assets, Net | ||||||||||||||||||||||
Intangible assets, net consist of the following: | ||||||||||||||||||||||
Weighted | Gross carrying amount | Accumulated amortization | Net book value | |||||||||||||||||||
average | ||||||||||||||||||||||
estimated | ||||||||||||||||||||||
(in thousands) | useful life | June 30, | December 31, | June 30, | December 31, | June 30, | December 31, | |||||||||||||||
(in years) | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Definite lived intangible assets | ||||||||||||||||||||||
Trademarks | 14 | $ | 12,249 | $ | 12,249 | $ | (4,771 | ) | $ | (4,534 | ) | $ | 7,478 | $ | 7,715 | |||||||
Customer-related intangible assets | 10 | 284,484 | 284,484 | (62,634 | ) | (44,208 | ) | 221,850 | 240,276 | |||||||||||||
Operating agreement | 20 | 35,000 | 35,000 | (7,729 | ) | (6,854 | ) | 27,271 | 28,146 | |||||||||||||
Non-compete agreement | 4 | — | 1,300 | — | (1,275 | ) | — | 25 | ||||||||||||||
Intellectual property | 10 | 300 | — | (10 | ) | — | 290 | — | ||||||||||||||
Total | $ | 332,033 | $ | 333,033 | $ | (75,144 | ) | $ | (56,871 | ) | $ | 256,889 | $ | 276,162 | ||||||||
Amortization expense for definite lived intangible assets was $19.6 million and $10.2 million for the six months ended June 30, 2014 and 2013, respectively ($10.1 million and $9.0 million for the second quarter of 2014 and 2013, respectively). Expected annual definite lived intangible asset amortization for 2014 through 2018 is $40.5 million, $39.9 million, $33.7 million, $29.2 million and $25.1 million, respectively. |
INVESTMENT_IN_EQUITY_AFFILIATE
INVESTMENT IN EQUITY AFFILIATE | 6 Months Ended |
Jun. 30, 2014 | |
INVESTMENT IN EQUITY AFFILIATE | ' |
INVESTMENT IN EQUITY AFFILIATE | ' |
NOTE 8 — INVESTMENT IN EQUITY AFFILIATE | |
Correspondent One purchased closed conforming residential mortgages from approved mortgage bankers. Prior to the sale of our interest in Correspondent One to Ocwen on March 31, 2013 (see Note 2), we had significant influence over the general operations of Correspondent One consistent with our 49% ownership level, and therefore, accounted for our investment under the equity method. On March 31, 2013, we sold our 49% interest in Correspondent One to Ocwen for $12.6 million. | |
Our net loss on this investment using the equity method was $0.1 million for the six months ended June 30, 2013 and was a $0.1 million gain for the second quarter of 2013 (no comparative amounts for 2014). |
OTHER_ASSETS
OTHER ASSETS | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
OTHER ASSETS | ' | |||||||
OTHER ASSETS | ' | |||||||
NOTE 9 — OTHER ASSETS | ||||||||
Other assets consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Security deposits, net | $ | 7,860 | $ | 7,314 | ||||
Debt issuance costs, net | 6,158 | 6,687 | ||||||
Maintenance agreements, non-current portion | 2,920 | 1,465 | ||||||
Restricted cash | 1,615 | 1,620 | ||||||
Other | 705 | 572 | ||||||
Total | $ | 19,258 | $ | 17,658 | ||||
(1) December 31, 2013 security deposits and other assets have been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ' | |||||||
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ' | |||||||
NOTE 10 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Accounts payable | $ | 22,593 | $ | 15,171 | ||||
Accrued expenses - general | 27,869 | 20,945 | ||||||
Accrued salaries and benefits | 32,418 | 30,011 | ||||||
Income taxes payable | 14,805 | 11,211 | ||||||
Payable to Ocwen | 5,001 | 7,361 | ||||||
Payable to AAMC | — | 7 | ||||||
Total | $ | 102,686 | $ | 84,706 | ||||
(1) December 31, 2013 payables have been revised to reflect purchase accounting measurement period adjustments related to the Homeward and Equator acquisitions. See Note 3. | ||||||||
Other current liabilities consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Book overdrafts | $ | 5,250 | $ | 4,232 | ||||
Other | 3,707 | 5,899 | ||||||
Total | $ | 8,957 | $ | 10,131 | ||||
LONGTERM_DEBT
LONG-TERM DEBT | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
LONG-TERM DEBT | ' | |||||||
LONG-TERM DEBT | ' | |||||||
NOTE 11 — LONG-TERM DEBT | ||||||||
Long-term debt consists of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Senior secured term loan | $ | 394,517 | $ | 396,503 | ||||
Less: unamortized discount, net | (1,157 | ) | (1,247 | ) | ||||
Net long-term debt | 393,360 | 395,256 | ||||||
Less: current portion | (3,975 | ) | (3,975 | ) | ||||
Long-term debt, less current portion | $ | 389,385 | $ | 391,281 | ||||
On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of the Company, entered into a senior secured term loan agreement, as subsequently amended, with Bank of America, N.A., as administrative agent, and certain lenders, pursuant to which we borrowed $200.0 million. The senior secured term loan was issued with a 1.0% original issue discount of $2.0 million, resulting in net proceeds of $198.0 million with the Company and certain wholly-owned subsidiaries acting as guarantors (collectively, the “Guarantors”). | ||||||||
On May 7, 2013, we amended the senior secured term loan agreement to increase the principal amount of the senior secured term loan by $200.0 million (the “Incremental Term Loan”), which was issued with a $1.0 million original issue premium, resulting in gross proceeds to the Company of $201.0 million. Additionally, the Incremental Term Loan amended the senior secured term loan agreement to, among other changes, provide for an additional $200.0 million incremental term loan facility accordion and increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement) that may be made by us, including increasing the amount of Company share repurchases permitted. | ||||||||
On December 9, 2013, we entered into an Amendment No. 2 (“Second Amendment”) to the senior secured term loan agreement in which we incurred indebtedness in the form of Refinancing Debt (as defined in the senior secured term loan agreement), the proceeds of which were used to refinance, in full, the $397.5 million of term loans outstanding under the senior secured term loan agreement immediately prior to the effectiveness of the Second Amendment. The Refinancing Debt bears interest at lower rates and has a maturity date approximately one year later than the prior term loans. The Second Amendment further modified the senior secured term loan agreement to, among other changes, increase the maximum permitted amount of Restricted Junior Payments (as defined in the senior secured term loan agreement), including share repurchases by the Company. | ||||||||
The Refinancing Debt must be repaid in equal consecutive quarterly principal installments of $1.0 million commencing on December 31, 2013, with the balance due at maturity. After giving effect to the Second Amendment, all amounts outstanding under the senior secured term loan agreement will become due on the earlier of (i) December 9, 2020, being the seventh anniversary of the closing date of the Second Amendment, and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders (as defined in the senior secured term loan agreement) upon the occurrence of any event of default under the senior secured term loan agreement. | ||||||||
In addition to the scheduled principal payments, the Refinancing Debt is (with certain exceptions) subject to mandatory prepayment upon issuances of debt, casualty and condemnation events and sales of assets, as well as from a percentage of excess cash flow (as defined in the senior secured term loan agreement) if the leverage ratio (as defined in the senior secured term loan agreement) is greater than 2.75 to 1.00. No mandatory prepayments were owed for the six months ended June 30, 2014. We are currently permitted to make voluntary prepayments without penalty. | ||||||||
After giving effect to the Second Amendment, all of the term loans outstanding under the senior secured term loan bear interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate (each as defined in the senior secured term loan agreement). Adjusted Eurodollar Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Base Rate and (y) 2.00% plus (ii) a 2.50% margin. The interest rate at June 30, 2014 was 4.50%. | ||||||||
Payments under the senior secured term loan agreement are guaranteed by the Guarantors and are secured by a pledge of all equity interests of certain subsidiaries as well as a lien on substantially all of the assets of Altisource Solutions S.à r.l. and the Guarantors, subject to certain exceptions. | ||||||||
The senior secured term loan agreement includes covenants that restrict or limit, among other things, our ability to: create liens and encumbrances; incur additional indebtedness; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases; change lines of business; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to its fiscal year and engage in mergers and consolidations. | ||||||||
The senior secured term loan agreement contains certain events of default, including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the senior secured term loan agreement within 5 days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of covenants, (iv) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (v) default on any other debt that equals or exceeds $40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change in Control (as defined in the senior secured term loan agreement), (vii) bankruptcy and insolvency events (as defined in the senior secured term loan agreement), (viii) entry by a court of one or more judgments against us (as defined in the senior secured term loan agreement) in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents (as defined in the senior secured term loan agreement) to be in full force and effect. If any event of default occurs and is not cured within applicable grace periods set forth in the senior secured term loan agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated. | ||||||||
At June 30, 2014, debt issuance costs were $6.2 million, net of $1.5 million of accumulated amortization. At December 31, 2013, debt issuance costs were $6.7 million, net of $1.0 million of accumulated amortization. Debt issuance costs are included in other assets in the accompanying condensed consolidated balance sheets. | ||||||||
Interest expense on the term loans, including amortization of debt issuance costs and the net debt discount, totaled $9.6 million and $8.1 million for the six months ended June 30, 2014 and 2013, respectively ($4.8 million and $4.9 million for the second quarter of 2014 and 2013, respectively). |
OTHER_NONCURRENT_LIABILITIES
OTHER NON-CURRENT LIABILITIES | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
OTHER NON-CURRENT LIABILITIES | ' | |||||||
OTHER NON-CURRENT LIABILITIES | ' | |||||||
NOTE 12 — OTHER NON-CURRENT LIABILITIES | ||||||||
Other non-current liabilities consist of the following: | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Contingent consideration (Earn Out) | $ | 8,091 | $ | 42,946 | ||||
Other non-current liabilities | 3,642 | 2,530 | ||||||
Total | $ | 11,733 | $ | 45,476 | ||||
EQUITY_AND_SHAREBASED_COMPENSA
EQUITY AND SHARE-BASED COMPENSATION | 6 Months Ended | |||||||||||
Jun. 30, 2014 | ||||||||||||
EQUITY AND SHARE-BASED COMPENSATION | ' | |||||||||||
EQUITY AND SHARE-BASED COMPENSATION | ' | |||||||||||
NOTE 13 — EQUITY AND SHARE-BASED COMPENSATION | ||||||||||||
Stock Repurchase Plan | ||||||||||||
On February 28, 2014, our shareholders approved a new stock repurchase program, which replaced the previous stock repurchase program. Under the new program, we are authorized to purchase up to 3.4 million shares of our common stock, based on a limit of 15% of the outstanding shares of common stock on the date of approval, in the open market, at a minimum price of $1.00 per share and a maximum price of $500.00 per share. This is in addition to amounts previously purchased under the prior programs. From authorization of the previous programs through June 30, 2014, we have purchased approximately 4.5 million shares of our common stock in the open market at an average price of $70.62 per share. We purchased 0.7 million shares of common stock at an average price of $109.00 per share during the six months ended June 30, 2014 and 0.6 million shares at an average price of $89.01 per share during the six months ended June 30, 2013 (0.4 million shares at an average price of $108.24 per share for the second quarter of 2014 and 0.3 million shares at an average price of $94.49 per share for the second quarter of 2013). As of June 30, 2014, approximately 2.9 million shares of common stock remain available for repurchase under the new program. Luxembourg law also limits share repurchases to approximately the balance of Altisource Portfolio Solutions S.A. (unconsolidated parent company) retained earnings, less the value of shares repurchased. As of June 30, 2014, approximately $16 million was available to repurchase our common stock under Luxembourg law. Our senior secured term loan also limits the amount we can spend on share repurchases in any year and may prevent repurchases in certain circumstances. As of June 30, 2014, approximately $88 million was available to repurchase our common stock under our senior secured term loan. | ||||||||||||
Share-Based Compensation | ||||||||||||
We issue share-based awards in the form of stock options and certain other equity-based awards for certain employees and officers. We recorded share-based compensation expense of $1.1 million and $1.5 million for the six months ended June 30, 2014 and 2013, respectively ($0.4 million and $0.1 million for the second quarter of 2014 and 2013, respectively). | ||||||||||||
Outstanding share-based compensation currently consists primarily of stock option grants that are a combination of service-based and market-based options. | ||||||||||||
Service-Based Options. These options are granted at fair value on the date of grant. The options generally vest over four years with equal annual cliff-vesting and expire on the earlier of 10 years after the date of grant or following termination of service. A total of 0.7 million service-based awards were outstanding at June 30, 2014. | ||||||||||||
Market-Based Options. These option grants have two components each of which vest only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. The vesting schedule for all market-based awards is 25% upon achievement of the criteria and the remaining 75% in three equal annual installments. A total of 1.8 million market-based awards were outstanding at June 30, 2014. | ||||||||||||
The Company granted less than 0.1 million stock options in each period (at a weighted average exercise price of $105.11 and $90.75 per share) during the six months ended June 30, 2014 and 2013, respectively. | ||||||||||||
The fair value of the service-based options was determined using the Black-Scholes option pricing model, and a lattice (binomial) model was used to determine the fair value of the market-based options, using the following assumptions as of the grant date: | ||||||||||||
Six months ended | Six months ended | |||||||||||
June 30, 2014 | June 30, 2013 | |||||||||||
Black-Scholes | Black-Scholes | Binomial | ||||||||||
Risk-free interest rate | 1.80% | 1.02% – 1.13% | 0.01% – 2.02% | |||||||||
Expected stock price volatility | 37.57% | 36.35% – 36.76% | 36.40% – 36.80% | |||||||||
Expected dividend yield | — | — | — | |||||||||
Expected option life (in years) | 6.25 | 6.25 | — | |||||||||
Contractual life (in years) | — | — | 14 | |||||||||
Fair value | $41.79 | $31.33 – $35.77 | $16.12 – $31.15 | |||||||||
The following table summarizes the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the fair value of stock options vested: | ||||||||||||
Six months ended June 30, | ||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | ||||||||||
Weighted average fair value at grant date per share | $ | 41.79 | $ | 25.83 | ||||||||
Intrinsic value of options exercised | 4,124 | 9,625 | ||||||||||
Fair value of options vested | 950 | 1,475 | ||||||||||
Share-based compensation expense is recorded net of estimated forfeiture rates ranging from 1% to 10%. | ||||||||||||
As of June 30, 2014, estimated unrecognized compensation costs related to share-based payments amounted to $1.7 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.7 years. | ||||||||||||
The following table summarizes the activity related to our stock options: | ||||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||
options | average | average | intrinsic value | |||||||||
exercise | contractual | (in thousands) | ||||||||||
price | term | |||||||||||
(in years) | ||||||||||||
Outstanding at December 31, 2013 | 2,589,343 | $ | 18.33 | 5.2 | $ | 363,293 | ||||||
Granted | 15,000 | 105.11 | ||||||||||
Exercised | (44,565 | ) | 14.43 | |||||||||
Forfeited | (16,001 | ) | 73.14 | |||||||||
Outstanding at June 30, 2014 | 2,543,777 | 18.56 | 4.71 | 244,590 | ||||||||
Exercisable at June 30, 2014 | 2,216,285 | 13.28 | 4.35 | 224,515 | ||||||||
COST_OF_REVENUE
COST OF REVENUE | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
COST OF REVENUE | ' | |||||||||||||
COST OF REVENUE | ' | |||||||||||||
NOTE 14 — COST OF REVENUE | ||||||||||||||
Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles, fees paid to external providers related to the provision of services, reimbursable expenses, technology and telecommunications expenses as well as depreciation and amortization of operating assets. The components of cost of revenue were as follows: | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Compensation and benefits | $ | 63,121 | $ | 36,744 | $ | 115,771 | $ | 69,323 | ||||||
Outside fees and services | 71,365 | 46,345 | 124,193 | 81,240 | ||||||||||
Reimbursable expenses | 32,276 | 23,299 | 61,071 | 43,565 | ||||||||||
Technology and telecommunications | 11,849 | 7,060 | 20,690 | 12,551 | ||||||||||
Depreciation and amortization | 5,388 | 3,524 | 10,079 | 7,255 | ||||||||||
Total | $ | 183,999 | $ | 116,972 | $ | 331,804 | $ | 213,934 | ||||||
SELLING_GENERAL_AND_ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ' | |||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ' | |||||||||||||
NOTE 15 — SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||||
Selling, general and administrative expenses include payroll for personnel employed in executive, finance, legal, human resources, vendor management, risk and operational effectiveness roles. This category also includes occupancy costs, professional fees and depreciation and amortization on non-operating assets. The components of selling, general and administrative expenses were as follows: | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Compensation and benefits | $ | 11,111 | $ | 6,609 | $ | 20,100 | $ | 12,066 | ||||||
Professional services | 2,808 | 1,384 | 6,790 | 3,016 | ||||||||||
Occupancy related costs | 9,496 | 7,957 | 18,807 | 14,533 | ||||||||||
Amortization of intangible assets | 10,107 | 9,037 | 19,573 | 10,237 | ||||||||||
Depreciation and amortization | 1,741 | 1,058 | 3,296 | 2,051 | ||||||||||
Change in the fair value of Equator Earn Out | (37,924 | ) | — | (37,924 | ) | — | ||||||||
Goodwill impairment | 37,473 | — | 37,473 | — | ||||||||||
Marketing costs | 7,667 | 1,328 | 12,784 | 1,980 | ||||||||||
Other | 6,542 | 2,455 | 11,656 | 4,625 | ||||||||||
Total | $ | 49,021 | $ | 29,828 | $ | 92,555 | $ | 48,508 | ||||||
OTHER_INCOME_EXPENSE_NET
OTHER INCOME (EXPENSE), NET | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
OTHER INCOME (EXPENSE), NET | ' | |||||||||||||
OTHER INCOME (EXPENSE), NET | ' | |||||||||||||
NOTE 16 — OTHER INCOME (EXPENSE), NET | ||||||||||||||
Other income (expense), net consists of the following: | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Gain (loss) in equity affiliate | $ | — | $ | 54 | $ | — | $ | (122 | ) | |||||
Interest income | 14 | 11 | 26 | 867 | ||||||||||
Other, net | (57 | ) | 12 | (22 | ) | 37 | ||||||||
Total | $ | (43 | ) | $ | 77 | $ | 4 | $ | 782 | |||||
Loss in equity affiliate for the six months ended June 30, 2013 represents our proportional share of the losses in Correspondent One (see Note 8). The gain in equity affiliate for the second quarter of 2013 represents the gain on sale of Correspondent One (see Note 2). There were no comparative amounts in 2014. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
NOTE 17 — EARNINGS PER SHARE | ||||||||||||||
Basic earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities using the treasury stock method. | ||||||||||||||
Basic and diluted EPS are calculated as follows: | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Net income attributable to Altisource | $ | 54,101 | $ | 30,931 | $ | 93,732 | $ | 58,449 | ||||||
Weighted average common shares outstanding, basic | 22,089 | 23,161 | 22,301 | 23,267 | ||||||||||
Dilutive effect of stock options | 2,077 | 1,662 | 2,114 | 1,673 | ||||||||||
Weighted average common shares outstanding, diluted | 24,166 | 24,823 | 24,415 | 24,940 | ||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 2.45 | $ | 1.34 | $ | 4.2 | $ | 2.51 | ||||||
Diluted | $ | 2.24 | $ | 1.25 | $ | 3.84 | $ | 2.34 | ||||||
For the six months ended June 30, 2014 and 2013, less than 0.1 million and 0.1 million options, respectively, that were anti-dilutive, have been excluded from the computation of diluted EPS (less than 0.1 million options in each period for the second quarter of 2014 and 2013). These options were anti-dilutive because their exercise price was greater than the average market price of our common stock. Also excluded from the computation of diluted EPS for the six months ended June 30, 2014 and 2013 are 0.1 million options in each period (0.1 million options in each period for the second quarter of 2014 and 2013), granted for shares that are issuable upon the achievement of certain market and performance criteria related to our common stock price and an annualized rate of return to investors that have not yet been met. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 18 — COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS | |
Litigation | |
From time to time, we are involved in legal proceedings arising in the ordinary course of business. We record a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where a range of loss is determined, we record a best estimate of loss within the range. | |
Regulatory Matters | |
Our business is subject to regulation and oversight by federal, state and local governmental authorities. We periodically receive subpoenas, civil investigative demands or other requests for information from regulatory agencies in connection with their regulatory or investigative authority. We are currently responding to such inquiries from federal and state agencies relating to certain aspects of our business. We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with these inquiries. | |
Escrow and Trust Balances | |
We hold customers’ assets in escrow and trust accounts at various financial institutions pending completion of certain real estate activities. We also hold cash in trust accounts at various financial institutions where contractual obligations mandate maintaining dedicated bank accounts for Financial Services collections. These amounts are held in escrow and trust accounts for limited periods of time and are not included in the condensed consolidated balance sheets. Amounts held in escrow and trust accounts were $64.0 million and $71.8 million at June 30, 2014 and December 31, 2013, respectively. |
SEGMENT_REPORTING
SEGMENT REPORTING | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||
NOTE 19 — SEGMENT REPORTING | |||||||||||||||||
Our business segments are based upon our organizational structure, which focuses primarily on the services offered, and are consistent with the internal reporting used by our Chief Executive Officer to evaluate operating performance and to assess the allocation of our resources. | |||||||||||||||||
We classify our business into three reporting segments. The Mortgage Services segment provides services that span the mortgage and real estate lifecycle and are typically outsourced by loan servicers, loan originators and investors in single family homes. The Financial Services segment provides collection and customer relationship management services primarily to debt originators and servicers (e.g., credit card, auto lending, retail credit and mortgage) and the utility and insurance industries. The Technology Services segment principally consists of our REALSuite™ software applications, Equator’s software applications as well as our information technology infrastructure services. The REALSuite platform provides a fully integrated set of software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing including the automated management and payment of a distributed network of vendors. Equator’s software applications provide comprehensive, end-to-end workflow and transaction services to manage real estate and foreclosure related activities and purchase related services from vendors. In addition, Corporate Items and Eliminations include eliminations of transactions between the reporting segments and costs related to corporate support functions including executive, finance, legal, human resources, vendor management, risk and operational effectiveness as well as interest expense. | |||||||||||||||||
Financial information for our segments is as follows: | |||||||||||||||||
Three months ended June 30, 2014 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 221,344 | $ | 25,476 | $ | 57,983 | $ | (8,731 | ) | $ | 296,072 | ||||||
Cost of revenue | 128,919 | 16,058 | 46,906 | (7,884 | ) | 183,999 | |||||||||||
Gross profit | 92,425 | 9,418 | 11,077 | (847 | ) | 112,073 | |||||||||||
Selling, general and administrative expenses | 23,472 | 4,773 | 7,533 | 13,243 | 49,021 | ||||||||||||
Income from operations | 68,953 | 4,645 | 3,544 | (14,090 | ) | 63,052 | |||||||||||
Other income (expense), net | 80 | 12 | (106 | ) | (4,813 | ) | (4,827 | ) | |||||||||
Income before income taxes and non-controlling interests | $ | 69,033 | $ | 4,657 | $ | 3,438 | $ | (18,903 | ) | $ | 58,225 | ||||||
Three months ended June 30, 2013 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 144,210 | $ | 23,072 | $ | 24,783 | $ | (5,955 | ) | $ | 186,110 | ||||||
Cost of revenue | 89,078 | 13,807 | 19,407 | (5,320 | ) | 116,972 | |||||||||||
Gross profit | 55,132 | 9,265 | 5,376 | (635 | ) | 69,138 | |||||||||||
Selling, general and administrative expenses | 12,590 | 3,534 | 3,028 | 10,676 | 29,828 | ||||||||||||
Income from operations | 42,542 | 5,731 | 2,348 | (11,311 | ) | 39,310 | |||||||||||
Other income (expense), net | 61 | (5 | ) | (1 | ) | (4,880 | ) | (4,825 | ) | ||||||||
Income before income taxes and non-controlling interests | $ | 42,603 | $ | 5,726 | $ | 2,347 | $ | (16,191 | ) | $ | 34,485 | ||||||
Six months ended June 30, 2014 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 397,120 | $ | 49,761 | $ | 105,487 | $ | (17,027 | ) | $ | 535,341 | ||||||
Cost of revenue | 231,723 | 30,671 | 84,671 | (15,261 | ) | 331,804 | |||||||||||
Gross profit | 165,397 | 19,090 | 20,816 | (1,766 | ) | 203,537 | |||||||||||
Selling, general and administrative expenses | 42,666 | 9,436 | 14,127 | 26,326 | 92,555 | ||||||||||||
Income from operations | 122,731 | 9,654 | 6,689 | (28,092 | ) | 110,982 | |||||||||||
Other income (expense), net | 128 | 11 | (122 | ) | (9,573 | ) | (9,556 | ) | |||||||||
Income before income taxes and non-controlling interests | $ | 122,859 | $ | 9,665 | $ | 6,567 | $ | (37,665 | ) | $ | 101,426 | ||||||
Six months ended June 30, 2013 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 261,658 | $ | 39,408 | $ | 45,014 | $ | (11,143 | ) | $ | 334,937 | ||||||
Cost of revenue | 161,447 | 25,833 | 36,519 | (9,865 | ) | 213,934 | |||||||||||
Gross profit | 100,211 | 13,575 | 8,495 | (1,278 | ) | 121,003 | |||||||||||
Selling, general and administrative expenses | 18,048 | 6,384 | 4,893 | 19,183 | 48,508 | ||||||||||||
Income from operations | 82,163 | 7,191 | 3,602 | (20,461 | ) | 72,495 | |||||||||||
Other income (expense), net | (112 | ) | (8 | ) | 3 | (7,215 | ) | (7,332 | ) | ||||||||
Income before income taxes and non-controlling interests | $ | 82,051 | $ | 7,183 | $ | 3,605 | $ | (27,676 | ) | $ | 65,163 | ||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Total assets: | |||||||||||||||||
June 30, 2014 | $ | 309,043 | $ | 59,290 | $ | 231,440 | $ | 111,227 | $ | 711,000 | |||||||
December 31, 2013 | 310,253 | 55,930 | 277,941 | 85,928 | 730,052 | ||||||||||||
Our services are provided to customers primarily located in the United States. Premises and equipment, net consist of the following, by country: | |||||||||||||||||
June 30, | December 31, | ||||||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||||||
United States | $ | 74,065 | $ | 63,615 | |||||||||||||
India | 17,855 | 16,404 | |||||||||||||||
Luxembourg | 5,264 | 3,217 | |||||||||||||||
Philippines | 3,778 | 4,016 | |||||||||||||||
Total | $ | 100,962 | $ | 87,252 |
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2014 | |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Intercompany and inter-segment transactions and accounts are eliminated in consolidation. | |
The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource, serves as the manager of Best Partners Mortgage Cooperative, Inc. doing business as Lenders One Mortgage Cooperative (“Lenders One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025. The management agreement between MPA and Lenders One® members, pursuant to which MPA is the management company of Lenders One, represents a variable interest in a variable interest entity. MPA is the primary beneficiary of Lenders One as it has the power to direct the activities that most significantly impact Lenders One’s economic performance and the obligation to absorb losses or the right to receive benefits from Lenders One. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis with the interests of the members reflected as non-controlling interests. As of June 30, 2014, Lenders One had total assets of $5.8 million and total liabilities of $4.9 million. As of December 31, 2013, Lenders One had total assets of $4.6 million and total liabilities of $3.5 million. | |
These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Form 10-K for the year ended December 31, 2013, filed with the SEC on February 13, 2014, which contains a summary of our significant accounting policies. Certain footnote detail in the Form 10-K is omitted from the information included herein. | |
Correction of Immaterial Errors | ' |
Correction of Immaterial Errors | |
During the second quarter of 2014, we determined that while we properly identified our related parties in previously issued financial statements, disclosures of certain immaterial related party expenses were omitted. We have corrected the previously presented disclosures of related party expenses in Note 2 — Transactions with Related Parties and on the face of the condensed consolidated statements of operations for the three and six months ended June 30, 2013. The impact of correcting these items in the notes to the condensed consolidated financial statements had the effect of increasing the amounts disclosed as related party cost of revenue from Ocwen Financial Corporation, together with its subsidiaries (“Ocwen”), by $8.9 million for the six months ended June 30, 2013 ($5.1 million for the second quarter of 2013), increasing the amounts disclosed as selling, general and administrative expenses from Ocwen billings to Altisource by $0.2 million for the six months ended June 30, 2013 ($0.1 million for the second quarter of 2013), decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Ocwen by $0.1 million for the six months ended June 30, 2013 ($0.1 million for the second quarter of 2013) and decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Altisource Asset Management Corporation (“AAMC”) by $0.2 million ($0.1 million for the second quarter of 2013). Correcting these items on the face of the condensed consolidated statements of operations resulted in the disclosure of related party cost of revenue of $8.9 million for the six months ended June 30, 2013 ($5.1 million for the second quarter of 2013) and a decrease in previously disclosed related party selling, general and administrative expenses by $1.7 million for the six months ended June 30, 2013 ($0.8 million for the second quarter of 2013). | |
In accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, the Company evaluated the effect of the disclosure and presentation errors on its previously issued annual and quarterly financial statements, both qualitatively and quantitatively, and concluded that the related party disclosures in the Company’s previously issued annual and quarterly financial statements are not materially misstated. | |
Future Adoption of a New Accounting Pronouncement | ' |
Future Adoption of a New Accounting Pronouncement | |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the new standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently evaluating the impact this new guidance may have on its results of operations and financial position. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, established a three-level hierarchy that prioritizes the inputs used to measure fair value as follows: | |
Level 1 — Quoted prices in active markets for identical assets and liabilities | |
Level 2 — Observable inputs other than quoted prices included in Level 1 | |
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. | |
Our financial assets and liabilities primarily include cash and cash equivalents, restricted cash, long-term debt and acquisition-related contingent consideration. Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair value due to the short-term nature of these instruments. The fair value for cash and cash equivalents and restricted cash was measured using level 1 inputs. The carrying amount of long-term debt approximates fair value due to the variable interest rate and consistent credit rating of the Company. The fair value of long-term debt was measured using level 2 inputs. The carrying amount of acquisition-related contingent consideration is equal to its fair value. The fair value of acquisition-related contingent consideration was measured using level 3 inputs, which included sensitivities pertaining to discount rates and financial projections. See Note 3 for further discussion of the change in fair value of contingent consideration. |
TRANSACTIONS_WITH_RELATED_PART1
TRANSACTIONS WITH RELATED PARTIES (Tables) | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | |||||||||
Schedule of related party revenue from Ocwen as a percentage of segment and consolidated revenue | ' | |||||||||
Three months ended | Six months ended | |||||||||
June 30, | June 30, | |||||||||
2014 | 2013 | 2014 | 2013 | |||||||
Mortgage Services | 65 | % | 70 | % | 67 | % | 69 | % | ||
Financial Services | 28 | % | 29 | % | 27 | % | 17 | % | ||
Technology Services | 40 | % | 54 | % | 38 | % | 52 | % | ||
Consolidated revenue | 59 | % | 65 | % | 60 | % | 63 | % | ||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 6 Months Ended | ||||||||||
Jun. 30, 2014 | |||||||||||
Acquisitions | ' | ||||||||||
Schedule of unaudited pro forma consolidated results of operations | ' | ||||||||||
Three months ended | |||||||||||
June 30, 2013 | |||||||||||
(in thousands, except per share amounts) | As reported | Pro forma | |||||||||
Revenue | $ | 186,110 | $ | 201,039 | |||||||
Net income attributable to Altisource | 30,931 | 29,064 | |||||||||
Earnings per share - Diluted | 1.25 | 1.17 | |||||||||
Six months ended | |||||||||||
June 30, 2013 | |||||||||||
(in thousands, except per share amounts) | As reported | Pro forma | |||||||||
Revenue | $ | 334,937 | $ | 398,285 | |||||||
Net income attributable to Altisource | 58,449 | 61,708 | |||||||||
Earnings per share - Diluted | 2.34 | 2.47 | |||||||||
Homeward servicing portfolio | ' | ||||||||||
Acquisitions | ' | ||||||||||
Schedule of the adjusted allocation of the purchase price | ' | ||||||||||
(in thousands) | |||||||||||
Premises and equipment | $ | 1,559 | |||||||||
Customer relationship | 75,609 | ||||||||||
Goodwill | 2,039 | ||||||||||
79,207 | |||||||||||
Accounts payable and accrued expenses | (3,390 | ) | |||||||||
Purchase price | $ | 75,817 | |||||||||
Schedule of estimated life of identified assets acquired | ' | ||||||||||
Estimated life | |||||||||||
(in years) | |||||||||||
Premises and equipment | 5-Mar | ||||||||||
Customer relationship | 7 | ||||||||||
Equator | ' | ||||||||||
Acquisitions | ' | ||||||||||
Schedule of the adjusted allocation of the purchase price | ' | ||||||||||
(in thousands) | Initial purchase | Adjustments | Adjusted purchase | ||||||||
price allocation | price allocation | ||||||||||
Cash and cash equivalents | $ | — | $ | 105 | $ | 105 | |||||
Accounts receivable | 9,293 | 3,490 | 12,783 | ||||||||
Prepaid expenses and other current assets | 954 | (498 | ) | 456 | |||||||
Premises and equipment | 16,974 | — | 16,974 | ||||||||
Customer relationships and trade names | 43,393 | — | 43,393 | ||||||||
Goodwill | 82,460 | — | 82,460 | ||||||||
Other non-current assets | 242 | 78 | 320 | ||||||||
Assets acquired | 153,316 | 3,175 | 156,491 | ||||||||
Accounts payable and accrued expenses | (7,232 | ) | 536 | (6,696 | ) | ||||||
Deferred revenue | (36,689 | ) | — | (36,689 | ) | ||||||
Liabilities assumed | (43,921 | ) | 536 | (43,385 | ) | ||||||
Purchase price | $ | 109,395 | $ | 3,711 | $ | 113,106 | |||||
Schedule of estimated life of identified assets acquired | ' | ||||||||||
Estimated life | |||||||||||
(in years) | |||||||||||
Premises and equipment (excluding internally developed software) | 5-Mar | ||||||||||
Internally developed software (included in premises and equipment) | 7 | ||||||||||
Customer relationships | 15-Jul | ||||||||||
Trade names | 4 | ||||||||||
Schedule of the impact of the change in the fair value of Earn Out and goodwill impairment | ' | ||||||||||
(in thousands) | |||||||||||
Change in the fair value of Equator Earn Out | $ | (37,924 | ) | ||||||||
Goodwill impairment | 37,473 | ||||||||||
$ | (451 | ) | |||||||||
ACCOUNTS_RECEIVABLE_NET_Tables
ACCOUNTS RECEIVABLE, NET (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
ACCOUNTS RECEIVABLE, NET | ' | |||||||
Schedule of accounts receivable, net | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Billed | ||||||||
Non-related parties | $ | 41,533 | $ | 41,011 | ||||
Ocwen | 28,137 | 11,658 | ||||||
HLSS | 194 | 83 | ||||||
AAMC | 195 | 1,347 | ||||||
Residential | 4,247 | 547 | ||||||
Other receivables | 786 | 1,643 | ||||||
75,092 | 56,289 | |||||||
Unbilled | ||||||||
Non-related parties | 53,911 | 44,102 | ||||||
Ocwen | 5,730 | 10,027 | ||||||
134,733 | 110,418 | |||||||
Less: allowance for doubtful accounts | (9,686 | ) | (5,631 | ) | ||||
Total | $ | 125,047 | $ | 104,787 | ||||
(1) December 31, 2013 accounts receivable has been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. |
PREPAID_EXPENSES_AND_OTHER_CUR1
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | |||||||
Schedule of prepaid expenses and other current assets | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Maintenance agreements, current portion | $ | 7,047 | $ | 4,600 | ||||
Income taxes receivable | 2,553 | 1,645 | ||||||
Prepaid expenses | 4,212 | 3,672 | ||||||
Other current assets | 2,210 | 974 | ||||||
Total | $ | 16,022 | $ | 10,891 | ||||
(1) December 31, 2013 prepaid expenses and other current assets have been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. |
PREMISES_AND_EQUIPMENT_NET_Tab
PREMISES AND EQUIPMENT, NET (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
PREMISES AND EQUIPMENT, NET | ' | |||||||
Schedule of premises and equipment, net | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Computer hardware and software | $ | 122,072 | $ | 103,400 | ||||
Office equipment and other | 31,627 | 28,057 | ||||||
Furniture and fixtures | 9,844 | 8,391 | ||||||
Leasehold improvements | 20,224 | 17,574 | ||||||
183,767 | 157,422 | |||||||
Less: accumulated depreciation and amortization | (82,805 | ) | (70,170 | ) | ||||
Total | $ | 100,962 | $ | 87,252 | ||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended | |||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | ' | |||||||||||||||||||||
Summary of goodwill by segment | ' | |||||||||||||||||||||
Mortgage | Financial | Technology | ||||||||||||||||||||
(in thousands) | Services(1) | Services | Services | Total | ||||||||||||||||||
Balance, December 31, 2013 | $ | 12,958 | $ | 2,378 | $ | 84,078 | $ | 99,414 | ||||||||||||||
Impairment of Equator goodwill(2) | — | — | (37,473 | ) | (37,473 | ) | ||||||||||||||||
Balance, June 30, 2014 | $ | 12,958 | $ | 2,378 | $ | 46,605 | $ | 61,941 | ||||||||||||||
(1) December 31, 2013 goodwill has been revised to reflect a purchase accounting measurement period adjustment related to the Homeward acquisition. See Note 3. | ||||||||||||||||||||||
(2) See Note 3 for a discussion of the Equator goodwill impairment. | ||||||||||||||||||||||
Schedule of intangible assets, net | ' | |||||||||||||||||||||
Weighted | Gross carrying amount | Accumulated amortization | Net book value | |||||||||||||||||||
average | ||||||||||||||||||||||
estimated | ||||||||||||||||||||||
(in thousands) | useful life | June 30, | December 31, | June 30, | December 31, | June 30, | December 31, | |||||||||||||||
(in years) | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Definite lived intangible assets | ||||||||||||||||||||||
Trademarks | 14 | $ | 12,249 | $ | 12,249 | $ | (4,771 | ) | $ | (4,534 | ) | $ | 7,478 | $ | 7,715 | |||||||
Customer-related intangible assets | 10 | 284,484 | 284,484 | (62,634 | ) | (44,208 | ) | 221,850 | 240,276 | |||||||||||||
Operating agreement | 20 | 35,000 | 35,000 | (7,729 | ) | (6,854 | ) | 27,271 | 28,146 | |||||||||||||
Non-compete agreement | 4 | — | 1,300 | — | (1,275 | ) | — | 25 | ||||||||||||||
Intellectual property | 10 | 300 | — | (10 | ) | — | 290 | — | ||||||||||||||
Total | $ | 332,033 | $ | 333,033 | $ | (75,144 | ) | $ | (56,871 | ) | $ | 256,889 | $ | 276,162 | ||||||||
OTHER_ASSETS_Tables
OTHER ASSETS (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
OTHER ASSETS | ' | |||||||
Schedule of other assets | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Security deposits, net | $ | 7,860 | $ | 7,314 | ||||
Debt issuance costs, net | 6,158 | 6,687 | ||||||
Maintenance agreements, non-current portion | 2,920 | 1,465 | ||||||
Restricted cash | 1,615 | 1,620 | ||||||
Other | 705 | 572 | ||||||
Total | $ | 19,258 | $ | 17,658 | ||||
(1) December 31, 2013 security deposits and other assets have been revised to reflect a purchase accounting measurement period adjustment related to the Equator acquisition. See Note 3. |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN1
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ' | |||||||
Schedule of accounts payable and accrued expenses | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013(1) | ||||||
Accounts payable | $ | 22,593 | $ | 15,171 | ||||
Accrued expenses - general | 27,869 | 20,945 | ||||||
Accrued salaries and benefits | 32,418 | 30,011 | ||||||
Income taxes payable | 14,805 | 11,211 | ||||||
Payable to Ocwen | 5,001 | 7,361 | ||||||
Payable to AAMC | — | 7 | ||||||
Total | $ | 102,686 | $ | 84,706 | ||||
(1) December 31, 2013 payables have been revised to reflect purchase accounting measurement period adjustments related to the Homeward and Equator acquisitions. See Note 3. | ||||||||
Schedule of other current liabilities | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Book overdrafts | $ | 5,250 | $ | 4,232 | ||||
Other | 3,707 | 5,899 | ||||||
Total | $ | 8,957 | $ | 10,131 | ||||
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
LONG-TERM DEBT | ' | |||||||
Schedule of long-term debt | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Senior secured term loan | $ | 394,517 | $ | 396,503 | ||||
Less: unamortized discount, net | (1,157 | ) | (1,247 | ) | ||||
Net long-term debt | 393,360 | 395,256 | ||||||
Less: current portion | (3,975 | ) | (3,975 | ) | ||||
Long-term debt, less current portion | $ | 389,385 | $ | 391,281 | ||||
OTHER_NONCURRENT_LIABILITIES_T
OTHER NON-CURRENT LIABILITIES (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
OTHER NON-CURRENT LIABILITIES | ' | |||||||
Schedule of other non-current liabilities | ' | |||||||
June 30, | December 31, | |||||||
(in thousands) | 2014 | 2013 | ||||||
Contingent consideration (Earn Out) | $ | 8,091 | $ | 42,946 | ||||
Other non-current liabilities | 3,642 | 2,530 | ||||||
Total | $ | 11,733 | $ | 45,476 | ||||
EQUITY_AND_SHAREBASED_COMPENSA1
EQUITY AND SHARE-BASED COMPENSATION (Tables) | 6 Months Ended | |||||||||||
Jun. 30, 2014 | ||||||||||||
EQUITY AND SHARE-BASED COMPENSATION | ' | |||||||||||
Schedule of assumptions used to determine the fair value of options as of the grant date | ' | |||||||||||
Six months ended | Six months ended | |||||||||||
June 30, 2014 | June 30, 2013 | |||||||||||
Black-Scholes | Black-Scholes | Binomial | ||||||||||
Risk-free interest rate | 1.80% | 1.02% – 1.13% | 0.01% – 2.02% | |||||||||
Expected stock price volatility | 37.57% | 36.35% – 36.76% | 36.40% – 36.80% | |||||||||
Expected dividend yield | — | — | — | |||||||||
Expected option life (in years) | 6.25 | 6.25 | — | |||||||||
Contractual life (in years) | — | — | 14 | |||||||||
Fair value | $41.79 | $31.33 – $35.77 | $16.12 – $31.15 | |||||||||
Summary of the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the fair value of stock options vested | ' | |||||||||||
Six months ended June 30, | ||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | ||||||||||
Weighted average fair value at grant date per share | $ | 41.79 | $ | 25.83 | ||||||||
Intrinsic value of options exercised | 4,124 | 9,625 | ||||||||||
Fair value of options vested | 950 | 1,475 | ||||||||||
Summary of the activity of the entity's stock options | ' | |||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||
options | average | average | intrinsic value | |||||||||
exercise | contractual | (in thousands) | ||||||||||
price | term | |||||||||||
(in years) | ||||||||||||
Outstanding at December 31, 2013 | 2,589,343 | $ | 18.33 | 5.2 | $ | 363,293 | ||||||
Granted | 15,000 | 105.11 | ||||||||||
Exercised | (44,565 | ) | 14.43 | |||||||||
Forfeited | (16,001 | ) | 73.14 | |||||||||
Outstanding at June 30, 2014 | 2,543,777 | 18.56 | 4.71 | 244,590 | ||||||||
Exercisable at June 30, 2014 | 2,216,285 | 13.28 | 4.35 | 224,515 | ||||||||
COST_OF_REVENUE_Tables
COST OF REVENUE (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
COST OF REVENUE | ' | |||||||||||||
Schedule of components of cost of revenue | ' | |||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Compensation and benefits | $ | 63,121 | $ | 36,744 | $ | 115,771 | $ | 69,323 | ||||||
Outside fees and services | 71,365 | 46,345 | 124,193 | 81,240 | ||||||||||
Reimbursable expenses | 32,276 | 23,299 | 61,071 | 43,565 | ||||||||||
Technology and telecommunications | 11,849 | 7,060 | 20,690 | 12,551 | ||||||||||
Depreciation and amortization | 5,388 | 3,524 | 10,079 | 7,255 | ||||||||||
Total | $ | 183,999 | $ | 116,972 | $ | 331,804 | $ | 213,934 | ||||||
SELLING_GENERAL_AND_ADMINISTRA1
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ' | |||||||||||||
Schedule of the components of selling, general and administrative expenses | ' | |||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Compensation and benefits | $ | 11,111 | $ | 6,609 | $ | 20,100 | $ | 12,066 | ||||||
Professional services | 2,808 | 1,384 | 6,790 | 3,016 | ||||||||||
Occupancy related costs | 9,496 | 7,957 | 18,807 | 14,533 | ||||||||||
Amortization of intangible assets | 10,107 | 9,037 | 19,573 | 10,237 | ||||||||||
Depreciation and amortization | 1,741 | 1,058 | 3,296 | 2,051 | ||||||||||
Change in the fair value of Equator Earn Out | (37,924 | ) | — | (37,924 | ) | — | ||||||||
Goodwill impairment | 37,473 | — | 37,473 | — | ||||||||||
Marketing costs | 7,667 | 1,328 | 12,784 | 1,980 | ||||||||||
Other | 6,542 | 2,455 | 11,656 | 4,625 | ||||||||||
Total | $ | 49,021 | $ | 29,828 | $ | 92,555 | $ | 48,508 | ||||||
OTHER_INCOME_EXPENSE_NET_Table
OTHER INCOME (EXPENSE), NET (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
OTHER INCOME (EXPENSE), NET | ' | |||||||||||||
Schedule of other income (expense), net | ' | |||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Gain (loss) in equity affiliate | $ | — | $ | 54 | $ | — | $ | (122 | ) | |||||
Interest income | 14 | 11 | 26 | 867 | ||||||||||
Other, net | (57 | ) | 12 | (22 | ) | 37 | ||||||||
Total | $ | (43 | ) | $ | 77 | $ | 4 | $ | 782 | |||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
EARNINGS PER SHARE | ' | |||||||||||||
Schedule of basic and diluted EPS calculation | ' | |||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30, | June 30, | |||||||||||||
(in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||
Net income attributable to Altisource | $ | 54,101 | $ | 30,931 | $ | 93,732 | $ | 58,449 | ||||||
Weighted average common shares outstanding, basic | 22,089 | 23,161 | 22,301 | 23,267 | ||||||||||
Dilutive effect of stock options | 2,077 | 1,662 | 2,114 | 1,673 | ||||||||||
Weighted average common shares outstanding, diluted | 24,166 | 24,823 | 24,415 | 24,940 | ||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | 2.45 | $ | 1.34 | $ | 4.2 | $ | 2.51 | ||||||
Diluted | $ | 2.24 | $ | 1.25 | $ | 3.84 | $ | 2.34 | ||||||
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||
Schedule of financial information of segments | ' | ||||||||||||||||
Three months ended June 30, 2014 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 221,344 | $ | 25,476 | $ | 57,983 | $ | (8,731 | ) | $ | 296,072 | ||||||
Cost of revenue | 128,919 | 16,058 | 46,906 | (7,884 | ) | 183,999 | |||||||||||
Gross profit | 92,425 | 9,418 | 11,077 | (847 | ) | 112,073 | |||||||||||
Selling, general and administrative expenses | 23,472 | 4,773 | 7,533 | 13,243 | 49,021 | ||||||||||||
Income from operations | 68,953 | 4,645 | 3,544 | (14,090 | ) | 63,052 | |||||||||||
Other income (expense), net | 80 | 12 | (106 | ) | (4,813 | ) | (4,827 | ) | |||||||||
Income before income taxes and non-controlling interests | $ | 69,033 | $ | 4,657 | $ | 3,438 | $ | (18,903 | ) | $ | 58,225 | ||||||
Three months ended June 30, 2013 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 144,210 | $ | 23,072 | $ | 24,783 | $ | (5,955 | ) | $ | 186,110 | ||||||
Cost of revenue | 89,078 | 13,807 | 19,407 | (5,320 | ) | 116,972 | |||||||||||
Gross profit | 55,132 | 9,265 | 5,376 | (635 | ) | 69,138 | |||||||||||
Selling, general and administrative expenses | 12,590 | 3,534 | 3,028 | 10,676 | 29,828 | ||||||||||||
Income from operations | 42,542 | 5,731 | 2,348 | (11,311 | ) | 39,310 | |||||||||||
Other income (expense), net | 61 | (5 | ) | (1 | ) | (4,880 | ) | (4,825 | ) | ||||||||
Income before income taxes and non-controlling interests | $ | 42,603 | $ | 5,726 | $ | 2,347 | $ | (16,191 | ) | $ | 34,485 | ||||||
Six months ended June 30, 2014 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 397,120 | $ | 49,761 | $ | 105,487 | $ | (17,027 | ) | $ | 535,341 | ||||||
Cost of revenue | 231,723 | 30,671 | 84,671 | (15,261 | ) | 331,804 | |||||||||||
Gross profit | 165,397 | 19,090 | 20,816 | (1,766 | ) | 203,537 | |||||||||||
Selling, general and administrative expenses | 42,666 | 9,436 | 14,127 | 26,326 | 92,555 | ||||||||||||
Income from operations | 122,731 | 9,654 | 6,689 | (28,092 | ) | 110,982 | |||||||||||
Other income (expense), net | 128 | 11 | (122 | ) | (9,573 | ) | (9,556 | ) | |||||||||
Income before income taxes and non-controlling interests | $ | 122,859 | $ | 9,665 | $ | 6,567 | $ | (37,665 | ) | $ | 101,426 | ||||||
Six months ended June 30, 2013 | |||||||||||||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Revenue | $ | 261,658 | $ | 39,408 | $ | 45,014 | $ | (11,143 | ) | $ | 334,937 | ||||||
Cost of revenue | 161,447 | 25,833 | 36,519 | (9,865 | ) | 213,934 | |||||||||||
Gross profit | 100,211 | 13,575 | 8,495 | (1,278 | ) | 121,003 | |||||||||||
Selling, general and administrative expenses | 18,048 | 6,384 | 4,893 | 19,183 | 48,508 | ||||||||||||
Income from operations | 82,163 | 7,191 | 3,602 | (20,461 | ) | 72,495 | |||||||||||
Other income (expense), net | (112 | ) | (8 | ) | 3 | (7,215 | ) | (7,332 | ) | ||||||||
Income before income taxes and non-controlling interests | $ | 82,051 | $ | 7,183 | $ | 3,605 | $ | (27,676 | ) | $ | 65,163 | ||||||
Corporate | |||||||||||||||||
Mortgage | Financial | Technology | Items and | Consolidated | |||||||||||||
(in thousands) | Services | Services | Services | Eliminations | Altisource | ||||||||||||
Total assets: | |||||||||||||||||
June 30, 2014 | $ | 309,043 | $ | 59,290 | $ | 231,440 | $ | 111,227 | $ | 711,000 | |||||||
December 31, 2013 | 310,253 | 55,930 | 277,941 | 85,928 | 730,052 | ||||||||||||
Schedule of premises and equipment, net by country | ' | ||||||||||||||||
June 30, | December 31, | ||||||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||||||
United States | $ | 74,065 | $ | 63,615 | |||||||||||||
India | 17,855 | 16,404 | |||||||||||||||
Luxembourg | 5,264 | 3,217 | |||||||||||||||
Philippines | 3,778 | 4,016 | |||||||||||||||
Total | $ | 100,962 | $ | 87,252 | |||||||||||||
ORGANIZATION_AND_BASIS_OF_PRES2
ORGANIZATION AND BASIS OF PRESENTATION (Details) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
segment | Related party expenses | Related party expenses | Related party expenses | Related party expenses | Related party expenses | Related party expenses | Lenders One | Lenders One | ||||
Adjustment | Adjustment | Adjustment | Adjustment | Adjustment | Adjustment | |||||||
Ocwen | Ocwen | AAMC | AAMC | |||||||||
ORGANIZATION AND BASIS OF PRESENTATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of reporting segments | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary of significant accounting policies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $5,800,000 | $4,600,000 |
Total liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,900,000 | 3,500,000 |
Cost of revenue | 9,554,000 | 5,087,000 | 16,842,000 | 8,914,000 | ' | ' | 5,100,000 | 8,900,000 | ' | ' | ' | ' |
Selling, general and administrative expenses billed by related party | ' | ' | ' | ' | ' | ' | 100,000 | 200,000 | ' | ' | ' | ' |
Selling, general and administrative expenses billed to related party | ' | ' | ' | ' | ' | ' | -100,000 | -100,000 | -100,000 | -200,000 | ' | ' |
Selling, general and administrative expenses | ($489,000) | ($30,000) | ($731,000) | ($284,000) | ($800,000) | ($1,700,000) | ' | ' | ' | ' | ' | ' |
TRANSACTIONS_WITH_RELATED_PART2
TRANSACTIONS WITH RELATED PARTIES (Details) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||||||||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2013 | Dec. 27, 2012 | Dec. 27, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Ocwen | Correspondent One | Correspondent One | Correspondent One | Correspondent One | HLSS | HLSS | HLSS | HLSS | Residential | Residential | Residential | Residential | AAMC | AAMC | AAMC | AAMC | AAMC | AAMC | AAMC | AAMC | |||||
Correspondent One | Senior unsecured term loan | Senior unsecured term loan | Senior unsecured term loan | Data Access and Services Agreement | Data Access and Services Agreement | Data Access and Services Agreement | Data Access and Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Mortgage Services | Mortgage Services | Mortgage Services | Mortgage Services | Financial Services | Financial Services | Financial Services | Financial Services | Technology Services | Technology Services | Technology Services | Technology Services | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Management, Support and Other Services Agreements | Management, Support and Other Services Agreements | Management, Support and Other Services Agreements | Management, Support and Other Services Agreements | Support Services Agreement | Support Services Agreement | Support Services Agreement | Support Services Agreement | Maximum | Maximum | Maximum | Maximum | |||||||||
Eurodollar Rate | Support and Other Services Agreements | Support and Other Services Agreements | Support and Other Services Agreements | Support and Other Services Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||
TRANSACTIONS WITH RELATED PARTIES | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related party revenue as a percentage of segment revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65.00% | 70.00% | 67.00% | 69.00% | 28.00% | 29.00% | 27.00% | 17.00% | 40.00% | 54.00% | 38.00% | 52.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related party revenue as a percentage of consolidated revenue | ' | ' | ' | ' | 59.00% | 65.00% | 60.00% | 63.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prior written notice period for cancellation of agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '90 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of revenue | $9,554,000 | $5,087,000 | $16,842,000 | $8,914,000 | ' | ' | ' | ' | ' | ' | ' | ' | $9,600,000 | $5,100,000 | $16,800,000 | $8,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Selling, general and administrative expenses billed to related party | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,200,000 | 600,000 | 2,200,000 | 1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 | 100,000 | 200,000 | 200,000 | 400,000 | 300,000 | ' | ' | ' | ' | 300,000 | 100,000 | 500,000 | 200,000 | ' | ' | ' | ' |
Selling, general and administrative expenses billed by related party | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,200,000 | 900,000 | 2,400,000 | 1,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue earned from related party | 179,027,000 | 121,234,000 | 324,585,000 | 211,332,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 | 100,000 | ' | ' | ' | ' | 3,900,000 | 200,000 | 4,700,000 | 400,000 | ' | ' | ' | ' | 100,000 | 100,000 | 100,000 | 100,000 |
Amount of loan provided to related party | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Eurodollar Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate margin (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate, variable interest rate floor (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of equity interest sold to the related party | ' | ' | ' | ' | ' | ' | ' | ' | 49.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from sale of equity interest | ' | ' | ' | ' | ' | ' | ' | ' | $12,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended |
Mar. 29, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
Preliminary adjusted allocation of the purchase price | ' | ' | ' |
Goodwill | ' | $61,941,000 | $99,414,000 |
Homeward servicing portfolio | Ocwen | ' | ' | ' |
Acquisitions | ' | ' | ' |
Amount paid | 75,800,000 | ' | ' |
Working capital and net income adjustment | ' | ' | 11,100,000 |
Reduction in premises and equipment | ' | ' | 1,200,000 |
Increase in current liabilities | ' | 2,000,000 | ' |
Preliminary adjusted allocation of the purchase price | ' | ' | ' |
Premises and equipment | 1,559,000 | ' | ' |
Customer relationship | 75,609,000 | ' | ' |
Goodwill | 2,039,000 | ' | ' |
Assets acquired | 79,207,000 | ' | ' |
Accounts payable and accrued expenses | -3,390,000 | ' | ' |
Purchase price | $75,817,000 | ' | ' |
ACQUISITIONS_Details_2
ACQUISITIONS (Details 2) (Homeward servicing portfolio, Ocwen) | 0 Months Ended |
Mar. 29, 2013 | |
Estimated life | ' |
Customer relationship | '7 years |
Minimum | ' |
Estimated life | ' |
Premises and equipment | '3 years |
Maximum | ' |
Estimated life | ' |
Premises and equipment | '5 years |
ACQUISITIONS_Details_3
ACQUISITIONS (Details 3) (ResCap, Ocwen, USD $) | 0 Months Ended |
Apr. 12, 2013 | |
ResCap | Ocwen | ' |
Acquisitions | ' |
Amount paid | $128,800,000 |
Acquired tangible assets | 0 |
Assumed liabilities in connection with the acquisition | 0 |
Final allocation of the purchase price | ' |
Customer relationship | $128,800,000 |
Estimated life | ' |
Customer relationship | '7 years |
ACQUISITIONS_Details_4
ACQUISITIONS (Details 4) (USD $) | 0 Months Ended | 6 Months Ended | ||
Nov. 15, 2013 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |
period | ||||
Preliminary adjusted allocation of the purchase price | ' | ' | ' | ' |
Goodwill | ' | $61,941,000 | ' | $99,414,000 |
Equator | ' | ' | ' | ' |
Acquisitions | ' | ' | ' | ' |
Amount paid | 63,400,000 | ' | ' | ' |
Number of consecutive 12-month periods for meeting targeted levels of adjusted EBITA | 3 | ' | ' | ' |
Number of months for each consecutive period for meeting targeted levels of adjusted EBITA | '12 months | ' | ' | ' |
Present value of future earn outs payments | ' | 8,100,000 | 46,000,000 | 46,000,000 |
Preliminary adjusted allocation of the purchase price | ' | ' | ' | ' |
Cash and cash equivalents | ' | 105,000 | ' | ' |
Cash and cash equivalents - Adjustment | ' | 105,000 | ' | ' |
Accounts receivable | 9,293,000 | 12,783,000 | ' | ' |
Accounts receivable - Adjustment | ' | 3,490,000 | ' | ' |
Prepaid expenses and other current assets | 954,000 | 456,000 | ' | ' |
Prepaid expenses and other current assets - Adjustment | ' | -498,000 | ' | ' |
Premises and equipment | 16,974,000 | 16,974,000 | ' | ' |
Customer relationships and trade names | 43,393,000 | 43,393,000 | ' | ' |
Goodwill | 82,460,000 | ' | ' | ' |
Goodwill excluding estimated impairment | ' | 82,460,000 | ' | ' |
Other non-current assets | 242,000 | 320,000 | ' | ' |
Other non-current assets - Adjustment | ' | 78,000 | ' | ' |
Assets acquired | 153,316,000 | 156,491,000 | ' | ' |
Assets acquired- Adjustment | ' | 3,175,000 | ' | ' |
Accounts payable and accrued expenses | -7,232,000 | -6,696,000 | ' | ' |
Accounts payable and accrued expenses - Adjustment | ' | 536,000 | ' | ' |
Deferred revenue | -36,689,000 | -36,689,000 | ' | ' |
Liabilities assumed | -43,921,000 | -43,385,000 | ' | ' |
Liabilities assumed - Adjustment | ' | 536,000 | ' | ' |
Purchase price | 109,395,000 | 113,106,000 | ' | ' |
Purchase price - Adjustment | ' | 3,711,000 | ' | ' |
Equator | Maximum | ' | ' | ' | ' |
Acquisitions | ' | ' | ' | ' |
Additional consideration | 80,000,000 | ' | ' | ' |
Earn Out consideration that can be earned in each of the first two 12-month periods | 22,500,000 | ' | ' | ' |
Earn Out consideration that can be earned in the third 12-month period | $35,000,000 | ' | ' | ' |
Additional consideration that can be paid in restricted stock shares (as a percent) | 20.00% | ' | ' | ' |
ACQUISITIONS_Details_5
ACQUISITIONS (Details 5) (USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | ||||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Nov. 15, 2013 | Nov. 15, 2013 | Nov. 15, 2013 | Nov. 15, 2013 | Nov. 15, 2013 | Nov. 15, 2013 |
Equator | Equator | Equator | Equator | Equator | Equator | Equator | |||
Customer relationships | Customer relationships | Trade names | Premises and equipment (excluding internally developed software) | Premises and equipment (excluding internally developed software) | Internally developed software (included in premises and equipment) | ||||
Minimum | Maximum | Minimum | Maximum | ||||||
Estimated life | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated useful lives | ' | ' | ' | ' | ' | ' | '3 years | '5 years | '7 years |
Estimated useful life | ' | ' | ' | '7 years | '15 years | '4 years | ' | ' | ' |
Change in the fair value of Equator Earn Out | ($37,924) | ($37,924) | ($37,924) | ' | ' | ' | ' | ' | ' |
Goodwill impairment | 37,473 | 37,473 | 37,473 | ' | ' | ' | ' | ' | ' |
Total | ' | ' | ($451) | ' | ' | ' | ' | ' | ' |
ACQUISITIONS_Details_6
ACQUISITIONS (Details 6) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Pro forma consolidated results of operations | ' | ' | ' | ' |
Revenue, As reported | $296,072 | $186,110 | $535,341 | $334,937 |
Revenue, Pro forma | ' | 201,039 | ' | 398,285 |
Net income attributable to Altisource, As reported | 54,101 | 30,931 | 93,732 | 58,449 |
Net income attributable to Altisource, Pro forma | ' | $29,064 | ' | $61,708 |
Earnings per share - Diluted (in dollars per share), As reported | $2.24 | $1.25 | $3.84 | $2.34 |
Earnings per share - Diluted (in dollars per share), Pro forma | ' | $1.17 | ' | $2.47 |
ACCOUNTS_RECEIVABLE_NET_Detail
ACCOUNTS RECEIVABLE, NET (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts receivable, net | ' | ' |
Accounts receivable, gross | $134,733 | $110,418 |
Less: allowance for doubtful accounts | -9,686 | -5,631 |
Total | 125,047 | 104,787 |
Billed | ' | ' |
Accounts receivable, net | ' | ' |
Non-related party, Accounts receivable | 41,533 | 41,011 |
Other receivables | 786 | 1,643 |
Accounts receivable, gross | 75,092 | 56,289 |
Billed | Ocwen | ' | ' |
Accounts receivable, net | ' | ' |
Receivable from related party | 28,137 | 11,658 |
Billed | HLSS | ' | ' |
Accounts receivable, net | ' | ' |
Receivable from related party | 194 | 83 |
Billed | AAMC | ' | ' |
Accounts receivable, net | ' | ' |
Receivable from related party | 195 | 1,347 |
Billed | Residential | ' | ' |
Accounts receivable, net | ' | ' |
Receivable from related party | 4,247 | 547 |
Unbilled | ' | ' |
Accounts receivable, net | ' | ' |
Non-related party, Accounts receivable | 53,911 | 44,102 |
Unbilled | Ocwen | ' | ' |
Accounts receivable, net | ' | ' |
Receivable from related party | $5,730 | $10,027 |
PREPAID_EXPENSES_AND_OTHER_CUR2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | ' |
Maintenance agreements, current portion | $7,047 | $4,600 |
Income taxes receivable | 2,553 | 1,645 |
Prepaid expenses | 4,212 | 3,672 |
Other current assets | 2,210 | 974 |
Total | $16,022 | $10,891 |
PREMISES_AND_EQUIPMENT_NET_Det
PREMISES AND EQUIPMENT, NET (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
PREMISES AND EQUIPMENT, NET | ' | ' | ' | ' | ' |
Premises and equipment, gross | $183,767 | ' | $183,767 | ' | $157,422 |
Less: accumulated depreciation and amortization | -82,805 | ' | -82,805 | ' | -70,170 |
Total | 100,962 | ' | 100,962 | ' | 87,252 |
Depreciation and amortization expense, inclusive of capital leases | 7,200 | 4,600 | 13,375 | 9,306 | ' |
Computer hardware and software | ' | ' | ' | ' | ' |
PREMISES AND EQUIPMENT, NET | ' | ' | ' | ' | ' |
Premises and equipment, gross | 122,072 | ' | 122,072 | ' | 103,400 |
Office equipment and other | ' | ' | ' | ' | ' |
PREMISES AND EQUIPMENT, NET | ' | ' | ' | ' | ' |
Premises and equipment, gross | 31,627 | ' | 31,627 | ' | 28,057 |
Furniture and fixtures | ' | ' | ' | ' | ' |
PREMISES AND EQUIPMENT, NET | ' | ' | ' | ' | ' |
Premises and equipment, gross | 9,844 | ' | 9,844 | ' | 8,391 |
Leasehold improvements | ' | ' | ' | ' | ' |
PREMISES AND EQUIPMENT, NET | ' | ' | ' | ' | ' |
Premises and equipment, gross | $20,224 | ' | $20,224 | ' | $17,574 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS, NET (Details) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | ||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 |
Mortgage Services | Mortgage Services | Financial Services | Financial Services | Technology Services | |||
Changes in goodwill | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | ' | $99,414 | $12,958 | $12,958 | $2,378 | $2,378 | $84,078 |
Impairment of Equator goodwill | -37,473 | -37,473 | ' | ' | ' | ' | -37,473 |
Balance at the end of the period | $61,941 | $61,941 | $12,958 | $12,958 | $2,378 | $2,378 | $46,605 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS, NET (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | $332,033,000 | ' | $332,033,000 | ' | $333,033,000 |
Accumulated amortization | -75,144,000 | ' | -75,144,000 | ' | -56,871,000 |
Net book value | 256,889,000 | ' | 256,889,000 | ' | 276,162,000 |
Amortization expense for definite lived intangible assets | 10,107,000 | 9,037,000 | 19,573,000 | 10,237,000 | ' |
2014 | 40,500,000 | ' | 40,500,000 | ' | ' |
2015 | 39,900,000 | ' | 39,900,000 | ' | ' |
2016 | 33,700,000 | ' | 33,700,000 | ' | ' |
2017 | 29,200,000 | ' | 29,200,000 | ' | ' |
2018 | 25,100,000 | ' | 25,100,000 | ' | ' |
Trademarks | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | 12,249,000 | ' | 12,249,000 | ' | 12,249,000 |
Accumulated amortization | -4,771,000 | ' | -4,771,000 | ' | -4,534,000 |
Net book value | 7,478,000 | ' | 7,478,000 | ' | 7,715,000 |
Trademarks | Weighted average | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Estimated useful life | ' | ' | '14 years | ' | ' |
Customer-related intangible assets | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | 284,484,000 | ' | 284,484,000 | ' | 284,484,000 |
Accumulated amortization | -62,634,000 | ' | -62,634,000 | ' | -44,208,000 |
Net book value | 221,850,000 | ' | 221,850,000 | ' | 240,276,000 |
Customer-related intangible assets | Weighted average | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Estimated useful life | ' | ' | '10 years | ' | ' |
Operating agreement | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | 35,000,000 | ' | 35,000,000 | ' | 35,000,000 |
Accumulated amortization | -7,729,000 | ' | -7,729,000 | ' | -6,854,000 |
Net book value | 27,271,000 | ' | 27,271,000 | ' | 28,146,000 |
Operating agreement | Weighted average | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Estimated useful life | ' | ' | '20 years | ' | ' |
Non-compete agreement | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | ' | ' | ' | ' | 1,300,000 |
Accumulated amortization | ' | ' | ' | ' | -1,275,000 |
Net book value | ' | ' | ' | ' | 25,000 |
Non-compete agreement | Weighted average | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Estimated useful life | ' | ' | '4 years | ' | ' |
Intellectual property | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Gross carrying amount | 300,000 | ' | 300,000 | ' | ' |
Accumulated amortization | -10,000 | ' | -10,000 | ' | ' |
Net book value | $290,000 | ' | $290,000 | ' | ' |
Intellectual property | Weighted average | ' | ' | ' | ' | ' |
Intangible Assets, Net | ' | ' | ' | ' | ' |
Estimated useful life | ' | ' | '10 years | ' | ' |
INVESTMENT_IN_EQUITY_AFFILIATE1
INVESTMENT IN EQUITY AFFILIATE (Details) (Correspondent One, USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | |||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 29, 2013 | Mar. 31, 2013 |
Ocwen | ||||||
Investment in equity affiliates | ' | ' | ' | ' | ' | ' |
Ownership percentage | ' | ' | ' | ' | 49.00% | ' |
Percentage of equity interest sold to the related party | ' | ' | ' | ' | ' | 49.00% |
Proceeds from sale of equity interest | ' | ' | ' | ' | ' | $12.60 |
Net gain (loss) on investment using the equity method | $0 | $0.10 | $0 | ($0.10) | ' | ' |
OTHER_ASSETS_Details
OTHER ASSETS (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
OTHER ASSETS | ' | ' |
Security deposits, net | $7,860 | $7,314 |
Debt issuance costs, net | 6,158 | 6,687 |
Maintenance agreements, non-current portion | 2,920 | 1,465 |
Restricted cash | 1,615 | 1,620 |
Other | 705 | 572 |
Total | $19,258 | $17,658 |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN2
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts payable and accrued expenses | ' | ' |
Accounts payable | $22,593 | $15,171 |
Accrued expenses - general | 27,869 | 20,945 |
Accrued salaries and benefits | 32,418 | 30,011 |
Income taxes payable | 14,805 | 11,211 |
Total | 102,686 | 84,706 |
Ocwen | ' | ' |
Accounts payable and accrued expenses | ' | ' |
Payable to related party | 5,001 | 7,361 |
AAMC | ' | ' |
Accounts payable and accrued expenses | ' | ' |
Payable to related party | ' | $7 |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN3
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details 2) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other current liabilities | ' | ' |
Book overdrafts | $5,250 | $4,232 |
Other | 3,707 | 5,899 |
Total | $8,957 | $10,131 |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Dec. 09, 2013 | 7-May-13 | Nov. 27, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Debt | ' | ' | ' | ' | ' | ' | ' | ' |
Senior secured term loan | ' | ' | ' | $394,517,000 | ' | $394,517,000 | ' | $396,503,000 |
Less: unamortized discount, net | ' | ' | ' | -1,157,000 | ' | -1,157,000 | ' | -1,247,000 |
Net long-term debt | ' | ' | ' | 393,360,000 | ' | 393,360,000 | ' | 395,256,000 |
Less: current portion | ' | ' | ' | -3,975,000 | ' | -3,975,000 | ' | -3,975,000 |
Long-term debt, less current portion | ' | ' | ' | 389,385,000 | ' | 389,385,000 | ' | 391,281,000 |
Proceeds from issuance of long-term debt | ' | ' | ' | ' | ' | ' | 201,000,000 | ' |
Debt issuance costs, net | ' | ' | ' | 6,158,000 | ' | 6,158,000 | ' | 6,687,000 |
Interest on long-term debt | ' | ' | ' | 4,784,000 | 4,902,000 | 9,560,000 | 8,114,000 | ' |
Senior secured term loan | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' |
Less: unamortized discount, net | ' | ' | -2,000,000 | ' | ' | ' | ' | ' |
Amount borrowed | ' | 200,000,000 | 200,000,000 | ' | ' | ' | ' | ' |
Original issue discount (as a percent) | ' | ' | 1.00% | ' | ' | ' | ' | ' |
Original issue premium | ' | 1,000,000 | ' | ' | ' | ' | ' | ' |
Proceeds from issuance of long-term debt | ' | 201,000,000 | 198,000,000 | ' | ' | ' | ' | ' |
Additional increase in debt | ' | ' | ' | 200,000,000 | ' | 200,000,000 | ' | ' |
Amount of long-term debt refinanced | 397,500,000 | ' | ' | ' | ' | ' | ' | ' |
Maturity period from prior term loans' maturity date | '1 year | ' | ' | ' | ' | ' | ' | ' |
Aggregate amount of each consecutive quarterly scheduled principal installment | 1,000,000 | ' | ' | ' | ' | ' | ' | ' |
Mandatory prepayments owed | ' | ' | ' | ' | ' | 0 | ' | ' |
Interest rate at the end of the period (as a percent) | ' | ' | ' | 4.50% | ' | 4.50% | ' | ' |
Debt issuance costs, net | ' | ' | ' | 6,200,000 | ' | 6,200,000 | ' | 6,700,000 |
Accumulated amortization | ' | ' | ' | 1,500,000 | ' | 1,500,000 | ' | 1,000,000 |
Interest on long-term debt | ' | ' | ' | 4,800,000 | 4,900,000 | 9,600,000 | 8,100,000 | ' |
Senior secured term loan | Maximum | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' |
Loan term | '7 years | ' | ' | ' | ' | ' | ' | ' |
Leverage ratio to be maintained under the credit facility covenants | ' | ' | ' | ' | ' | 2.75 | ' | ' |
Number of days within which the entity fails to pay principal when due or interest or any other amount owing on any other obligation under the credit agreement, is considered as event of default | ' | ' | ' | ' | ' | '5 days | ' | ' |
Amount of principal or interest if failed to pay considered as event of default | ' | ' | ' | ' | ' | 40,000,000 | ' | ' |
Amount of debt which results in acceleration of debt if failed to pay considered as event of default | ' | ' | ' | ' | ' | 40,000,000 | ' | ' |
Amount of unbonded, undischarged or unstayed debt under entry by court of one or more judgments for certain period to determine as event of default | ' | ' | ' | ' | ' | $40,000,000 | ' | ' |
Senior secured term loan | Adjusted Eurodollar Rate | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate | ' | ' | ' | ' | ' | 'Adjusted Eurodollar Rate | ' | ' |
Fixed interest rate base (as a percent) | ' | ' | ' | ' | ' | 1.00% | ' | ' |
Interest rate margin (as a percent) | ' | ' | ' | ' | ' | 3.50% | ' | ' |
Senior secured term loan | Base Rate | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate | ' | ' | ' | ' | ' | 'Base Rate | ' | ' |
Fixed interest rate base (as a percent) | ' | ' | ' | ' | ' | 2.00% | ' | ' |
Interest rate margin (as a percent) | ' | ' | ' | ' | ' | 2.50% | ' | ' |
OTHER_NONCURRENT_LIABILITIES_D
OTHER NON-CURRENT LIABILITIES (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
OTHER NON-CURRENT LIABILITIES | ' | ' |
Contingent consideration (Earn Out) | $8,091 | $42,946 |
Other non-current liabilities | 3,642 | 2,530 |
Total | $11,733 | $45,476 |
EQUITY_AND_SHAREBASED_COMPENSA2
EQUITY AND SHARE-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 50 Months Ended | 0 Months Ended | |||||||||||||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Feb. 28, 2014 | |
Minimum | Maximum | Maximum | Black-Scholes | Black-Scholes | Black-Scholes | Black-Scholes | Binomial | Binomial | Binomial | Options | Options | Options | Options | Options | Options | Options | Stock Repurchase Programs | Stock Repurchase Programs | Stock Repurchase Programs | Stock Repurchase Programs | Stock Repurchase Programs | 2014 Stock Repurchase Program | ||||||
Minimum | Maximum | Minimum | Maximum | Service-Based | Service-Based | Market-Based | Market-Based, ordinary performance | Market-Based, ordinary performance | Market-Based, extraordinary performance | Market-Based, extraordinary performance | ||||||||||||||||||
Maximum | installment | Minimum | Minimum | |||||||||||||||||||||||||
component | ||||||||||||||||||||||||||||
Stock Repurchase Plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of common stock authorized to be purchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,400,000 |
Percentage of outstanding shares authorized to be repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% |
Minimum purchase price authorized (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1 |
Maximum purchase price authorized (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $500 |
Number of shares of common stock purchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000 | 300,000 | 700,000 | 600,000 | 4,500,000 | ' |
Average purchase price per share (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $108.24 | $94.49 | $109 | $89.01 | $70.62 | ' |
Remaining number of shares available for repurchase under the plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,900,000 | ' | 2,900,000 | ' | 2,900,000 | ' |
Amount available to repurchase common stock under Luxembourg law (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $16,000,000 | ' | $16,000,000 | ' | $16,000,000 | ' |
Capacity available to repurchase common stock under senior secured term loan (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 88,000,000 | ' | 88,000,000 | ' | 88,000,000 | ' |
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation expense (in dollars) | 400,000 | 100,000 | 1,100,000 | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding (in shares) | 2,543,777 | ' | 2,543,777 | ' | 2,589,343 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 700,000 | ' | 1,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of components of an award | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Market-based options subject to specified performance achievement (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.67 | ' | 0.33 | ' | ' | ' | ' | ' | ' | ' |
Multiplier of stock price over exercise price as a condition for the award to vest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | 3 | ' | ' | ' | ' | ' | ' |
Percentage of compounded annual gain of stock price over exercise price required for the award to vest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | ' | 25.00% | ' | ' | ' | ' | ' | ' |
Vesting percentage for awards that vest upon achievement of certain criteria | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cumulative vesting percentage for awards that vest in equal annual installments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of equal annual installments for vesting of award | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options granted (in shares) | ' | ' | 15,000 | ' | ' | ' | 100,000 | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average exercise price of stock options granted (in dollars per share) | ' | ' | $105.11 | $90.75 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assumptions used to determine the fair value of options as of the grant date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Risk-free interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 1.80% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Risk-free interest rate, minimum (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.02% | ' | ' | 0.01% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Risk-free interest rate, maximum (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.13% | ' | ' | 2.02% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected stock price volatility (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 37.57% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected stock price volatility, minimum (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 36.35% | ' | ' | 36.40% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected stock price volatility, maximum (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 36.76% | ' | ' | 36.80% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected option life | ' | ' | ' | ' | ' | ' | ' | ' | '6 years 3 months | '6 years 3 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contractual life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '14 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value (in dollars per share) | ' | ' | $41.79 | $25.83 | ' | ' | ' | ' | $41.79 | ' | $31.33 | $35.77 | ' | $16.12 | $31.15 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average fair value of stock options granted and total intrinsic value of stock options exercised | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average fair value at grant date per share (in dollars per share) | ' | ' | $41.79 | $25.83 | ' | ' | ' | ' | $41.79 | ' | $31.33 | $35.77 | ' | $16.12 | $31.15 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of options exercised (in dollars) | ' | ' | 4,124,000 | 9,625,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of options vested (in dollars) | ' | ' | 950,000 | 1,475,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated forfeiture rate (as a percent) | ' | ' | ' | ' | ' | 1.00% | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated unrecognized compensation costs (in dollars) | $1,700,000 | ' | $1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average remaining requisite service period for stock options over which unrecognized compensation costs would be recognized | ' | ' | '2 years 8 months 12 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
EQUITY_AND_SHAREBASED_COMPENSA3
EQUITY AND SHARE-BASED COMPENSATION (Details 2) (USD $) | 6 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Number of Options | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 2,589,343 | ' | ' |
Granted (in shares) | 15,000 | ' | ' |
Exercised (in shares) | -44,565 | ' | ' |
Forfeited (in shares) | -16,001 | ' | ' |
Outstanding at the end of the period (in shares) | 2,543,777 | ' | 2,589,343 |
Exercisable at the end of the period (in shares) | 2,216,285 | ' | ' |
Weighted average exercise price | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $18.33 | ' | ' |
Granted (in dollars per share) | $105.11 | $90.75 | ' |
Exercised (in dollars per share) | $14.43 | ' | ' |
Forfeited (in dollars per share) | $73.14 | ' | ' |
Outstanding at the end of the period (in dollars per share) | $18.56 | ' | $18.33 |
Exercisable at the end of the period (in dollars per share) | $13.28 | ' | ' |
Weighted average contractual term | ' | ' | ' |
Weighted average contractual term | '4 years 8 months 16 days | ' | '5 years 2 months 12 days |
Exercisable at the end of the period | '4 years 4 months 6 days | ' | ' |
Aggregate intrinsic value | ' | ' | ' |
Aggregate intrinsic value (in dollars) | $244,590 | ' | $363,293 |
Exercisable at the end of the period (in dollars) | $224,515 | ' | ' |
COST_OF_REVENUE_Details
COST OF REVENUE (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
COST OF REVENUE | ' | ' | ' | ' |
Compensation and benefits | $63,121 | $36,744 | $115,771 | $69,323 |
Outside fees and services | 71,365 | 46,345 | 124,193 | 81,240 |
Reimbursable expenses | 32,276 | 23,299 | 61,071 | 43,565 |
Technology and telecommunications | 11,849 | 7,060 | 20,690 | 12,551 |
Depreciation and amortization | 5,388 | 3,524 | 10,079 | 7,255 |
Total | $183,999 | $116,972 | $331,804 | $213,934 |
SELLING_GENERAL_AND_ADMINISTRA2
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ' | ' | ' | ' |
Compensation and benefits | $11,111 | $6,609 | $20,100 | $12,066 |
Professional services | 2,808 | 1,384 | 6,790 | 3,016 |
Occupancy related costs | 9,496 | 7,957 | 18,807 | 14,533 |
Amortization of intangible assets | 10,107 | 9,037 | 19,573 | 10,237 |
Depreciation and amortization | 1,741 | 1,058 | 3,296 | 2,051 |
Change in the fair value of Equator Earn Out | -37,924 | ' | -37,924 | ' |
Goodwill impairment | 37,473 | ' | 37,473 | ' |
Marketing costs | 7,667 | 1,328 | 12,784 | 1,980 |
Other | 6,542 | 2,455 | 11,656 | 4,625 |
Total | $49,021 | $29,828 | $92,555 | $48,508 |
OTHER_INCOME_EXPENSE_NET_Detai
OTHER INCOME (EXPENSE), NET (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
OTHER INCOME (EXPENSE), NET | ' | ' | ' | ' |
Gain (loss) in equity affiliate | ' | $54 | ' | ($122) |
Interest income | 14 | 11 | 26 | 867 |
Other, net | -57 | 12 | -22 | 37 |
Total | ($43) | $77 | $4 | $782 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
EARNINGS PER SHARE | ' | ' | ' | ' |
Net income attributable to Altisource (in dollars) | $54,101 | $30,931 | $93,732 | $58,449 |
Weighted average common shares outstanding, basic | 22,089,000 | 23,161,000 | 22,301,000 | 23,267,000 |
Dilutive effect of stock options (in shares) | 2,077,000 | 1,662,000 | 2,114,000 | 1,673,000 |
Weighted average common shares outstanding, diluted | 24,166,000 | 24,823,000 | 24,415,000 | 24,940,000 |
Earnings per share: | ' | ' | ' | ' |
Basic (in dollars per share) | $2.45 | $1.34 | $4.20 | $2.51 |
Diluted (in dollars per share) | $2.24 | $1.25 | $3.84 | $2.34 |
Options | ' | ' | ' | ' |
Anti-dilutive securities | ' | ' | ' | ' |
Options excluded from the computation of diluted EPS (in shares) | ' | ' | ' | 100,000 |
Options | Maximum | ' | ' | ' | ' |
Anti-dilutive securities | ' | ' | ' | ' |
Options excluded from the computation of diluted EPS (in shares) | 100,000 | 100,000 | 100,000 | ' |
Options for shares issuable upon achievement of market and performance criteria | ' | ' | ' | ' |
Anti-dilutive securities | ' | ' | ' | ' |
Options excluded from the computation of diluted EPS (in shares) | 100,000 | 100,000 | 100,000 | 100,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Escrow and Trust Balances | ' | ' |
Amounts held in escrow and trust accounts | $64 | $71.80 |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
segment | |||||
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Number of reporting segments | ' | ' | 3 | ' | ' |
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Revenue | $296,072 | $186,110 | $535,341 | $334,937 | ' |
Cost of revenue | 183,999 | 116,972 | 331,804 | 213,934 | ' |
Gross profit | 112,073 | 69,138 | 203,537 | 121,003 | ' |
Selling, general and administrative expenses | 49,021 | 29,828 | 92,555 | 48,508 | ' |
Income from operations | 63,052 | 39,310 | 110,982 | 72,495 | ' |
Other income (expense), net | -4,827 | -4,825 | -9,556 | -7,332 | ' |
Income before income taxes and non-controlling interests | 58,225 | 34,485 | 101,426 | 65,163 | ' |
Total Assets: | ' | ' | ' | ' | ' |
Total Assets | 711,000 | ' | 711,000 | ' | 730,052 |
Operating Segment | Mortgage Services | ' | ' | ' | ' | ' |
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Revenue | 221,344 | 144,210 | 397,120 | 261,658 | ' |
Cost of revenue | 128,919 | 89,078 | 231,723 | 161,447 | ' |
Gross profit | 92,425 | 55,132 | 165,397 | 100,211 | ' |
Selling, general and administrative expenses | 23,472 | 12,590 | 42,666 | 18,048 | ' |
Income from operations | 68,953 | 42,542 | 122,731 | 82,163 | ' |
Other income (expense), net | 80 | 61 | 128 | -112 | ' |
Income before income taxes and non-controlling interests | 69,033 | 42,603 | 122,859 | 82,051 | ' |
Total Assets: | ' | ' | ' | ' | ' |
Total Assets | 309,043 | ' | 309,043 | ' | 310,253 |
Operating Segment | Financial Services | ' | ' | ' | ' | ' |
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Revenue | 25,476 | 23,072 | 49,761 | 39,408 | ' |
Cost of revenue | 16,058 | 13,807 | 30,671 | 25,833 | ' |
Gross profit | 9,418 | 9,265 | 19,090 | 13,575 | ' |
Selling, general and administrative expenses | 4,773 | 3,534 | 9,436 | 6,384 | ' |
Income from operations | 4,645 | 5,731 | 9,654 | 7,191 | ' |
Other income (expense), net | 12 | -5 | 11 | -8 | ' |
Income before income taxes and non-controlling interests | 4,657 | 5,726 | 9,665 | 7,183 | ' |
Total Assets: | ' | ' | ' | ' | ' |
Total Assets | 59,290 | ' | 59,290 | ' | 55,930 |
Operating Segment | Technology Services | ' | ' | ' | ' | ' |
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Revenue | 57,983 | 24,783 | 105,487 | 45,014 | ' |
Cost of revenue | 46,906 | 19,407 | 84,671 | 36,519 | ' |
Gross profit | 11,077 | 5,376 | 20,816 | 8,495 | ' |
Selling, general and administrative expenses | 7,533 | 3,028 | 14,127 | 4,893 | ' |
Income from operations | 3,544 | 2,348 | 6,689 | 3,602 | ' |
Other income (expense), net | -106 | -1 | -122 | 3 | ' |
Income before income taxes and non-controlling interests | 3,438 | 2,347 | 6,567 | 3,605 | ' |
Total Assets: | ' | ' | ' | ' | ' |
Total Assets | 231,440 | ' | 231,440 | ' | 277,941 |
Corporate Items and Eliminations | ' | ' | ' | ' | ' |
SEGMENT REPORTING | ' | ' | ' | ' | ' |
Revenue | -8,731 | -5,955 | -17,027 | -11,143 | ' |
Cost of revenue | -7,884 | -5,320 | -15,261 | -9,865 | ' |
Gross profit | -847 | -635 | -1,766 | -1,278 | ' |
Selling, general and administrative expenses | 13,243 | 10,676 | 26,326 | 19,183 | ' |
Income from operations | -14,090 | -11,311 | -28,092 | -20,461 | ' |
Other income (expense), net | -4,813 | -4,880 | -9,573 | -7,215 | ' |
Income before income taxes and non-controlling interests | -18,903 | -16,191 | -37,665 | -27,676 | ' |
Total Assets: | ' | ' | ' | ' | ' |
Total Assets | $111,227 | ' | $111,227 | ' | $85,928 |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Premises and equipment, net | ' | ' |
Premises and equipment, net | $100,962 | $87,252 |
United States | ' | ' |
Premises and equipment, net | ' | ' |
Premises and equipment, net | 74,065 | 63,615 |
India | ' | ' |
Premises and equipment, net | ' | ' |
Premises and equipment, net | 17,855 | 16,404 |
Luxembourg | ' | ' |
Premises and equipment, net | ' | ' |
Premises and equipment, net | 5,264 | 3,217 |
Philippines | ' | ' |
Premises and equipment, net | ' | ' |
Premises and equipment, net | $3,778 | $4,016 |