Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 20, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Altisource Portfolio Solutions S.A. | |
Entity Central Index Key | 1462418 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,132,326 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $105,623 | $161,361 |
Available for sale securities - investment in HLSS | 26,681 | 0 |
Accounts receivable, net | 126,716 | 112,183 |
Prepaid expenses and other current assets | 21,154 | 23,567 |
Deferred tax assets, net | 4,987 | 4,987 |
Total current assets | 285,161 | 302,098 |
Premises and equipment, net | 126,521 | 127,759 |
Goodwill | 90,851 | 90,851 |
Intangible assets, net | 236,355 | 245,246 |
Other assets | 21,793 | 22,267 |
Total assets | 760,681 | 788,221 |
Current liabilities: | ||
Accounts payable and accrued expenses | 87,845 | 111,766 |
Current portion of long-term debt | 5,945 | 5,945 |
Deferred revenue | 9,289 | 9,829 |
Other current liabilities | 10,407 | 13,227 |
Total current liabilities | 113,486 | 140,767 |
Long-term debt, less current portion | 581,310 | 582,669 |
Deferred tax liabilities, net | 2,670 | 2,694 |
Other non-current liabilities | 21,334 | 20,648 |
Commitments, contingencies and regulatory matters (Note 19) | ||
Equity: | ||
Common stock ($1.00 par value; 25,413 shares authorized and issued and 20,132 outstanding as of March 31, 2015; 25,413 shares authorized and issued and 20,279 outstanding as of December 31, 2014) | 25,413 | 25,413 |
Additional paid-in capital | 91,952 | 91,509 |
Retained earnings | 369,964 | 367,967 |
Treasury stock, at cost (5,281 shares as of March 31, 2015 and 5,134 shares as of December 31, 2014) | -446,550 | -444,495 |
Altisource equity | 40,779 | 40,394 |
Non-controlling interests | 1,102 | 1,049 |
Total equity | 41,881 | 41,443 |
Total liabilities and equity | $760,681 | $788,221 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $1 | $1 |
Common stock, shares authorized (in shares) | 25,413,000 | 25,413,000 |
Common stock, shares issued (in shares) | 25,413,000 | 25,413,000 |
Common stock, shares outstanding (in shares) | 20,132,000 | 20,279,000 |
Treasury stock, shares (in shares) | 5,281,000 | 5,134,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenue | $240,482 | $239,269 |
Cost of revenue | 172,826 | 147,805 |
Gross profit | 67,656 | 91,464 |
Selling, general and administrative expenses | 52,406 | 43,534 |
Income from operations | 15,250 | 47,930 |
Other income (expense), net: | ||
Interest expense | -7,160 | -4,776 |
Other than temporary impairment loss on HLSS equity securities | -3,285 | 0 |
Other income (expense), net | 3 | 47 |
Total other income (expense), net | -10,442 | -4,729 |
Income before income taxes and non-controlling interests | 4,808 | 43,201 |
Income tax provision | -400 | -3,055 |
Net income | 4,408 | 40,146 |
Net income attributable to non-controlling interests | -710 | -515 |
Net income attributable to Altisource | 3,698 | 39,631 |
Earnings per share: | ||
Basic (in usd per share) | $0.18 | $1.76 |
Diluted (in usd per share) | $0.18 | $1.61 |
Weighted average shares outstanding: | ||
Basic (in shares) | 20,172 | 22,509 |
Diluted (in shares) | 20,995 | 24,662 |
Transactions with related parties included above: | ||
Revenue | 148,639 | 145,558 |
Cost of revenue | 10,288 | 7,288 |
Selling, general and administrative expenses | $657 | ($242) |
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, 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 | 40,146 | 39,631 | 515 | |||
Distributions to non-controlling interest holders | -653 | -653 | ||||
Share-based compensation expense | 658 | 658 | ||||
Exercise of stock options | 401 | -1,732 | 2,133 | |||
Repurchase of shares | -35,766 | -35,766 | ||||
Balance at Mar. 31, 2014 | 162,527 | 25,413 | 89,931 | 277,460 | -231,181 | 904 |
Balance (in shares) at Mar. 31, 2014 | 25,413 | |||||
Balance at Dec. 31, 2014 | 41,443 | 25,413 | 91,509 | 367,967 | -444,495 | 1,049 |
Balance (in shares) at Dec. 31, 2014 | 25,413 | |||||
Increase (Decrease) in Equity | ||||||
Net income | 4,408 | 3,698 | 710 | |||
Distributions to non-controlling interest holders | -657 | -657 | ||||
Share-based compensation expense | 443 | 443 | ||||
Exercise of stock options | 203 | -1,701 | 1,904 | |||
Repurchase of shares | -3,959 | -3,959 | ||||
Balance at Mar. 31, 2015 | $41,881 | $25,413 | $91,952 | $369,964 | ($446,550) | $1,102 |
Balance (in shares) at Mar. 31, 2015 | 25,413 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $4,408 | $40,146 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 8,826 | 6,246 |
Amortization of intangible assets | 8,891 | 9,466 |
Other than temporary impairment loss on HLSS equity securities | 3,285 | 0 |
Change in the fair value of acquisition related contingent consideration | 148 | 0 |
Share-based compensation expense | 443 | 658 |
Bad debt expense | 607 | 1,755 |
Amortization of debt discount | 127 | 46 |
Amortization of debt issuance costs | 351 | 242 |
Deferred income taxes | -24 | 461 |
(Gain) loss on disposal of fixed assets | -19 | 96 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -15,140 | -22,599 |
Prepaid expenses and other current assets | 2,413 | -1,847 |
Other assets | 127 | -1,014 |
Accounts payable and accrued expenses | -27,559 | 7,695 |
Other current and non-current liabilities | -2,822 | -5,042 |
Net cash (used in) provided by operating activities | -15,938 | 36,309 |
Cash flows from investing activities: | ||
Additions to premises and equipment | -3,931 | -12,945 |
Purchase of HLSS equity securities | -29,966 | 0 |
Other investing activities | -4 | -300 |
Net cash used in investing activities | -33,901 | -13,245 |
Cash flows from financing activities: | ||
Repayment of long-term debt | -1,486 | -994 |
Proceeds from stock option exercises | 203 | 401 |
Purchase of treasury stock | -3,959 | -35,766 |
Distributions to non-controlling interests | -657 | -653 |
Net cash used in financing activities | -5,899 | -37,012 |
Net decrease in cash and cash equivalents | -55,738 | -13,948 |
Cash and cash equivalents at the beginning of the period | 161,361 | 130,324 |
Cash and cash equivalents at the end of the period | 105,623 | 116,376 |
Supplemental cash flow information: | ||
Interest paid | 6,655 | 4,469 |
Income taxes paid, net | 1,520 | 201 |
Non-cash investing and financing activities: | ||
(Decrease) increase in payables for purchases of premises and equipment | ($3,638) | $684 |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
ORGANIZATION AND BASIS OF PRESENTATION | 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.” | ||
We conduct our operations through three reportable segments: Mortgage Services, Financial Services and Technology Services. In addition, we report our corporate related expenditures and eliminations separately (see Note 20 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 those estimates. Intercompany and inter-segment transactions and accounts have been eliminated in consolidation. Certain prior year amounts reported by the Mortgage Services and Technology Services segments have been reclassified to conform with the current year presentation. | ||
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 March 31, 2015, Lenders One had total assets of $8.8 million and total liabilities of $7.7 million. As of December 31, 2014, Lenders One had total assets of $7.7 million and total liabilities of $6.7 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, 2014, filed with the SEC on March 2, 2015, 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 | ||
As previously disclosed, during 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 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 months ended March 31, 2014. 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 and its subsidiaries (“Ocwen”) by $7.3 million for the three months ended March 31, 2014; | |
• | increasing the amounts disclosed as selling, general and administrative expenses from Ocwen billings to Altisource by $0.4 million for the three months ended March 31, 2014; | |
• | decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Ocwen by $0.2 million for the three months ended March 31, 2014; and | |
• | decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Altisource Asset Management Corporation (“AAMC”) by $0.3 million for the three months ended March 31, 2014. | |
Correcting these items on the face of the condensed consolidated statements of operations resulted in the disclosure of related party cost of revenue of $7.3 million and a decrease in previously disclosed related party selling, general and administrative expenses by $1.1 million for the three months ended March 31, 2014. | ||
In accordance with the Financial Accounting Standards Board (“FASB”) 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. | ||
Fair Value Measurements | ||
Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is 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. | ||
Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. | ||
Future Adoption of New Accounting Pronouncements | ||
In May 2014, FASB issued Accounting Standards Update (“ASU”) 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. | ||
In February 2015, FASB issued ASU No. 2015-02, Consolidation: Amendments to the Consolidation Analysis. This standard addresses the consolidation of certain legal entities relative to current requirements under GAAP of a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. This standard will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the standard in an interim period, any adjustments should be reflected as of the beginning of the year that includes that interim period. The Company is currently evaluating the impact this new guidance may have on its results of operations and financial position. | ||
In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This revised standard changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. This standard will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of this standard to have a material impact on its results of operations or financial position. |
TRANSACTIONS_WITH_RELATED_PART
TRANSACTIONS WITH RELATED PARTIES | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Related Party Transactions [Abstract] | ||||
TRANSACTIONS WITH RELATED PARTIES | TRANSACTIONS WITH RELATED PARTIES | |||
Through January 16, 2015, William C. Erbey served as our Chairman as well as the Executive Chairman of Ocwen and Chairman of each of Home Loan Servicing Solutions, Ltd. (“HLSS”), Altisource Residential Corporation (“Residential”) and AAMC. Effective January 16, 2015, Mr. Erbey stepped down as the Executive Chairman of Ocwen and Chairman of each of Altisource, HLSS, Residential and AAMC and is no longer a member of the Board of Directors for any of these companies. As of March 31, 2015, Mr. Erbey owned or controlled approximately 30% of the common stock of Altisource, approximately 14% of the common stock of Ocwen, approximately 1% of the common stock of HLSS, approximately 4% of the common stock of Residential and approximately 28% of the common stock of AAMC. As of March 31, 2015, Mr. Erbey also held 857,543 options to purchase Altisource common stock (all of which were exercisable), 3,572,626 options to purchase Ocwen common stock (3,322,626 of which were exercisable) and 85,755 options to purchase AAMC common stock (all of which were exercisable). Accordingly, as a result of Mr. Erbey’s positions and the continuing common ownership, these companies have been and are related parties of Altisource. | ||||
Ocwen | ||||
Revenue | ||||
Ocwen is our largest customer. Ocwen purchases certain mortgage services and technology services from us under the terms of the 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 nation” provision and the parties to the Service Agreements have the right to renegotiate pricing. The Service Agreements also prohibit Ocwen from establishing fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward Residential, Inc. and Residential Capital, LLC portfolios. In addition, Ocwen purchases certain origination services from Altisource under an agreement that extends through January 2017. 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 primarily consists of revenue earned directly from Ocwen and revenue earned from the loans serviced by Ocwen when Ocwen designates us as the service provider. Related party revenue from Ocwen as a percentage of segment and consolidated revenue was as follows for the three months ended March 31: | ||||
2015 | 2014 | |||
Mortgage Services | 63% | 69% | ||
Financial Services | 25% | 26% | ||
Technology Services | 47% | 35% | ||
Consolidated revenue | 59% | 61% | ||
We record revenue we earn from Ocwen under the Service Agreements at rates we believe to be comparable market rates as we believe they are consistent with the fees we charge to other customers and/or fees charged by our competitors for comparable services. | ||||
We earn additional revenue on the portfolios serviced by Ocwen that is not considered related party revenue when a party other than Ocwen selects Altisource as the service provider. For the three months ended March 31, 2015 and 2014, we recognized revenue of $53.5 million and $54.7 million, respectively, on the portfolios serviced by Ocwen that is not considered related party revenue. | ||||
Cost of Revenue | ||||
At times, we use Ocwen’s contractors and/or employees to support Altisource related services. Ocwen generally bills us for these contractors and/or employees based on their fully-allocated cost. Additionally, through March 31, 2015, we purchased certain data relating to Ocwen’s servicing portfolio in connection with a Data Access and Services Agreement. The Data Access and Services Agreement could be renegotiated and could be canceled by either Altisource or Ocwen with 90 days prior written notice. Based upon our previously provided notice, the Data Access and Services Agreement was terminated effective March 31, 2015. Ocwen billed us a per asset fee for this data. For the three months ended March 31, 2015 and 2014, Ocwen billed us $10.3 million and $7.3 million, 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 in connection with Support Services Agreements. Prior to January 1, 2015, these services included such areas as human resources, vendor management, vendor oversight, corporate services, operational effectiveness, quality assurance, quantitative analytics, tax and treasury. For the three months ended March 31, 2015, these services included vendor management, corporate services and facility charges. The Support Services Agreement with Ocwen Mortgage Servicing, Inc. extends through September 2018 with automatic one-year renewals thereafter. The Support Services Agreement with Ocwen Financial Corporation extends through October 2017 with automatic one-year renewals thereafter. Billings for these services were generally 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 three months ended March 31, 2015 and 2014, we billed Ocwen $0.6 million and $1.0 million, respectively, and Ocwen billed us $1.6 million and $1.2 million, respectively. These amounts are reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. | ||||
HLSS | ||||
HLSS is a publicly traded company whose primary objective is the acquisition of mortgage servicing rights and related servicing advances, loans held for investment and other residential mortgage related assets. As of March 31, 2015 and December 31, 2014, HLSS owned, for a significant portion of Ocwen-serviced non-government-sponsored enterprise loans, (1) the rights to receive the servicing fees that Ocwen is entitled to receive and (2) associated servicing advances. | ||||
Under a support services agreement, we provide HLSS certain finance, human resources, tax and facilities services and we sell information technology services to HLSS. We billed HLSS $0.6 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively. Of these amounts, $0.5 million for the three months ended March 31, 2015 (no comparative amount in 2014) is reflected in revenue in the condensed consolidated statements of operations and, for the three months ended March 31, 2015 and 2014, $0.1 million and $0.2 million, respectively, is reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. | ||||
On February 22, 2015, HLSS and New Residential Investment Corp. (“NRZ”) announced they entered into a definitive agreement whereby NRZ would acquire all of the outstanding shares of HLSS, subject to shareholder approval and other customary closing conditions. | ||||
From March 10, 2015 to March 17, 2015, we purchased 1.6 million shares of HLSS common stock for $30.0 million in the open market. See Note 5. | ||||
On April 6, 2015, HLSS and NRZ announced they terminated the merger agreement announced on February 22, 2015 and entered into a purchase agreement under which NRZ acquired substantially all of the assets and assumed substantially all of the liabilities of HLSS. The asset purchase was consummated concurrently with signing of the purchase agreement. Furthermore, NRZ separately agreed to a multi-year extension of the servicing contracts with Ocwen. HLSS also announced that it adopted a plan of complete liquidation and dissolution. Additional information is contained in HLSS’ public filings. | ||||
Residential and AAMC | ||||
Residential and AAMC were separated from Altisource on December 21, 2012 and their equity was distributed to our shareholders on December 24, 2012 and they are each separate publicly traded companies. Residential is focused on acquiring and managing single family rental properties by acquiring sub-performing and non-performing residential mortgage loans as well as single family homes at or following the foreclosure sale throughout the United States. AAMC’s primary business is to provide asset management and certain corporate governance services to institutional investors. Its primary client currently is Residential. | ||||
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, property management and REO asset management services. In addition, we have agreements with Residential and AAMC to provide services such as finance, human resources, facilities, technology and insurance risk management. Further, we have separate agreements for certain services related to income tax matters, trademark licenses and technology products and services. | ||||
For the three months ended March 31, 2015 and 2014, we billed Residential $6.8 million and $0.8 million, respectively, under these services agreements. These amounts are reflected in revenue in the condensed consolidated statements of operations. This excludes revenue from services we provide to Residential’s loans serviced by Ocwen where we are retained by Ocwen. That revenue is included in Ocwen related party revenue. For the three months ended March 31, 2015 and 2014, we billed AAMC $0.2 million and $0.3 million, respectively, under the services agreements. Of these amounts, less than $0.1 million in each period is reflected in revenue in the condensed consolidated statements of operations and, for the three months ended March 31, 2015 and 2014, $0.2 million and $0.3 million, respectively, is reflected as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Business Combinations [Abstract] | |||||
ACQUISITIONS | ACQUISITIONS | ||||
Mortgage Builder Acquisition | |||||
On September 12, 2014, we acquired certain assets and assumed certain liabilities of Mortgage Builder Software, Inc. (“Mortgage Builder”) pursuant to a Purchase and Sale Agreement dated July 18, 2014 (the “Purchase and Sale Agreement”). Mortgage Builder is a provider of residential mortgage loan origination and servicing software systems. Pursuant to the terms of the Purchase and Sale Agreement, we paid $15.7 million at closing in cash (net of closing working capital adjustments). Additionally, the Purchase and Sale Agreement provides for the payment of up to $7.0 million in potential additional consideration (the “MB Earn-Out”) based on Adjusted Revenue (as defined in the Purchase and Sale Agreement) in the three consecutive 12-month periods following closing. At closing, we estimated the fair value of the MB Earn-Out to be $1.6 million, determined based on the present value of future estimated MB Earn-Out payments. The Mortgage Builder acquisition is not material in relation to the Company’s results of operations or financial position. | |||||
The preliminary allocation of the purchase price is as follows: | |||||
(in thousands) | |||||
Cash | $ | 726 | |||
Accounts receivable, net | 1,120 | ||||
Prepaid expenses | 38 | ||||
Premises and equipment, net | 553 | ||||
Software | 1,509 | ||||
Trademarks and trade names | 209 | ||||
Customer relationship | 4,824 | ||||
Goodwill | 9,135 | ||||
18,114 | |||||
Accounts payable and accrued expenses | (881 | ) | |||
Purchase price | $ | 17,233 | |||
Owners Acquisition | |||||
On November 21, 2014, we acquired certain assets and assumed certain liabilities of Owners Advantage, LLC (“Owners”). Owners is a self-directed online real estate marketplace. We paid $19.8 million at closing in cash plus contingent consideration of up to an additional $7.0 million over two years (“Owners Earn Out”), based on Adjusted Revenue (as defined in the purchase agreement). At closing, we estimated the fair value of the Owners Earn Out to be $1.9 million determined based on the present value of future estimated Owners Earn Out payments. The Owners acquisition is not material in relation to the Company’s results of operations or financial position. | |||||
The preliminary allocation of the purchase price is as follows: | |||||
(in thousands) | |||||
Accounts receivable, net | $ | 41 | |||
Prepaid expenses | 32 | ||||
Software | 501 | ||||
Trademarks and trade names | 1,431 | ||||
Goodwill | 19,775 | ||||
21,780 | |||||
Accounts payable | (41 | ) | |||
Purchase price | $ | 21,739 | |||
FAIR_VALUE_FAIR_VALUE
FAIR VALUE FAIR VALUE | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||
Fair Value | FAIR VALUE | ||||||||||||||||||||||||||||||||
Fair Value Measurements on a Recurring Basis | |||||||||||||||||||||||||||||||||
Available for sale securities are carried at fair value and consist of 1.6 million shares of HLSS common stock as of March 31, 2015 (no comparative amount in 2014). As of March 31, 2015, the fair value of available for sale securities was $26.7 million (1,613,125 shares at $16.54 per share) (no comparative amount in 2014). Available for sale securities are measured using Level 1 inputs as these securities have quoted prices in active markets. | |||||||||||||||||||||||||||||||||
Liabilities for acquisition related contingent consideration are carried at fair value and were recorded in connection with the acquisitions of Equator, LLC in 2013 and Mortgage Builder and Owners in 2014. As of March 31, 2015 and December 31, 2014, the fair value of acquisition related contingent consideration was $11.8 million and $11.6 million, respectively (see Note 13). We measured the liabilities for acquisition related contingent consideration using Level 3 inputs as they are determined based on the present value of future estimated payments, which included sensitivities pertaining to discount rates and financial projections. | |||||||||||||||||||||||||||||||||
There were no transfers between different levels during the periods presented. | |||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||||||||||||||||||
The following table presents the carrying amount and estimated fair value of financial instruments held by the Company at March 31, 2015 and December 31, 2014 that are not carried at fair value. The fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP: | |||||||||||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||||||||||
(in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 105,623 | $ | 105,623 | $ | — | $ | — | $ | 161,361 | $ | 161,361 | $ | — | $ | — | |||||||||||||||||
Restricted cash | 3,026 | 3,026 | — | — | 3,022 | 3,022 | — | — | |||||||||||||||||||||||||
Long-term debt | 590,057 | — | 430,742 | — | 591,543 | — | 467,319 | — | |||||||||||||||||||||||||
Our financial assets and liabilities primarily include cash and cash equivalents, restricted cash and long-term debt. 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 and were measured using Level 1 inputs. The fair value of our long-term debt is based on quoted market prices. We do not believe that there is an active market for our debt, based on the frequency of trading. Therefore, the quoted prices are considered Level 2 inputs. |
AVAILABLE_FOR_SALE_SECURITIES_
AVAILABLE FOR SALE SECURITIES - INVESTMENT IN HLSS (Notes) | 3 Months Ended |
Mar. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
AVAILABLE FOR SALE SECURITIES - INVESTMENT IN HLSS | AVAILABLE FOR SALE SECURITIES - INVESTMENT IN HLSS |
During the three months ended March 31, 2015, we purchased 1.6 million shares of HLSS common stock for $30.0 million in the open market (1,613,125 shares at an average price per share of $18.58). This investment is classified as available for sale and reflected at fair value at the balance sheet date ($26.7 million as of March 31, 2015) (no comparative amount in 2014). Unrealized gains and losses on available for sale securities are reflected in other comprehensive income, unless there is an impairment that is other than temporary. In the event that a decline in market value is other than temporary, we record a charge to earnings and a new cost basis in the investment is established. Based on HLSS’ sale of substantially all of its assets and plan of complete liquidation and dissolution (see Note 2), we determined that our investment in HLSS is other than temporarily impaired. Accordingly, we recognized an other than temporary impairment loss on HLSS equity securities of $3.3 million in the accompanying condensed consolidated statements of operations during the three months ended March 31, 2015. This amount reflects the difference between the cost and fair value of the HLSS equity securities as of March 31, 2015 (based on 1,613,125 shares at $16.54 per share). |
ACCOUNTS_RECEIVABLE_NET
ACCOUNTS RECEIVABLE, NET | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Receivables [Abstract] | |||||||||
ACCOUNTS RECEIVABLE, NET | ACCOUNTS RECEIVABLE, NET | ||||||||
Accounts receivable, net consists of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Billed | |||||||||
Non-related parties | $ | 40,419 | $ | 37,576 | |||||
Ocwen | 38,824 | 22,831 | |||||||
HLSS | 91 | 86 | |||||||
AAMC | 116 | 129 | |||||||
Residential | 7,274 | 11,320 | |||||||
Other receivables | 1,661 | 1,590 | |||||||
88,385 | 73,532 | ||||||||
Unbilled | |||||||||
Non-related parties | 50,389 | 46,775 | |||||||
Ocwen | 10,777 | 14,551 | |||||||
HLSS | 450 | — | |||||||
150,001 | 134,858 | ||||||||
Less: allowance for doubtful accounts | (23,285 | ) | (22,675 | ) | |||||
Total | $ | 126,716 | $ | 112,183 | |||||
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. We also include in unbilled receivables amounts that are earned during a month and billed in the following month. |
PREPAID_EXPENSES_AND_OTHER_CUR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||||||||
Prepaid expenses and other current assets consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Maintenance agreements, current portion | $ | 5,645 | $ | 6,367 | |||||
Income taxes receivable | 6,207 | 5,258 | |||||||
Prepaid expenses | 4,453 | 6,989 | |||||||
Other current assets | 4,849 | 4,953 | |||||||
Total | $ | 21,154 | $ | 23,567 | |||||
PREMISES_AND_EQUIPMENT_NET
PREMISES AND EQUIPMENT, NET | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
PREMISES AND EQUIPMENT, NET | PREMISES AND EQUIPMENT, NET | ||||||||
Premises and equipment, net consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Computer hardware and software | $ | 151,262 | $ | 140,799 | |||||
Office equipment and other | 33,578 | 36,032 | |||||||
Furniture and fixtures | 12,880 | 12,231 | |||||||
Leasehold improvements | 32,996 | 34,069 | |||||||
230,716 | 223,131 | ||||||||
Less: accumulated depreciation and amortization | (104,195 | ) | (95,372 | ) | |||||
Total | $ | 126,521 | $ | 127,759 | |||||
Depreciation and amortization expense amounted to $8.8 million and $6.2 million for the three months ended March 31, 2015 and 2014, 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 | 3 Months Ended | ||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET | ||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||
The following is a summary of goodwill by segment: | |||||||||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Total | |||||||||||||||||||||||
Services | Services | Services | |||||||||||||||||||||||||
Balance, March 31, 2015 and December 31, 2014 | $ | 32,733 | $ | 2,378 | $ | 55,740 | $ | 90,851 | |||||||||||||||||||
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 (in years) | March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||
Definite lived intangible assets: | |||||||||||||||||||||||||||
Trademarks and trade names | 13 | $ | 13,889 | $ | 13,889 | $ | (5,196 | ) | $ | (5,016 | ) | $ | 8,693 | $ | 8,873 | ||||||||||||
Customer related intangible assets | 10 | 289,308 | 289,308 | (87,871 | ) | (79,606 | ) | 201,437 | 209,702 | ||||||||||||||||||
Operating agreement | 20 | 35,000 | 35,000 | (9,042 | ) | (8,604 | ) | 25,958 | 26,396 | ||||||||||||||||||
Intellectual property | 10 | 300 | 300 | (33 | ) | (25 | ) | 267 | 275 | ||||||||||||||||||
Total | $ | 338,497 | $ | 338,497 | $ | (102,142 | ) | $ | (93,251 | ) | $ | 236,355 | $ | 245,246 | |||||||||||||
Amortization expense for definite lived intangible assets was $8.9 million and $9.5 million for the three months ended March 31, 2015 and 2014, respectively. Expected annual definite lived intangible asset amortization for 2015 through 2019 is $37.9 million, $34.5 million, $30.3 million, $26.4 million and $23.2 million, respectively. |
OTHER_ASSETS
OTHER ASSETS | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
OTHER ASSETS | OTHER ASSETS | ||||||||
Other assets consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Security deposits, net | $ | 7,177 | $ | 7,277 | |||||
Debt issuance costs, net | 7,747 | 8,099 | |||||||
Maintenance agreements, non-current portion | 3,305 | 3,324 | |||||||
Restricted cash | 3,026 | 3,022 | |||||||
Other | 538 | 545 | |||||||
Total | $ | 21,793 | $ | 22,267 | |||||
ACCOUNTS_PAYABLE_ACCRUED_EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Accounts payable | $ | 13,924 | $ | 22,880 | |||||
Income taxes payable | 6,413 | 7,643 | |||||||
Payable to Ocwen | 4,842 | 5,400 | |||||||
Accrued expenses - general | 31,470 | 25,500 | |||||||
Accrued salaries and benefits | 30,296 | 44,150 | |||||||
Accrued expenses - Ocwen | 900 | 6,193 | |||||||
Total | $ | 87,845 | $ | 111,766 | |||||
Other current liabilities consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Book overdrafts | $ | 4,595 | $ | 4,788 | |||||
Other | 5,812 | 8,439 | |||||||
Total | $ | 10,407 | $ | 13,227 | |||||
LONGTERM_DEBT
LONG-TERM DEBT | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
LONG-TERM DEBT | LONG-TERM DEBT | ||||||||
Long-term debt consists of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Senior secured term loan | $ | 590,057 | $ | 591,543 | |||||
Less: unamortized discount, net | (2,802 | ) | (2,929 | ) | |||||
Net long-term debt | 587,255 | 588,614 | |||||||
Less: current portion | (5,945 | ) | (5,945 | ) | |||||
Long-term debt, less current portion | $ | 581,310 | $ | 582,669 | |||||
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 with Bank of America, N.A., as administrative agent, and certain lenders. The Company and certain wholly-owned subsidiaries are guarantors of the term loan (collectively, the “Guarantors”). We subsequently amended the senior secured term loan agreement to increase the principal amount of the senior secured term loan and, among other changes, re-establish the $200.0 million incremental term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year and increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement). As of March 31, 2015, $587.3 million, net of unamortized discount of $2.8 million, was outstanding under the senior secured term loan agreement, as amended, compared to $588.6 million, net of unamortized discount of $2.9 million, as of December 31, 2014. | |||||||||
After giving effect to the third amendment entered into on August 1, 2014, the term loan must be repaid in equal consecutive quarterly principal installments of $1.5 million, which commenced on September 30, 2014, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement will become due on the earlier of (i) December 9, 2020 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 upon the occurrence of any event of default under the senior secured term loan agreement. | |||||||||
In addition to the scheduled principal payments, the term loan 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 Consolidated Excess Cash Flow if the leverage ratio is greater than 3.00 to 1.00. No mandatory prepayments were owed for the three months ended March 31, 2015. | |||||||||
The term loan bears interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate. 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 March 31, 2015 was 4.50%. | |||||||||
Term loan payments 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 five 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 of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us 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 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 March 31, 2015, debt issuance costs were $7.7 million, net of $2.5 million of accumulated amortization. At December 31, 2014, debt issuance costs were $8.1 million, net of $2.2 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 $7.2 million and $4.8 million for the three months ended March 31, 2015 and 2014, respectively. |
OTHER_NONCURRENT_LIABILITIES
OTHER NON-CURRENT LIABILITIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Liabilities Disclosure [Abstract] | |||||||||
OTHER NON-CURRENT LIABILITIES | OTHER NON-CURRENT LIABILITIES | ||||||||
Other non-current liabilities consist of the following: | |||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Acquisition related contingent consideration | $ | 11,764 | $ | 11,616 | |||||
Other non-current liabilities | 9,570 | 9,032 | |||||||
Total | $ | 21,334 | $ | 20,648 | |||||
EQUITY_AND_SHAREBASED_COMPENSA
EQUITY AND SHARE-BASED COMPENSATION | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
SHAREHOLDERSb EQUITY AND SHARE-BASED COMPENSATION | SHAREHOLDERS’ 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 March 31, 2015, we have purchased approximately 6.4 million shares of our common stock in the open market at an average price of $77.69 per share. We purchased 0.2 million shares of common stock at an average price of $23.44 per share during the three months ended March 31, 2015 and 0.3 million shares at an average price of $109.97 per share during the three months ended March 31, 2014. As of March 31, 2015, approximately 1.0 million shares of common stock remain available for repurchase under the new program. Our senior secured term loan limits the amount we can spend on share repurchases in any year and may prevent repurchases in certain circumstances. As of March 31, 2015, approximately $285 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 $0.4 million and $0.7 million for the three months ended March 31, 2015 and 2014, 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 ten years after the date of grant or following termination of service. A total of 0.7 million service-based awards were outstanding at March 31, 2015. | |||||||||||||
Market-Based Options. These option grants have two components, each of which vests 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 1.9 million market-based awards were outstanding at March 31, 2015. | |||||||||||||
The Company granted less than 0.1 million stock options (at a weighted average exercise price of $26.42 per share) during the three months ended March 31, 2015. There were no options granted during the three months ended March 31, 2014. | |||||||||||||
The fair value of the service-based options was determined using the Black-Scholes option pricing model and the fair value of the market-based options was determined using a lattice (binomial) model. The following assumptions were used to determine the fair value as of the grant date: | |||||||||||||
Three months ended | |||||||||||||
March 31, 2015 | |||||||||||||
Black-Scholes | Binomial | ||||||||||||
Risk-free interest rate (%) | 1.67 | % | 0.02% - 2.01% | ||||||||||
Expected stock price volatility (%) | 55.06 | % | 55.06 | % | |||||||||
Expected dividend yield | — | — | |||||||||||
Expected option life (in years) | 6.25 | — | |||||||||||
Contractual life (in years) | — | 14 | |||||||||||
Fair value | $11.69 | $10.68 - $11.93 | |||||||||||
The following table summarizes the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the grant date fair value of stock options vested during the period presented: | |||||||||||||
Three months ended March 31, | |||||||||||||
(in thousands, except per share amounts) | 2015 | 2014 | |||||||||||
Weighted average fair value at grant date per share | $ | 11.56 | N/A | ||||||||||
Intrinsic value of options exercised | 176 | 2,690 | |||||||||||
Grant date fair value of options vested during the period | 264 | 391 | |||||||||||
N/A - not applicable. | |||||||||||||
Share-based compensation expense is recorded net of estimated forfeiture rates ranging from 1% to 10%. | |||||||||||||
As of March 31, 2015, estimated unrecognized compensation costs related to share-based payments amounted to $3.2 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 3.3 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, 2014 | 2,601,892 | $ | 21.21 | 4.44 | $ | 47,805 | |||||||
Granted | 30,000 | 26.42 | |||||||||||
Exercised | (21,984 | ) | 9.19 | ||||||||||
Forfeited | (23,000 | ) | 51.92 | ||||||||||
Outstanding at March 31, 2015 | 2,586,908 | 21.1 | 4.27 | 6,143 | |||||||||
Exercisable at March 31, 2015 | 2,264,976 | 13.73 | 3.72 | 6,143 | |||||||||
COST_OF_REVENUE
COST OF REVENUE | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Cost of Revenue [Abstract] | |||||||||
COST OF REVENUE | 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 for the three months ended March 31: | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Compensation and benefits | $ | 69,326 | $ | 52,650 | |||||
Outside fees and services | 53,247 | 52,828 | |||||||
Reimbursable expenses | 31,956 | 28,795 | |||||||
Technology and telecommunications | 11,893 | 8,841 | |||||||
Depreciation and amortization | 6,404 | 4,691 | |||||||
Total | $ | 172,826 | $ | 147,805 | |||||
SELLING_GENERAL_AND_ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Selling, General and Administrative Expense [Abstract] | |||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||
Selling, general and administrative expenses include payroll for personnel employed in executive, finance, legal, compliance, 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 for the three months ended March 31: | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Compensation and benefits | $ | 12,763 | $ | 8,989 | |||||
Professional services | 7,990 | 3,982 | |||||||
Occupancy related costs | 10,654 | 9,311 | |||||||
Amortization of intangible assets | 8,891 | 9,466 | |||||||
Depreciation and amortization | 2,422 | 1,555 | |||||||
Marketing costs | 5,353 | 5,177 | |||||||
Other | 4,333 | 5,054 | |||||||
Total | $ | 52,406 | $ | 43,534 | |||||
OTHER_INCOME_EXPENSE_NET
OTHER INCOME (EXPENSE), NET | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Income and Expenses [Abstract] | |||||||||
OTHER INCOME (EXPENSE), NET | OTHER INCOME (EXPENSE), NET | ||||||||
Other income (expense), net consists of the following for the three months ended March 31: | |||||||||
(in thousands) | 2015 | 2014 | |||||||
Interest income | $ | 31 | $ | 12 | |||||
Other, net | (28 | ) | 35 | ||||||
Total | $ | 3 | $ | 47 | |||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
EARNINGS PER SHARE | 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 for the three months ended March 31: | |||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Net income attributable to Altisource | $ | 3,698 | $ | 39,631 | |||||
Weighted average common shares outstanding, basic | 20,172 | 22,509 | |||||||
Dilutive effect of stock options | 823 | 2,153 | |||||||
Weighted average common shares outstanding, diluted | 20,995 | 24,662 | |||||||
Earnings per share: | |||||||||
Basic | $ | 0.18 | $ | 1.76 | |||||
Diluted | $ | 0.18 | $ | 1.61 | |||||
For the three months ended March 31, 2015 and 2014, 0.7 million options and less than 0.1 million options, respectively, that were anti-dilutive have been excluded from the computation of diluted EPS. 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 are 0.2 million options and less than 0.1 million options for each of the three months ended March 31, 2015 and 2014, respectively, 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 | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS | COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS |
Litigation | |
From time to time, we are involved in legal and administrative proceedings arising in the course of our business. We record a liability for these matters if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range. | |
On September 8, 2014, the West Palm Beach Firefighter’s Pension Fund filed a putative securities class action suit against Altisource and certain of its officers and directors in the United States District Court for the Southern District of Florida alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 with regard to disclosures concerning pricing and transactions with related parties that allegedly inflated Altisource share prices. The court subsequently appointed the Pension Fund of the International Union of Painters and Allied Trades District Council 35 and the Annuity Fund of the International Union of Painters and Allied Trades District Council 35 as Lead Plaintiffs. On January 30, 2015, Lead Plaintiffs filed an amended class action complaint which adds Ocwen Financial Corporation as a defendant, and seeks a determination that the action may be maintained as a class action on behalf of purchasers of the Company’s securities between April 25, 2013 and December 21, 2014 and an unspecified amount of damages. Altisource intends to vigorously defend this lawsuit. | |
On February 11, 2015, W.A. Sokolowski, an alleged shareholder of Ocwen Financial Corporation, filed an amended shareholder derivative complaint in the United States District Court for the Southern District of Florida against Ocwen Financial Corporation, certain of its officers and directors, Altisource and other companies. The suit seeks recovery of an unspecified amount of damages on behalf of Ocwen for alleged breaches of fiduciary duty by Ocwen’s current and former officers and directors, which were allegedly aided and abetted by Altisource and other defendants. Altisource, which has not been served with the suit, intends to vigorously defend the lawsuit. | |
Altisource is unable to predict the outcomes of these lawsuits or reasonably estimate the potential loss, if any, arising from the suits, given that a motion to dismiss was filed but has not yet been adjudicated in the first case, Altisource has not been served in the second case, discovery has not commenced in either case and significant legal and factual issues remain to be determined in both cases. | |
In addition to the matters referenced above, we are involved in legal actions in the course of our business, some of which seek monetary damages. We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows. | |
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. | |
Ocwen Related Matters | |
Ocwen is our largest customer and 59% of our revenue for the three months ended March 31, 2015 was related party revenue from Ocwen. Additionally, 24% of our revenue for the three months ended March 31, 2015 was earned on the portfolios serviced by Ocwen, but is not considered related party revenue because a party other than Ocwen selects Altisource as the service provider. Ocwen has been and is subject to a number of pending federal and state regulatory investigations, inquiries and requests for information that have or could result in adverse regulatory actions against Ocwen. For example, as a result of various regulatory actions, Ocwen is (i) subject to an independent auditor’s review of compliance with California servicing laws and has agreed not to obtain any new servicing rights in California until the regulator is satisfied with future document requests, (ii) operating under the oversight of an on-site operations monitor imposed by New York Department of Financial Services (“NYDFS”), which is assessing the adequacy and effectiveness of Ocwen’s operations, including information technology systems, (iii) required to perform benchmarking pricing studies for transactions with related parties, which are subject to periodic review by the monitor imposed by the NYDFS and (iv) subject to requirements under an agreement with the Consumer Finance Protection Bureau and various states attorneys general and agencies that imposed specific servicing guidelines and oversight by an independent national monitor, who is investigating the reliability of information Ocwen has provided. In addition to these matters, Ocwen continues to be subject to other regulatory investigations, inquiries and requests for information and pending legal proceedings, and Ocwen may become subject to future federal and state regulatory investigations, inquiries and requests for information, any of which could also result in adverse regulatory or other actions against Ocwen. | |
As a result of these various difficulties faced by Ocwen, its debt and servicer ratings have been downgraded. Further, certain bondholders of Ocwen-serviced residential mortgage-backed securities (“RMBS”) alleged that Ocwen, as servicer of certain mortgage-backed securities trusts, defaulted on these servicing agreements. | |
The foregoing may have significant and varied effects on Ocwen’s business and our continuing relationships with Ocwen. For example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services (including information technology services), it may be required to seek changes to its existing pricing structure with related parties or otherwise, it may lose or sell some or all of its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing licenses. Additional regulatory actions may impose additional restrictions on or require changes in Ocwen’s business that would require it to sell assets or change its business operations. Any or all of these effects could result in our eventual loss of Ocwen as a customer or a reduction in the volume of services they purchase from us or the loss of other customers. | |
If any of the following events occurred, Altisource’s revenue would be significantly lower and our results of operations would be materially adversely affected, including from the impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable: | |
• Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us | |
• Ocwen loses or sells a significant portion or all of its non-GSE servicing rights or subservicing arrangements | |
• Ocwen loses its state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio | |
• The contractual relationship between Ocwen and Altisource changes significantly or there are significant changes to our | |
pricing to Ocwen for services from which we generate material revenue | |
Management cannot predict the outcome of the Ocwen related matters or the impact they may have on Altisource. However, in the event these Ocwen related matters materially negatively impact Altisource, we believe the impact to Altisource would occur over an extended period of time and the variable nature of our cost structure allows us to realign our cost structure in line with remaining revenue. | |
In this regard, we have a plan that allows us to efficiently execute on this realignment. We believe that transfers of Ocwen’s servicing rights to a successor servicer(s) would take an extended period of time because of the approval required from many parties, including regulators, rating agencies, RMBS trustees, lenders and others. During this period of time, we believe we would continue to generate revenue from the services we provide to the portfolio. Additionally, we have several growth initiatives that focus on diversifying and growing our revenue and customer base. Our major growth initiatives include: | |
• Attracting new clients to our comprehensive default related businesses | |
• Growing our origination services and technology businesses | |
• Expanding our innovative online real estate marketplaces | |
• Growing our property management and renovation services businesses | |
We have an established sales and marketing strategy to support each of these initiatives. | |
Management believes our plans, together with current liquidity and cash flows from operations will be sufficient to meet working capital, capital expenditures, debt service and other cash needs for at least the next year. However, there can be no assurance that our plans would be successful or our operations would be profitable. | |
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 $86.8 million and $62.5 million at March 31, 2015 and December 31, 2014, respectively. |
SEGMENT_REPORTING
SEGMENT REPORTING | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
SEGMENT REPORTING | 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 (our Chief Operating Decision Maker) to evaluate operating performance and to assess the allocation of our resources. | |||||||||||||||||||||
We classify our businesses into three reportable segments. The Mortgage Services segment provides services that span the mortgage and real estate lifecycle and are typically outsourced by loan servicers, loan originators, investors and other sellers of 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, insurance and hotel industries. The Technology Services segment provides a portfolio of software, data analytics and infrastructure management services that support the efficient and compliant management of mortgage and real estate activities and marketplace transactions across the lifecycle. In addition, Corporate Items and Eliminations include eliminations of transactions between the reportable segments, interest expense and costs related to corporate support functions including executive, finance, legal, compliance, human resources, vendor management, risk and operational effectiveness and marketing. Intercompany transactions primarily consist of information technology infrastructure services. | |||||||||||||||||||||
Financial information for our segments is as follows: | |||||||||||||||||||||
Three months ended March 31, 2015 | |||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Revenue | $ | 177,006 | $ | 22,354 | $ | 51,970 | $ | (10,848 | ) | $ | 240,482 | ||||||||||
Cost of revenue | 114,804 | 15,103 | 52,723 | (9,804 | ) | 172,826 | |||||||||||||||
Gross profit (loss) | 62,202 | 7,251 | (753 | ) | (1,044 | ) | 67,656 | ||||||||||||||
Selling, general and administrative expenses | 20,561 | 4,715 | 7,315 | 19,815 | 52,406 | ||||||||||||||||
Income (loss) from operations | 41,641 | 2,536 | (8,068 | ) | (20,859 | ) | 15,250 | ||||||||||||||
Other income (expense), net | (4 | ) | (12 | ) | 1 | (10,427 | ) | (10,442 | ) | ||||||||||||
Income (loss) before income taxes and non-controlling interests | $ | 41,637 | $ | 2,524 | $ | (8,067 | ) | $ | (31,286 | ) | $ | 4,808 | |||||||||
Three months ended March 31, 2014 | |||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Revenue | $ | 176,430 | $ | 24,285 | $ | 46,850 | $ | (8,296 | ) | $ | 239,269 | ||||||||||
Cost of revenue | 103,237 | 14,613 | 37,332 | (7,377 | ) | 147,805 | |||||||||||||||
Gross profit (loss) | 73,193 | 9,672 | 9,518 | (919 | ) | 91,464 | |||||||||||||||
Selling, general and administrative expenses | 19,174 | 4,663 | 6,614 | 13,083 | 43,534 | ||||||||||||||||
Income (loss) from operations | 54,019 | 5,009 | 2,904 | (14,002 | ) | 47,930 | |||||||||||||||
Other income (expense), net | 48 | (1 | ) | (16 | ) | (4,760 | ) | (4,729 | ) | ||||||||||||
Income (loss) before income taxes and non-controlling interests | $ | 54,067 | $ | 5,008 | $ | 2,888 | $ | (18,762 | ) | $ | 43,201 | ||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Total assets: | |||||||||||||||||||||
31-Mar-15 | $ | 299,647 | $ | 54,365 | $ | 238,580 | $ | 168,089 | $ | 760,681 | |||||||||||
31-Dec-14 | 313,550 | 56,096 | 250,059 | 168,516 | 788,221 | ||||||||||||||||
Our services are provided to customers primarily located in the United States. Premises and equipment, net consist of the following, by country: | |||||||||||||||||||||
(in thousands) | March 31, | December 31, | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
United States | $ | 86,043 | $ | 88,274 | |||||||||||||||||
India | 25,952 | 27,082 | |||||||||||||||||||
Luxembourg | 11,430 | 9,059 | |||||||||||||||||||
Philippines | 3,096 | 3,344 | |||||||||||||||||||
Total | $ | 126,521 | $ | 127,759 | |||||||||||||||||
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
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 those estimates. Intercompany and inter-segment transactions and accounts have been eliminated in consolidation. Certain prior year amounts reported by the Mortgage Services and Technology Services segments have been reclassified to conform with the current year presentation. | ||
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 March 31, 2015, Lenders One had total assets of $8.8 million and total liabilities of $7.7 million. As of December 31, 2014, Lenders One had total assets of $7.7 million and total liabilities of $6.7 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, 2014, filed with the SEC on March 2, 2015, 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 | As previously disclosed, during 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 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 months ended March 31, 2014. 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 and its subsidiaries (“Ocwen”) by $7.3 million for the three months ended March 31, 2014; | |
• | increasing the amounts disclosed as selling, general and administrative expenses from Ocwen billings to Altisource by $0.4 million for the three months ended March 31, 2014; | |
• | decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Ocwen by $0.2 million for the three months ended March 31, 2014; and | |
• | decreasing the amounts disclosed as selling, general and administrative expenses from Altisource billings to Altisource Asset Management Corporation (“AAMC”) by $0.3 million for the three months ended March 31, 2014. | |
Correcting these items on the face of the condensed consolidated statements of operations resulted in the disclosure of related party cost of revenue of $7.3 million and a decrease in previously disclosed related party selling, general and administrative expenses by $1.1 million for the three months ended March 31, 2014. | ||
In accordance with the Financial Accounting Standards Board (“FASB”) 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. | ||
Fair Value Measurements | Fair Value Measurements | |
Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is 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. | ||
Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. | ||
Future Adoption of New Accounting Pronouncement | Future Adoption of New Accounting Pronouncements | |
In May 2014, FASB issued Accounting Standards Update (“ASU”) 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. | ||
In February 2015, FASB issued ASU No. 2015-02, Consolidation: Amendments to the Consolidation Analysis. This standard addresses the consolidation of certain legal entities relative to current requirements under GAAP of a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. This standard will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the standard in an interim period, any adjustments should be reflected as of the beginning of the year that includes that interim period. The Company is currently evaluating the impact this new guidance may have on its results of operations and financial position. | ||
In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This revised standard changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. This standard will be effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of this standard to have a material impact on its results of operations or financial position. |
TRANSACTIONS_WITH_RELATED_PART1
TRANSACTIONS WITH RELATED PARTIES (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Related Party Transactions [Abstract] | ||||
Schedule of related party revenue as a percentage of segment and consolidated revenue | Related party revenue from Ocwen as a percentage of segment and consolidated revenue was as follows for the three months ended March 31: | |||
2015 | 2014 | |||
Mortgage Services | 63% | 69% | ||
Financial Services | 25% | 26% | ||
Technology Services | 47% | 35% | ||
Consolidated revenue | 59% | 61% |
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Mortgage Builder | |||||
Acquisitions | |||||
Schedule of the adjusted allocation of the purchase price | The preliminary allocation of the purchase price is as follows: | ||||
(in thousands) | |||||
Cash | $ | 726 | |||
Accounts receivable, net | 1,120 | ||||
Prepaid expenses | 38 | ||||
Premises and equipment, net | 553 | ||||
Software | 1,509 | ||||
Trademarks and trade names | 209 | ||||
Customer relationship | 4,824 | ||||
Goodwill | 9,135 | ||||
18,114 | |||||
Accounts payable and accrued expenses | (881 | ) | |||
Purchase price | $ | 17,233 | |||
Owners.com | |||||
Acquisitions | |||||
Schedule of the adjusted allocation of the purchase price | The preliminary allocation of the purchase price is as follows: | ||||
(in thousands) | |||||
Accounts receivable, net | $ | 41 | |||
Prepaid expenses | 32 | ||||
Software | 501 | ||||
Trademarks and trade names | 1,431 | ||||
Goodwill | 19,775 | ||||
21,780 | |||||
Accounts payable | (41 | ) | |||
Purchase price | $ | 21,739 | |||
FAIR_VALUE_FAIR_VALUE_Tables
FAIR VALUE FAIR VALUE (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | The fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP: | ||||||||||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||||||||||
(in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 105,623 | $ | 105,623 | $ | — | $ | — | $ | 161,361 | $ | 161,361 | $ | — | $ | — | |||||||||||||||||
Restricted cash | 3,026 | 3,026 | — | — | 3,022 | 3,022 | — | — | |||||||||||||||||||||||||
Long-term debt | 590,057 | — | 430,742 | — | 591,543 | — | 467,319 | — | |||||||||||||||||||||||||
ACCOUNTS_RECEIVABLE_NET_Tables
ACCOUNTS RECEIVABLE, NET (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Receivables [Abstract] | |||||||||
Schedule of accounts receivable, net | Accounts receivable, net consists of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Billed | |||||||||
Non-related parties | $ | 40,419 | $ | 37,576 | |||||
Ocwen | 38,824 | 22,831 | |||||||
HLSS | 91 | 86 | |||||||
AAMC | 116 | 129 | |||||||
Residential | 7,274 | 11,320 | |||||||
Other receivables | 1,661 | 1,590 | |||||||
88,385 | 73,532 | ||||||||
Unbilled | |||||||||
Non-related parties | 50,389 | 46,775 | |||||||
Ocwen | 10,777 | 14,551 | |||||||
HLSS | 450 | — | |||||||
150,001 | 134,858 | ||||||||
Less: allowance for doubtful accounts | (23,285 | ) | (22,675 | ) | |||||
Total | $ | 126,716 | $ | 112,183 | |||||
PREPAID_EXPENSES_AND_OTHER_CUR1
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Maintenance agreements, current portion | $ | 5,645 | $ | 6,367 | |||||
Income taxes receivable | 6,207 | 5,258 | |||||||
Prepaid expenses | 4,453 | 6,989 | |||||||
Other current assets | 4,849 | 4,953 | |||||||
Total | $ | 21,154 | $ | 23,567 | |||||
PREMISES_AND_EQUIPMENT_NET_Tab
PREMISES AND EQUIPMENT, NET (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of premises and equipment, net | Premises and equipment, net consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Computer hardware and software | $ | 151,262 | $ | 140,799 | |||||
Office equipment and other | 33,578 | 36,032 | |||||||
Furniture and fixtures | 12,880 | 12,231 | |||||||
Leasehold improvements | 32,996 | 34,069 | |||||||
230,716 | 223,131 | ||||||||
Less: accumulated depreciation and amortization | (104,195 | ) | (95,372 | ) | |||||
Total | $ | 126,521 | $ | 127,759 | |||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended | ||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||
Summary of changes in goodwill | The following is a summary of goodwill by segment: | ||||||||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Total | |||||||||||||||||||||||
Services | Services | Services | |||||||||||||||||||||||||
Balance, March 31, 2015 and December 31, 2014 | $ | 32,733 | $ | 2,378 | $ | 55,740 | $ | 90,851 | |||||||||||||||||||
Schedule of 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 (in years) | March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||
Definite lived intangible assets: | |||||||||||||||||||||||||||
Trademarks and trade names | 13 | $ | 13,889 | $ | 13,889 | $ | (5,196 | ) | $ | (5,016 | ) | $ | 8,693 | $ | 8,873 | ||||||||||||
Customer related intangible assets | 10 | 289,308 | 289,308 | (87,871 | ) | (79,606 | ) | 201,437 | 209,702 | ||||||||||||||||||
Operating agreement | 20 | 35,000 | 35,000 | (9,042 | ) | (8,604 | ) | 25,958 | 26,396 | ||||||||||||||||||
Intellectual property | 10 | 300 | 300 | (33 | ) | (25 | ) | 267 | 275 | ||||||||||||||||||
Total | $ | 338,497 | $ | 338,497 | $ | (102,142 | ) | $ | (93,251 | ) | $ | 236,355 | $ | 245,246 | |||||||||||||
OTHER_ASSETS_Tables
OTHER ASSETS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of other assets | Other assets consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Security deposits, net | $ | 7,177 | $ | 7,277 | |||||
Debt issuance costs, net | 7,747 | 8,099 | |||||||
Maintenance agreements, non-current portion | 3,305 | 3,324 | |||||||
Restricted cash | 3,026 | 3,022 | |||||||
Other | 538 | 545 | |||||||
Total | $ | 21,793 | $ | 22,267 | |||||
ACCOUNTS_PAYABLE_ACCRUED_EXPEN1
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Accounts payable | $ | 13,924 | $ | 22,880 | |||||
Income taxes payable | 6,413 | 7,643 | |||||||
Payable to Ocwen | 4,842 | 5,400 | |||||||
Accrued expenses - general | 31,470 | 25,500 | |||||||
Accrued salaries and benefits | 30,296 | 44,150 | |||||||
Accrued expenses - Ocwen | 900 | 6,193 | |||||||
Total | $ | 87,845 | $ | 111,766 | |||||
Schedule of other current liabilities | Other current liabilities consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Book overdrafts | $ | 4,595 | $ | 4,788 | |||||
Other | 5,812 | 8,439 | |||||||
Total | $ | 10,407 | $ | 13,227 | |||||
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Schedule of long-term debt | Long-term debt consists of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Senior secured term loan | $ | 590,057 | $ | 591,543 | |||||
Less: unamortized discount, net | (2,802 | ) | (2,929 | ) | |||||
Net long-term debt | 587,255 | 588,614 | |||||||
Less: current portion | (5,945 | ) | (5,945 | ) | |||||
Long-term debt, less current portion | $ | 581,310 | $ | 582,669 | |||||
OTHER_NONCURRENT_LIABILITIES_T
OTHER NON-CURRENT LIABILITIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Liabilities Disclosure [Abstract] | |||||||||
Schedule of other non current liabilities | Other non-current liabilities consist of the following: | ||||||||
(in thousands) | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Acquisition related contingent consideration | $ | 11,764 | $ | 11,616 | |||||
Other non-current liabilities | 9,570 | 9,032 | |||||||
Total | $ | 21,334 | $ | 20,648 | |||||
EQUITY_AND_SHAREBASED_COMPENSA1
EQUITY AND SHARE-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Schedule of assumptions used to determine the fair value of options as of the grant date | The fair value of the service-based options was determined using the Black-Scholes option pricing model and the fair value of the market-based options was determined using a lattice (binomial) model. The following assumptions were used to determine the fair value as of the grant date: | ||||||||||||
Three months ended | |||||||||||||
March 31, 2015 | |||||||||||||
Black-Scholes | Binomial | ||||||||||||
Risk-free interest rate (%) | 1.67 | % | 0.02% - 2.01% | ||||||||||
Expected stock price volatility (%) | 55.06 | % | 55.06 | % | |||||||||
Expected dividend yield | — | — | |||||||||||
Expected option life (in years) | 6.25 | — | |||||||||||
Contractual life (in years) | — | 14 | |||||||||||
Fair value | $11.69 | $10.68 - $11.93 | |||||||||||
Summary of the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the fair value of options vested | The following table summarizes the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the grant date fair value of stock options vested during the period presented: | ||||||||||||
Three months ended March 31, | |||||||||||||
(in thousands, except per share amounts) | 2015 | 2014 | |||||||||||
Weighted average fair value at grant date per share | $ | 11.56 | N/A | ||||||||||
Intrinsic value of options exercised | 176 | 2,690 | |||||||||||
Grant date fair value of options vested during the period | 264 | 391 | |||||||||||
Summary of the activity of the entity's stock options | 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, 2014 | 2,601,892 | $ | 21.21 | 4.44 | $ | 47,805 | |||||||
Granted | 30,000 | 26.42 | |||||||||||
Exercised | (21,984 | ) | 9.19 | ||||||||||
Forfeited | (23,000 | ) | 51.92 | ||||||||||
Outstanding at March 31, 2015 | 2,586,908 | 21.1 | 4.27 | 6,143 | |||||||||
Exercisable at March 31, 2015 | 2,264,976 | 13.73 | 3.72 | 6,143 | |||||||||
COST_OF_REVENUE_Tables
COST OF REVENUE (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Cost of Revenue [Abstract] | |||||||||
Schedule of components of cost of revenue | The components of cost of revenue were as follows for the three months ended March 31: | ||||||||
(in thousands) | 2015 | 2014 | |||||||
Compensation and benefits | $ | 69,326 | $ | 52,650 | |||||
Outside fees and services | 53,247 | 52,828 | |||||||
Reimbursable expenses | 31,956 | 28,795 | |||||||
Technology and telecommunications | 11,893 | 8,841 | |||||||
Depreciation and amortization | 6,404 | 4,691 | |||||||
Total | $ | 172,826 | $ | 147,805 | |||||
SELLING_GENERAL_AND_ADMINISTRA1
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Selling, General and Administrative Expense [Abstract] | |||||||||
Schedule of the components of selling, general and administrative expenses | The components of selling, general and administrative expenses were as follows for the three months ended March 31: | ||||||||
(in thousands) | 2015 | 2014 | |||||||
Compensation and benefits | $ | 12,763 | $ | 8,989 | |||||
Professional services | 7,990 | 3,982 | |||||||
Occupancy related costs | 10,654 | 9,311 | |||||||
Amortization of intangible assets | 8,891 | 9,466 | |||||||
Depreciation and amortization | 2,422 | 1,555 | |||||||
Marketing costs | 5,353 | 5,177 | |||||||
Other | 4,333 | 5,054 | |||||||
Total | $ | 52,406 | $ | 43,534 | |||||
OTHER_INCOME_EXPENSE_NET_Table
OTHER INCOME (EXPENSE), NET (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Other Income and Expenses [Abstract] | |||||||||
Schedule of other income (expense), net | Other income (expense), net consists of the following for the three months ended March 31: | ||||||||
(in thousands) | 2015 | 2014 | |||||||
Interest income | $ | 31 | $ | 12 | |||||
Other, net | (28 | ) | 35 | ||||||
Total | $ | 3 | $ | 47 | |||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Schedule of basic and diluted EPS calculation | Basic and diluted EPS are calculated as follows for the three months ended March 31: | ||||||||
(in thousands, except per share data) | 2015 | 2014 | |||||||
Net income attributable to Altisource | $ | 3,698 | $ | 39,631 | |||||
Weighted average common shares outstanding, basic | 20,172 | 22,509 | |||||||
Dilutive effect of stock options | 823 | 2,153 | |||||||
Weighted average common shares outstanding, diluted | 20,995 | 24,662 | |||||||
Earnings per share: | |||||||||
Basic | $ | 0.18 | $ | 1.76 | |||||
Diluted | $ | 0.18 | $ | 1.61 | |||||
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
Schedule of financial information of segments | Financial information for our segments is as follows: | ||||||||||||||||||||
Three months ended March 31, 2015 | |||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Revenue | $ | 177,006 | $ | 22,354 | $ | 51,970 | $ | (10,848 | ) | $ | 240,482 | ||||||||||
Cost of revenue | 114,804 | 15,103 | 52,723 | (9,804 | ) | 172,826 | |||||||||||||||
Gross profit (loss) | 62,202 | 7,251 | (753 | ) | (1,044 | ) | 67,656 | ||||||||||||||
Selling, general and administrative expenses | 20,561 | 4,715 | 7,315 | 19,815 | 52,406 | ||||||||||||||||
Income (loss) from operations | 41,641 | 2,536 | (8,068 | ) | (20,859 | ) | 15,250 | ||||||||||||||
Other income (expense), net | (4 | ) | (12 | ) | 1 | (10,427 | ) | (10,442 | ) | ||||||||||||
Income (loss) before income taxes and non-controlling interests | $ | 41,637 | $ | 2,524 | $ | (8,067 | ) | $ | (31,286 | ) | $ | 4,808 | |||||||||
Three months ended March 31, 2014 | |||||||||||||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Revenue | $ | 176,430 | $ | 24,285 | $ | 46,850 | $ | (8,296 | ) | $ | 239,269 | ||||||||||
Cost of revenue | 103,237 | 14,613 | 37,332 | (7,377 | ) | 147,805 | |||||||||||||||
Gross profit (loss) | 73,193 | 9,672 | 9,518 | (919 | ) | 91,464 | |||||||||||||||
Selling, general and administrative expenses | 19,174 | 4,663 | 6,614 | 13,083 | 43,534 | ||||||||||||||||
Income (loss) from operations | 54,019 | 5,009 | 2,904 | (14,002 | ) | 47,930 | |||||||||||||||
Other income (expense), net | 48 | (1 | ) | (16 | ) | (4,760 | ) | (4,729 | ) | ||||||||||||
Income (loss) before income taxes and non-controlling interests | $ | 54,067 | $ | 5,008 | $ | 2,888 | $ | (18,762 | ) | $ | 43,201 | ||||||||||
(in thousands) | Mortgage | Financial | Technology | Corporate | Consolidated | ||||||||||||||||
Services | Services | Services | Items and | Altisource | |||||||||||||||||
Eliminations | |||||||||||||||||||||
Total assets: | |||||||||||||||||||||
31-Mar-15 | $ | 299,647 | $ | 54,365 | $ | 238,580 | $ | 168,089 | $ | 760,681 | |||||||||||
31-Dec-14 | 313,550 | 56,096 | 250,059 | 168,516 | 788,221 | ||||||||||||||||
Schedule of premises and equipment, net by country | Our services are provided to customers primarily located in the United States. Premises and equipment, net consist of the following, by country: | ||||||||||||||||||||
(in thousands) | March 31, | December 31, | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
United States | $ | 86,043 | $ | 88,274 | |||||||||||||||||
India | 25,952 | 27,082 | |||||||||||||||||||
Luxembourg | 11,430 | 9,059 | |||||||||||||||||||
Philippines | 3,096 | 3,344 | |||||||||||||||||||
Total | $ | 126,521 | $ | 127,759 | |||||||||||||||||
ORGANIZATION_AND_BASIS_OF_PRES2
ORGANIZATION AND BASIS OF PRESENTATION (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
segment | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of reporting segments | 3 | ||
Summary of significant accounting policies | |||
Cost of revenue | $10,288,000 | $7,288,000 | |
Selling, general and administrative expenses | -657,000 | 242,000 | |
Related party expenses | Adjustment | |||
Summary of significant accounting policies | |||
Cost of revenue | 7,300,000 | ||
Selling, general and administrative expenses | 1,100,000 | ||
Related party expenses | Adjustment | Ocwen | |||
Summary of significant accounting policies | |||
Cost of revenue | 7,300,000 | ||
Selling, general and administrative expenses billed by related party | 400,000 | ||
Selling, general and administrative expenses billed to related party, decrease | 200,000 | ||
Related party expenses | Adjustment | AAMC | |||
Summary of significant accounting policies | |||
Selling, general and administrative expenses billed to related party, decrease | 300,000 | ||
Lenders One | |||
Summary of significant accounting policies | |||
Total assets | 8,800,000 | 7,700,000 | |
Total liabilities | $7,700,000 | $6,700,000 |
TRANSACTIONS_WITH_RELATED_PART2
TRANSACTIONS WITH RELATED PARTIES (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 17, 2015 | |
TRANSACTIONS WITH RELATED PARTIES | |||
Exercisable at the end of the period (in shares) | 2,264,976 | ||
Other portfolio servicing revenue | $53,500,000 | $54,700,000 | |
Cost of revenue | 10,288,000 | 7,288,000 | |
Purchase amount of available-for-sale securities | 29,966,000 | 0 | |
Revenue earned from related party (less than .1 million) | 148,639,000 | 145,558,000 | |
Ocwen | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Related party revenue from Ocwen as a percentage of consolidated revenue | 59.00% | 61.00% | |
Ocwen | Data Access and Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Prior written notice period for cancellation of agreement | 90 days | ||
Cost of revenue | 10,300,000 | 7,300,000 | |
Ocwen | Support Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Selling, general and administrative expenses billed to related party | 600,000 | 1,000,000 | |
Selling, general and administrative expenses billed by related party | 1,600,000 | 1,200,000 | |
Ocwen | Mortgage Services | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Related party revenue from Ocwen as a percentage of segment revenue | 63.00% | 69.00% | |
Ocwen | Financial Services | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Related party revenue from Ocwen as a percentage of segment revenue | 25.00% | 26.00% | |
Ocwen | Technology Services | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Related party revenue from Ocwen as a percentage of segment revenue | 47.00% | 35.00% | |
HLSS | Support Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Selling, general and administrative expenses billed to related party | 600,000 | ||
Residential | Management, Support and Other Services Agreements | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Revenue earned from related party (less than .1 million) | 6,800,000 | 800,000 | |
AAMC | Support Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Selling, general and administrative expenses billed to related party | 200,000 | 300,000 | |
AAMC | Support and Other Services Agreements | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Revenue earned from related party (less than .1 million) | 100,000 | ||
Board of Directors Chairman | Altisource Portfolio Solutions | |||
TRANSACTIONS WITH RELATED PARTIES | |||
William C. Erbey ownership percentage | 30.00% | ||
Exercisable at the end of the period (in shares) | 857,543 | ||
Board of Directors Chairman | Ocwen | |||
TRANSACTIONS WITH RELATED PARTIES | |||
William C. Erbey ownership percentage | 14.00% | ||
Exercisable at the end of the period (in shares) | 3,572,626 | ||
Exercisable options held by related parties (in shares) | 3,322,626 | ||
Board of Directors Chairman | HLSS | |||
TRANSACTIONS WITH RELATED PARTIES | |||
William C. Erbey ownership percentage | 1.00% | ||
Board of Directors Chairman | Residential | |||
TRANSACTIONS WITH RELATED PARTIES | |||
William C. Erbey ownership percentage | 4.00% | ||
Board of Directors Chairman | AAMC | |||
TRANSACTIONS WITH RELATED PARTIES | |||
William C. Erbey ownership percentage | 28.00% | ||
Exercisable at the end of the period (in shares) | 85,755 | ||
Selling, General and Administrative Expenses | HLSS | Support Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Selling, general and administrative expenses billed to related party | 100,000 | 200,000 | |
Sales | HLSS | Support Services Agreement | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Selling, general and administrative expenses billed to related party | 500,000 | 0 | |
Common stock | HLSS | |||
TRANSACTIONS WITH RELATED PARTIES | |||
Number of available-for-sale shares acquired (in shares) | 1,600,000 | ||
Purchase amount of available-for-sale securities | $30,000,000 | $30,000,000 |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 0 Months Ended | |
In Millions, unless otherwise specified | Sep. 12, 2014 | Nov. 21, 2014 |
Mortgage Builder | ||
Acquisitions | ||
Amount paid | $15.70 | |
Additional consideration | 7 | |
Owners.com | ||
Acquisitions | ||
Amount paid | 19.8 | |
Additional consideration | 7 | |
Contingent consideration payment period | 2 years | |
Fair Value, Measurements, Recurring | Mortgage Builder | ||
Acquisitions | ||
Present value of future earn outs payments | 1.6 | |
Fair Value, Measurements, Recurring | Owners.com | ||
Acquisitions | ||
Present value of future earn outs payments | $1.90 |
ACQUISITIONS_Details_2
ACQUISITIONS (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 12, 2014 |
In Thousands, unless otherwise specified | |||
Acquisitions | |||
Goodwill | $90,851 | $90,851 | |
Mortgage Builder | |||
Acquisitions | |||
Cash | 726 | ||
Accounts receivable, net | 1,120 | ||
Prepaid expenses | 38 | ||
Premises and equipment, net | 553 | ||
Software | 1,509 | ||
Trademarks and trade names | 209 | ||
Customer relationship | 4,824 | ||
Goodwill | 9,135 | ||
Assets acquired | 18,114 | ||
Accounts payable and accrued expenses | -881 | ||
Purchase price | $17,233 |
ACQUISITIONS_Details_3
ACQUISITIONS (Details 3) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Nov. 21, 2014 |
In Thousands, unless otherwise specified | |||
Acquisitions | |||
Goodwill | $90,851 | $90,851 | |
Owners.com | |||
Acquisitions | |||
Accounts receivable, net | 41 | ||
Prepaid expenses | 32 | ||
Software | 501 | ||
Trademarks and trade names | 1,431 | ||
Goodwill | 19,775 | ||
Assets acquired | 21,780 | ||
Accounts payable | -41 | ||
Purchase price | $21,739 |
FAIR_VALUE_FAIR_VALUE_Details
FAIR VALUE FAIR VALUE (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
Mar. 17, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Available for sale securities - investment in HLSS | $26,681,000 | $0 | ||
Fair Value, Measurements, Recurring | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fair value of acquisition related contingent consideration | 11,800,000 | 11,600,000 | ||
Common stock | HLSS | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Number of available-for-sale shares acquired (in shares) | 1,600,000 | |||
Available for sale securities - investment in HLSS | 26,681,000 | 0 | ||
Common stock | HLSS | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Number of available-for-sale shares acquired (in shares) | 1,613,125 | 0 | ||
Available for sale securities - investment in HLSS | $26,681,000 | |||
Available-for-sale Securities | Common stock | HLSS | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Price per share (in usd per share) | $16.54 | 0 |
FAIR_VALUE_FAIR_VALUE_Details_
FAIR VALUE FAIR VALUE (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | $105,623 | $161,361 | $116,376 | $130,324 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 105,623 | 161,361 | ||
Restricted cash | 3,026 | 3,022 | ||
Long-term debt | 0 | 0 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Long-term debt | 430,742 | 467,319 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Long-term debt | 0 | 0 | ||
Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | ||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 105,623 | 161,361 | ||
Restricted cash | 3,026 | 3,022 | ||
Long-term debt | $590,057 | $591,543 |
AVAILABLE_FOR_SALE_SECURITIES_1
AVAILABLE FOR SALE SECURITIES - INVESTMENT IN HLSS (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 17, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||||
Purchase amount of available-for-sale securities | $29,966 | $0 | ||
Available for sale securities - investment in HLSS | 26,681 | 0 | ||
Other than temporary impairment loss on HLSS equity securities | 3,285 | 0 | ||
HLSS | Common stock | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Number of available-for-sale shares acquired (in shares) | 1,600,000 | |||
Purchase amount of available-for-sale securities | 30,000 | 30,000 | ||
Available for sale securities - investment in HLSS | 26,681 | 0 | ||
HLSS | Available-for-sale Securities | Common stock | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Pre-impairment price per share (in usd per share) | $18.58 | |||
Other than temporary impairment loss on HLSS equity securities | 3,285 | |||
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | HLSS | Common stock | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Number of available-for-sale shares acquired (in shares) | 1,613,125 | 0 | ||
Available for sale securities - investment in HLSS | $26,681 | |||
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | HLSS | Available-for-sale Securities | Common stock | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Price per share (in usd per share) | $16.54 | $0 |
ACCOUNTS_RECEIVABLE_NET_Detail
ACCOUNTS RECEIVABLE, NET (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts receivable, net | ||
Accounts receivable, gross | $150,001 | $134,858 |
Less: allowance for doubtful accounts | -23,285 | -22,675 |
Total | 126,716 | 112,183 |
Billed | ||
Accounts receivable, net | ||
Non-related parties | 40,419 | 37,576 |
Other receivables | 1,661 | 1,590 |
Accounts receivable, gross | 88,385 | 73,532 |
Billed | Ocwen | ||
Accounts receivable, net | ||
Receivable from related party | 38,824 | 22,831 |
Billed | HLSS | ||
Accounts receivable, net | ||
Receivable from related party | 91 | 86 |
Billed | AAMC | ||
Accounts receivable, net | ||
Receivable from related party | 116 | 129 |
Billed | Residential | ||
Accounts receivable, net | ||
Receivable from related party | 7,274 | 11,320 |
Unbilled | ||
Accounts receivable, net | ||
Non-related parties | 50,389 | 46,775 |
Unbilled | Ocwen | ||
Accounts receivable, net | ||
Receivable from related party | 10,777 | 14,551 |
Unbilled | AAMC | ||
Accounts receivable, net | ||
Receivable from related party | $450 | $0 |
PREPAID_EXPENSES_AND_OTHER_CUR2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Maintenance agreements, current portion | $5,645 | $6,367 |
Income taxes receivable | 6,207 | 5,258 |
Prepaid expenses | 4,453 | 6,989 |
Other current assets | 4,849 | 4,953 |
Total | $21,154 | $23,567 |
PREMISES_AND_EQUIPMENT_NET_Det
PREMISES AND EQUIPMENT, NET (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
PREMISES AND EQUIPMENT, NET | |||
Premises and equipment, gross | $230,716 | $223,131 | |
Less: accumulated depreciation and amortization | -104,195 | -95,372 | |
Total | 126,521 | 127,759 | |
Depreciation and amortization expense, inclusive of capital leases | 8,826 | 6,246 | |
Computer hardware and software | |||
PREMISES AND EQUIPMENT, NET | |||
Premises and equipment, gross | 151,262 | 140,799 | |
Office equipment and other | |||
PREMISES AND EQUIPMENT, NET | |||
Premises and equipment, gross | 33,578 | 36,032 | |
Furniture and fixtures | |||
PREMISES AND EQUIPMENT, NET | |||
Premises and equipment, gross | 12,880 | 12,231 | |
Leasehold improvements | |||
PREMISES AND EQUIPMENT, NET | |||
Premises and equipment, gross | $32,996 | $34,069 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS, NET (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Changes in goodwill | ||
Balance, March 31, 2015 and December 31, 2014 | $90,851 | $90,851 |
Mortgage Services | ||
Changes in goodwill | ||
Balance, March 31, 2015 and December 31, 2014 | 32,733 | 32,733 |
Financial Services | ||
Changes in goodwill | ||
Balance, March 31, 2015 and December 31, 2014 | 2,378 | 2,378 |
Technology Services | ||
Changes in goodwill | ||
Balance, March 31, 2015 and December 31, 2014 | $55,740 | $55,740 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS, NET (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Intangible Assets, Net | |||
Gross carrying amount | $338,497,000 | 338,497,000 | |
Accumulated amortization | -102,142,000 | -93,251,000 | |
Net book value | 236,355,000 | 245,246,000 | |
Amortization expense for definite lived intangible assets | 8,891,000 | 9,466,000 | |
2015 | 37,900,000 | ||
2016 | 34,500,000 | ||
2017 | 30,300,000 | ||
2018 | 26,400,000 | ||
2019 | 23,200,000 | ||
Trademarks and trade names | |||
Intangible Assets, Net | |||
Gross carrying amount | 13,889,000 | 13,889,000 | |
Accumulated amortization | -5,196,000 | -5,016,000 | |
Net book value | 8,693,000 | 8,873,000 | |
Trademarks and trade names | Weighted average | |||
Intangible Assets, Net | |||
Weighted average estimated useful life (in years) | 13 years | 13 years | |
Customer related intangible assets | |||
Intangible Assets, Net | |||
Gross carrying amount | 289,308,000 | 289,308,000 | |
Accumulated amortization | -87,871,000 | -79,606,000 | |
Net book value | 201,437,000 | 209,702,000 | |
Customer related intangible assets | Weighted average | |||
Intangible Assets, Net | |||
Weighted average estimated useful life (in years) | 10 years | 10 years | |
Operating agreement | |||
Intangible Assets, Net | |||
Gross carrying amount | 35,000,000 | 35,000,000 | |
Accumulated amortization | -9,042,000 | -8,604,000 | |
Net book value | 25,958,000 | 26,396,000 | |
Operating agreement | Weighted average | |||
Intangible Assets, Net | |||
Weighted average estimated useful life (in years) | 20 years | 20 years | |
Intellectual property | |||
Intangible Assets, Net | |||
Gross carrying amount | 300,000 | 300,000 | |
Accumulated amortization | -33,000 | -25,000 | |
Net book value | $267,000 | 275,000 | |
Intellectual property | Weighted average | |||
Intangible Assets, Net | |||
Weighted average estimated useful life (in years) | 10 years | 10 years |
OTHER_ASSETS_Details
OTHER ASSETS (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Security deposits, net | $7,177 | $7,277 |
Debt issuance costs, net | 7,747 | 8,099 |
Maintenance agreements, non-current portion | 3,305 | 3,324 |
Restricted cash | 3,026 | 3,022 |
Other | 538 | 545 |
Total | $21,793 | $22,267 |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN2
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accounts payable and accrued expenses | ||
Accounts payable | $13,924 | $22,880 |
Income taxes payable | 6,413 | 7,643 |
Accrued expenses | 31,470 | 25,500 |
Accrued salaries and benefits | 30,296 | 44,150 |
Total | 87,845 | 111,766 |
Ocwen | ||
Accounts payable and accrued expenses | ||
Payable to Ocwen | 4,842 | 5,400 |
Accrued expenses | $900 | $6,193 |
ACCOUNTS_PAYABLE_ACCRUED_EXPEN3
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Other current liabilities | ||
Book overdrafts | $4,595 | $4,788 |
Other | 5,812 | 8,439 |
Total | $10,407 | $13,227 |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
Aug. 01, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Debt | ||||
Senior secured term loan | $590,057,000 | $591,543,000 | ||
Less: unamortized discount, net | -2,802,000 | -2,929,000 | ||
Net long-term debt | 587,255,000 | 588,614,000 | ||
Less: current portion | -5,945,000 | -5,945,000 | ||
Long-term debt, less current portion | 581,310,000 | 582,669,000 | ||
Debt issuance costs, net | 7,747,000 | 8,099,000 | ||
Interest on long-term debt | 7,160,000 | 4,776,000 | ||
Senior secured term loan | ||||
Debt | ||||
Aggregate amount of each consecutive quarterly scheduled principal installment | 1,500,000 | |||
Term of senior secured loan agreement | 7 years | |||
Mandatory prepayments owed | 0 | |||
Interest rate at the end of the period (as a percent) | 4.50% | |||
Debt issuance costs, net | 7,700,000 | 8,100,000 | ||
Accumulated amortization | 2,500,000 | 2,200,000 | ||
Interest on long-term debt | 7,200,000 | 4,800,000 | ||
Senior secured term loan | Maximum | ||||
Debt | ||||
Leverage ratio to be maintained under the credit facility covenants | 3 | |||
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 $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Other Liabilities Disclosure [Abstract] | ||
Acquisition related contingent consideration | $11,764 | $11,616 |
Other non-current liabilities | 9,570 | 9,032 |
Total | $21,334 | $20,648 |
EQUITY_AND_SHAREBASED_COMPENSA2
EQUITY AND SHARE-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 59 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Feb. 28, 2014 | Dec. 31, 2014 | |
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Share-based compensation expense (in dollars) | $400,000 | $700,000 | |||
Outstanding (in shares) | 2,586,908 | 2,586,908 | 2,601,892 | ||
Stock options granted (in shares) | 30,000 | 0 | |||
Weighted average exercise price of stock options granted (in usd per share) | $26.42 | ||||
Assumptions used to determine the fair value of options as of the grant date | |||||
Fair value (in usd per share) | $11.56 | ||||
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 usd per share) | $11.56 | ||||
Intrinsic value of options exercised (in dollars) | 176,000 | 2,690,000 | |||
Fair value of options vested (in dollars) | 264,000 | 391,000 | |||
Estimated unrecognized compensation costs (in dollars) | 3,200,000 | 3,200,000 | |||
Weighted average remaining requisite service period for stock options over which unrecognized compensation costs would be recognized | 3 years 4 months | ||||
Minimum | |||||
Weighted average fair value of stock options granted and total intrinsic value of stock options exercised | |||||
Estimated forfeiture rate (as a percent) | 1.00% | 1.00% | |||
Maximum | |||||
Weighted average fair value of stock options granted and total intrinsic value of stock options exercised | |||||
Estimated forfeiture rate (as a percent) | 10.00% | 10.00% | |||
Black-Scholes | |||||
Assumptions used to determine the fair value of options as of the grant date | |||||
Risk-free interest rate (%) | 1.67% | ||||
Expected stock price volatility (%) | 55.06% | ||||
Expected option life (in years) | 6 years 3 months | ||||
Fair value (in usd per share) | $11.69 | ||||
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 usd per share) | $11.69 | ||||
Binomial | |||||
Assumptions used to determine the fair value of options as of the grant date | |||||
Expected stock price volatility (%) | 55.06% | ||||
Risk-free interest rate, minimum (as a percent) | 0.02% | ||||
Risk-free interest rate, maximum (as a percent) | 2.01% | ||||
Contractual life (in years) | 14 years | ||||
Binomial | Minimum | |||||
Assumptions used to determine the fair value of options as of the grant date | |||||
Fair value (in usd per share) | $10.68 | ||||
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 usd per share) | $10.68 | ||||
Binomial | Maximum | |||||
Assumptions used to determine the fair value of options as of the grant date | |||||
Fair value (in usd per share) | $11.93 | ||||
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 usd per share) | $11.93 | ||||
Options | Service-Based | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Vesting period | 4 years | ||||
Outstanding (in shares) | 700,000 | 700,000 | |||
Options | Service-Based | Maximum | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Expiration term | 10 years | ||||
Options | Market-Based | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Outstanding (in shares) | 1,900,000 | 1,900,000 | |||
Number of components of an award | 2 | ||||
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 | ||||
Options | Market-Based, ordinary performance | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Market-based options subject to specified performance achievement (as a percent) | 0.67 | ||||
Options | Market-Based, ordinary performance | Minimum | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Multiplier of stock price over exercise price as a condition for the award to vest | 2 | ||||
Percentage of compounded annual gain of stock price over exercise price required for the award to vest | 20.00% | ||||
Options | Market-Based, extraordinary performance | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Market-based options subject to specified performance achievement (as a percent) | 0.33 | ||||
Options | Market-Based, extraordinary performance | Minimum | |||||
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | |||||
Multiplier of stock price over exercise price as a condition for the award to vest | 3 | ||||
Percentage of compounded annual gain of stock price over exercise price required for the award to vest | 25.00% | ||||
Stock Repurchase Programs | |||||
Stock Repurchase Plan | |||||
Number of shares of common stock purchased (in shares) | 200,000 | 300,000 | 6,400,000 | ||
Average purchase price per share (in usd per share) | $23.44 | $109.97 | $77.69 | ||
Remaining number of shares available for repurchase under the plan (in shares) | 1,000,000 | 1,000,000 | |||
Capacity available to repurchase common stock under senior secured term loan (in dollars) | $285,000,000 | $285,000,000 | |||
2014 Stock Repurchase Program | |||||
Stock Repurchase Plan | |||||
Number of shares of common stock authorized to be purchased (in shares) | 3,400,000 | ||||
Percentage of outstanding shares authorized to be repurchased | 15.00% | ||||
Minimum purchase price authorized (in usd per share) | $1 | ||||
Maximum purchase price authorized (in usd per share) | $500 |
EQUITY_AND_SHAREBASED_COMPENSA3
EQUITY AND SHARE-BASED COMPENSATION (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Number of Options | |||
Outstanding at the beginning of the period (in shares) | 2,601,892 | ||
Granted (in shares) | 30,000 | 0 | |
Exercised (in shares) | -21,984 | ||
Forfeited (in shares) | -23,000 | ||
Outstanding at the end of the period (in shares) | 2,586,908 | 2,601,892 | |
Exercisable at the end of the period (in shares) | 2,264,976 | ||
Weighted average exercise price | |||
Outstanding at the beginning of the period (in usd per share) | $21.21 | ||
Granted (in usd per share) | $26.42 | ||
Exercised (in usd per share) | $9.19 | ||
Forfeited (in usd per share) | $51.92 | ||
Outstanding at the end of the period (in usd per share) | $21.10 | $21.21 | |
Exercisable at the end of the period (in usd per share) | $13.73 | ||
Weighted average contractual term | |||
Weighted average contractual term, beginning balance | 4 years 3 months 7 days | 4 years 5 months 9 days | |
Weighted average contractual term, ending balance | 4 years 3 months 7 days | 4 years 5 months 9 days | |
Exercisable at the end of the period | 3 years 8 months 19 days | ||
Aggregate intrinsic value | |||
Aggregate intrinsic value, beginning balance (in dollars) | $47,805 | ||
Aggregate intrinsic value, ending balance (in dollars) | 6,143 | 47,805 | |
Exercisable at the end of the period (in dollars) | $6,143 |
COST_OF_REVENUE_Details
COST OF REVENUE (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cost of Revenue [Abstract] | ||
Compensation and benefits | $69,326 | $52,650 |
Outside fees and services | 53,247 | 52,828 |
Reimbursable expenses | 31,956 | 28,795 |
Technology and telecommunications | 11,893 | 8,841 |
Depreciation and amortization | 6,404 | 4,691 |
Total | $172,826 | $147,805 |
SELLING_GENERAL_AND_ADMINISTRA2
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Selling, General and Administrative Expense [Abstract] | ||
Compensation and benefits | $12,763 | $8,989 |
Professional services | 7,990 | 3,982 |
Occupancy related costs | 10,654 | 9,311 |
Amortization of intangible assets | 8,891 | 9,466 |
Depreciation and amortization | 2,422 | 1,555 |
Marketing costs | 5,353 | 5,177 |
Other | 4,333 | 5,054 |
Total | $52,406 | $43,534 |
OTHER_INCOME_EXPENSE_NET_Detai
OTHER INCOME (EXPENSE), NET (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Other Income and Expenses [Abstract] | ||
Interest income | $31 | $12 |
Other, net | -28 | 35 |
Total | $3 | $47 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net income attributable to Altisource (in dollars) | $3,698 | $39,631 |
Weighted average common shares outstanding, basic (in shares) | 20,172,000 | 22,509,000 |
Dilutive effect of stock options (in shares) | 823,000 | 2,153,000 |
Weighted average common shares outstanding, diluted (in shares) | 20,995,000 | 24,662,000 |
Earnings per share: | ||
Basic (in usd per share) | $0.18 | $1.76 |
Diluted (in usd per share) | $0.18 | $1.61 |
Options | ||
Anti-dilutive securities | ||
Options excluded from the computation of diluted EPS, (less than .1 million for items ended March 31, 2014) (in shares) | 700,000 | 100,000 |
Options for shares issuable upon achievement of market and performance criteria | ||
Anti-dilutive securities | ||
Options excluded from the computation of diluted EPS, (less than .1 million for items ended March 31, 2014) (in shares) | 200,000 | 100,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Escrow and Trust Balances | ||
Amounts held in escrow and trust accounts | 86.8 | $62.50 |
Ocwen | ||
Concentration Risk [Line Items] | ||
Percentage of revenue | 24.00% | |
Sales Revenue, Services, Net | Ocwen | ||
Concentration Risk [Line Items] | ||
Percentage of largest customer | 59.00% |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
segment | |||
Segment Reporting [Abstract] | |||
Number of reporting segments | 3 | ||
SEGMENT REPORTING | |||
Revenue | $240,482 | $239,269 | |
Cost of revenue | 172,826 | 147,805 | |
Gross profit | 67,656 | 91,464 | |
Selling, general and administrative expenses | 52,406 | 43,534 | |
Income from operations | 15,250 | 47,930 | |
Other income (expense), net | -10,442 | -4,729 | |
Income before income taxes and non-controlling interests | 4,808 | 43,201 | |
Total Assets: | |||
Total Assets | 760,681 | 788,221 | |
Operating Segment | Mortgage Services | |||
SEGMENT REPORTING | |||
Revenue | 177,006 | 176,430 | |
Cost of revenue | 114,804 | 103,237 | |
Gross profit | 62,202 | 73,193 | |
Selling, general and administrative expenses | 20,561 | 19,174 | |
Income from operations | 41,641 | 54,019 | |
Other income (expense), net | -4 | 48 | |
Income before income taxes and non-controlling interests | 41,637 | 54,067 | |
Total Assets: | |||
Total Assets | 299,647 | 313,550 | |
Operating Segment | Financial Services | |||
SEGMENT REPORTING | |||
Revenue | 22,354 | 24,285 | |
Cost of revenue | 15,103 | 14,613 | |
Gross profit | 7,251 | 9,672 | |
Selling, general and administrative expenses | 4,715 | 4,663 | |
Income from operations | 2,536 | 5,009 | |
Other income (expense), net | -12 | -1 | |
Income before income taxes and non-controlling interests | 2,524 | 5,008 | |
Total Assets: | |||
Total Assets | 54,365 | 56,096 | |
Operating Segment | Technology Services | |||
SEGMENT REPORTING | |||
Revenue | 51,970 | 46,850 | |
Cost of revenue | 52,723 | 37,332 | |
Gross profit | -753 | 9,518 | |
Selling, general and administrative expenses | 7,315 | 6,614 | |
Income from operations | -8,068 | 2,904 | |
Other income (expense), net | 1 | -16 | |
Income before income taxes and non-controlling interests | -8,067 | 2,888 | |
Total Assets: | |||
Total Assets | 238,580 | 250,059 | |
Corporate Items and Eliminations | |||
SEGMENT REPORTING | |||
Revenue | -10,848 | -8,296 | |
Cost of revenue | -9,804 | -7,377 | |
Gross profit | -1,044 | -919 | |
Selling, general and administrative expenses | 19,815 | 13,083 | |
Income from operations | -20,859 | -14,002 | |
Other income (expense), net | -10,427 | -4,760 | |
Income before income taxes and non-controlling interests | -31,286 | -18,762 | |
Total Assets: | |||
Total Assets | $168,089 | $168,516 |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Premises & equipment, net | ||
Premises and equipment, net | $126,521 | $127,759 |
United States | ||
Premises & equipment, net | ||
Premises and equipment, net | 86,043 | 88,274 |
India | ||
Premises & equipment, net | ||
Premises and equipment, net | 25,952 | 27,082 |
Luxembourg | ||
Premises & equipment, net | ||
Premises and equipment, net | 11,430 | 9,059 |
Philippines | ||
Premises & equipment, net | ||
Premises and equipment, net | $3,096 | $3,344 |