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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Luxembourg
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98-0554932
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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September 30,
2016 |
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December 31,
2015 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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134,948
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$
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179,327
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Available for sale securities
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45,174
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|
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—
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Accounts receivable, net
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101,580
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105,023
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Prepaid expenses and other current assets
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31,927
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21,751
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Total current assets
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313,629
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306,101
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Premises and equipment, net
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109,785
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119,121
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Goodwill
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89,905
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82,801
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Intangible assets, net
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162,976
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197,003
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Deferred tax assets, net
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4,847
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3,619
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Other assets
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12,190
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13,153
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Total assets
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$
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693,332
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$
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721,798
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$
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101,361
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$
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91,871
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Current portion of long-term debt
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5,945
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5,945
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Deferred revenue
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10,927
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15,060
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Other current liabilities
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13,846
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16,266
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Total current liabilities
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132,079
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129,142
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Long-term debt, less current portion
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468,689
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522,233
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Other non-current liabilities
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13,790
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18,153
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Commitments, contingencies and regulatory matters (Note 22)
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Equity:
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Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,878 outstanding as of September 30, 2016; 25,413 shares authorized and issued and 19,021 outstanding as of December 31, 2015)
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25,413
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25,413
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Additional paid-in capital
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101,013
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96,321
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Retained earnings
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359,435
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369,270
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Accumulated other comprehensive loss
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(2,156
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)
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—
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Treasury stock, at cost (6,535 shares as of September 30, 2016 and 6,392 shares as of December 31, 2015)
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(406,559
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)
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(440,026
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)
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Altisource equity
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77,146
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50,978
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Non-controlling interests
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1,628
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1,292
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Total equity
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78,774
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52,270
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Total liabilities and equity
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$
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693,332
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$
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721,798
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Three months ended
September 30, |
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Nine months ended
September 30, |
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2016
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2015
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2016
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2015
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Revenue
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$
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252,745
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$
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272,776
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$
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758,676
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$
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781,579
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Cost of revenue
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174,002
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173,850
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517,236
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514,835
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Gross profit
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78,743
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98,926
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241,440
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266,744
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Selling, general and administrative expenses
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53,886
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51,338
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161,709
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155,310
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Change in the fair value of Equator Earn Out
|
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—
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—
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—
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(7,591
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)
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Income from operations
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24,857
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47,588
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79,731
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119,025
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Other income (expense), net:
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Interest expense
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(5,952
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)
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(7,041
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)
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(18,481
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)
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(21,396
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)
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Loss on HLSS equity securities and dividends received, net
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—
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—
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—
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(1,854
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)
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Other income (expense), net
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(109
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)
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653
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2,608
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1,477
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Total other income (expense), net
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(6,061
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)
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(6,388
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)
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(15,873
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)
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(21,773
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)
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Income before income taxes and non-controlling interests
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18,796
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41,200
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63,858
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97,252
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Income tax provision
|
|
(7,324
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)
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(3,303
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)
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(12,808
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)
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(8,101
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)
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Net income
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11,472
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37,897
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51,050
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89,151
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Net income attributable to non-controlling interests
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(883
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)
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(851
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)
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(1,973
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)
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(2,457
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)
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Net income attributable to Altisource
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$
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10,589
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$
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37,046
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$
|
49,077
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$
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86,694
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Earnings per share:
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Basic
|
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$
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0.57
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$
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1.94
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$
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2.63
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$
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4.42
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Diluted
|
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$
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0.54
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$
|
1.82
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|
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$
|
2.49
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$
|
4.19
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Weighted average shares outstanding:
|
|
|
|
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||||||||
Basic
|
|
18,715
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19,091
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18,669
|
|
|
19,608
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Diluted
|
|
19,568
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|
|
20,411
|
|
|
19,738
|
|
|
20,688
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|
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Comprehensive income:
|
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Net income
|
|
$
|
11,472
|
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$
|
37,897
|
|
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$
|
51,050
|
|
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$
|
89,151
|
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Other comprehensive income (loss), net of tax:
|
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||||||||
Unrealized gain (loss) on securities, net of income tax benefit (provision) of $(2,070), $0, $889, $0
|
|
5,016
|
|
|
—
|
|
|
(2,156
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income, net of tax
|
|
16,488
|
|
|
37,897
|
|
|
48,894
|
|
|
89,151
|
|
||||
Comprehensive income attributable to non-controlling interests
|
|
(883
|
)
|
|
(851
|
)
|
|
(1,973
|
)
|
|
(2,457
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income attributable to Altisource
|
|
$
|
15,605
|
|
|
$
|
37,046
|
|
|
$
|
46,921
|
|
|
$
|
86,694
|
|
|
Altisource Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Treasury stock, at cost
|
|
Non-controlling interests
|
|
Total
|
|||||||||||||||||
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Balance, December 31, 2014
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
91,509
|
|
|
$
|
367,967
|
|
|
$
|
—
|
|
|
$
|
(444,495
|
)
|
|
$
|
1,049
|
|
|
$
|
41,443
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
86,694
|
|
|
—
|
|
|
—
|
|
|
2,457
|
|
|
89,151
|
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,144
|
)
|
|
(2,144
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
3,258
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,258
|
|
|||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,054
|
)
|
|
—
|
|
|
2,386
|
|
|
—
|
|
|
332
|
|
|||||||
Issuance of restricted shares for CastleLine acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,612
|
)
|
|
—
|
|
|
36,039
|
|
|
—
|
|
|
14,427
|
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,971
|
)
|
|
—
|
|
|
(48,971
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, September 30, 2015
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
94,767
|
|
|
$
|
430,995
|
|
|
$
|
—
|
|
|
$
|
(455,041
|
)
|
|
$
|
1,362
|
|
|
$
|
97,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2015
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
96,321
|
|
|
$
|
369,270
|
|
|
$
|
—
|
|
|
$
|
(440,026
|
)
|
|
$
|
1,292
|
|
|
$
|
52,270
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
49,077
|
|
|
—
|
|
|
—
|
|
|
1,973
|
|
|
51,050
|
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,156
|
)
|
|
—
|
|
|
—
|
|
|
(2,156
|
)
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,637
|
)
|
|
(1,637
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
4,692
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,692
|
|
|||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,912
|
)
|
|
—
|
|
|
67,788
|
|
|
—
|
|
|
8,876
|
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,321
|
)
|
|
—
|
|
|
(34,321
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, September 30, 2016
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
101,013
|
|
|
$
|
359,435
|
|
|
$
|
(2,156
|
)
|
|
$
|
(406,559
|
)
|
|
$
|
1,628
|
|
|
$
|
78,774
|
|
|
Nine months ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
51,050
|
|
|
$
|
89,151
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
27,521
|
|
|
27,637
|
|
||
Amortization of intangible assets
|
36,432
|
|
|
27,995
|
|
||
Loss on HLSS equity securities and dividends received, net
|
—
|
|
|
1,854
|
|
||
Change in the fair value of acquisition related contingent consideration
|
(1,174
|
)
|
|
(7,302
|
)
|
||
Share-based compensation expense
|
4,692
|
|
|
3,258
|
|
||
Bad debt expense
|
763
|
|
|
3,477
|
|
||
Gain on early extinguishment of debt
|
(5,464
|
)
|
|
(1,986
|
)
|
||
Amortization of debt discount
|
307
|
|
|
379
|
|
||
Amortization of debt issuance costs
|
850
|
|
|
1,045
|
|
||
Deferred income taxes
|
17
|
|
|
54
|
|
||
Loss on disposal of fixed assets
|
30
|
|
|
50
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
3,505
|
|
|
(19,681
|
)
|
||
Prepaid expenses and other current assets
|
(10,167
|
)
|
|
2,001
|
|
||
Other assets
|
496
|
|
|
2,085
|
|
||
Accounts payable and accrued expenses
|
7,005
|
|
|
(20,876
|
)
|
||
Other current and non-current liabilities
|
(9,828
|
)
|
|
10
|
|
||
Net cash provided by operating activities
|
106,035
|
|
|
109,151
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Additions to premises and equipment
|
(16,525
|
)
|
|
(27,670
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(9,617
|
)
|
|
(11,193
|
)
|
||
Purchase of available for sale securities
|
(48,219
|
)
|
|
(29,966
|
)
|
||
Proceeds received from sale of and dividends from HLSS equity securities
|
—
|
|
|
28,112
|
|
||
Other investing activities
|
266
|
|
|
722
|
|
||
Net cash used in investing activities
|
(74,095
|
)
|
|
(39,995
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Repayment and repurchases of long-term debt
|
(49,237
|
)
|
|
(29,087
|
)
|
||
Proceeds from stock option exercises
|
8,876
|
|
|
332
|
|
||
Purchase of treasury stock
|
(34,321
|
)
|
|
(48,971
|
)
|
||
Distributions to non-controlling interests
|
(1,637
|
)
|
|
(2,144
|
)
|
||
Other financing activities
|
—
|
|
|
(500
|
)
|
||
Net cash used in financing activities
|
(76,319
|
)
|
|
(80,370
|
)
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(44,379
|
)
|
|
(11,214
|
)
|
||
Cash and cash equivalents at the beginning of the period
|
179,327
|
|
|
161,361
|
|
||
|
|
|
|
||||
Cash and cash equivalents at the end of the period
|
$
|
134,948
|
|
|
$
|
150,147
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
|
|
||
Interest paid
|
$
|
17,244
|
|
|
$
|
19,770
|
|
Income taxes paid, net
|
14,178
|
|
|
6,638
|
|
||
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Acquisition of businesses with restricted shares
|
$
|
—
|
|
|
$
|
14,427
|
|
Increase (decrease) in payables for purchases of premises and equipment
|
2,458
|
|
|
(5,326
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
|
|
|
|
||||
Mortgage Services
|
|
59
|
%
|
|
64
|
%
|
|
59
|
%
|
|
63
|
%
|
Financial Services
|
|
16
|
%
|
|
16
|
%
|
|
17
|
%
|
|
20
|
%
|
Technology Services
|
|
41
|
%
|
|
51
|
%
|
|
41
|
%
|
|
52
|
%
|
Consolidated revenue
|
|
56
|
%
|
|
60
|
%
|
|
56
|
%
|
|
59
|
%
|
(in thousands)
|
|
|
||
|
|
|
||
Accounts receivable, net
|
|
$
|
1,103
|
|
Prepaid expenses
|
|
25
|
|
|
Other assets
|
|
25
|
|
|
Premises and equipment, net
|
|
299
|
|
|
Goodwill
|
|
8,449
|
|
|
|
|
9,901
|
|
|
Accounts payable and accrued expenses
|
|
(111
|
)
|
|
Other current liabilities
|
|
(173
|
)
|
|
|
|
|
||
Purchase price
|
|
$
|
9,617
|
|
(in thousands)
|
|
Initial purchase price allocation
|
|
Adjustments
|
|
Final purchase price allocation
|
||||||
|
|
|
|
|
|
|
||||||
Cash
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Accounts receivable, net
|
|
245
|
|
|
(76
|
)
|
|
169
|
|
|||
Premises and equipment, net
|
|
2,471
|
|
|
(1,067
|
)
|
|
1,404
|
|
|||
Other assets
|
|
199
|
|
|
(196
|
)
|
|
3
|
|
|||
Trademarks and trade names
|
|
1,205
|
|
|
—
|
|
|
1,205
|
|
|||
Databases/other
|
|
910
|
|
|
1,035
|
|
|
1,945
|
|
|||
Non-compete agreements
|
|
330
|
|
|
—
|
|
|
330
|
|
|||
Customer relationships
|
|
255
|
|
|
—
|
|
|
255
|
|
|||
Goodwill
|
|
19,565
|
|
|
50
|
|
|
19,615
|
|
|||
|
|
25,183
|
|
|
(254
|
)
|
|
24,929
|
|
|||
Accounts payable and accrued expenses
|
|
(391
|
)
|
|
46
|
|
|
(345
|
)
|
|||
|
|
|
|
|
|
|
||||||
Purchase price
|
|
$
|
24,792
|
|
|
$
|
(208
|
)
|
|
$
|
24,584
|
|
(in thousands)
|
|
Initial purchase price allocation
|
|
Adjustments
|
|
Final purchase price allocation
|
||||||
|
|
|
|
|
|
|
||||||
Cash
|
|
$
|
1,088
|
|
|
$
|
—
|
|
|
$
|
1,088
|
|
Accounts receivable, net
|
|
510
|
|
|
(410
|
)
|
|
100
|
|
|||
Prepaid expenses
|
|
66
|
|
|
(46
|
)
|
|
20
|
|
|||
Restricted cash
|
|
2,501
|
|
|
—
|
|
|
2,501
|
|
|||
Non-compete agreements
|
|
1,105
|
|
|
25
|
|
|
1,130
|
|
|||
Databases/other
|
|
465
|
|
|
1,335
|
|
|
1,800
|
|
|||
Customer relationships
|
|
395
|
|
|
—
|
|
|
395
|
|
|||
Trademarks and trade names
|
|
150
|
|
|
10
|
|
|
160
|
|
|||
Deferred taxes
|
|
—
|
|
|
356
|
|
|
356
|
|
|||
Goodwill
|
|
28,125
|
|
|
(1,395
|
)
|
|
26,730
|
|
|||
|
|
34,405
|
|
|
(125
|
)
|
|
34,280
|
|
|||
Accounts payable and accrued expenses
|
|
(875
|
)
|
|
38
|
|
|
(837
|
)
|
|||
Deferred revenue
|
|
(87
|
)
|
|
87
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Purchase price
|
|
$
|
33,443
|
|
|
$
|
—
|
|
|
$
|
33,443
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Billed
|
|
$
|
63,066
|
|
|
$
|
67,021
|
|
Unbilled
|
|
48,288
|
|
|
56,458
|
|
||
|
|
111,354
|
|
|
123,479
|
|
||
Less: allowance for doubtful accounts
|
|
(9,774
|
)
|
|
(18,456
|
)
|
||
|
|
|
|
|
||||
Total
|
|
$
|
101,580
|
|
|
$
|
105,023
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Maintenance agreements, current portion
|
|
$
|
7,213
|
|
|
$
|
7,000
|
|
Short-term investments in real estate
|
|
8,695
|
|
|
—
|
|
||
Income taxes receivable
|
|
3,132
|
|
|
633
|
|
||
Prepaid expenses
|
|
6,166
|
|
|
7,873
|
|
||
Other current assets
|
|
6,721
|
|
|
6,245
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
31,927
|
|
|
$
|
21,751
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Computer hardware and software
|
|
$
|
163,140
|
|
|
$
|
177,010
|
|
Office equipment and other
|
|
19,586
|
|
|
21,720
|
|
||
Furniture and fixtures
|
|
13,792
|
|
|
14,443
|
|
||
Leasehold improvements
|
|
35,726
|
|
|
35,503
|
|
||
|
|
232,244
|
|
|
248,676
|
|
||
Less: accumulated depreciation and amortization
|
|
(122,459
|
)
|
|
(129,555
|
)
|
||
|
|
|
|
|
||||
Total
|
|
$
|
109,785
|
|
|
$
|
119,121
|
|
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Balance as of December 31, 2015
|
|
$
|
80,423
|
|
|
$
|
2,378
|
|
|
$
|
82,801
|
|
Acquisition of CastleLine
(1)
|
|
(1,395
|
)
|
|
—
|
|
|
(1,395
|
)
|
|||
Acquisitions of RentRange and Investability
(2)
|
|
50
|
|
|
—
|
|
|
50
|
|
|||
Acquisition of Granite
|
|
8,449
|
|
|
—
|
|
|
8,449
|
|
|||
Balance as of September 30, 2016
|
|
$
|
87,527
|
|
|
$
|
2,378
|
|
|
$
|
89,905
|
|
(1)
|
During the second quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the CastleLine acquisition. See
Note 4
.
|
(2)
|
During the third quarter of 2016, goodwill was revised to reflect a purchase accounting measurement period adjustment related to the RentRange and Investability acquisition. See
Note 4
.
|
|
|
Weighted average estimated useful life
(in years)
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net book value
|
||||||||||||||||||
(in thousands)
|
|
|
September 30,
2016 |
|
December 31,
2015 |
|
September 30,
2016 |
|
December 31,
2015 |
|
September 30,
2016 |
|
December 31,
2015 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Definite lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks and trade names
|
|
13
|
|
$
|
15,254
|
|
|
$
|
15,244
|
|
|
$
|
(7,419
|
)
|
|
$
|
(6,491
|
)
|
|
$
|
7,835
|
|
|
$
|
8,753
|
|
Customer related intangible assets
|
|
10
|
|
274,428
|
|
|
274,428
|
|
|
(146,890
|
)
|
|
(113,725
|
)
|
|
127,538
|
|
|
160,703
|
|
||||||
Operating agreement
|
|
20
|
|
35,000
|
|
|
35,000
|
|
|
(11,667
|
)
|
|
(10,354
|
)
|
|
23,333
|
|
|
24,646
|
|
||||||
Non-compete agreements
|
|
4
|
|
1,460
|
|
|
1,435
|
|
|
(405
|
)
|
|
(115
|
)
|
|
1,055
|
|
|
1,320
|
|
||||||
Intellectual property
|
|
10
|
|
300
|
|
|
300
|
|
|
(78
|
)
|
|
(55
|
)
|
|
222
|
|
|
245
|
|
||||||
Other intangible assets
|
|
5
|
|
3,745
|
|
|
1,375
|
|
|
(752
|
)
|
|
(39
|
)
|
|
2,993
|
|
|
1,336
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
|
$
|
330,187
|
|
|
$
|
327,782
|
|
|
$
|
(167,211
|
)
|
|
$
|
(130,779
|
)
|
|
$
|
162,976
|
|
|
$
|
197,003
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Security deposits
|
|
$
|
5,599
|
|
|
$
|
5,341
|
|
Maintenance agreements, non-current portion
|
|
1,177
|
|
|
1,570
|
|
||
Restricted cash
|
|
4,505
|
|
|
4,801
|
|
||
Other
|
|
909
|
|
|
1,441
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
12,190
|
|
|
$
|
13,153
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Accounts payable
|
|
$
|
16,940
|
|
|
$
|
11,644
|
|
Accrued expenses - general
|
|
34,148
|
|
|
30,347
|
|
||
Accrued salaries and benefits
|
|
46,417
|
|
|
46,564
|
|
||
Income taxes payable
|
|
3,856
|
|
|
3,316
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
101,361
|
|
|
$
|
91,871
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Unfunded cash account balances
|
|
$
|
2,995
|
|
|
$
|
6,395
|
|
Other
|
|
10,851
|
|
|
9,871
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
13,846
|
|
|
$
|
16,266
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Senior secured term loan
|
|
$
|
481,140
|
|
|
$
|
536,598
|
|
Less: debt issuance costs, net
|
|
(4,778
|
)
|
|
(6,184
|
)
|
||
Less: unamortized discount, net
|
|
(1,728
|
)
|
|
(2,236
|
)
|
||
Net long-term debt
|
|
474,634
|
|
|
528,178
|
|
||
Less: current portion
|
|
(5,945
|
)
|
|
(5,945
|
)
|
||
|
|
|
|
|
||||
Long-term debt, less current portion
|
|
$
|
468,689
|
|
|
$
|
522,233
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
Acquisition related obligations
|
|
$
|
3,191
|
|
|
$
|
8,422
|
|
Other non-current liabilities
|
|
10,599
|
|
|
9,731
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
13,790
|
|
|
$
|
18,153
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Carrying amount
|
|
Fair value
|
|
Carrying amount
|
|
Fair value
|
||||||||||||||||||||||||
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
|
$
|
134,948
|
|
|
$
|
134,948
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,327
|
|
|
$
|
179,327
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
4,505
|
|
|
4,505
|
|
|
—
|
|
|
—
|
|
|
4,801
|
|
|
4,801
|
|
|
—
|
|
|
—
|
|
||||||||
Available for sale securities
|
|
45,174
|
|
|
45,174
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition contingent consideration
|
|
2,757
|
|
|
—
|
|
|
—
|
|
|
2,757
|
|
|
3,932
|
|
|
—
|
|
|
—
|
|
|
3,932
|
|
||||||||
Long-term debt
|
|
481,140
|
|
|
—
|
|
|
452,272
|
|
|
—
|
|
|
536,598
|
|
|
—
|
|
|
469,523
|
|
|
—
|
|
|
|
Nine months ended
September 30, 2016 |
|
Nine months ended
September 30, 2015 |
||||||||
|
|
Black-Scholes
|
|
Binomial
|
|
Black-Scholes
|
|
Binomial
|
||||
|
|
|
|
|
|
|
|
|
||||
Risk-free interest rate (%)
|
|
1.25 - 1.89
|
|
|
0.23 - 1.97
|
|
|
1.50 - 1.78
|
|
|
0.02 - 2.26
|
|
Expected stock price volatility (%)
|
|
59.75 - 62.14
|
|
|
59.76 - 62.14
|
|
|
55.06 - 58.58
|
|
|
55.06 - 57.60
|
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Expected option life (in years)
|
|
6.00 - 6.25
|
|
|
4.54 - 4.88
|
|
|
6.00 - 6.25
|
|
|
4.10 - 4.88
|
|
Fair value
|
|
$11.15 - $18.60
|
|
|
$11.06 - $19.27
|
|
|
$10.01 - $17.34
|
|
|
$9.91 - $16.13
|
|
|
|
Nine months ended September 30,
|
||||||
(in thousands, except per share amounts)
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Weighted average grant date fair value of stock options granted per share
|
|
$
|
16.85
|
|
|
$
|
12.62
|
|
Intrinsic value of options exercised
|
|
17,280
|
|
|
232
|
|
||
Grant date fair value of stock options that vested
|
|
2,372
|
|
|
1,195
|
|
|
Number of options
|
|
Weighted average exercise price
|
|
Weighted average contractual term
(in years
)
|
|
Aggregate intrinsic value
(
in thousands)
|
|||||
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2015
|
3,163,125
|
|
|
$
|
20.13
|
|
|
4.94
|
|
$
|
35,842
|
|
Granted
|
142,654
|
|
|
29.22
|
|
|
|
|
|
|||
Exercised
|
(1,110,193
|
)
|
|
9.57
|
|
|
|
|
|
|
||
Forfeited
|
(115,539
|
)
|
|
36.53
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||||
Outstanding at September 30, 2016
|
2,080,047
|
|
|
$
|
25.48
|
|
|
5.55
|
|
$
|
22,595
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at September 30, 2016
|
1,274,537
|
|
|
$
|
20.17
|
|
|
3.62
|
|
$
|
18,372
|
|
|
Number of restricted shares
|
|
|
|
|
Outstanding at December 31, 2015
|
272,326
|
|
Granted
|
12,878
|
|
Issued
|
(18,774
|
)
|
Forfeited
|
(15,400
|
)
|
|
|
|
Outstanding at September 30, 2016
|
251,030
|
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
239,782
|
|
|
$
|
245,469
|
|
|
$
|
715,386
|
|
|
$
|
689,880
|
|
Reimbursable expenses
|
|
12,080
|
|
|
26,456
|
|
|
41,317
|
|
|
89,242
|
|
||||
Non-controlling interests
|
|
883
|
|
|
851
|
|
|
1,973
|
|
|
2,457
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
252,745
|
|
|
$
|
272,776
|
|
|
$
|
758,676
|
|
|
$
|
781,579
|
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
66,357
|
|
|
$
|
62,997
|
|
|
$
|
201,193
|
|
|
$
|
197,213
|
|
Outside fees and services
|
|
77,445
|
|
|
66,952
|
|
|
222,574
|
|
|
175,021
|
|
||||
Reimbursable expenses
|
|
12,080
|
|
|
26,456
|
|
|
41,317
|
|
|
89,242
|
|
||||
Technology and telecommunications
|
|
11,502
|
|
|
10,630
|
|
|
32,145
|
|
|
32,878
|
|
||||
Depreciation and amortization
|
|
6,618
|
|
|
6,815
|
|
|
20,007
|
|
|
20,481
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
174,002
|
|
|
$
|
173,850
|
|
|
$
|
517,236
|
|
|
$
|
514,835
|
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
14,145
|
|
|
$
|
13,906
|
|
|
$
|
42,460
|
|
|
$
|
40,305
|
|
Occupancy related costs
|
|
8,903
|
|
|
9,808
|
|
|
26,785
|
|
|
30,509
|
|
||||
Amortization of intangible assets
|
|
11,465
|
|
|
10,118
|
|
|
36,432
|
|
|
27,995
|
|
||||
Professional services
|
|
4,097
|
|
|
4,008
|
|
|
17,533
|
|
|
18,637
|
|
||||
Marketing costs
|
|
9,275
|
|
|
7,325
|
|
|
21,438
|
|
|
18,598
|
|
||||
Depreciation and amortization
|
|
2,557
|
|
|
2,390
|
|
|
7,514
|
|
|
7,156
|
|
||||
Other
|
|
3,444
|
|
|
3,783
|
|
|
9,547
|
|
|
12,110
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
$
|
53,886
|
|
|
$
|
51,338
|
|
|
$
|
161,709
|
|
|
$
|
155,310
|
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Gain on early extinguishment of debt
|
|
$
|
—
|
|
|
$
|
872
|
|
|
$
|
5,464
|
|
|
$
|
1,986
|
|
Expenses related to the purchase of available for sale securities
|
|
—
|
|
|
—
|
|
|
(3,356
|
)
|
|
—
|
|
||||
Interest income
|
|
11
|
|
|
39
|
|
|
28
|
|
|
101
|
|
||||
Other, net
|
|
(120
|
)
|
|
(258
|
)
|
|
472
|
|
|
(610
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
(109
|
)
|
|
$
|
653
|
|
|
$
|
2,608
|
|
|
$
|
1,477
|
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||||||
(in thousands, except per share data)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Altisource
|
|
$
|
10,589
|
|
|
$
|
37,046
|
|
|
$
|
49,077
|
|
|
$
|
86,694
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, basic
|
|
18,715
|
|
|
19,091
|
|
|
18,669
|
|
|
19,608
|
|
||||
Dilutive effect of stock options and restricted shares
|
|
853
|
|
|
1,320
|
|
|
1,069
|
|
|
1,080
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, diluted
|
|
19,568
|
|
|
20,411
|
|
|
19,738
|
|
|
20,688
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.57
|
|
|
$
|
1.94
|
|
|
$
|
2.63
|
|
|
$
|
4.42
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
$
|
0.54
|
|
|
$
|
1.82
|
|
|
$
|
2.49
|
|
|
$
|
4.19
|
|
•
|
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 and Altisource fails to be retained as a service provider
|
•
|
Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio
|
•
|
Altisource fails to be retained as a service provider
|
•
|
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
|
•
|
Servicer Solutions business
|
•
|
Origination Solutions business
|
•
|
Consumer Real Estate Solutions business
|
•
|
Real Estate Investor Solutions business
|
|
|
Three months ended September 30, 2016
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
204,696
|
|
|
$
|
17,599
|
|
|
$
|
41,544
|
|
|
$
|
(11,094
|
)
|
|
$
|
252,745
|
|
Cost of revenue
|
|
132,399
|
|
|
13,238
|
|
|
38,557
|
|
|
(10,192
|
)
|
|
174,002
|
|
|||||
Gross profit (loss)
|
|
72,297
|
|
|
4,361
|
|
|
2,987
|
|
|
(902
|
)
|
|
78,743
|
|
|||||
Selling, general and administrative expenses
|
|
27,543
|
|
|
4,002
|
|
|
6,115
|
|
|
16,226
|
|
|
53,886
|
|
|||||
Income (loss) from operations
|
|
44,754
|
|
|
359
|
|
|
(3,128
|
)
|
|
(17,128
|
)
|
|
24,857
|
|
|||||
Total other income (expense), net
|
|
8
|
|
|
28
|
|
|
1
|
|
|
(6,098
|
)
|
|
(6,061
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
44,762
|
|
|
$
|
387
|
|
|
$
|
(3,127
|
)
|
|
$
|
(23,226
|
)
|
|
$
|
18,796
|
|
|
|
Three months ended September 30, 2015
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
209,506
|
|
|
$
|
21,337
|
|
|
$
|
51,437
|
|
|
$
|
(9,504
|
)
|
|
$
|
272,776
|
|
Cost of revenue
|
|
122,724
|
|
|
15,418
|
|
|
44,419
|
|
|
(8,711
|
)
|
|
173,850
|
|
|||||
Gross profit (loss)
|
|
86,782
|
|
|
5,919
|
|
|
7,018
|
|
|
(793
|
)
|
|
98,926
|
|
|||||
Selling, general and administrative expenses
|
|
23,399
|
|
|
4,553
|
|
|
7,628
|
|
|
15,758
|
|
|
51,338
|
|
|||||
Income (loss) from operations
|
|
63,383
|
|
|
1,366
|
|
|
(610
|
)
|
|
(16,551
|
)
|
|
47,588
|
|
|||||
Total other income (expense), net
|
|
9
|
|
|
31
|
|
|
38
|
|
|
(6,466
|
)
|
|
(6,388
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
63,392
|
|
|
$
|
1,397
|
|
|
$
|
(572
|
)
|
|
$
|
(23,017
|
)
|
|
$
|
41,200
|
|
|
|
Nine months ended September 30, 2016
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
612,243
|
|
|
$
|
57,461
|
|
|
$
|
120,291
|
|
|
$
|
(31,319
|
)
|
|
$
|
758,676
|
|
Cost of revenue
|
|
381,543
|
|
|
41,645
|
|
|
122,874
|
|
|
(28,826
|
)
|
|
517,236
|
|
|||||
Gross profit (loss)
|
|
230,700
|
|
|
15,816
|
|
|
(2,583
|
)
|
|
(2,493
|
)
|
|
241,440
|
|
|||||
Selling, general and administrative expenses
|
|
83,119
|
|
|
12,515
|
|
|
20,113
|
|
|
45,962
|
|
|
161,709
|
|
|||||
Income (loss) from operations
|
|
147,581
|
|
|
3,301
|
|
|
(22,696
|
)
|
|
(48,455
|
)
|
|
79,731
|
|
|||||
Total other income (expense), net
|
|
57
|
|
|
63
|
|
|
101
|
|
|
(16,094
|
)
|
|
(15,873
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
147,638
|
|
|
$
|
3,364
|
|
|
$
|
(22,595
|
)
|
|
$
|
(64,549
|
)
|
|
$
|
63,858
|
|
|
|
Nine months ended September 30, 2015
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
583,873
|
|
|
$
|
67,080
|
|
|
$
|
159,399
|
|
|
$
|
(28,773
|
)
|
|
$
|
781,579
|
|
Cost of revenue
|
|
350,238
|
|
|
46,058
|
|
|
144,565
|
|
|
(26,026
|
)
|
|
514,835
|
|
|||||
Gross profit (loss)
|
|
233,635
|
|
|
21,022
|
|
|
14,834
|
|
|
(2,747
|
)
|
|
266,744
|
|
|||||
Selling, general and administrative expenses
|
|
69,188
|
|
|
13,856
|
|
|
22,189
|
|
|
50,077
|
|
|
155,310
|
|
|||||
Change in the fair value of Equator Earn Out
|
|
—
|
|
|
—
|
|
|
(7,591
|
)
|
|
—
|
|
|
(7,591
|
)
|
|||||
Income (loss) from operations
|
|
164,447
|
|
|
7,166
|
|
|
236
|
|
|
(52,824
|
)
|
|
119,025
|
|
|||||
Total other income (expense), net
|
|
28
|
|
|
21
|
|
|
21
|
|
|
(21,843
|
)
|
|
(21,773
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
164,475
|
|
|
$
|
7,187
|
|
|
$
|
257
|
|
|
$
|
(74,667
|
)
|
|
$
|
97,252
|
|
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
September 30, 2016
|
|
$
|
315,384
|
|
|
$
|
44,652
|
|
|
$
|
141,846
|
|
|
$
|
191,450
|
|
|
$
|
693,332
|
|
December 31, 2015
|
|
325,461
|
|
|
53,757
|
|
|
151,969
|
|
|
190,611
|
|
|
721,798
|
|
(in thousands)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
|
||||
United States
|
|
$
|
76,683
|
|
|
$
|
85,021
|
|
India
|
|
15,705
|
|
|
21,187
|
|
||
Luxembourg
|
|
14,372
|
|
|
9,944
|
|
||
Philippines
|
|
2,776
|
|
|
2,664
|
|
||
Uruguay
|
|
249
|
|
|
305
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
109,785
|
|
|
$
|
119,121
|
|
•
|
assumptions related to the sources of liquidity and the adequacy of financial resources;
|
•
|
assumptions about our ability to grow our business, including executing on our strategic initiatives;
|
•
|
assumptions about our ability to improve margins;
|
•
|
expectations regarding collection rates and placements in our Financial Services segment;
|
•
|
assumptions regarding the impact of seasonality;
|
•
|
estimates regarding the calculation of our effective tax rate; and
|
•
|
estimates regarding our reserves and valuations.
|
•
|
if, as a result of difficulties faced by Ocwen Financial Corporation and its subsidiaries (“Ocwen”), we were to lose Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us;
|
•
|
our ability to execute on our strategic initiatives;
|
•
|
our ability to retain our existing customers, expand relationships and attract new customers;
|
•
|
the level of loan delinquencies and charge-offs;
|
•
|
the level of origination volume;
|
•
|
technology failures;
|
•
|
the trend toward outsourcing;
|
•
|
our ability to raise debt;
|
•
|
our ability to retain our directors, executive officers and key personnel;
|
•
|
our ability to integrate acquired businesses;
|
•
|
our ability to comply with and burdens imposed by governmental regulations and policies and any changes in such regulations and policies; and
|
•
|
significant changes in the Luxembourg tax regime or interpretations of the Luxembourg tax regime.
|
•
|
The average number of loans serviced by Ocwen on REALServicing was
1.5 million
for the
nine
months ended
September 30, 2016
compared to
2.2 million
for the
nine
months ended
September 30, 2015
, a decrease of 32% (
1.4 million
for the
third quarter
of
2016
and
1.9 million
for the
third quarter
of
2015
, a decrease of 26%). The average number of delinquent non-government-sponsored enterprise loans serviced by Ocwen on REALServicing was
224 thousand
for the
nine
months ended
September 30, 2016
compared to
286 thousand
for the
nine
months ended
September 30, 2015
, a decrease of 22% (
211 thousand
for the
third quarter
of
2016
and
269 thousand
for the
third quarter
of
2015
, a decrease of 22%);
|
•
|
During the
nine
months ended
September 30, 2016
and
2015
, we repurchased portions of our senior secured term loan with aggregate par values of
$51.0 million
and
$27.0 million
, respectively, (
$0
and
$11.0 million
for the
third quarter
of
2016
and
2015
, respectively) recognizing net gains on the early extinguishment of debt of
$5.5 million
and
$2.0 million
, respectively (
$0
and
$0.9 million
for the
third quarter
of
2016
and
2015
, respectively);
|
•
|
During the
nine
months ended
September 30, 2016
, we purchased
4.1 million
shares of Residential common stock for
$48.2 million
, incurred expenses of
$3.4 million
and earned dividends of
$1.0 million
related to this investment (no comparative amounts in 2015);
|
•
|
On
July 29, 2016
, we acquired certain assets and assumed certain liabilities of
Granite Loan Management of Delaware, LLC
(“Granite”) for
$9.6 million
in cash at closing;
|
•
|
On October 9, 2015, we acquired GoldenGator, LLC (doing business as RentRange
®
) (“RentRange”), REIsmart, LLC (doing business as Investability
™
) (“Investability”) and Onit Solutions, LLC, a support company for RentRange and Investability, for
$24.8 million
, composed of
$17.5 million
in cash and
247 thousand
shares of restricted common stock of the Company with a value of
$7.3 million
as of the closing date;
|
•
|
On July 17, 2015, we acquired CastleLine Holdings, LLC and its subsidiaries (“CastleLine”) for
$33.4 million
. The purchase consideration was composed of
$12.3 million
of cash at closing,
$10.5 million
of cash payable over four years from the acquisition date and
495 thousand
shares of restricted common stock of the Company with a value of
$14.4 million
as of the closing date. Of the cash payable following acquisition,
$3.8 million
is contingent on certain future employment conditions of certain of the sellers, and therefore excluded from the purchase price;
|
•
|
During the
nine
months ended
September 30, 2015
, we paid the former owners of Equator, LLC (“Equator”)
$0.5 million
to extinguish any liability for Equator related contingent consideration (“Equator Earn Out”). In connection with this settlement, we reduced the liability for the Equator Earn Out to
$0
and recognized a
$7.6 million
increase in earnings;
|
•
|
During the
nine
month ended
September 30, 2015
, we recognized a loss on the sale of equity securities of Home Loan Servicing Solutions, Ltd. (“HLSS”), net of dividends received, of
$1.9 million
;
|
•
|
Effective March 31, 2015, we terminated the Data Access and Services Agreement with Ocwen; and
|
•
|
The effective income tax rate increased to
20.1%
for the
nine
months ended
September 30, 2016
and
39.0%
for the
third quarter
of
2016
from an increase in our expected 2016 effective tax rate and adjustments to true-up the tax provision from prior quarters. The effective tax rate increase was primarily due to lower pretax income margins, which changed the expected mix of taxable income across the jurisdictions in which we operate.
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands, except per share data)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Mortgage Services
|
|
$
|
191,766
|
|
|
$
|
182,222
|
|
|
5
|
|
|
$
|
569,038
|
|
|
$
|
492,277
|
|
|
16
|
|
Financial Services
|
|
17,566
|
|
|
21,314
|
|
|
(18
|
)
|
|
57,376
|
|
|
66,977
|
|
|
(14
|
)
|
||||
Technology Services
|
|
41,544
|
|
|
51,437
|
|
|
(19
|
)
|
|
120,291
|
|
|
159,399
|
|
|
(25
|
)
|
||||
Eliminations
|
|
(11,094
|
)
|
|
(9,504
|
)
|
|
17
|
|
|
(31,319
|
)
|
|
(28,773
|
)
|
|
9
|
|
||||
Total service revenue
|
|
239,782
|
|
|
245,469
|
|
|
(2
|
)
|
|
715,386
|
|
|
689,880
|
|
|
4
|
|
||||
Reimbursable expenses
|
|
12,080
|
|
|
26,456
|
|
|
(54
|
)
|
|
41,317
|
|
|
89,242
|
|
|
(54
|
)
|
||||
Non-controlling interests
|
|
883
|
|
|
851
|
|
|
4
|
|
|
1,973
|
|
|
2,457
|
|
|
(20
|
)
|
||||
Total revenue
|
|
252,745
|
|
|
272,776
|
|
|
(7
|
)
|
|
758,676
|
|
|
781,579
|
|
|
(3
|
)
|
||||
Cost of revenue
|
|
174,002
|
|
|
173,850
|
|
|
—
|
|
|
517,236
|
|
|
514,835
|
|
|
—
|
|
||||
Gross profit
|
|
78,743
|
|
|
98,926
|
|
|
(20
|
)
|
|
241,440
|
|
|
266,744
|
|
|
(9
|
)
|
||||
Selling, general and administrative expenses
|
|
53,886
|
|
|
51,338
|
|
|
5
|
|
|
161,709
|
|
|
155,310
|
|
|
4
|
|
||||
Change in the fair value of Equator Earn Out
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,591
|
)
|
|
(100
|
)
|
||||
Income from operations
|
|
24,857
|
|
|
47,588
|
|
|
(48
|
)
|
|
79,731
|
|
|
119,025
|
|
|
(33
|
)
|
||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(5,952
|
)
|
|
(7,041
|
)
|
|
(15
|
)
|
|
(18,481
|
)
|
|
(21,396
|
)
|
|
(14
|
)
|
||||
Loss on HLSS equity securities and dividends received, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,854
|
)
|
|
(100
|
)
|
||||
Other income (expense), net
|
|
(109
|
)
|
|
653
|
|
|
(117
|
)
|
|
2,608
|
|
|
1,477
|
|
|
77
|
|
||||
Total other income (expense), net
|
|
(6,061
|
)
|
|
(6,388
|
)
|
|
(5
|
)
|
|
(15,873
|
)
|
|
(21,773
|
)
|
|
(27
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes and non-controlling interests
|
|
18,796
|
|
|
41,200
|
|
|
(54
|
)
|
|
63,858
|
|
|
97,252
|
|
|
(34
|
)
|
||||
Income tax provision
|
|
(7,324
|
)
|
|
(3,303
|
)
|
|
122
|
|
|
(12,808
|
)
|
|
(8,101
|
)
|
|
58
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
11,472
|
|
|
37,897
|
|
|
(70
|
)
|
|
51,050
|
|
|
89,151
|
|
|
(43
|
)
|
||||
Net income attributable to non-controlling interests
|
|
(883
|
)
|
|
(851
|
)
|
|
4
|
|
|
(1,973
|
)
|
|
(2,457
|
)
|
|
(20
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to Altisource
|
|
$
|
10,589
|
|
|
$
|
37,046
|
|
|
(71
|
)
|
|
$
|
49,077
|
|
|
$
|
86,694
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross profit/service revenue
|
|
33
|
%
|
|
40
|
%
|
|
|
|
34
|
%
|
|
39
|
%
|
|
|
|
|||||
Income from operations/service revenue
|
|
10
|
%
|
|
19
|
%
|
|
|
|
11
|
%
|
|
17
|
%
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.57
|
|
|
$
|
1.94
|
|
|
(71
|
)
|
|
$
|
2.63
|
|
|
$
|
4.42
|
|
|
(40
|
)
|
Diluted
|
|
$
|
0.54
|
|
|
$
|
1.82
|
|
|
(70
|
)
|
|
$
|
2.49
|
|
|
$
|
4.19
|
|
|
(41
|
)
|
|
|
Three months ended September 30, 2016
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenue
|
|
$
|
191,766
|
|
|
$
|
17,566
|
|
|
$
|
41,544
|
|
|
$
|
(11,094
|
)
|
|
$
|
239,782
|
|
Reimbursable expenses
|
|
12,047
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
12,080
|
|
|||||
Non-controlling interests
|
|
883
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
883
|
|
|||||
|
|
204,696
|
|
|
17,599
|
|
|
41,544
|
|
|
(11,094
|
)
|
|
252,745
|
|
|||||
Cost of revenue
|
|
132,399
|
|
|
13,238
|
|
|
38,557
|
|
|
(10,192
|
)
|
|
174,002
|
|
|||||
Gross profit (loss)
|
|
72,297
|
|
|
4,361
|
|
|
2,987
|
|
|
(902
|
)
|
|
78,743
|
|
|||||
Selling, general and administrative expenses
|
|
27,543
|
|
|
4,002
|
|
|
6,115
|
|
|
16,226
|
|
|
53,886
|
|
|||||
Income (loss) from operations
|
|
44,754
|
|
|
359
|
|
|
(3,128
|
)
|
|
(17,128
|
)
|
|
24,857
|
|
|||||
Total other income (expense), net
|
|
8
|
|
|
28
|
|
|
1
|
|
|
(6,098
|
)
|
|
(6,061
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and
non-controlling interests
|
|
$
|
44,762
|
|
|
$
|
387
|
|
|
$
|
(3,127
|
)
|
|
$
|
(23,226
|
)
|
|
$
|
18,796
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit/service revenue
|
|
38
|
%
|
|
25
|
%
|
|
7
|
%
|
|
N/M
|
|
|
33
|
%
|
|||||
Income (loss) from operations/service revenue
|
|
23
|
%
|
|
2
|
%
|
|
(8
|
)%
|
|
N/M
|
|
|
10
|
%
|
|
|
Three months ended September 30, 2015
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenue
|
|
$
|
182,222
|
|
|
$
|
21,314
|
|
|
$
|
51,437
|
|
|
$
|
(9,504
|
)
|
|
$
|
245,469
|
|
Reimbursable expenses
|
|
26,433
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
26,456
|
|
|||||
Non-controlling interests
|
|
851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
851
|
|
|||||
|
|
209,506
|
|
|
21,337
|
|
|
51,437
|
|
|
(9,504
|
)
|
|
272,776
|
|
|||||
Cost of revenue
|
|
122,724
|
|
|
15,418
|
|
|
44,419
|
|
|
(8,711
|
)
|
|
173,850
|
|
|||||
Gross profit (loss)
|
|
86,782
|
|
|
5,919
|
|
|
7,018
|
|
|
(793
|
)
|
|
98,926
|
|
|||||
Selling, general and administrative expenses
|
|
23,399
|
|
|
4,553
|
|
|
7,628
|
|
|
15,758
|
|
|
51,338
|
|
|||||
Income (loss) from operations
|
|
63,383
|
|
|
1,366
|
|
|
(610
|
)
|
|
(16,551
|
)
|
|
47,588
|
|
|||||
Total other income (expense), net
|
|
9
|
|
|
31
|
|
|
38
|
|
|
(6,466
|
)
|
|
(6,388
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and
non-controlling interests
|
|
$
|
63,392
|
|
|
$
|
1,397
|
|
|
$
|
(572
|
)
|
|
$
|
(23,017
|
)
|
|
$
|
41,200
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit/service revenue
|
|
48
|
%
|
|
28
|
%
|
|
14
|
%
|
|
N/M
|
|
|
40
|
%
|
|||||
Income (loss) from operations/service revenue
|
|
35
|
%
|
|
6
|
%
|
|
(1
|
)%
|
|
N/M
|
|
|
19
|
%
|
|
|
Nine months ended September 30, 2016
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenue
|
|
$
|
569,038
|
|
|
$
|
57,376
|
|
|
$
|
120,291
|
|
|
$
|
(31,319
|
)
|
|
$
|
715,386
|
|
Reimbursable expenses
|
|
41,232
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
41,317
|
|
|||||
Non-controlling interests
|
|
1,973
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,973
|
|
|||||
|
|
612,243
|
|
|
57,461
|
|
|
120,291
|
|
|
(31,319
|
)
|
|
758,676
|
|
|||||
Cost of revenue
|
|
381,543
|
|
|
41,645
|
|
|
122,874
|
|
|
(28,826
|
)
|
|
517,236
|
|
|||||
Gross profit (loss)
|
|
230,700
|
|
|
15,816
|
|
|
(2,583
|
)
|
|
(2,493
|
)
|
|
241,440
|
|
|||||
Selling, general and administrative expenses
|
|
83,119
|
|
|
12,515
|
|
|
20,113
|
|
|
45,962
|
|
|
161,709
|
|
|||||
Income (loss) from operations
|
|
147,581
|
|
|
3,301
|
|
|
(22,696
|
)
|
|
(48,455
|
)
|
|
79,731
|
|
|||||
Total other income (expense), net
|
|
57
|
|
|
63
|
|
|
101
|
|
|
(16,094
|
)
|
|
(15,873
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
147,638
|
|
|
$
|
3,364
|
|
|
$
|
(22,595
|
)
|
|
$
|
(64,549
|
)
|
|
$
|
63,858
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit (loss)/service revenue
|
|
41
|
%
|
|
28
|
%
|
|
(2
|
)%
|
|
N/M
|
|
|
34
|
%
|
|||||
Income (loss) from operations/service revenue
|
|
26
|
%
|
|
6
|
%
|
|
(19
|
)%
|
|
N/M
|
|
|
11
|
%
|
|
|
Nine months ended September 30, 2015
|
||||||||||||||||||
(in thousands)
|
|
Mortgage Services
|
|
Financial Services
|
|
Technology Services
|
|
Corporate Items and Eliminations
|
|
Consolidated Altisource
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenue
|
|
$
|
492,277
|
|
|
$
|
66,977
|
|
|
$
|
159,399
|
|
|
$
|
(28,773
|
)
|
|
$
|
689,880
|
|
Reimbursable expenses
|
|
89,139
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
89,242
|
|
|||||
Non-controlling interests
|
|
2,457
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,457
|
|
|||||
|
|
583,873
|
|
|
67,080
|
|
|
159,399
|
|
|
(28,773
|
)
|
|
781,579
|
|
|||||
Cost of revenue
|
|
350,238
|
|
|
46,058
|
|
|
144,565
|
|
|
(26,026
|
)
|
|
514,835
|
|
|||||
Gross profit (loss)
|
|
233,635
|
|
|
21,022
|
|
|
14,834
|
|
|
(2,747
|
)
|
|
266,744
|
|
|||||
Selling, general and administrative expenses
|
|
69,188
|
|
|
13,856
|
|
|
22,189
|
|
|
50,077
|
|
|
155,310
|
|
|||||
Change in the fair value of Equator Earn Out
|
|
—
|
|
|
—
|
|
|
(7,591
|
)
|
|
—
|
|
|
(7,591
|
)
|
|||||
Income (loss) from operations
|
|
164,447
|
|
|
7,166
|
|
|
236
|
|
|
(52,824
|
)
|
|
119,025
|
|
|||||
Total other income (expense), net
|
|
28
|
|
|
21
|
|
|
21
|
|
|
(21,843
|
)
|
|
(21,773
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
$
|
164,475
|
|
|
$
|
7,187
|
|
|
$
|
257
|
|
|
$
|
(74,667
|
)
|
|
$
|
97,252
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit/service revenue
|
|
47
|
%
|
|
31
|
%
|
|
9
|
%
|
|
N/M
|
|
|
39
|
%
|
|||||
Income from operations/service revenue
|
|
33
|
%
|
|
11
|
%
|
|
—
|
%
|
|
N/M
|
|
|
17
|
%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Asset management services
|
|
$
|
144,001
|
|
|
$
|
130,074
|
|
|
11
|
|
|
$
|
420,667
|
|
|
$
|
334,093
|
|
|
26
|
|
Insurance services
|
|
23,560
|
|
|
25,801
|
|
|
(9
|
)
|
|
68,288
|
|
|
74,280
|
|
|
(8
|
)
|
||||
Residential property valuation
|
|
11,438
|
|
|
13,769
|
|
|
(17
|
)
|
|
46,567
|
|
|
47,210
|
|
|
(1
|
)
|
||||
Default management services
|
|
4,499
|
|
|
7,006
|
|
|
(36
|
)
|
|
14,524
|
|
|
20,774
|
|
|
(30
|
)
|
||||
Origination services
|
|
8,268
|
|
|
5,572
|
|
|
48
|
|
|
18,992
|
|
|
15,920
|
|
|
19
|
|
||||
Total service revenue
|
|
191,766
|
|
|
182,222
|
|
|
5
|
|
|
569,038
|
|
|
492,277
|
|
|
16
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset management services
|
|
9,662
|
|
|
23,548
|
|
|
(59
|
)
|
|
32,157
|
|
|
81,386
|
|
|
(60
|
)
|
||||
Insurance services
|
|
1,791
|
|
|
2,140
|
|
|
(16
|
)
|
|
7,026
|
|
|
5,322
|
|
|
32
|
|
||||
Default management services
|
|
516
|
|
|
692
|
|
|
(25
|
)
|
|
1,873
|
|
|
2,320
|
|
|
(19
|
)
|
||||
Origination services
|
|
78
|
|
|
53
|
|
|
47
|
|
|
176
|
|
|
111
|
|
|
59
|
|
||||
Total reimbursable expenses
|
|
12,047
|
|
|
26,433
|
|
|
(54
|
)
|
|
41,232
|
|
|
89,139
|
|
|
(54
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-controlling interests
|
|
883
|
|
|
851
|
|
|
4
|
|
|
1,973
|
|
|
2,457
|
|
|
(20
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
204,696
|
|
|
$
|
209,506
|
|
|
(2
|
)
|
|
$
|
612,243
|
|
|
$
|
583,873
|
|
|
5
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
30,431
|
|
|
$
|
21,108
|
|
|
44
|
|
|
$
|
85,865
|
|
|
$
|
62,112
|
|
|
38
|
|
Outside fees and services
|
|
76,710
|
|
|
66,381
|
|
|
16
|
|
|
220,369
|
|
|
173,103
|
|
|
27
|
|
||||
Reimbursable expenses
|
|
12,047
|
|
|
26,433
|
|
|
(54
|
)
|
|
41,232
|
|
|
89,139
|
|
|
(54
|
)
|
||||
Technology and telecommunications
|
|
12,284
|
|
|
7,856
|
|
|
56
|
|
|
31,275
|
|
|
23,193
|
|
|
35
|
|
||||
Depreciation and amortization
|
|
927
|
|
|
946
|
|
|
(2
|
)
|
|
2,802
|
|
|
2,691
|
|
|
4
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
132,399
|
|
|
$
|
122,724
|
|
|
8
|
|
|
$
|
381,543
|
|
|
$
|
350,238
|
|
|
9
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
1,789
|
|
|
$
|
1,148
|
|
|
56
|
|
|
$
|
7,631
|
|
|
$
|
3,159
|
|
|
142
|
|
Professional services
|
|
1,852
|
|
|
1,278
|
|
|
45
|
|
|
8,502
|
|
|
9,388
|
|
|
(9
|
)
|
||||
Occupancy related costs
|
|
3,486
|
|
|
2,744
|
|
|
27
|
|
|
10,087
|
|
|
8,147
|
|
|
24
|
|
||||
Amortization of intangible assets
|
|
9,542
|
|
|
7,941
|
|
|
20
|
|
|
30,863
|
|
|
21,158
|
|
|
46
|
|
||||
Depreciation and amortization
|
|
750
|
|
|
614
|
|
|
22
|
|
|
2,202
|
|
|
1,768
|
|
|
25
|
|
||||
Marketing costs
|
|
9,003
|
|
|
6,433
|
|
|
40
|
|
|
20,598
|
|
|
16,213
|
|
|
27
|
|
||||
Other
|
|
1,121
|
|
|
3,241
|
|
|
(65
|
)
|
|
3,236
|
|
|
9,355
|
|
|
(65
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
27,543
|
|
|
$
|
23,399
|
|
|
18
|
|
|
$
|
83,119
|
|
|
$
|
69,188
|
|
|
20
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Customer relationship management
|
|
$
|
8,777
|
|
|
$
|
13,138
|
|
|
(33
|
)
|
|
$
|
29,052
|
|
|
$
|
38,323
|
|
|
(24
|
)
|
Asset recovery management
|
|
8,789
|
|
|
8,176
|
|
|
7
|
|
|
28,324
|
|
|
28,654
|
|
|
(1
|
)
|
||||
Total service revenue
|
|
17,566
|
|
|
21,314
|
|
|
(18
|
)
|
|
57,376
|
|
|
66,977
|
|
|
(14
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Asset recovery management
|
|
33
|
|
|
23
|
|
|
43
|
|
|
85
|
|
|
103
|
|
|
(17
|
)
|
||||
Total reimbursable expenses
|
|
33
|
|
|
23
|
|
|
43
|
|
|
85
|
|
|
103
|
|
|
(17
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
17,599
|
|
|
$
|
21,337
|
|
|
(18
|
)
|
|
$
|
57,461
|
|
|
$
|
67,080
|
|
|
(14
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
10,019
|
|
|
$
|
11,843
|
|
|
(15
|
)
|
|
$
|
31,554
|
|
|
$
|
34,797
|
|
|
(9
|
)
|
Outside fees and services
|
|
762
|
|
|
620
|
|
|
23
|
|
|
2,283
|
|
|
2,050
|
|
|
11
|
|
||||
Reimbursable expenses
|
|
33
|
|
|
23
|
|
|
43
|
|
|
85
|
|
|
103
|
|
|
(17
|
)
|
||||
Technology and telecommunications
|
|
1,990
|
|
|
2,486
|
|
|
(20
|
)
|
|
6,409
|
|
|
7,726
|
|
|
(17
|
)
|
||||
Depreciation and amortization
|
|
434
|
|
|
446
|
|
|
(3
|
)
|
|
1,314
|
|
|
1,382
|
|
|
(5
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
13,238
|
|
|
$
|
15,418
|
|
|
(14
|
)
|
|
$
|
41,645
|
|
|
$
|
46,058
|
|
|
(10
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
192
|
|
|
$
|
302
|
|
|
(36
|
)
|
|
$
|
581
|
|
|
$
|
654
|
|
|
(11
|
)
|
Professional services
|
|
251
|
|
|
323
|
|
|
(22
|
)
|
|
565
|
|
|
962
|
|
|
(41
|
)
|
||||
Occupancy related costs
|
|
1,529
|
|
|
1,795
|
|
|
(15
|
)
|
|
4,870
|
|
|
5,641
|
|
|
(14
|
)
|
||||
Amortization of intangible assets
|
|
988
|
|
|
825
|
|
|
20
|
|
|
2,762
|
|
|
2,897
|
|
|
(5
|
)
|
||||
Depreciation and amortization
|
|
572
|
|
|
612
|
|
|
(7
|
)
|
|
1,780
|
|
|
1,826
|
|
|
(3
|
)
|
||||
Other
|
|
470
|
|
|
696
|
|
|
(32
|
)
|
|
1,957
|
|
|
1,876
|
|
|
4
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
4,002
|
|
|
$
|
4,553
|
|
|
(12
|
)
|
|
$
|
12,515
|
|
|
$
|
13,856
|
|
|
(10
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software services
|
|
$
|
30,917
|
|
|
$
|
36,403
|
|
|
(15
|
)
|
|
$
|
88,076
|
|
|
$
|
107,614
|
|
|
(18
|
)
|
IT infrastructure services
|
|
10,627
|
|
|
15,034
|
|
|
(29
|
)
|
|
32,215
|
|
|
51,785
|
|
|
(38
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
41,544
|
|
|
$
|
51,437
|
|
|
(19
|
)
|
|
$
|
120,291
|
|
|
$
|
159,399
|
|
|
(25
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
25,907
|
|
|
$
|
30,046
|
|
|
(14
|
)
|
|
$
|
83,774
|
|
|
$
|
100,304
|
|
|
(16
|
)
|
Outside fees and services
|
|
6
|
|
|
3
|
|
|
100
|
|
|
21
|
|
|
16
|
|
|
31
|
|
||||
Technology and telecommunications
|
|
7,387
|
|
|
8,947
|
|
|
(17
|
)
|
|
23,188
|
|
|
27,837
|
|
|
(17
|
)
|
||||
Depreciation and amortization
|
|
5,257
|
|
|
5,423
|
|
|
(3
|
)
|
|
15,891
|
|
|
16,408
|
|
|
(3
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
38,557
|
|
|
$
|
44,419
|
|
|
(13
|
)
|
|
$
|
122,874
|
|
|
$
|
144,565
|
|
|
(15
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
(38
|
)
|
|
$
|
750
|
|
|
(105
|
)
|
|
$
|
1,004
|
|
|
$
|
2,623
|
|
|
(62
|
)
|
Professional services
|
|
923
|
|
|
402
|
|
|
130
|
|
|
2,474
|
|
|
840
|
|
|
195
|
|
||||
Occupancy related costs
|
|
2,697
|
|
|
3,220
|
|
|
(16
|
)
|
|
8,127
|
|
|
10,349
|
|
|
(21
|
)
|
||||
Amortization of intangible assets
|
|
935
|
|
|
1,352
|
|
|
(31
|
)
|
|
2,807
|
|
|
3,940
|
|
|
(29
|
)
|
||||
Depreciation and amortization
|
|
872
|
|
|
594
|
|
|
47
|
|
|
2,485
|
|
|
1,434
|
|
|
73
|
|
||||
Marketing costs
|
|
227
|
|
|
307
|
|
|
(26
|
)
|
|
717
|
|
|
629
|
|
|
14
|
|
||||
Other
|
|
499
|
|
|
1,003
|
|
|
(50
|
)
|
|
2,499
|
|
|
2,374
|
|
|
5
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
6,115
|
|
|
$
|
7,628
|
|
|
(20
|
)
|
|
$
|
20,113
|
|
|
$
|
22,189
|
|
|
(9
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
12,202
|
|
|
$
|
11,706
|
|
|
4
|
|
|
$
|
33,244
|
|
|
$
|
33,869
|
|
|
(2
|
)
|
Professional services
|
|
1,071
|
|
|
2,005
|
|
|
(47
|
)
|
|
5,992
|
|
|
7,447
|
|
|
(20
|
)
|
||||
Occupancy related costs
|
|
1,191
|
|
|
2,049
|
|
|
(42
|
)
|
|
3,701
|
|
|
6,372
|
|
|
(42
|
)
|
||||
Depreciation and amortization
|
|
363
|
|
|
570
|
|
|
(36
|
)
|
|
1,047
|
|
|
2,128
|
|
|
(51
|
)
|
||||
Marketing costs
|
|
33
|
|
|
424
|
|
|
(92
|
)
|
|
99
|
|
|
1,485
|
|
|
(93
|
)
|
||||
Other
|
|
1,366
|
|
|
(996
|
)
|
|
237
|
|
|
1,879
|
|
|
(1,224
|
)
|
|
254
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
16,226
|
|
|
15,758
|
|
|
3
|
|
|
45,962
|
|
|
50,077
|
|
|
(8
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other income (expense), net
|
|
6,098
|
|
|
6,466
|
|
|
(6
|
)
|
|
16,094
|
|
|
21,843
|
|
|
(26
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total corporate costs
|
|
$
|
22,324
|
|
|
$
|
22,224
|
|
|
—
|
|
|
$
|
62,056
|
|
|
$
|
71,920
|
|
|
(14
|
)
|
(in thousands)
|
|
2016
|
|
2015
|
|
% Increase (decrease)
|
|||||
|
|
|
|
|
|
|
|||||
Net income adjusted for non-cash items
|
|
$
|
115,024
|
|
|
$
|
145,612
|
|
|
(21
|
)
|
Changes in operating assets and liabilities
|
|
(8,989
|
)
|
|
(36,461
|
)
|
|
75
|
|
||
Net cash flows provided by operating activities
|
|
106,035
|
|
|
109,151
|
|
|
(3
|
)
|
||
Net cash flows used in investing activities
|
|
(74,095
|
)
|
|
(39,995
|
)
|
|
(85
|
)
|
||
Net cash flows used in financing activities
|
|
(76,319
|
)
|
|
(80,370
|
)
|
|
5
|
|
||
Net decrease in cash and cash equivalents
|
|
(44,379
|
)
|
|
(11,214
|
)
|
|
(296
|
)
|
||
Cash and cash equivalents at the beginning of the period
|
|
179,327
|
|
|
161,361
|
|
|
11
|
|
||
|
|
|
|
|
|
|
|||||
Cash and cash equivalents at the end of the period
|
|
$
|
134,948
|
|
|
$
|
150,147
|
|
|
(10
|
)
|
•
|
Review the processes related to the impairment assessment of long-lived and indefinite-lived assets
|
•
|
Enhance review controls relating to the review of impairment indicators of long-lived assets and the impairment analysis of indefinite-lived assets
|
•
|
Test and evaluate the design and operating effectiveness of the control procedures
|
•
|
Assess the effectiveness of the remediation plan
|
Period
|
|
Total number of shares purchased
(1)
|
|
Weighted average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs
(2)
|
|
Maximum number of shares that may yet be purchased under the plans or programs
(2)
|
|||||
|
|
|
|
|
|
|
|
|
|||||
Common stock:
|
|
|
|
|
|
|
|
|
|||||
July 1 – 31, 2016
|
|
43,880
|
|
|
$
|
25.15
|
|
|
43,880
|
|
|
4,476,277
|
|
August 1 – 31, 2016
|
|
396,950
|
|
|
28.38
|
|
|
396,950
|
|
|
4,079,327
|
|
|
September 1 – 30, 2016
|
|
66,860
|
|
|
32.77
|
|
|
66,860
|
|
|
4,012,467
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
507,690
|
|
|
$
|
28.68
|
|
|
507,690
|
|
|
4,012,467
|
|
(1)
|
May include shares withheld from employees to satisfy tax withholding obligations that arose from the exercise of stock options.
|
(2)
|
On
May 18, 2016
, our shareholders authorized a new share repurchase program that replaces the prior program and authorizes us to purchase up to
4.6 million
shares of our common stock in the open market.
|
*
|
10.1
|
Non-Qualified Stock Option Award Agreement between the Company and Gregory J. Ritts, dated as of August 29, 2016
|
|
|
|
*
|
10.2
|
Non-Qualified Stock Option Award Agreement between the Company and Vivek Bhandari, dated as of August 29, 2016
|
|
|
|
|
10.3
|
Form of Director Restricted Share Award Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 24, 2016)
|
|
|
|
|
10.4
|
Amendment and Waiver Agreement dated September 30, 2016 between Altisource Solutions S.à r.l. and Altisource Residential Corporation (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on October 3, 2016)
|
|
|
|
*
|
31.1
|
Section 302 Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)
|
|
|
|
*
|
31.2
|
Section 302 Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)
|
|
|
|
*
|
32.1
|
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
*
|
101
|
Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016 is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2016 and 2015; (iii) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2016 and 2015; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
*
|
Filed herewith
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
October 27, 2016
|
By:
|
/s/ Michelle D. Esterman
|
|
|
|
Michelle D. Esterman
|
|
|
|
Chief Financial Officer
|
|
|
|
(On behalf of the Registrant and as its Principal Financial Officer)
|
1.
|
OPTION GRANT
|
2.
|
OPTION TERM
|
3.
|
VESTING OF OPTIONS
|
A.
|
Vesting Schedule
|
(1)
|
Time-Based Vesting
. Subject to the provisions of Sections 5 and 6 below, fifty percent (50%) of the Options (the “Time-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Time-Based Options shall vest on each anniversary of the date of this Agreement commencing on the first anniversary of this Agreement and continuing until all Time-Based Options are vested.
|
(2)
|
Performance-Based Vesting
. Fifty percent (50%) of the Options shall be performance awards pursuant to Section 6.04 of the 2009 Plan (the “Performance-Based Options”) and shall vest based on the achievement of the following performance criteria as follows, subject in each case to the provisions of Sections 5 and 6 below.
|
(a)
|
Ordinary Performance-Based Vesting.
Two-thirds (2/3) of the Performance-Based Options (the “Ordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Ordinary Performance-Based Options shall vest on the date as of which both of the following performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds two times the Strike Price,
and
(y) investors achieve a 20%
Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Ordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.
|
(b)
|
Extraordinary Performance-Based Vesting
. One-third (1/3) of the Performance-Based Options (the “Extraordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One- third (1/3) of the Extraordinary Performance-Based Options shall vest on the date as of which
both
of the following extraordinary performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds three times the Strike Price,
and
(y) investors achieve a 25% Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Extraordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.
|
B.
|
Accelerated Vesting
|
(1)
|
If the Employee’s employment is terminated by reason of (a) death or Disability or (b) Retirement, then the Time-Based Options shall vest and shall become immediately exercisable in full on the date of such termination;
provided
,
however
, that the Employee’s right to such accelerated vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, or three (3) years on the date of Retirement, unless otherwise determined by the Company in its sole discretion.
|
(2)
|
If the Employee’s employment is terminated by reason of death or Disability, then the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall remain outstanding, subject to vesting only upon satisfaction of the respective criteria for the vesting of such options set forth in Section 3, Subsection A above;
provided
,
however
, that the Employee’s right to such continued vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, unless otherwise determined by the Company in its sole discretion.
|
C.
|
General
|
4.
|
METHOD OF OPTION EXERCISE
|
A.
|
Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice to the Company at its executive offices to the attention of the Corporate Secretary of the Company (the “Secretary”). Such notice shall state the election to exercise the Options, shall state the number of shares in respect of which it is being exercised (the “Purchased Shares”) and shall be signed by the person or persons so exercising the Options. In no case may the Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, the Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise the Options.
|
B.
|
Such notice shall be accompanied by (i) a personal check payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (ii) delivery to the Company of the number of Shares duly endorsed for transfer and owned by the Employee that have an aggregate Fair Market Value equal to the aggregate purchase price of the Purchased Shares or (iii) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Compensation Committee of the Board of Directors (the “Committee”). “Fair Market Value” shall have the meaning given to that term in the 2009 Plan. In addition to and at the time of payment of the purchase price, the person exercising the Options shall pay to the Company the full amount of any federal and state withholding or other taxes applicable to the taxable income of such person resulting from such exercise in cash unless the Committee in its sole discretion shall permit such taxes to be paid in Shares. Such payment may also be made in the form of payroll withholding, at the election of the option holder. The Company shall issue the Shares of the said Purchased Shares as soon as practicable after receipt of the notice and all required payments by the person or persons exercising the Options as provided in Section 4, Subsection A above. Unless the person or persons exercising the Options shall otherwise direct the Company in writing, such Shares shall be registered in the name of the person or persons so exercising the Options and shall be delivered as aforesaid to or upon the written order of the person or persons exercising the Options.
|
C.
|
In the event the Options shall be exercised, pursuant to Sections 3 and 5 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Options.
|
D.
|
The date of exercise of the Options shall be the date on which the notice, the documents and all payments required under this Section 4 are received by or arranged with the Secretary. If such notice is received after the market closes, the following trading day will be considered the date of exercise. All Shares that shall be purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.
|
E.
|
The Company may require the Employee to exercise the Options electronically through the Shareworks system or any other online system pursuant to the procedures set forth therein as determined by the Company in its sole discretion.
|
F.
|
The Company may amend the procedures set forth in Section 4, Subsections A through E in its sole discretion.
|
5.
|
TERMINATION OF OPTIONS
|
A.
|
The Options shall terminate upon the exercise of such Options in the manner provided in this Agreement and the 2009 Plan, whether or not the Shares are ultimately delivered.
|
B.
|
Except as may otherwise be provided in Section 5, Subsection C below for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date;
provided, however
, that in the event that the applicable ordinary performance and/or extraordinary performance conditions are achieved prior to the tenth anniversary of the Grant Date, the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall terminate on the earlier to occur of: (1) the third anniversary of the date the relevant performance criteria are achieved, or (2) the tenth anniversary of the Grant Date. For the avoidance of doubt, the achievement of performance conditions for the Performance-Based Options only will not extend the life of the Extraordinary Performance-Based Options beyond the tenth anniversary of the date of this Agreement. For the further avoidance of doubt, in the event of an employment termination described
|
C.
|
If, prior to exercise, expiration, surrender or cancellation of the Options, the Employee’s employment terminates, the Options shall terminate in accordance with the 2009 Plan except as follows:
|
(1)
|
by reason of Disability, then the Options shall terminate not later than (a) five (5) years after the date of such termination of employment or (b) the end of the Option’s term, whichever occurs first. In the event of the death of the Employee after such termination of employment, the Options shall terminate on the earlier to occur of: (i) three (3) years after the date of the Employee’s death; or (ii) the end of the Option’s term, during which period the Options may be exercised by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.
|
(2)
|
by reason of death, then the Options shall terminate no later than (a) three (3) years after the date of the Employee’s death or (b) the end of the Option’s term, whichever occurs first, during which period the Options may be exercised at any time by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.
|
(3)
|
by reason of termination of employment by the Company for Cause, then all Options shall terminate on such date of termination of employment.
|
(4)
|
by reason of termination of employment by the Employee (subject to Section 5, Subsection C(5) below with respect to Retirement), then all unvested Options shall terminate on such date of termination of employment and all vested Options shall terminate on the date that is six (6) months after the date of such termination of employment.
|
(5)
|
by reason of termination of employment by the Company without Cause or Retirement of the Employee, then if the respective performance criteria for Ordinary Performance-Based Options or Extraordinary Performance-Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the later of (x) the six (6) month anniversary of the date such Option vests, or (y) the six (6) month anniversary of the date of such termination of employment, and (ii) if the respective performance criteria for such Ordinary Performance-Based Options or Extraordinary Performance-Based Options have not been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the ninety (90) day anniversary of the date of termination of employment. Notwithstanding the foregoing, if the respective performance criteria for the Ordinary Performance-Based Options or the Extraordinary Performance Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, the Company will have the right in its sole discretion to require the Employee to exercise all or part of such Ordinary Performance-Based Options or such Extraordinary Performance-Based Options at any time. For the avoidance of doubt, in no event shall this Section 5, Subsection C(4) extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.
|
D.
|
The Employee’s right to retain any Options following termination of employment under this Section 5 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of such termination of employment, or three (3) years in the case of Retirement, unless otherwise determined by the Company in its sole discretion.
|
6.
|
CONDITIONS UPON TERMINATION OF EMPLOYMENT
|
A.
|
For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not (A) engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company, (B) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire or engagement as an independent contractor elsewhere, (C) in any way interfere with the relationship between any customer, supplier, licensee or business relation of the Company or (D) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted by Company.
|
B.
|
For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times for consultations at the request of the Company’s management with respect to phases of the business with which the Employee was actively connected during the Employee’s employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.
|
C.
|
The Employee acknowledges that the Company would not have awarded the Options granted to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.
|
D.
|
In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies available to the Company at law or in equity (a) the Options, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the market value (on the date of exercise) of any Shares acquired on exercise of the Options less the exercise price paid for such Shares (the “Share Value”) to the extent such Shares were acquired by the Employee upon exercise of the Options at any time from 180 days prior to the earlier of (i) the date of termination of employment or (ii) the date the Employee fails to comply with any promise made in this Section 6, to 180 days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount (either in cash or in Shares) to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company.
|
E.
|
The Employee further acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 6, Subsection (D) above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants.
|
F.
|
Any determination by the Board of Directors with regard to Section 6, Subsections (D) and (E) shall be conclusive.
|
7.
|
ADJUSTMENT UPON CHANGES IN STOCK; CHANGE OF CONTROL/RESTRUCTURING EVENT
|
A.
|
Except to the extent governed by Section 7, Subsection (B) below, if there shall be any change in the Shares subject to the Options granted hereunder, through merger, consolidation, reorganization,
|
B.
|
If a Change of Control/Restructuring Event occurs, the acquiring person or entity shall have the right to cancel the Options in exchange for a payment equal to the then intrinsic value of the Options as determined by the Board, effective as of the Change of Control/Restructuring Date, or to allow the Options to continue in full force and effect in accordance with the terms hereof. If the Options are to remain in place following such Change of Control/Restructuring Event, the Board shall have the right in its discretion to make appropriate adjustments in the aggregate number and kind of Shares and the price per Share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such Change of Control/Restructuring Event. Such discretions shall include the authority to replace outstanding Options with any one or more of the following: (a) adjusted options of the Company; (b) adjusted options on the equity of any separate company surviving such Change of Control/Restructuring event; and (c) a combination of adjusted options on the shares of both the Company and the separate company, as such Board sees as equitable. In the event of any such option adjustment and/or conversion, such Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement.
|
C.
|
The 2009 Plan and Agreement and the awards granted hereunder shall not affect the right of the Company to reclassify, recapitalize, issue equity or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, wind up or otherwise reorganize. The Board of Directors shall have the discretion to make adjustments to the awards made hereunder to reflect any changes that the Board of Directors deems appropriate as a result of any sale, an IPO, business combination, acquisition, recapitalization, reclassification, merger, consolidation, reorganization, stock dividend, stock split, spin off of one or more divisions or subsidiaries, a “going private” transaction (which shall mean any transaction that results in the occurrence of any of the following events: (i) Altisource’s common stock is no longer listed on any national securities exchange or quoted on the Nasdaq National Market or other securities quotation system; (ii) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (iii) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the awards. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the awards made hereunder to avoid inequitable dilution or enlargement of award
|
8.
|
NON-TRANSFERABILITY OF OPTIONS
|
9.
|
PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS
|
10.
|
DEFINITIONS
|
A.
|
As used herein, the term “Annualized Rate of Return” shall be determined as a function of the Corporation’s stock price appreciation and dividends and other distributions over the Strike Price. For this purpose, dividends and other distributions shall be deemed reinvested in stock of the Company on the date such dividends and distributions are paid to shareholders. The Committee shall make all determinations of Annualized Rate of Return under this Agreement at its sole discretion.
|
B.
|
As used herein, the term “Cause” shall mean, as reasonably determined by the Board of Directors (excluding the Employee, if the Employee is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement, whether or not committed in the course of the Employee’s employment with the Company.
|
C.
|
As used herein, “Change of Control/Restructuring Date” shall mean either the date (i) which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or (ii) a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”
|
D.
|
As used herein, a “Change of Control/Restructuring Event” shall mean (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a
|
E.
|
As used herein, the term “Confidential Information” shall mean all information relating to Company, including any of its subsidiaries, customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.
|
F.
|
As used herein, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.
|
G.
|
As used herein, the term “Retirement” shall mean termination (other than by reason of death or Disability) of the Employee’s employment with the Company or one of its subsidiaries pursuant to and in accordance with a plan or program of the Company or subsidiary applicable to the Employee provided, however, that for purposes of this Agreement only, the Employee must have attained the age of sixty (60) and been an employee of the Company for not less than three (3) years as of the date of termination of employment by reason of Retirement.
|
11.
|
AMENDMENT
|
12.
|
CONSTRUCTION
|
13.
|
ENTIRE AGREEMENT
|
14.
|
HEADINGS
|
15.
|
CONFIRMING INFORMATION
|
I hereby agree to and accept the terms of this Agreement.
Employee
_______________________________
Gregory J. Ritts
|
|
|
|
|
|
Altisource Portfolio Solutions S.A.
By: ___________________________
Name: William B. Shepro
Title: Chief Executive Officer
|
|
Attested by: ____________________
Name: Kevin J. Wilcox
Title: Chief Administration and Risk Officer
|
|
1.
|
OPTION GRANT
|
2.
|
OPTION TERM
|
3.
|
VESTING OF OPTIONS
|
A.
|
Vesting Schedule
|
(1)
|
Time-Based Vesting
. Subject to the provisions of Sections 5 and 6 below, fifty percent (50%) of the Options (the “Time-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Time-Based Options shall vest on each anniversary of the date of this Agreement commencing on the first anniversary of this Agreement and continuing until all Time-Based Options are vested.
|
(2)
|
Performance-Based Vesting
. Fifty percent (50%) of the Options shall be performance awards pursuant to Section 6.04 of the 2009 Plan (the “Performance-Based Options”) and shall vest based on the achievement of the following performance criteria as follows, subject in each case to the provisions of Sections 5 and 6 below.
|
(a)
|
Ordinary Performance-Based Vesting.
Two-thirds (2/3) of the Performance-Based Options (the “Ordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One-third (1/3) of the Ordinary Performance-Based Options shall vest on the date as of which both of the following performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds two times the Strike Price,
and
(y) investors achieve a 20%
Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Ordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.
|
(b)
|
Extraordinary Performance-Based Vesting
. One-third (1/3) of the Performance-Based Options (the “Extraordinary Performance-Based Options”) shall vest in three (3) equal annual increments, as follows. One- third (1/3) of the Extraordinary Performance-Based Options shall vest on the date as of which
both
of the following extraordinary performance criteria have been met: (x) the per share price of the Shares at any time from the date of this Agreement equals or exceeds three times the Strike Price,
and
(y) investors achieve a 25% Annualized Rate of Return from the date of this Agreement based on the Strike Price. Thereafter, one-third (1/3) of the Extraordinary Performance-Based Options shall automatically vest on each of the consecutive two (2) anniversaries of the date of such initial vesting.
|
B.
|
Accelerated Vesting
|
(1)
|
If the Employee’s employment is terminated by reason of (a) death or Disability or (b) Retirement, then the Time-Based Options shall vest and shall become immediately exercisable in full on the date of such termination;
provided
,
however
, that the Employee’s right to such accelerated vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, or three (3) years on the date of Retirement, unless otherwise determined by the Company in its sole discretion.
|
(2)
|
If the Employee’s employment is terminated by reason of death or Disability, then the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall remain outstanding, subject to vesting only upon satisfaction of the respective criteria for the vesting of such options set forth in Section 3, Subsection A above;
provided
,
however
, that the Employee’s right to such continued vesting is subject to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of death or Disability, unless otherwise determined by the Company in its sole discretion.
|
C.
|
General
|
4.
|
METHOD OF OPTION EXERCISE
|
A.
|
Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice to the Company at its executive offices to the attention of the Corporate Secretary of the Company (the “Secretary”). Such notice shall state the election to exercise the Options, shall state the number of shares in respect of which it is being exercised (the “Purchased Shares”) and shall be signed by the person or persons so exercising the Options. In no case may the Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, the Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise the Options.
|
B.
|
Such notice shall be accompanied by (i) a personal check payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (ii) delivery to the Company of the number of Shares duly endorsed for transfer and owned by the Employee that have an aggregate Fair Market Value equal to the aggregate purchase price of the Purchased Shares or (iii) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Compensation Committee of the Board of Directors (the “Committee”). “Fair Market Value” shall have the meaning given to that term in the 2009 Plan. In addition to and at the time of payment of the purchase price, the person exercising the Options shall pay to the Company the full amount of any federal and state withholding or other taxes applicable to the taxable income of such person resulting from such exercise in cash unless the Committee in its sole discretion shall permit such taxes to be paid in Shares. Such payment may also be made in the form of payroll withholding, at the election of the option holder. The Company shall issue the Shares of the said Purchased Shares as soon as practicable after receipt of the notice and all required payments by the person or persons exercising the Options as provided in Section 4, Subsection A above. Unless the person or persons exercising the Options shall otherwise direct the Company in writing, such Shares shall be registered in the name of the person or persons so exercising the Options and shall be delivered as aforesaid to or upon the written order of the person or persons exercising the Options.
|
C.
|
In the event the Options shall be exercised, pursuant to Sections 3 and 5 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Options.
|
D.
|
The date of exercise of the Options shall be the date on which the notice, the documents and all payments required under this Section 4 are received by or arranged with the Secretary. If such notice is received after the market closes, the following trading day will be considered the date of exercise. All Shares that shall be purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.
|
E.
|
The Company may require the Employee to exercise the Options electronically through the Shareworks system or any other online system pursuant to the procedures set forth therein as determined by the Company in its sole discretion.
|
F.
|
The Company may amend the procedures set forth in Section 4, Subsections A through E in its sole discretion.
|
5.
|
TERMINATION OF OPTIONS
|
A.
|
The Options shall terminate upon the exercise of such Options in the manner provided in this Agreement and the 2009 Plan, whether or not the Shares are ultimately delivered.
|
B.
|
Except as may otherwise be provided in Section 5, Subsection C below for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date;
provided, however
, that in the event that the applicable ordinary performance and/or extraordinary performance conditions are achieved prior to the tenth anniversary of the Grant Date, the Ordinary Performance-Based Options and the Extraordinary Performance-Based Options shall terminate on the earlier to occur of: (1) the third anniversary of the date the relevant performance criteria are achieved, or (2) the tenth anniversary of the Grant Date. For the avoidance of doubt, the achievement of performance conditions for the Performance-Based Options only will not extend the life of the Extraordinary Performance-Based Options beyond the tenth anniversary of the date of this Agreement. For the further avoidance of doubt, in the event of an employment termination described
|
C.
|
If, prior to exercise, expiration, surrender or cancellation of the Options, the Employee’s employment terminates, the Options shall terminate in accordance with the 2009 Plan except as follows:
|
(1)
|
by reason of Disability, then the Options shall terminate not later than (a) five (5) years after the date of such termination of employment or (b) the end of the Option’s term, whichever occurs first. In the event of the death of the Employee after such termination of employment, the Options shall terminate on the earlier to occur of: (i) three (3) years after the date of the Employee’s death; or (ii) the end of the Option’s term, during which period the Options may be exercised by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.
|
(2)
|
by reason of death, then the Options shall terminate no later than (a) three (3) years after the date of the Employee’s death or (b) the end of the Option’s term, whichever occurs first, during which period the Options may be exercised at any time by the person or persons to whom the Employee’s rights shall pass by will or by the applicable laws of descent or distribution.
|
(3)
|
by reason of termination of employment by the Company for Cause, then all Options shall terminate on such date of termination of employment.
|
(4)
|
by reason of termination of employment by the Employee (subject to Section 5, Subsection C(5) below with respect to Retirement), then all unvested Options shall terminate on such date of termination of employment and all vested Options shall terminate on the date that is six (6) months after the date of such termination of employment.
|
(5)
|
by reason of termination of employment by the Company without Cause or Retirement of the Employee, then if the respective performance criteria for Ordinary Performance-Based Options or Extraordinary Performance-Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the later of (x) the six (6) month anniversary of the date such Option vests, or (y) the six (6) month anniversary of the date of such termination of employment, and (ii) if the respective performance criteria for such Ordinary Performance-Based Options or Extraordinary Performance-Based Options have not been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Ordinary Performance-Based Options or Extraordinary Performance-Based Options, as applicable, shall terminate on the ninety (90) day anniversary of the date of termination of employment. Notwithstanding the foregoing, if the respective performance criteria for the Ordinary Performance-Based Options or the Extraordinary Performance Based Options have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, the Company will have the right in its sole discretion to require the Employee to exercise all or part of such Ordinary Performance-Based Options or such Extraordinary Performance-Based Options at any time. For the avoidance of doubt, in no event shall this Section 5, Subsection C(4) extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.
|
D.
|
The Employee’s right to retain any Options following termination of employment under this Section 5 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years on the date of such termination of employment, or three (3) years in the case of Retirement, unless otherwise determined by the Company in its sole discretion.
|
6.
|
CONDITIONS UPON TERMINATION OF EMPLOYMENT
|
A.
|
For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not (A) engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company, (B) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire or engagement as an independent contractor elsewhere, (C) in any way interfere with the relationship between any customer, supplier, licensee or business relation of the Company or (D) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted by Company.
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B.
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For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times for consultations at the request of the Company’s management with respect to phases of the business with which the Employee was actively connected during the Employee’s employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.
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C.
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The Employee acknowledges that the Company would not have awarded the Options granted to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.
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D.
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In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies available to the Company at law or in equity (a) the Options, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the market value (on the date of exercise) of any Shares acquired on exercise of the Options less the exercise price paid for such Shares (the “Share Value”) to the extent such Shares were acquired by the Employee upon exercise of the Options at any time from 180 days prior to the earlier of (i) the date of termination of employment or (ii) the date the Employee fails to comply with any promise made in this Section 6, to 180 days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount (either in cash or in Shares) to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company.
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E.
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The Employee further acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 6, Subsection (D) above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants.
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F.
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Any determination by the Board of Directors with regard to Section 6, Subsections (D) and (E) shall be conclusive.
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7.
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ADJUSTMENT UPON CHANGES IN STOCK; CHANGE OF CONTROL/RESTRUCTURING EVENT
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A.
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Except to the extent governed by Section 7, Subsection (B) below, if there shall be any change in the Shares subject to the Options granted hereunder, through merger, consolidation, reorganization,
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B.
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If a Change of Control/Restructuring Event occurs, the acquiring person or entity shall have the right to cancel the Options in exchange for a payment equal to the then intrinsic value of the Options as determined by the Board, effective as of the Change of Control/Restructuring Date, or to allow the Options to continue in full force and effect in accordance with the terms hereof. If the Options are to remain in place following such Change of Control/Restructuring Event, the Board shall have the right in its discretion to make appropriate adjustments in the aggregate number and kind of Shares and the price per Share subject to the Options. Further, the Board shall adjust the ordinary performance conditions and extraordinary performance conditions as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such Change of Control/Restructuring Event. Such discretions shall include the authority to replace outstanding Options with any one or more of the following: (a) adjusted options of the Company; (b) adjusted options on the equity of any separate company surviving such Change of Control/Restructuring event; and (c) a combination of adjusted options on the shares of both the Company and the separate company, as such Board sees as equitable. In the event of any such option adjustment and/or conversion, such Board shall attempt to reasonably approximate the aggregate value of the Employee’s outstanding Options under this Agreement.
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C.
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The 2009 Plan and Agreement and the awards granted hereunder shall not affect the right of the Company to reclassify, recapitalize, issue equity or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, wind up or otherwise reorganize. The Board of Directors shall have the discretion to make adjustments to the awards made hereunder to reflect any changes that the Board of Directors deems appropriate as a result of any sale, an IPO, business combination, acquisition, recapitalization, reclassification, merger, consolidation, reorganization, stock dividend, stock split, spin off of one or more divisions or subsidiaries, a “going private” transaction (which shall mean any transaction that results in the occurrence of any of the following events: (i) Altisource’s common stock is no longer listed on any national securities exchange or quoted on the Nasdaq National Market or other securities quotation system; (ii) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (iii) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the awards. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the awards made hereunder to avoid inequitable dilution or enlargement of award
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8.
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NON-TRANSFERABILITY OF OPTIONS
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9.
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PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS
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10.
|
DEFINITIONS
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A.
|
As used herein, the term “Annualized Rate of Return” shall be determined as a function of the Corporation’s stock price appreciation and dividends and other distributions over the Strike Price. For this purpose, dividends and other distributions shall be deemed reinvested in stock of the Company on the date such dividends and distributions are paid to shareholders. The Committee shall make all determinations of Annualized Rate of Return under this Agreement at its sole discretion.
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B.
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As used herein, the term “Cause” shall mean, as reasonably determined by the Board of Directors (excluding the Employee, if the Employee is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement, whether or not committed in the course of the Employee’s employment with the Company.
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C.
|
As used herein, “Change of Control/Restructuring Date” shall mean either the date (i) which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or (ii) a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”
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D.
|
As used herein, a “Change of Control/Restructuring Event” shall mean (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a
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E.
|
As used herein, the term “Confidential Information” shall mean all information relating to Company, including any of its subsidiaries, customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.
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F.
|
As used herein, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.
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G.
|
As used herein, the term “Retirement” shall mean termination (other than by reason of death or Disability) of the Employee’s employment with the Company or one of its subsidiaries pursuant to and in accordance with a plan or program of the Company or subsidiary applicable to the Employee provided, however, that for purposes of this Agreement only, the Employee must have attained the age of sixty (60) and been an employee of the Company for not less than three (3) years as of the date of termination of employment by reason of Retirement.
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11.
|
AMENDMENT
|
12.
|
CONSTRUCTION
|
13.
|
ENTIRE AGREEMENT
|
14.
|
HEADINGS
|
15.
|
CONFIRMING INFORMATION
|
I hereby agree to and accept the terms of this Agreement.
Employee
_______________________________
Vivek Bhandari
|
|
|
|
|
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Altisource Portfolio Solutions S.A.
By: ___________________________
Name: William B. Shepro
Title: Chief Executive Officer
|
|
Attested by: ____________________
Name: Kevin J. Wilcox
Title: Chief Administration and Risk Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
September 30, 2016
of Altisource Portfolio Solutions S.A.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
October 27, 2016
|
By:
|
/s/ William B. Shepro
|
|
|
|
William B. Shepro
|
|
|
|
Director and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
September 30, 2016
of Altisource Portfolio Solutions S.A.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
October 27, 2016
|
By:
|
/s/ Michelle D. Esterman
|
|
|
|
Michelle D. Esterman
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer and
Principal Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ William B. Shepro
|
|
By:
|
/s/ Michelle D. Esterman
|
|
William B. Shepro
|
|
|
Michelle D. Esterman
|
|
Director and Chief Executive Officer
|
|
|
Chief Financial Officer
|
|
(Principal Executive Officer)
|
|
|
(Principal Financial Officer and
Principal Accounting Officer)
|
|
October 27, 2016
|
|
|
October 27, 2016
|