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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
o
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Accelerated filer
þ
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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June 30,
2018 |
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December 31,
2017 |
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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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84,569
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$
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105,006
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Investment in equity securities
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43,185
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49,153
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Accounts receivable, net
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45,426
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52,740
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Prepaid expenses and other current assets
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70,009
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64,742
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Total current assets
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243,189
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271,641
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Premises and equipment, net
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58,820
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73,273
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Goodwill
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86,283
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86,283
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Intangible assets, net
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105,374
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120,065
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Deferred tax assets, net
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305,056
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303,707
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Other assets
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11,174
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10,195
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Total assets
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$
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809,896
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$
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865,164
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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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67,646
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$
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84,400
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Current portion of long-term debt
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41,200
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5,945
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Deferred revenue
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19,131
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9,802
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Other current liabilities
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5,889
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9,414
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Total current liabilities
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133,866
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109,561
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Long-term debt, less current portion
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354,332
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403,336
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Other non-current liabilities
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9,407
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12,282
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Commitments, contingencies and regulatory matters (Note 19)
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Equity:
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Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,027 outstanding as of June 30, 2018; 100,000 shares authorized, 25,413 shares issued and 17,418 outstanding as of December 31, 2017)
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25,413
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25,413
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Additional paid-in capital
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116,586
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112,475
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Retained earnings
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596,268
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626,600
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Accumulated other comprehensive income
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—
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733
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Treasury stock, at cost (8,386 shares as of June 30, 2018 and 7,995 shares as of December 31, 2017)
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(427,380
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)
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(426,609
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)
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Altisource equity
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310,887
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338,612
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Non-controlling interests
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1,404
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1,373
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Total equity
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312,291
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339,985
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Total liabilities and equity
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$
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809,896
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$
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865,164
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Three months ended
June 30, |
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Six months ended
June 30, |
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2018
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2017
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2018
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2017
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Revenue
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$
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218,556
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$
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250,685
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$
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415,994
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$
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491,168
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Cost of revenue
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163,206
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185,393
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310,400
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363,346
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Gross profit
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55,350
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65,292
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105,594
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127,822
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Selling, general and administrative expenses
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42,924
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52,470
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86,048
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100,171
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Income from operations
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12,426
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12,822
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19,546
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27,651
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Other income (expense), net:
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Interest expense
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(7,027
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)
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(5,465
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)
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(12,890
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)
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(11,263
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)
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Unrealized gain (loss) on investment in equity securities (Note 3)
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1,533
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—
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(5,968
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)
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—
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Other income (expense), net
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(3,861
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)
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4,803
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(2,589
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)
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5,518
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Total other income (expense), net
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(9,355
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)
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(662
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)
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(21,447
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)
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(5,745
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)
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Income (loss) before income taxes and non-controlling interests
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3,071
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12,160
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(1,901
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)
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21,906
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Income tax (provision) benefit
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(816
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)
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(2,438
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)
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549
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(5,024
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)
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Net income (loss)
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2,255
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9,722
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(1,352
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)
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16,882
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Net income attributable to non-controlling interests
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(687
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)
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(687
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)
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(1,212
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)
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(1,302
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)
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Net income (loss) attributable to Altisource
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$
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1,568
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$
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9,035
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$
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(2,564
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)
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$
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15,580
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Earnings (loss) per share:
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Basic
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$
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0.09
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$
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0.49
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$
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(0.15
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)
|
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$
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0.84
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Diluted
|
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$
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0.09
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$
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0.48
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$
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(0.15
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)
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$
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0.82
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||||||||
Weighted average shares outstanding:
|
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||||||||
Basic
|
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17,142
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18,335
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17,260
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|
|
18,497
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Diluted
|
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17,553
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18,836
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17,260
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19,069
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Comprehensive income (loss):
|
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Net income (loss)
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$
|
2,255
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$
|
9,722
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$
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(1,352
|
)
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$
|
16,882
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|
Other comprehensive income (loss), net of tax:
|
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||||||||
Reclassification of unrealized gain on investment in equity securities, net of income tax provision of $200, to retained earnings from the cumulative effect of an accounting change (Note 1)
|
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—
|
|
|
—
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|
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(733
|
)
|
|
—
|
|
||||
Unrealized (loss) gain on investment in equity securities, net of income tax benefit (provision) of $0, $2,593, $0, $(2,132)
|
|
—
|
|
|
(6,981
|
)
|
|
—
|
|
|
5,742
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss), net of tax
|
|
2,255
|
|
|
2,741
|
|
|
(2,085
|
)
|
|
22,624
|
|
||||
Comprehensive income attributable to non-controlling interests
|
|
(687
|
)
|
|
(687
|
)
|
|
(1,212
|
)
|
|
(1,302
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss) attributable to Altisource
|
|
$
|
1,568
|
|
|
$
|
2,054
|
|
|
$
|
(3,297
|
)
|
|
$
|
21,322
|
|
|
Altisource Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive income (loss)
|
|
Treasury stock, at cost
|
|
Non-controlling interests
|
|
Total
|
|||||||||||||||||
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2016
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
107,288
|
|
|
$
|
333,786
|
|
|
$
|
(1,745
|
)
|
|
$
|
(403,953
|
)
|
|
$
|
1,405
|
|
|
$
|
62,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
15,580
|
|
|
—
|
|
|
—
|
|
|
1,302
|
|
|
16,882
|
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,742
|
|
|
—
|
|
|
—
|
|
|
5,742
|
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,056
|
)
|
|
(1,056
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
1,858
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,858
|
|
|||||||
Cumulative effect of an accounting change (Note 13)
|
—
|
|
|
—
|
|
|
932
|
|
|
(932
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Exercise of stock options and issuance of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,014
|
)
|
|
—
|
|
|
5,779
|
|
|
—
|
|
|
765
|
|
|||||||
Treasury shares withheld for the payment of tax on restricted share issuances
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,494
|
)
|
|
—
|
|
|
405
|
|
|
—
|
|
|
(1,089
|
)
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,573
|
)
|
|
—
|
|
|
(18,573
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2017
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
110,078
|
|
|
$
|
341,926
|
|
|
$
|
3,997
|
|
|
$
|
(416,342
|
)
|
|
$
|
1,651
|
|
|
$
|
66,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2017
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
112,475
|
|
|
$
|
626,600
|
|
|
$
|
733
|
|
|
$
|
(426,609
|
)
|
|
$
|
1,373
|
|
|
$
|
339,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,564
|
)
|
|
—
|
|
|
—
|
|
|
1,212
|
|
|
(1,352
|
)
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,181
|
)
|
|
(1,181
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
4,111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,111
|
|
|||||||
Cumulative effect of accounting changes (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,715
|
)
|
|
(733
|
)
|
|
—
|
|
|
—
|
|
|
(10,448
|
)
|
|||||||
Exercise of stock options and issuance of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,237
|
)
|
|
—
|
|
|
19,944
|
|
|
—
|
|
|
2,707
|
|
|||||||
Treasury shares withheld for the payment of tax on restricted share issuances and stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
(816
|
)
|
|
—
|
|
|
406
|
|
|
—
|
|
|
(410
|
)
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,121
|
)
|
|
—
|
|
|
(21,121
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2018
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
116,586
|
|
|
$
|
596,268
|
|
|
$
|
—
|
|
|
$
|
(427,380
|
)
|
|
$
|
1,404
|
|
|
$
|
312,291
|
|
|
Six months ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(1,352
|
)
|
|
$
|
16,882
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
17,049
|
|
|
18,895
|
|
||
Amortization of intangible assets
|
14,691
|
|
|
18,539
|
|
||
Change in the fair value of acquisition related contingent consideration
|
—
|
|
|
16
|
|
||
Unrealized loss on investment in equity securities
|
5,968
|
|
|
—
|
|
||
Share-based compensation expense
|
4,111
|
|
|
1,858
|
|
||
Bad debt expense
|
1,503
|
|
|
2,890
|
|
||
Gain on early extinguishment of debt
|
—
|
|
|
(3,937
|
)
|
||
Amortization of debt discount
|
298
|
|
|
156
|
|
||
Amortization of debt issuance costs
|
502
|
|
|
433
|
|
||
Deferred income taxes
|
(1,349
|
)
|
|
—
|
|
||
Loss on disposal of fixed assets
|
558
|
|
|
2,798
|
|
||
Loss on debt refinancing (Note 10)
|
4,434
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
6,923
|
|
|
11,954
|
|
||
Prepaid expenses and other current assets
|
(5,267
|
)
|
|
(6,811
|
)
|
||
Other assets
|
967
|
|
|
523
|
|
||
Accounts payable and accrued expenses
|
(17,152
|
)
|
|
(10,637
|
)
|
||
Other current and non-current liabilities
|
(8,631
|
)
|
|
(41,042
|
)
|
||
Net cash provided by operating activities
|
23,253
|
|
|
12,517
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Additions to premises and equipment
|
(2,756
|
)
|
|
(5,658
|
)
|
||
Net cash used in investing activities
|
(2,756
|
)
|
|
(5,658
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
407,880
|
|
|
—
|
|
||
Repayments and repurchases of long-term debt
|
(421,821
|
)
|
|
(24,766
|
)
|
||
Debt issuance costs
|
(5,042
|
)
|
|
—
|
|
||
Proceeds from stock option exercises
|
2,707
|
|
|
765
|
|
||
Purchase of treasury shares
|
(21,121
|
)
|
|
(15,531
|
)
|
||
Distributions to non-controlling interests
|
(1,181
|
)
|
|
(1,056
|
)
|
||
Payment of tax withholding on issuance of restricted shares and stock option exercises
|
(410
|
)
|
|
(1,089
|
)
|
||
Net cash used in financing activities
|
(38,988
|
)
|
|
(41,677
|
)
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(18,491
|
)
|
|
(34,818
|
)
|
||
Cash, cash equivalents and restricted cash at the beginning of the period
|
108,843
|
|
|
153,421
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
90,352
|
|
|
$
|
118,603
|
|
|
|
|
|
|
|||
Supplemental cash flow information:
|
|
|
|
|
|
||
Interest paid
|
$
|
11,540
|
|
|
$
|
10,787
|
|
Income taxes paid, net
|
2,865
|
|
|
12,668
|
|
||
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Increase (decrease) in payables for purchases of premises and equipment
|
$
|
398
|
|
|
$
|
(378
|
)
|
Increase in payables for purchases of treasury shares
|
—
|
|
|
3,042
|
|
•
|
For the majority of the services we provide, we recognize transactional revenue when the service is provided.
|
•
|
For loan servicing technologies, we recognize revenue based on the number of loans on the system, on a per-transaction basis or over the estimated average number of months the loans and real estate owned (“REO”) are on the platform, as applicable. We generally recognize revenue for professional services relating to loan servicing technologies over the contract period. For our loan origination system, we generally recognize revenue over the contract term, beginning on the commencement date of each contract. For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed. For loan disbursement processing services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements. We use judgment to determine the period over which we recognize revenue for certain of these services. For mortgage charge-off collections performed on behalf of our clients, we recognize revenue as a percentage of amounts collected following collection from the borrowers.
|
•
|
For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount.
|
•
|
Reimbursable expenses revenue, primarily related to our property preservation and inspection services, real estate sales and our foreclosure trustee services businesses, is included in revenue with an equal amount recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers.
|
•
|
For the majority of the services we provide, we recognize transactional revenue when the service is provided.
|
•
|
For our renovation services, revenue is recognized over the period of the construction activity, based on the estimated percentage of completion of the projects. We use judgment to determine the period over which we recognize revenue for certain of these services. For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. For the buy-renovate-lease-sell business, we recognize revenue associated with our sales of short-term investments in real estate on a gross basis as we assume the risks and rewards of ownership of the asset.
|
•
|
Reimbursable expenses revenue, primarily related to our real estate sales business, is included in revenue with an equal offsetting expense recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers.
|
•
|
For the majority of the services we provide, we recognize transactional revenue when the service is provided. We generally earn fees for our post-charge-off consumer debt collection services as a percentage of the amount we collect on delinquent consumer receivables and recognize revenue following collection from the borrowers. We provide customer relationship management services for which we typically earn and recognize revenue on a per-person, per-call or per-minute basis as the related services are performed.
|
•
|
For the information technology (“IT”) infrastructure services we provide to Ocwen Financial Corporation (“Ocwen”), Front Yard Residential Corporation (“RESI”) and Altisource Asset Management Corporation (“AAMC”), we recognize revenue primarily based on the number of users of the applicable systems, fixed fees and the number and type of licensed platforms. We recognize revenue associated with implementation services upon completion and maintenance services ratably over the related service period.
|
|
|
Impact of the adoption of Topic 606
|
||||||||||
(in thousands)
|
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
45,426
|
|
|
$
|
642
|
|
|
$
|
46,068
|
|
Total current assets
|
|
243,189
|
|
|
642
|
|
|
243,831
|
|
|||
Total assets
|
|
809,896
|
|
|
642
|
|
|
810,538
|
|
|||
|
|
|
|
|
|
|
||||||
Other current liabilities
|
|
5,889
|
|
|
(217
|
)
|
|
5,672
|
|
|||
Deferred revenue
|
|
19,131
|
|
|
(9,100
|
)
|
|
10,031
|
|
|||
Total current liabilities
|
|
133,866
|
|
|
(9,317
|
)
|
|
124,549
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred revenue, non-current
|
|
41
|
|
|
1,160
|
|
|
1,201
|
|
|||
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
596,268
|
|
|
8,799
|
|
|
605,067
|
|
|||
Altisource equity
|
|
310,887
|
|
|
8,799
|
|
|
319,686
|
|
|||
Total equity
|
|
312,291
|
|
|
8,799
|
|
|
321,090
|
|
|||
Total liabilities and equity
|
|
809,896
|
|
|
642
|
|
|
810,538
|
|
|
|
Impact of the adoption of Topic 606
|
||||||||||
(in thousands)
|
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
218,556
|
|
|
$
|
(1,203
|
)
|
|
$
|
217,353
|
|
Cost of revenue
|
|
163,206
|
|
|
662
|
|
|
163,868
|
|
|||
Gross profit
|
|
55,350
|
|
|
(1,865
|
)
|
|
53,485
|
|
|||
Income from operations
|
|
12,426
|
|
|
(1,865
|
)
|
|
10,561
|
|
|||
Income before income taxes and non-controlling interests
|
|
3,071
|
|
|
(1,865
|
)
|
|
1,206
|
|
|||
Income tax provision
|
|
(816
|
)
|
|
544
|
|
|
(272
|
)
|
|||
Net income
|
|
2,255
|
|
|
(1,321
|
)
|
|
934
|
|
|||
Net income attributable to Altisource
|
|
1,568
|
|
|
(1,321
|
)
|
|
247
|
|
|
|
Impact of the adoption of Topic 606
|
||||||||||
(in thousands)
|
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
415,994
|
|
|
$
|
(791
|
)
|
|
$
|
415,203
|
|
Cost of revenue
|
|
310,400
|
|
|
1,459
|
|
|
311,859
|
|
|||
Gross profit
|
|
105,594
|
|
|
(2,250
|
)
|
|
103,344
|
|
|||
Income from operations
|
|
19,546
|
|
|
(2,250
|
)
|
|
17,296
|
|
|||
Loss before income taxes and non-controlling interests
|
|
(1,901
|
)
|
|
(2,250
|
)
|
|
(4,151
|
)
|
|||
Income tax benefit
|
|
549
|
|
|
650
|
|
|
1,199
|
|
|||
Net loss
|
|
(1,352
|
)
|
|
(1,600
|
)
|
|
(2,952
|
)
|
|||
Net loss attributable to Altisource
|
|
(2,564
|
)
|
|
(1,600
|
)
|
|
(4,164
|
)
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
|
|
|
|
||||
Mortgage Market
|
|
60
|
%
|
|
68
|
%
|
|
60
|
%
|
|
68
|
%
|
Real Estate Market
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Other Businesses, Corporate and Eliminations
|
|
9
|
%
|
|
11
|
%
|
|
9
|
%
|
|
13
|
%
|
Consolidated revenue
|
|
50
|
%
|
|
58
|
%
|
|
51
|
%
|
|
58
|
%
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Billed
|
|
$
|
39,313
|
|
|
$
|
40,787
|
|
Unbilled
|
|
17,446
|
|
|
22,532
|
|
||
Subtotal
|
|
56,759
|
|
|
63,319
|
|
||
Less: Allowance for doubtful accounts
|
|
(11,333
|
)
|
|
(10,579
|
)
|
||
|
|
|
|
|
||||
Total
|
|
$
|
45,426
|
|
|
$
|
52,740
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Short-term investments in real estate
|
|
$
|
35,289
|
|
|
$
|
29,405
|
|
Maintenance agreements, current portion
|
|
4,961
|
|
|
8,014
|
|
||
Income taxes receivable
|
|
11,396
|
|
|
9,227
|
|
||
Prepaid expenses
|
|
7,501
|
|
|
7,898
|
|
||
Other current assets
|
|
10,862
|
|
|
10,198
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
70,009
|
|
|
$
|
64,742
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Computer hardware and software
|
|
$
|
182,606
|
|
|
$
|
179,567
|
|
Leasehold improvements
|
|
32,658
|
|
|
33,417
|
|
||
Furniture and fixtures
|
|
13,695
|
|
|
14,092
|
|
||
Office equipment and other
|
|
8,887
|
|
|
9,388
|
|
||
|
|
237,846
|
|
|
236,464
|
|
||
Less: Accumulated depreciation and amortization
|
|
(179,026
|
)
|
|
(163,191
|
)
|
||
|
|
|
|
|
||||
Total
|
|
$
|
58,820
|
|
|
$
|
73,273
|
|
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Balance as of June 30, 2018 and December 31, 2017
|
|
$
|
73,259
|
|
|
$
|
10,056
|
|
|
$
|
2,968
|
|
|
$
|
86,283
|
|
|
|
Weighted average estimated useful life
(in years) |
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net book value
|
||||||||||||||||||
(in thousands)
|
|
|
June 30,
2018 |
|
December 31,
2017 |
|
June 30,
2018 |
|
December 31,
2017 |
|
June 30,
2018 |
|
December 31,
2017 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Definite lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer related intangible assets
|
|
10
|
|
$
|
273,172
|
|
|
$
|
277,828
|
|
|
$
|
(196,315
|
)
|
|
$
|
(188,258
|
)
|
|
$
|
76,857
|
|
|
$
|
89,570
|
|
Operating agreement
|
|
20
|
|
35,000
|
|
|
35,000
|
|
|
(14,748
|
)
|
|
(13,865
|
)
|
|
20,252
|
|
|
21,135
|
|
||||||
Trademarks and trade names
|
|
14
|
|
12,554
|
|
|
15,354
|
|
|
(6,480
|
)
|
|
(8,881
|
)
|
|
6,074
|
|
|
6,473
|
|
||||||
Non-compete agreements
|
|
4
|
|
1,230
|
|
|
1,560
|
|
|
(872
|
)
|
|
(897
|
)
|
|
358
|
|
|
663
|
|
||||||
Intellectual property
|
|
10
|
|
300
|
|
|
300
|
|
|
(130
|
)
|
|
(115
|
)
|
|
170
|
|
|
185
|
|
||||||
Other intangible assets
|
|
5
|
|
3,745
|
|
|
3,745
|
|
|
(2,082
|
)
|
|
(1,706
|
)
|
|
1,663
|
|
|
2,039
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
|
$
|
326,001
|
|
|
$
|
333,787
|
|
|
$
|
(220,627
|
)
|
|
$
|
(213,722
|
)
|
|
$
|
105,374
|
|
|
$
|
120,065
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Security deposits
|
|
$
|
4,807
|
|
|
$
|
5,304
|
|
Restricted cash
|
|
5,783
|
|
|
3,837
|
|
||
Other
|
|
584
|
|
|
1,054
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
11,174
|
|
|
$
|
10,195
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Accounts payable
|
|
$
|
13,781
|
|
|
$
|
15,682
|
|
Accrued expenses - general
|
|
26,343
|
|
|
27,268
|
|
||
Accrued salaries and benefits
|
|
27,062
|
|
|
41,363
|
|
||
Income taxes payable
|
|
460
|
|
|
87
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
67,646
|
|
|
$
|
84,400
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Unfunded cash account balances
|
|
$
|
3,147
|
|
|
$
|
5,900
|
|
Other
|
|
2,742
|
|
|
3,514
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
5,889
|
|
|
$
|
9,414
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Term loans
|
|
$
|
403,760
|
|
|
$
|
413,581
|
|
Less: Debt issuance costs, net
|
|
(4,317
|
)
|
|
(3,158
|
)
|
||
Less: Unamortized discount, net
|
|
(3,911
|
)
|
|
(1,142
|
)
|
||
Net long-term debt
|
|
395,532
|
|
|
409,281
|
|
||
Less: Current portion
|
|
(41,200
|
)
|
|
(5,945
|
)
|
||
|
|
|
|
|
||||
Long-term debt, less current portion
|
|
$
|
354,332
|
|
|
$
|
403,336
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Income tax liabilities
|
|
$
|
5,605
|
|
|
$
|
5,955
|
|
Deferred revenue
|
|
41
|
|
|
2,101
|
|
||
Other non-current liabilities
|
|
3,761
|
|
|
4,226
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
9,407
|
|
|
$
|
12,282
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
(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
|
|
$
|
84,569
|
|
|
$
|
84,569
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105,006
|
|
|
$
|
105,006
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
5,783
|
|
|
5,783
|
|
|
—
|
|
|
—
|
|
|
3,837
|
|
|
3,837
|
|
|
—
|
|
|
—
|
|
||||||||
Investment in equity securities
|
|
43,185
|
|
|
43,185
|
|
|
—
|
|
|
—
|
|
|
49,153
|
|
|
49,153
|
|
|
—
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term debt
|
|
403,760
|
|
|
—
|
|
|
401,067
|
|
|
—
|
|
|
413,581
|
|
|
—
|
|
|
407,377
|
|
|
—
|
|
|
|
Six months ended
June 30, 2018 |
|
Six months ended
June 30, 2017 |
||||||||
|
|
Black-Scholes
|
|
Binomial
|
|
Black-Scholes
|
|
Binomial
|
||||
|
|
|
|
|
|
|
|
|
||||
Risk-free interest rate (%)
|
|
2.66 – 2.98
|
|
|
1.64 – 2.83
|
|
|
2.06 – 2.29
|
|
|
0.77 – 2.38
|
|
Expected stock price volatility (%)
|
|
70.31 – 71.86
|
|
|
71.81 – 71.86
|
|
|
61.49 – 66.68
|
|
|
66.68
|
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Expected option life (in years)
|
|
6.00 – 6.25
|
|
|
2.56 – 4.32
|
|
|
6.00 – 7.50
|
|
|
3.53 – 3.85
|
|
Fair value
|
|
$16.17 – $19.06
|
|
|
$14.67 – $18.28
|
|
|
$23.91 – $24.80
|
|
|
$23.54 – $24.30
|
|
|
|
Six months ended June 30,
|
||||||
(in thousands, except per share amounts)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Weighted average grant date fair value of stock options granted per share
|
|
$
|
16.27
|
|
|
$
|
24.23
|
|
Intrinsic value of options exercised
|
|
4,393
|
|
|
875
|
|
||
Grant date fair value of stock options that vested
|
|
1,334
|
|
|
1,693
|
|
|
Number of options
|
|
Weighted average exercise price
|
|
Weighted average contractual term
(in years)
|
|
Aggregate intrinsic value
(in thousands)
|
|||||
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2017
|
1,745,906
|
|
|
$
|
28.20
|
|
|
4.96
|
|
$
|
10,202
|
|
Granted
|
271,876
|
|
|
25.06
|
|
|
|
|
|
|||
Exercised
|
(295,752
|
)
|
|
9.48
|
|
|
|
|
|
|
||
Forfeited
|
(180,578
|
)
|
|
33.91
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||||
Outstanding at June 30, 2018
|
1,541,452
|
|
|
30.56
|
|
|
5.76
|
|
5,235
|
|
||
|
|
|
|
|
|
|
|
|||||
Exercisable at June 30, 2018
|
921,627
|
|
|
27.03
|
|
|
3.96
|
|
5,132
|
|
|
Number of restricted shares
|
|
|
|
|
Outstanding at December 31, 2017
|
356,509
|
|
Granted
|
305,282
|
|
Issued
|
(88,043
|
)
|
Forfeited/canceled
|
(96,853
|
)
|
|
|
|
Outstanding at June 30, 2018
|
476,895
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
208,861
|
|
|
$
|
238,107
|
|
|
$
|
397,627
|
|
|
$
|
467,946
|
|
Reimbursable expenses
|
|
9,008
|
|
|
11,891
|
|
|
17,155
|
|
|
21,920
|
|
||||
Non-controlling interests
|
|
687
|
|
|
687
|
|
|
1,212
|
|
|
1,302
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
218,556
|
|
|
$
|
250,685
|
|
|
$
|
415,994
|
|
|
$
|
491,168
|
|
|
|
Three months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Revenue recognized when services are performed or assets are sold
|
|
Revenue related to technology platforms and professional services
|
|
Reimbursable expenses revenue
|
|
Total revenue
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Mortgage Market:
|
|
|
|
|
|
|
|
|
||||||||
Servicer Solutions
|
|
$
|
139,084
|
|
|
$
|
18,525
|
|
|
$
|
8,460
|
|
|
$
|
166,069
|
|
Origination Solutions
|
|
10,243
|
|
|
2,292
|
|
|
58
|
|
|
12,593
|
|
||||
Total Mortgage Market
|
|
149,327
|
|
|
20,817
|
|
|
8,518
|
|
|
178,662
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Real Estate Market:
|
|
|
|
|
|
|
|
|
||||||||
Consumer Real Estate Solutions
|
|
2,312
|
|
|
—
|
|
|
—
|
|
|
2,312
|
|
||||
Real Estate Investor Solutions
|
|
21,352
|
|
|
—
|
|
|
481
|
|
|
21,833
|
|
||||
Total Real Estate Market
|
|
23,664
|
|
|
—
|
|
|
481
|
|
|
24,145
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Businesses, Corporate and Eliminations
|
|
14,215
|
|
|
1,525
|
|
|
9
|
|
|
15,749
|
|
||||
Total revenue
|
|
$
|
187,206
|
|
|
$
|
22,342
|
|
|
$
|
9,008
|
|
|
$
|
218,556
|
|
|
|
Six months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Revenue recognized when services are performed or assets are sold
|
|
Revenue related to technology platforms and professional services
|
|
Reimbursable expenses revenue
|
|
Total revenue
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Mortgage Market:
|
|
|
|
|
|
|
|
|
||||||||
Servicer Solutions
|
|
$
|
268,620
|
|
|
$
|
36,798
|
|
|
$
|
16,062
|
|
|
$
|
321,480
|
|
Origination Solutions
|
|
19,428
|
|
|
4,978
|
|
|
114
|
|
|
24,520
|
|
||||
Total Mortgage Market
|
|
288,048
|
|
|
41,776
|
|
|
16,176
|
|
|
346,000
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Real Estate Market:
|
|
|
|
|
|
|
|
|
||||||||
Consumer Real Estate Solutions
|
|
3,717
|
|
|
—
|
|
|
2
|
|
|
3,719
|
|
||||
Real Estate Investor Solutions
|
|
34,750
|
|
|
—
|
|
|
956
|
|
|
35,706
|
|
||||
Total Real Estate Market
|
|
38,467
|
|
|
—
|
|
|
958
|
|
|
39,425
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Businesses, Corporate and Eliminations
|
|
27,647
|
|
|
2,901
|
|
|
21
|
|
|
30,569
|
|
||||
Total revenue
|
|
$
|
354,162
|
|
|
$
|
44,677
|
|
|
$
|
17,155
|
|
|
$
|
415,994
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
54,769
|
|
|
$
|
62,666
|
|
|
$
|
109,635
|
|
|
$
|
125,758
|
|
Outside fees and services
|
|
68,879
|
|
|
86,255
|
|
|
133,977
|
|
|
167,214
|
|
||||
Cost of real estate sold
|
|
13,320
|
|
|
7,114
|
|
|
16,499
|
|
|
12,049
|
|
||||
Technology and telecommunications
|
|
10,852
|
|
|
10,941
|
|
|
20,303
|
|
|
22,292
|
|
||||
Reimbursable expenses
|
|
9,008
|
|
|
11,891
|
|
|
17,155
|
|
|
21,920
|
|
||||
Depreciation and amortization
|
|
6,378
|
|
|
6,526
|
|
|
12,831
|
|
|
14,113
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
163,206
|
|
|
$
|
185,393
|
|
|
$
|
310,400
|
|
|
$
|
363,346
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
12,197
|
|
|
$
|
15,541
|
|
|
$
|
25,766
|
|
|
$
|
28,047
|
|
Occupancy related costs
|
|
7,189
|
|
|
9,538
|
|
|
15,623
|
|
|
19,811
|
|
||||
Amortization of intangible assets
|
|
7,544
|
|
|
9,393
|
|
|
14,691
|
|
|
18,539
|
|
||||
Marketing costs
|
|
3,978
|
|
|
3,697
|
|
|
7,585
|
|
|
7,966
|
|
||||
Professional services
|
|
4,328
|
|
|
4,367
|
|
|
7,554
|
|
|
8,097
|
|
||||
Depreciation and amortization
|
|
1,950
|
|
|
2,361
|
|
|
4,218
|
|
|
4,782
|
|
||||
Other
|
|
5,738
|
|
|
7,573
|
|
|
10,611
|
|
|
12,929
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
42,924
|
|
|
$
|
52,470
|
|
|
$
|
86,048
|
|
|
$
|
100,171
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on debt refinancing
|
|
$
|
(4,434
|
)
|
|
$
|
—
|
|
|
$
|
(4,434
|
)
|
|
$
|
—
|
|
Gain on early extinguishment of debt
|
|
—
|
|
|
3,937
|
|
|
—
|
|
|
3,937
|
|
||||
Interest income
|
|
100
|
|
|
44
|
|
|
231
|
|
|
142
|
|
||||
Other, net
|
|
473
|
|
|
822
|
|
|
1,614
|
|
|
1,439
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
(3,861
|
)
|
|
$
|
4,803
|
|
|
$
|
(2,589
|
)
|
|
$
|
5,518
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Altisource
|
|
$
|
1,568
|
|
|
$
|
9,035
|
|
|
$
|
(2,564
|
)
|
|
$
|
15,580
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, basic
|
|
17,142
|
|
|
18,335
|
|
|
17,260
|
|
|
18,497
|
|
||||
Dilutive effect of stock options, restricted shares and
restricted share units |
|
411
|
|
|
501
|
|
|
—
|
|
|
572
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, diluted
|
|
17,553
|
|
|
18,836
|
|
|
17,260
|
|
|
19,069
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.09
|
|
|
$
|
0.49
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.84
|
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
0.48
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.82
|
|
•
|
Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us
|
•
|
Ocwen loses, sells or transfers a significant portion or all of its remaining 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
|
•
|
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
|
•
|
Altisource otherwise fails to be retained as a service provider
|
|
|
Three months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
178,662
|
|
|
$
|
24,145
|
|
|
$
|
15,749
|
|
|
$
|
218,556
|
|
Cost of revenue
|
|
115,329
|
|
|
28,191
|
|
|
19,686
|
|
|
163,206
|
|
||||
Gross profit (loss)
|
|
63,333
|
|
|
(4,046
|
)
|
|
(3,937
|
)
|
|
55,350
|
|
||||
Selling, general and administrative expenses
|
|
20,604
|
|
|
5,180
|
|
|
17,140
|
|
|
42,924
|
|
||||
Income (loss) from operations
|
|
42,729
|
|
|
(9,226
|
)
|
|
(21,077
|
)
|
|
12,426
|
|
||||
Total other income (expense), net
|
|
(4
|
)
|
|
12
|
|
|
(9,363
|
)
|
|
(9,355
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
42,725
|
|
|
$
|
(9,214
|
)
|
|
$
|
(30,440
|
)
|
|
$
|
3,071
|
|
|
|
Three months ended June 30, 2017
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
210,195
|
|
|
$
|
25,130
|
|
|
$
|
15,360
|
|
|
$
|
250,685
|
|
Cost of revenue
|
|
144,326
|
|
|
26,844
|
|
|
14,223
|
|
|
185,393
|
|
||||
Gross profit (loss)
|
|
65,869
|
|
|
(1,714
|
)
|
|
1,137
|
|
|
65,292
|
|
||||
Selling, general and administrative expenses
|
|
29,805
|
|
|
5,551
|
|
|
17,114
|
|
|
52,470
|
|
||||
Income (loss) from operations
|
|
36,064
|
|
|
(7,265
|
)
|
|
(15,977
|
)
|
|
12,822
|
|
||||
Total other income (expense), net
|
|
102
|
|
|
—
|
|
|
(764
|
)
|
|
(662
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
36,166
|
|
|
$
|
(7,265
|
)
|
|
$
|
(16,741
|
)
|
|
$
|
12,160
|
|
|
|
Six months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
346,000
|
|
|
$
|
39,425
|
|
|
$
|
30,569
|
|
|
$
|
415,994
|
|
Cost of revenue
|
|
226,402
|
|
|
46,745
|
|
|
37,253
|
|
|
310,400
|
|
||||
Gross profit (loss)
|
|
119,598
|
|
|
(7,320
|
)
|
|
(6,684
|
)
|
|
105,594
|
|
||||
Selling, general and administrative expenses
|
|
43,978
|
|
|
9,298
|
|
|
32,772
|
|
|
86,048
|
|
||||
Income (loss) from operations
|
|
75,620
|
|
|
(16,618
|
)
|
|
(39,456
|
)
|
|
19,546
|
|
||||
Total other income (expense), net
|
|
12
|
|
|
14
|
|
|
(21,473
|
)
|
|
(21,447
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
75,632
|
|
|
$
|
(16,604
|
)
|
|
$
|
(60,929
|
)
|
|
$
|
(1,901
|
)
|
|
|
Six months ended June 30, 2017
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
414,918
|
|
|
$
|
45,193
|
|
|
$
|
31,057
|
|
|
$
|
491,168
|
|
Cost of revenue
|
|
284,476
|
|
|
48,987
|
|
|
29,883
|
|
|
363,346
|
|
||||
Gross profit (loss)
|
|
130,442
|
|
|
(3,794
|
)
|
|
1,174
|
|
|
127,822
|
|
||||
Selling, general and administrative expenses
|
|
58,487
|
|
|
9,876
|
|
|
31,808
|
|
|
100,171
|
|
||||
Income (loss) from operations
|
|
71,955
|
|
|
(13,670
|
)
|
|
(30,634
|
)
|
|
27,651
|
|
||||
Total other income (expense), net
|
|
112
|
|
|
—
|
|
|
(5,857
|
)
|
|
(5,745
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
72,067
|
|
|
$
|
(13,670
|
)
|
|
$
|
(36,491
|
)
|
|
$
|
21,906
|
|
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
June 30, 2018
|
|
$
|
265,463
|
|
|
$
|
85,080
|
|
|
$
|
459,353
|
|
|
$
|
809,896
|
|
December 31, 2017
|
|
304,346
|
|
|
64,624
|
|
|
496,194
|
|
|
865,164
|
|
(in thousands)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
|
||||
United States
|
|
$
|
34,597
|
|
|
$
|
46,268
|
|
Luxembourg
|
|
16,708
|
|
|
16,688
|
|
||
India
|
|
5,575
|
|
|
8,136
|
|
||
Philippines
|
|
1,848
|
|
|
2,038
|
|
||
Uruguay
|
|
92
|
|
|
143
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
58,820
|
|
|
$
|
73,273
|
|
•
|
assumptions related to 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;
|
•
|
assumptions regarding the impact of seasonality;
|
•
|
estimates regarding our effective tax rate; and
|
•
|
estimates regarding our reserves and valuations.
|
•
|
our ability to retain Ocwen Financial Corporation (“Ocwen”) as a customer or our ability to receive the anticipated volume of referrals from Ocwen;
|
•
|
our ability to reach agreement with New Residential Investment Corp. (individually, together with one or more of its subsidiaries, or one or more of its subsidiaries individually, “NRZ”) on a Services Agreement or the possibility of termination of the Cooperative Brokerage Agreement, as amended, and related letter agreement (collectively, the “Brokerage Agreement”);
|
•
|
the contractual provisions in certain of our agreements or contracts that we may enter into in the future may cause a termination event or event of default if a change in control was deemed to have occurred if, among other things, a shareholder group is formed;
|
•
|
our ability to execute on our strategic businesses;
|
•
|
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 outsourcing trends;
|
•
|
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.
|
• Property preservation and inspection services
• Real estate brokerage and auction services
• Title insurance (agent and related services) and settlement services
• Appraisal management services, valuation data, broker and non-broker valuation services
• Foreclosure trustee services
• Residential and commercial loan servicing technologies
|
|
• Vendor management, marketplace transaction management and payment management technologies
• Document management platform
• Default services (real estate owned (“REO”), foreclosure, bankruptcy, eviction) technologies
• Mortgage charge-off collections
• Residential and commercial construction inspection and risk mitigation services
|
• Title insurance (agent and related services) and settlement services
• Appraisal management services, valuation data, broker and non-broker valuation services
• Fulfillment services
• Loan origination system
|
|
• Document management platform
• Certified loan insurance, certification services and mortgage fraud insurance
• Vendor management oversight platform
• Mortgage banker cooperative management
• Mortgage trading platform
|
• Real estate brokerage doing business as Owners.com
®
• Title insurance (agent and related services) and settlement services
|
|
• Mortgage brokerage
• Homeowners insurance
|
• Property preservation and inspection services
• Real estate brokerage and auction services
• Data solutions
• Title insurance (agent and related services) and settlement services
|
|
• Buy-renovate-lease-sell
• Renovation services
• Property management services
• Appraisal management services, valuation data, broker and non-broker valuation services
|
•
|
Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us
|
•
|
Ocwen loses, sells or transfers a significant portion or all of its remaining 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
|
•
|
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
|
•
|
Altisource otherwise fails to be retained as a service provider
|
•
|
The average number of loans serviced by Ocwen on REALServicing (including those MSRs owned by NRZ and subserviced by Ocwen) was approximately
1.1 million
for the
six
months ended
June 30, 2018
compared to
1.3 million
for the
six
months ended
June 30, 2017
, a
decrease
of
13%
(
1.1 million
for the
second quarter
of
2018
and
1.3 million
for the
second quarter
of
2017
, a
decrease
of
13%
). The average number of delinquent non-GSE loans serviced by Ocwen on REALServicing was approximately
162 thousand
for the
six
months ended
June 30, 2018
compared to
184 thousand
for the
six
months ended
June 30, 2017
, a
decrease
of
12%
(
153 thousand
for the
second quarter
of
2018
and
177 thousand
for the
second quarter
of
2017
, a
decrease
of
14%
).
|
•
|
On April 3, 2018, Altisource and its wholly-owned subsidiary, Altisource S.à r.l., entered into the Credit Agreement, pursuant to which, among other things, Altisource borrowed
$412.0 million
in the form of Term B Loans. Proceeds from the Term B Loans were used to repay the Company’s prior senior secured term loan. The interest rate of the Term B Loans during the
second quarter
of
2018
was 6.31%. The comparative interest rates under the Credit agreement and the prior credit agreement were 5.71% and 4.51% for the
six
months ended
June 30, 2018
and 2017, respectively (4.51% for the
second quarter
of
2017
). In connection with the refinancing, we recognized a loss of
$4.4 million
from the write-off of the unamortized debt issuance costs and debt discount in the
second quarter
of
2018
(no comparative amounts in
2017
).
|
•
|
Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2016-01
, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
, which requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. Previously, changes in the fair value of the Company’s available for sale securities were included in comprehensive income. For the
six
months ended
June 30, 2018
, we recognized an unrealized loss from our investment in RESI common shares of
$6.0 million
(unrealized gain of
$1.5 million
for the
second quarter
of
2018
). During the
six
months ended
June 30, 2017
, comprehensive income included an unrealized gain from our investment in RESI common shares of
$5.7 million
, net of a
$2.1 million
income tax provision (unrealized loss of
$7.0 million
, net of a
$2.6 million
income tax benefit for the
second quarter
of
2017
). See
Note 1
to the condensed consolidated financial statements for additional information on the adoption of the new accounting standard on investments in equity securities.
|
•
|
In the
second quarter
of
2017
, we repurchased portions of our senior secured term loan with an aggregate par value of $26.0 million at a weighted average discount of 16.5%, recognizing a net gain of $3.9 million on the early extinguishment of debt (no comparative amounts in 2018).
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands, except per share data)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Mortgage Market
|
|
$
|
169,457
|
|
|
$
|
198,414
|
|
|
(15
|
)
|
|
$
|
328,612
|
|
|
$
|
393,387
|
|
|
(16
|
)
|
Real Estate Market
|
|
23,664
|
|
|
24,347
|
|
|
(3
|
)
|
|
38,467
|
|
|
43,536
|
|
|
(12
|
)
|
||||
Other Businesses, Corporate and Eliminations
|
|
15,740
|
|
|
15,346
|
|
|
3
|
|
|
30,548
|
|
|
31,023
|
|
|
(2
|
)
|
||||
Total service revenue
|
|
208,861
|
|
|
238,107
|
|
|
(12
|
)
|
|
397,627
|
|
|
467,946
|
|
|
(15
|
)
|
||||
Reimbursable expenses
|
|
9,008
|
|
|
11,891
|
|
|
(24
|
)
|
|
17,155
|
|
|
21,920
|
|
|
(22
|
)
|
||||
Non-controlling interests
|
|
687
|
|
|
687
|
|
|
—
|
|
|
1,212
|
|
|
1,302
|
|
|
(7
|
)
|
||||
Total revenue
|
|
218,556
|
|
|
250,685
|
|
|
(13
|
)
|
|
415,994
|
|
|
491,168
|
|
|
(15
|
)
|
||||
Cost of revenue
|
|
163,206
|
|
|
185,393
|
|
|
(12
|
)
|
|
310,400
|
|
|
363,346
|
|
|
(15
|
)
|
||||
Gross profit
|
|
55,350
|
|
|
65,292
|
|
|
(15
|
)
|
|
105,594
|
|
|
127,822
|
|
|
(17
|
)
|
||||
Selling, general and administrative expenses
|
|
42,924
|
|
|
52,470
|
|
|
(18
|
)
|
|
86,048
|
|
|
100,171
|
|
|
(14
|
)
|
||||
Income from operations
|
|
12,426
|
|
|
12,822
|
|
|
(3
|
)
|
|
19,546
|
|
|
27,651
|
|
|
(29
|
)
|
||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(7,027
|
)
|
|
(5,465
|
)
|
|
29
|
|
|
(12,890
|
)
|
|
(11,263
|
)
|
|
14
|
|
||||
Unrealized gain (
loss)
on investments in equity securities
|
|
1,533
|
|
|
—
|
|
|
N/M
|
|
|
(5,968
|
)
|
|
—
|
|
|
N/M
|
|
||||
Other income (expense), net
|
|
(3,861
|
)
|
|
4,803
|
|
|
(180
|
)
|
|
(2,589
|
)
|
|
5,518
|
|
|
(147
|
)
|
||||
Total other income (expense), net
|
|
(9,355
|
)
|
|
(662
|
)
|
|
N/M
|
|
|
(21,447
|
)
|
|
(5,745
|
)
|
|
273
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
3,071
|
|
|
12,160
|
|
|
(75
|
)
|
|
(1,901
|
)
|
|
21,906
|
|
|
(109
|
)
|
||||
Income tax (provision) benefit
|
|
(816
|
)
|
|
(2,438
|
)
|
|
(67
|
)
|
|
549
|
|
|
(5,024
|
)
|
|
(111
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
2,255
|
|
|
9,722
|
|
|
(77
|
)
|
|
(1,352
|
)
|
|
16,882
|
|
|
(108
|
)
|
||||
Net income attributable to non-controlling interests
|
|
(687
|
)
|
|
(687
|
)
|
|
—
|
|
|
(1,212
|
)
|
|
(1,302
|
)
|
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Altisource
|
|
$
|
1,568
|
|
|
$
|
9,035
|
|
|
(83
|
)
|
|
$
|
(2,564
|
)
|
|
$
|
15,580
|
|
|
(116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross profit/service revenue
|
|
27
|
%
|
|
27
|
%
|
|
|
|
27
|
%
|
|
27
|
%
|
|
|
|
|||||
Income from operations/service revenue
|
|
6
|
%
|
|
5
|
%
|
|
|
|
5
|
%
|
|
6
|
%
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.09
|
|
|
$
|
0.49
|
|
|
(82
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
0.84
|
|
|
(118
|
)
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
0.48
|
|
|
(81
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
0.82
|
|
|
(118
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
54,769
|
|
|
$
|
62,666
|
|
|
(13
|
)
|
|
$
|
109,635
|
|
|
$
|
125,758
|
|
|
(13
|
)
|
Outside fees and services
|
|
68,879
|
|
|
86,255
|
|
|
(20
|
)
|
|
133,977
|
|
|
167,214
|
|
|
(20
|
)
|
||||
Cost of real estate sold
|
|
13,320
|
|
|
7,114
|
|
|
87
|
|
|
16,499
|
|
|
12,049
|
|
|
37
|
|
||||
Technology and telecommunications
|
|
10,852
|
|
|
10,941
|
|
|
(1
|
)
|
|
20,303
|
|
|
22,292
|
|
|
(9
|
)
|
||||
Reimbursable expenses
|
|
9,008
|
|
|
11,891
|
|
|
(24
|
)
|
|
17,155
|
|
|
21,920
|
|
|
(22
|
)
|
||||
Depreciation and amortization
|
|
6,378
|
|
|
6,526
|
|
|
(2
|
)
|
|
12,831
|
|
|
14,113
|
|
|
(9
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
163,206
|
|
|
$
|
185,393
|
|
|
(12
|
)
|
|
$
|
310,400
|
|
|
$
|
363,346
|
|
|
(15
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
12,197
|
|
|
$
|
15,541
|
|
|
(22
|
)
|
|
$
|
25,766
|
|
|
$
|
28,047
|
|
|
(8
|
)
|
Occupancy related costs
|
|
7,189
|
|
|
9,538
|
|
|
(25
|
)
|
|
15,623
|
|
|
19,811
|
|
|
(21
|
)
|
||||
Amortization of intangible assets
|
|
7,544
|
|
|
9,393
|
|
|
(20
|
)
|
|
14,691
|
|
|
18,539
|
|
|
(21
|
)
|
||||
Marketing costs
|
|
3,978
|
|
|
3,697
|
|
|
8
|
|
|
7,585
|
|
|
7,966
|
|
|
(5
|
)
|
||||
Professional services
|
|
4,328
|
|
|
4,367
|
|
|
(1
|
)
|
|
7,554
|
|
|
8,097
|
|
|
(7
|
)
|
||||
Depreciation and amortization
|
|
1,950
|
|
|
2,361
|
|
|
(17
|
)
|
|
4,218
|
|
|
4,782
|
|
|
(12
|
)
|
||||
Other
|
|
5,738
|
|
|
7,573
|
|
|
(24
|
)
|
|
10,611
|
|
|
12,929
|
|
|
(18
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
42,924
|
|
|
$
|
52,470
|
|
|
(18
|
)
|
|
$
|
86,048
|
|
|
$
|
100,171
|
|
|
(14
|
)
|
|
|
Three months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
169,457
|
|
|
$
|
23,664
|
|
|
$
|
15,740
|
|
|
$
|
208,861
|
|
Reimbursable expenses
|
|
8,518
|
|
|
481
|
|
|
9
|
|
|
9,008
|
|
||||
Non-controlling interests
|
|
687
|
|
|
—
|
|
|
—
|
|
|
687
|
|
||||
|
|
178,662
|
|
|
24,145
|
|
|
15,749
|
|
|
218,556
|
|
||||
Cost of revenue
|
|
115,329
|
|
|
28,191
|
|
|
19,686
|
|
|
163,206
|
|
||||
Gross profit (loss)
|
|
63,333
|
|
|
(4,046
|
)
|
|
(3,937
|
)
|
|
55,350
|
|
||||
Selling, general and administrative expenses
|
|
20,604
|
|
|
5,180
|
|
|
17,140
|
|
|
42,924
|
|
||||
Income (loss) from operations
|
|
42,729
|
|
|
(9,226
|
)
|
|
(21,077
|
)
|
|
12,426
|
|
||||
Total other income (expense), net
|
|
(4
|
)
|
|
12
|
|
|
(9,363
|
)
|
|
(9,355
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
42,725
|
|
|
$
|
(9,214
|
)
|
|
$
|
(30,440
|
)
|
|
$
|
3,071
|
|
|
|
|
|
|
|
|
|
|
||||||||
Margins:
|
|
|
|
|
|
|
|
|
||||||||
Gross profit (loss)/service revenue
|
|
37
|
%
|
|
(17
|
)%
|
|
(25
|
)%
|
|
27
|
%
|
||||
Income (loss) from operations/service revenue
|
|
25
|
%
|
|
(39
|
)%
|
|
(134
|
)%
|
|
6
|
%
|
|
|
Three months ended June 30, 2017
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
198,414
|
|
|
$
|
24,347
|
|
|
$
|
15,346
|
|
|
$
|
238,107
|
|
Reimbursable expenses
|
|
11,094
|
|
|
783
|
|
|
14
|
|
|
11,891
|
|
||||
Non-controlling interests
|
|
687
|
|
|
—
|
|
|
—
|
|
|
687
|
|
||||
|
|
210,195
|
|
|
25,130
|
|
|
15,360
|
|
|
250,685
|
|
||||
Cost of revenue
|
|
144,326
|
|
|
26,844
|
|
|
14,223
|
|
|
185,393
|
|
||||
Gross profit (loss)
|
|
65,869
|
|
|
(1,714
|
)
|
|
1,137
|
|
|
65,292
|
|
||||
Selling, general and administrative expenses
|
|
29,805
|
|
|
5,551
|
|
|
17,114
|
|
|
52,470
|
|
||||
Income (loss) from operations
|
|
36,064
|
|
|
(7,265
|
)
|
|
(15,977
|
)
|
|
12,822
|
|
||||
Total other income (expense), net
|
|
102
|
|
|
—
|
|
|
(764
|
)
|
|
(662
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
36,166
|
|
|
$
|
(7,265
|
)
|
|
$
|
(16,741
|
)
|
|
$
|
12,160
|
|
|
|
|
|
|
|
|
|
|
||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit (loss)/service revenue
|
|
33
|
%
|
|
(7
|
)%
|
|
7
|
%
|
|
27
|
%
|
||||
Income (loss) from operations/service revenue
|
|
18
|
%
|
|
(30
|
)%
|
|
(104
|
)%
|
|
5
|
%
|
|
|
Six months ended June 30, 2018
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service revenue
|
|
$
|
328,612
|
|
|
$
|
38,467
|
|
|
$
|
30,548
|
|
|
$
|
397,627
|
|
Reimbursable expenses
|
|
16,176
|
|
|
958
|
|
|
21
|
|
|
17,155
|
|
||||
Non-controlling interests
|
|
1,212
|
|
|
—
|
|
|
—
|
|
|
1,212
|
|
||||
|
|
346,000
|
|
|
39,425
|
|
|
30,569
|
|
|
415,994
|
|
||||
Cost of revenue
|
|
226,402
|
|
|
46,745
|
|
|
37,253
|
|
|
310,400
|
|
||||
Gross profit (loss)
|
|
119,598
|
|
|
(7,320
|
)
|
|
(6,684
|
)
|
|
105,594
|
|
||||
Selling, general and administrative expenses
|
|
43,978
|
|
|
9,298
|
|
|
32,772
|
|
|
86,048
|
|
||||
Income (loss) from operations
|
|
75,620
|
|
|
(16,618
|
)
|
|
(39,456
|
)
|
|
19,546
|
|
||||
Total other income (expense), net
|
|
12
|
|
|
14
|
|
|
(21,473
|
)
|
|
(21,447
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
75,632
|
|
|
$
|
(16,604
|
)
|
|
$
|
(60,929
|
)
|
|
$
|
(1,901
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit (loss)/service revenue
|
|
36
|
%
|
|
(19
|
)%
|
|
(22
|
)%
|
|
27
|
%
|
||||
Income (loss) from operations/service revenue
|
|
23
|
%
|
|
(43
|
)%
|
|
(129
|
)%
|
|
5
|
%
|
|
|
Six months ended June 30, 2017
|
||||||||||||||
(in thousands)
|
|
Mortgage Market
|
|
Real Estate Market
|
|
Other Businesses, Corporate and Eliminations
|
|
Consolidated Altisource
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service revenue
|
|
$
|
393,387
|
|
|
$
|
43,536
|
|
|
$
|
31,023
|
|
|
$
|
467,946
|
|
Reimbursable expenses
|
|
20,229
|
|
|
1,657
|
|
|
34
|
|
|
21,920
|
|
||||
Non-controlling interests
|
|
1,302
|
|
|
—
|
|
|
—
|
|
|
1,302
|
|
||||
|
|
414,918
|
|
|
45,193
|
|
|
31,057
|
|
|
491,168
|
|
||||
Cost of revenue
|
|
284,476
|
|
|
48,987
|
|
|
29,883
|
|
|
363,346
|
|
||||
Gross profit (loss)
|
|
130,442
|
|
|
(3,794
|
)
|
|
1,174
|
|
|
127,822
|
|
||||
Selling, general and administrative expenses
|
|
58,487
|
|
|
9,876
|
|
|
31,808
|
|
|
100,171
|
|
||||
Income (loss) from operations
|
|
71,955
|
|
|
(13,670
|
)
|
|
(30,634
|
)
|
|
27,651
|
|
||||
Total other income (expense), net
|
|
112
|
|
|
—
|
|
|
(5,857
|
)
|
|
(5,745
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes and
non-controlling interests |
|
$
|
72,067
|
|
|
$
|
(13,670
|
)
|
|
$
|
(36,491
|
)
|
|
$
|
21,906
|
|
|
|
|
|
|
|
|
|
|
||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit (loss)/service revenue
|
|
33
|
%
|
|
(9
|
)%
|
|
4
|
%
|
|
27
|
%
|
||||
Income (loss) from operations/service revenue
|
|
18
|
%
|
|
(31
|
)%
|
|
(99
|
)%
|
|
6
|
%
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Servicer Solutions
|
|
$
|
157,609
|
|
|
$
|
185,756
|
|
|
(15
|
)
|
|
$
|
305,418
|
|
|
$
|
369,189
|
|
|
(17
|
)
|
Origination Solutions
|
|
11,848
|
|
|
12,658
|
|
|
(6
|
)
|
|
23,194
|
|
|
24,198
|
|
|
(4
|
)
|
||||
Total service revenue
|
|
169,457
|
|
|
198,414
|
|
|
(15
|
)
|
|
328,612
|
|
|
393,387
|
|
|
(16
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Servicer Solutions
|
|
8,460
|
|
|
11,015
|
|
|
(23
|
)
|
|
16,062
|
|
|
20,051
|
|
|
(20
|
)
|
||||
Origination Solutions
|
|
58
|
|
|
79
|
|
|
(27
|
)
|
|
114
|
|
|
178
|
|
|
(36
|
)
|
||||
Total reimbursable expenses
|
|
8,518
|
|
|
11,094
|
|
|
(23
|
)
|
|
16,176
|
|
|
20,229
|
|
|
(20
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-controlling interests
|
|
687
|
|
|
687
|
|
|
—
|
|
|
1,212
|
|
|
1,302
|
|
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
178,662
|
|
|
$
|
210,195
|
|
|
(15
|
)
|
|
$
|
346,000
|
|
|
$
|
414,918
|
|
|
(17
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
33,659
|
|
|
$
|
41,923
|
|
|
(20
|
)
|
|
$
|
68,625
|
|
|
$
|
84,678
|
|
|
(19
|
)
|
Outside fees and services
|
|
62,232
|
|
|
78,710
|
|
|
(21
|
)
|
|
119,793
|
|
|
154,080
|
|
|
(22
|
)
|
||||
Reimbursable expenses
|
|
8,518
|
|
|
11,094
|
|
|
(23
|
)
|
|
16,176
|
|
|
20,229
|
|
|
(20
|
)
|
||||
Technology and telecommunications
|
|
6,344
|
|
|
7,709
|
|
|
(18
|
)
|
|
12,690
|
|
|
15,881
|
|
|
(20
|
)
|
||||
Depreciation and amortization
|
|
4,576
|
|
|
4,890
|
|
|
(6
|
)
|
|
9,118
|
|
|
9,608
|
|
|
(5
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
115,329
|
|
|
$
|
144,326
|
|
|
(20
|
)
|
|
$
|
226,402
|
|
|
$
|
284,476
|
|
|
(20
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
3,112
|
|
|
$
|
5,947
|
|
|
(48
|
)
|
|
$
|
7,969
|
|
|
$
|
11,101
|
|
|
(28
|
)
|
Occupancy related costs
|
|
3,924
|
|
|
6,823
|
|
|
(42
|
)
|
|
9,178
|
|
|
12,039
|
|
|
(24
|
)
|
||||
Amortization of intangible assets
|
|
6,618
|
|
|
8,709
|
|
|
(24
|
)
|
|
13,137
|
|
|
17,144
|
|
|
(23
|
)
|
||||
Professional services
|
|
1,825
|
|
|
2,469
|
|
|
(26
|
)
|
|
3,271
|
|
|
4,699
|
|
|
(30
|
)
|
||||
Marketing costs
|
|
1,603
|
|
|
1,763
|
|
|
(9
|
)
|
|
3,331
|
|
|
4,235
|
|
|
(21
|
)
|
||||
Depreciation and amortization
|
|
678
|
|
|
1,006
|
|
|
(33
|
)
|
|
1,574
|
|
|
1,869
|
|
|
(16
|
)
|
||||
Other
|
|
2,844
|
|
|
3,088
|
|
|
(8
|
)
|
|
5,518
|
|
|
7,400
|
|
|
(25
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
20,604
|
|
|
$
|
29,805
|
|
|
(31
|
)
|
|
$
|
43,978
|
|
|
$
|
58,487
|
|
|
(25
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consumer Real Estate Solutions
|
|
$
|
2,312
|
|
|
$
|
1,290
|
|
|
79
|
|
|
$
|
3,717
|
|
|
$
|
1,999
|
|
|
86
|
|
Real Estate Investor Solutions
|
|
21,352
|
|
|
23,057
|
|
|
(7
|
)
|
|
34,750
|
|
|
41,537
|
|
|
(16
|
)
|
||||
Total service revenue
|
|
23,664
|
|
|
24,347
|
|
|
(3
|
)
|
|
38,467
|
|
|
43,536
|
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consumer Real Estate Solutions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
N/M
|
|
||||
Real Estate Investor Solutions
|
|
481
|
|
|
783
|
|
|
(39
|
)
|
|
956
|
|
|
1,657
|
|
|
(42
|
)
|
||||
Total reimbursable expenses
|
|
481
|
|
|
783
|
|
|
(39
|
)
|
|
958
|
|
|
1,657
|
|
|
(42
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
24,145
|
|
|
$
|
25,130
|
|
|
(4
|
)
|
|
$
|
39,425
|
|
|
$
|
45,193
|
|
|
(13
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
7,530
|
|
|
$
|
10,148
|
|
|
(26
|
)
|
|
$
|
14,532
|
|
|
$
|
19,390
|
|
|
(25
|
)
|
Outside fees and services
|
|
5,791
|
|
|
6,669
|
|
|
(13
|
)
|
|
12,660
|
|
|
11,385
|
|
|
11
|
|
||||
Cost of real estate sold
|
|
13,320
|
|
|
7,114
|
|
|
87
|
|
|
16,499
|
|
|
12,049
|
|
|
37
|
|
||||
Reimbursable expenses
|
|
481
|
|
|
783
|
|
|
(39
|
)
|
|
958
|
|
|
1,657
|
|
|
(42
|
)
|
||||
Technology and telecommunications
|
|
867
|
|
|
1,734
|
|
|
(50
|
)
|
|
1,710
|
|
|
3,456
|
|
|
(51
|
)
|
||||
Depreciation and amortization
|
|
202
|
|
|
396
|
|
|
(49
|
)
|
|
386
|
|
|
1,050
|
|
|
(63
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
28,191
|
|
|
$
|
26,844
|
|
|
5
|
|
|
$
|
46,745
|
|
|
$
|
48,987
|
|
|
(5
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
908
|
|
|
$
|
1,138
|
|
|
(20
|
)
|
|
$
|
1,617
|
|
|
$
|
1,737
|
|
|
(7
|
)
|
Occupancy related costs
|
|
441
|
|
|
1,050
|
|
|
(58
|
)
|
|
1,012
|
|
|
1,722
|
|
|
(41
|
)
|
||||
Amortization of intangible assets
|
|
508
|
|
|
211
|
|
|
141
|
|
|
719
|
|
|
422
|
|
|
70
|
|
||||
Professional services
|
|
212
|
|
|
312
|
|
|
(32
|
)
|
|
370
|
|
|
635
|
|
|
(42
|
)
|
||||
Marketing costs
|
|
2,301
|
|
|
1,880
|
|
|
22
|
|
|
4,095
|
|
|
3,604
|
|
|
14
|
|
||||
Depreciation and amortization
|
|
132
|
|
|
225
|
|
|
(41
|
)
|
|
259
|
|
|
381
|
|
|
(32
|
)
|
||||
Other
|
|
678
|
|
|
735
|
|
|
(8
|
)
|
|
1,226
|
|
|
1,375
|
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
5,180
|
|
|
$
|
5,551
|
|
|
(7
|
)
|
|
$
|
9,298
|
|
|
$
|
9,876
|
|
|
(6
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Customer relationship management
|
|
$
|
7,246
|
|
|
$
|
7,503
|
|
|
(3
|
)
|
|
$
|
13,639
|
|
|
$
|
14,860
|
|
|
(8
|
)
|
Asset recovery management
|
|
6,969
|
|
|
6,120
|
|
|
14
|
|
|
14,008
|
|
|
12,197
|
|
|
15
|
|
||||
IT infrastructure services
|
|
1,525
|
|
|
1,723
|
|
|
(11
|
)
|
|
2,901
|
|
|
3,966
|
|
|
(27
|
)
|
||||
Total service revenue
|
|
15,740
|
|
|
15,346
|
|
|
3
|
|
|
30,548
|
|
|
31,023
|
|
|
(2
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset recovery management
|
|
9
|
|
|
14
|
|
|
(36
|
)
|
|
21
|
|
|
34
|
|
|
(38
|
)
|
||||
Total reimbursable expenses
|
|
9
|
|
|
14
|
|
|
(36
|
)
|
|
21
|
|
|
34
|
|
|
(38
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
15,749
|
|
|
$
|
15,360
|
|
|
3
|
|
|
$
|
30,569
|
|
|
$
|
31,057
|
|
|
(2
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
13,580
|
|
|
$
|
10,595
|
|
|
28
|
|
|
$
|
26,478
|
|
|
$
|
21,690
|
|
|
22
|
|
Outside fees and services
|
|
856
|
|
|
876
|
|
|
(2
|
)
|
|
1,524
|
|
|
1,749
|
|
|
(13
|
)
|
||||
Reimbursable expenses
|
|
9
|
|
|
14
|
|
|
(36
|
)
|
|
21
|
|
|
34
|
|
|
(38
|
)
|
||||
Technology and telecommunications
|
|
3,641
|
|
|
1,498
|
|
|
143
|
|
|
5,903
|
|
|
2,955
|
|
|
100
|
|
||||
Depreciation and amortization
|
|
1,600
|
|
|
1,240
|
|
|
29
|
|
|
3,327
|
|
|
3,455
|
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
19,686
|
|
|
$
|
14,223
|
|
|
38
|
|
|
$
|
37,253
|
|
|
$
|
29,883
|
|
|
25
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
8,177
|
|
|
$
|
8,456
|
|
|
(3
|
)
|
|
$
|
16,180
|
|
|
$
|
15,209
|
|
|
6
|
|
Occupancy related costs
|
|
2,824
|
|
|
1,665
|
|
|
70
|
|
|
5,433
|
|
|
6,050
|
|
|
(10
|
)
|
||||
Amortization of intangible assets
|
|
418
|
|
|
473
|
|
|
(12
|
)
|
|
835
|
|
|
973
|
|
|
(14
|
)
|
||||
Professional services
|
|
2,291
|
|
|
1,586
|
|
|
44
|
|
|
3,913
|
|
|
2,763
|
|
|
42
|
|
||||
Marketing costs
|
|
74
|
|
|
54
|
|
|
37
|
|
|
159
|
|
|
127
|
|
|
25
|
|
||||
Depreciation and amortization
|
|
1,140
|
|
|
1,130
|
|
|
1
|
|
|
2,385
|
|
|
2,532
|
|
|
(6
|
)
|
||||
Other
|
|
2,216
|
|
|
3,750
|
|
|
(41
|
)
|
|
3,867
|
|
|
4,154
|
|
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
17,140
|
|
|
$
|
17,114
|
|
|
—
|
|
|
$
|
32,772
|
|
|
$
|
31,808
|
|
|
3
|
|
(in thousands)
|
|
2018
|
|
2017
|
|
% Increase (decrease)
|
|||||
|
|
|
|
|
|
|
|
||||
Net (loss) income adjusted for non-cash items
|
|
$
|
46,413
|
|
|
$
|
58,530
|
|
|
(21
|
)
|
Changes in operating assets and liabilities
|
|
(23,160
|
)
|
|
(46,013
|
)
|
|
50
|
|
||
Cash flows provided by operating activities
|
|
23,253
|
|
|
12,517
|
|
|
86
|
|
||
Cash flows used in investing activities
|
|
(2,756
|
)
|
|
(5,658
|
)
|
|
51
|
|
||
Cash flows used in financing activities
|
|
(38,988
|
)
|
|
(41,677
|
)
|
|
6
|
|
||
Net decrease in cash, cash equivalents an
d restricted cash
|
|
(18,491
|
)
|
|
(34,818
|
)
|
|
47
|
|
||
Cash, cash equivalents and restricted cash at the beginn
ing of the period
|
|
108,843
|
|
|
153,421
|
|
|
(29
|
)
|
||
|
|
|
|
|
|
|
|
||||
Cash, cash equivalents and restricted cash at the
end of the period
|
|
$
|
90,352
|
|
|
$
|
118,603
|
|
|
(24
|
)
|
a)
|
Evaluation of Disclosure Controls and Procedures
|
b)
|
Internal Control over Financial Reporting
|
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:
|
|
|
|
|
|
|
|
|
|||||
April 1 – 30, 2018
|
|
219,200
|
|
|
$
|
26.04
|
|
|
219,200
|
|
|
2,843,019
|
|
May 1 – 31, 2018
|
|
168,500
|
|
|
28.20
|
|
|
168,500
|
|
|
4,199,600
|
|
|
June 1 – 30, 2018
|
|
21,854
|
|
|
30.03
|
|
|
21,854
|
|
|
4,177,746
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
409,554
|
|
|
$
|
27.14
|
|
|
409,554
|
|
|
4,177,746
|
|
(1)
|
In addition to the repurchases included in the table above,
19,472
common shares were withheld from employees to satisfy tax withholding obligations that arose from the vesting of restricted shares and stock option exercises.
|
(2)
|
On
May 15, 2018
, our shareholders approved the renewal of the share repurchase program originally approved by the shareholders on
May 17, 2017
, which replaced the previous share repurchase program and authorizes us to purchase up to
4.3 million
shares of our common stock in the open market, subject to certain parameters.
|
Exhibit Number
|
|
Exhibit Description
|
10.1
*†
|
|
|
|
|
|
|
|
|
|
|
|
10.3
*
|
|
|
|
|
|
31.1
*
|
|
|
|
|
|
31.2
*
|
|
|
|
|
|
32.1
*
|
|
|
|
|
|
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 June 30, 2018 is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets at June 30, 2018 and December 31, 2017; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2018 and 2017; (iii) Condensed Consolidated Statements of Equity for the six months ended June 30, 2018 and 2017; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017; and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
______________________________________
|
||
*
|
|
Filed herewith.
|
†
|
|
Denotes a management contract or compensatory arrangement.
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date:
|
July 26, 2018
|
|
By:
|
/s/ William B. Shepro
|
|
|
|
|
William B. Shepro
|
|
|
|
|
Director and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
Date:
|
July 26, 2018
|
|
By:
|
/s/ Michelle D. Esterman
|
|
|
|
|
Michelle D. Esterman
|
|
|
|
|
Executive Vice President, Finance
|
|
|
|
|
(Principal Accounting Officer)
|
1.
|
OPTION GRANT
|
2.
|
OPTION TERM
|
3.
|
VESTING OF OPTIONS
|
A.
|
Vesting Schedule
|
(1)
|
Following the conclusion of the 2018 calendar year and prior to the first anniversary of the Grant Date, the Compensation Committee of the Board of Directors of Altisource shall confirm the extent to which the performance measure described in Exhibit A (the “Performance Measure”) is satisfied. Based upon the achievement against the Performance Measure, a percentage of the Target Amount (between 0% and 200%) shall become vestable Options (the “Stock Option Vestable Portion”) and shall vest in accordance with the provisions of Section 3 Subsection A(2) below.
|
(2)
|
One-fourth (1/4) of the Stock Option Vestable Portion
(if any, as determined pursuant to the provisions of Exhibit A)
shall vest on each of the first, second, third and fourth anniversaries of the Grant Date.
|
(3)
|
All Options that do not constitute the Stock Option Vestable Portion shall be forfeited and cancelled immediately upon confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied (if at all).
|
B.
|
General
|
4.
|
METHOD OF OPTION EXERCISE
|
A.
|
Subject to the terms and conditions of this Agreement, vested 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 “Notice”). The Notice shall state the election to exercise vested 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 such Options. In no case may vested Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the vested Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, vested Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company and not under a notice of resignation. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise vested Options (in the case of the Employee’s guardian or legal representative, such guardian or legal representative, as applicable, will be considered to be the Employee for purposes of exercising the Employee’s rights in this Section 4, Subsections A and B).
|
B.
|
A Notice shall be accompanied by (1) a personal check or wire transfer payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (2) 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 (3) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Board of Directors. “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 vested 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
|
C.
|
To the extent Options shall be exercised, pursuant to Section 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 an Option 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 Corporate Secretary of the Company. If such Notice is received after the market closes, the following trading day will be considered the date of exercise. All Purchased Shares shall be fully paid and non-assessable.
|
E.
|
The Company may require the Employee to exercise the Options electronically through the Solium 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 this 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 Purchased Shares are ultimately delivered.
|
B.
|
Except as may otherwise be provided in Section 3 Subsection A(3) and this Section 5, Subsections A and C for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date.
|
C.
|
If, prior to exercise, expiration, forfeiture, 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 termination of employment by the Company for Cause, then all Options shall terminate on the date of termination of employment.
|
(2)
|
by reason of termination of employment by the Employee (other than by reason of retirement), then all unvested Options shall terminate on the date Employee provides notice of his or her resignation and all vested Options shall terminate on the date that is six (6) months after the date of termination of employment.
|
(3)
|
by reason of termination of employment by the Company without Cause then:
|
(a)
|
if the date of such termination occurs after September 30, 2018 but before the Stock Option Vestable Portion has been determined, the Options shall remain outstanding and the Stock Option Vestable Portion (if any) shall be determined pursuant to the provisions of Exhibit A, after which the Stock Option Vestable Portion, if any, shall vest and shall become immediately exercisable in full on the date of such determination and shall be exercisable for a period of six (6) months following such vesting date; provided however that if Employee has been employed with the Company for less than two (2) years at the time of termination, then any unvested Options that are determined to be eligible to vest within twelve (12) months of such termination shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2), and shall be exercisable within six (6) months of such vesting date, and the remainder of the Options shall be forfeited by the Employee as of the date the Stock Option Vestable Portion has been determined. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(3)(a) prior to the first anniversary of the Grant Date.
|
(b)
|
if the date of such termination occurs after September 30, 2018 and after the determination of the Stock Option Vestable Portion, the Stock Option Vestable Portion, if any, shall vest and shall become immediately exercisable in full on the date of such termination and shall be exercisable for a period of six (6) months following such termination date; provided however that if Employee has been employed with the Company for less than two (2) years, then any unvested Options that are scheduled to vest within twelve (12) months of such termination of employment shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2), and shall be
|
(c)
|
if the date of such termination of employment occurs prior to September 30, 2018, then all Options shall terminate on the date of such termination without Cause as applicable.
|
(4)
|
by reason of termination of employment by reason of retirement, Disability, or death of the employee then:
|
(a)
|
if the date of such termination occurs after September 30, 2018 but before the Stock Option Vestable Portion has been determined, the Options shall remain outstanding and the Stock Option Vestable Portion (if any) shall be determined pursuant to the provisions of Exhibit A after which the Stock Option Vestable Portion, if any, shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2) and any vested Options shall terminate as follows: (i) in the case of retirement or Disability, on the earlier of (x) five (5) years after the date of the Employee’s retirement or Disability, as applicable or (y) the end of the Option’s term and (ii) in the case of death, on the earlier of (x) three (3) years after the date of the Employee’s death or (y) the end of the Option’s term. Notwithstanding the foregoing, the Company will have the right in its sole discretion to require the Employee to exercise all or part of any Options retained pursuant to this paragraph at any time. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(4)(a) prior to the first anniversary of the Grant Date.
|
(b)
|
if the date of such termination occurs after September 30, 2018 and after the determination of the Stock Option Vestable Portion, the Stock Option Vestable Portion that has not yet vested shall vest and
|
(c)
|
if the date of such termination of employment occurs prior to September 30, 2018, then all Options shall terminate on the date of such retirement, Disability or death, as applicable.
|
(d)
|
The Employee’s right to retain any Options or right to accelerated vesting following termination of employment under Section 5 Subsection C(4) is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least three (3) years in the case of retirement (and has reached the minimum age for retirement set forth in the 2009 Plan) or two (2) years in the case of Disability or death, unless otherwise determined by the Company in its sole discretion.
|
D.
|
In no event shall this Section 5, Subsection C extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.
|
6.
|
CONDITIONS UPON TERMINATION OF EMPLOYMENT; CLAW-BACK POLICY
|
A.
|
For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not: (i) within the territory where the Employee is working or within which the Employee had responsibility at the time of termination, perform, either directly or indirectly, on behalf of a competitor the same or similar job duties that Employee performed on behalf of the Company in the two (2) years prior to departure, (ii) 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, (iii) solicit the sale of competitive goods or services from any customer, supplier, licensee, or business relation of the Company with which
|
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 Section 6, Subsection D above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants.
|
F.
|
The Options shall be subject to any claw-back policy implemented by the Board of Directors of the Company or any Successor Entity.
|
7.
|
CORPORATE TRANSACTIONS; CHANGE OF CONTROL/RESTRUCTURING EVENT; OTHER EVENTS
|
A.
|
Corporate Transactions
|
B.
|
Change of Control/Restructuring Event
|
(1)
|
If a Change of Control/Restructuring Event occurs, the Board of Directors shall have the right to make appropriate adjustments, including, without limiting the generality of the foregoing (i) allow the Options to continue in full force and effect in accordance with the terms hereof or (ii)
issue an award of shares in the
Successor Entity as the Board of Directors deems equitable
.
|
(2)
|
If the Options are to remain in place following such Change of Control/Restructuring Event, appropriate adjustments (as the Board of Directors sees as equitable) shall be made by the Board of Directors in its discretion in the aggregate number and kind of Shares subject to the 2009 Plan and the number and kind of Shares and the price per Share subject to the Options. Further, the
|
(3)
|
Notwithstanding any provision of Section 7 Subsection B(1) and B(2) to the contrary, in the event
a Change of Control/Restructuring Event occurs
, if the Options are not assumed or replaced by the acquiror/continuing entity on terms deemed by the Board of Directors to be appropriate, then the Board of Directors
shall have the right to
(i)
provide for accelerated vesting and settlement of the Options immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event or (ii) to the extent
the
Successor Entity
allows the Options to stay in place,
to make appropriate adjustments to avoid an expansion or reduction in the value of the award.
|
C.
|
Other Events
|
(1)
|
The 2009 Plan and Agreement and the Options 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 Options made hereunder (including, without limitation, to the Performance Measure and defined levels of achievement) 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: (a) Altisource’s common stock is no longer listed on any national securities exchange or quoted on the NASDAQ Global Select Market or other securities quotation system; (b) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (c) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the Options. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the Options made hereunder (including, without limitation to the
|
(2)
|
The Board of Directors may also specify any inclusion(s) or exclusion(s) for charges related to any event(s) or occurrence(s) which the Board of Directors determines should be included or excluded, as appropriate, for purposes of measuring performance against the applicable Performance Measure and the calculation methodology for such Performance Measure, which may include, but is not limited to, acquisitions and dispositions, market changes, reserve adjustments for litigation or regulatory/enforcement matters, litigation or claim judgments or settlements. If the Board of Directors determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances, renders the previously established Performance Measure and defined levels of achievement unsuitable, the Board of Directors may also, in its discretion, modify such levels of achievement, in whole or in part, as the Board of Directors deems appropriate.
|
D.
|
The parties agree that and adjustments made to Exhibit A pursuant to this Section 7 shall not require an amendment to this Agreement, which will remain in effect in accordance with its terms.
|
8.
|
NON-TRANSFERABILITY OF OPTIONS
|
9.
|
PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS
|
10.
|
DEFINITIONS
|
A.
|
As used herein, the term “Board of Directors” shall mean the Board of Directors or Compensation Committee of Altisource or any Successor Entity, as applicable, and the term “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of Altisource.
|
B.
|
As used herein, “Cause” means, as reasonably determined by the Board of Directors (excluding the Employee, if he/she 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
or such other crime which may bring disrepute upon the Company
, whether or not committed in the course of the Employee’s employment with the Company. For the avoidance of doubt, termination of employment as a result of a business reorganization or reduction in force will be deemed termination without Cause.
|
C.
|
As used herein, “Change of Control/Restructuring Date” means 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” means (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,
|
E.
|
As used herein, “Confidential Information” means 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, the 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, “Disability” means 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 “Successor Entity” means the person that is formed by, replaces or otherwise survives the Company as a result of a transaction, series of transaction or restructuring with the effect that the Company ceases to exist.
|
H.
|
Capitalized terms used but not defined in this Agreement or in Exhibit A shall have the meanings set forth in the 2009 Plan.
|
11.
|
AMENDMENT
|
12.
|
CONSTRUCTION
|
13.
|
ENTIRE AGREEMENT
|
14.
|
HEADINGS
|
15.
|
CONFIRMING INFORMATION
|
I hereby agree to and accept the terms of this Agreement.
Employee
_______________________________
[ ]
|
|
|
|
|
|
|
|
Altisource Portfolio Solutions S.A.
By: ___________________________
Name:
Title:
|
|
Attested by: ____________________
Name:
Title:
|
|
|
|
2018 Adjusted EPS
(in $)
|
Stock Option Vestable Portion
(% of Target Amount)
|
$[ ] or less
|
0%
|
$[ ]-$ [ ]
|
[ ]% - [ ]%
|
$[ ]
|
[ ]%
|
$[ ]- $[ ]
|
[ ]% - [ ]%
|
$[ ] or greater
|
200%
|
BORROWER:
|
ALTISOURCE S.À R.L.
By:
/s/ Kevin Wilcox
Name: Kevin Wilcox
Title: Manager
|
ADMINISTRATIVE AGENT:
|
MORGAN STANLEY SENIOR FUNDING, INC.
By:
/s/ Wissam Kairouz
Name: Wissam Kairouz
Title: Authorized Signatory
|
REQUIRED LENDERS:
|
[On file with the Administrative Agent]
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
June 30, 2018
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;
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(c)
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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
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(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
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5.
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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 (or persons performing the equivalent functions):
|
(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
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(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.
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Date:
|
July 26, 2018
|
|
By:
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/s/ William B. Shepro
|
|
|
|
|
William B. Shepro
|
|
|
|
|
Director and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
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1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
June 30, 2018
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 (or persons performing the equivalent functions):
|
(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:
|
July 26, 2018
|
|
By:
|
/s/ Indroneel Chatterjee
|
|
|
|
|
Indroneel Chatterjee
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial 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/ Indroneel Chatterjee
|
|
William B. Shepro
|
|
|
Indroneel Chatterjee
|
|
Director and Chief Executive Officer
|
|
|
Chief Financial Officer
|
|
(Principal Executive Officer)
|
|
|
(Principal Financial Officer)
|
|
July 26, 2018
|
|
|
July 26, 2018
|