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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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Title of each class
|
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $1.00 par value
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ASPS
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NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Page
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June 30,
2019 |
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December 31,
2018 |
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ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
85,379
|
|
|
$
|
58,294
|
|
Investment in equity securities (Note 4)
|
43,730
|
|
|
36,181
|
|
||
Accounts receivable, net
|
44,247
|
|
|
36,466
|
|
||
Short-term investments in real estate (Note 7)
|
414
|
|
|
39,873
|
|
||
Assets held for sale (Note 3)
|
35,656
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
23,633
|
|
|
30,720
|
|
||
Total current assets
|
233,059
|
|
|
201,534
|
|
||
|
|
|
|
||||
Premises and equipment, net (Notes 1 and 8)
|
59,980
|
|
|
45,631
|
|
||
Goodwill
|
79,009
|
|
|
81,387
|
|
||
Intangible assets, net
|
68,616
|
|
|
91,653
|
|
||
Deferred tax assets, net
|
293,287
|
|
|
309,089
|
|
||
Other assets
|
9,920
|
|
|
12,406
|
|
||
|
|
|
|
||||
Total assets
|
$
|
743,871
|
|
|
$
|
741,700
|
|
|
|
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|
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LIABILITIES AND EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
63,791
|
|
|
$
|
87,240
|
|
Current portion of long-term debt
|
6,502
|
|
|
—
|
|
||
Deferred revenue
|
5,590
|
|
|
10,108
|
|
||
Liabilities held for sale (Note 3)
|
14,850
|
|
|
—
|
|
||
Other current liabilities (Notes 1 and 11)
|
20,410
|
|
|
7,030
|
|
||
Total current liabilities
|
111,143
|
|
|
104,378
|
|
||
|
|
|
|
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Long-term debt, less current portion
|
319,854
|
|
|
331,476
|
|
||
Other non-current liabilities (Notes 1 and 13)
|
27,002
|
|
|
9,178
|
|
||
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|
|
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Commitments, contingencies and regulatory matters (Note 23)
|
|
|
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|
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Equity:
|
|
|
|
||||
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 16,079 outstanding as of June 30, 2019; 16,276 outstanding as of December 31, 2018)
|
25,413
|
|
|
25,413
|
|
||
Additional paid-in capital
|
128,120
|
|
|
122,667
|
|
||
Retained earnings
|
574,040
|
|
|
590,655
|
|
||
Treasury stock, at cost (9,334 shares as of June 30, 2019 and 9,137 shares as of
December 31, 2018) |
(443,480
|
)
|
|
(443,304
|
)
|
||
Altisource equity
|
284,093
|
|
|
295,431
|
|
||
|
|
|
|
||||
Non-controlling interests
|
1,779
|
|
|
1,237
|
|
||
Total equity
|
285,872
|
|
|
296,668
|
|
||
|
|
|
|
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Total liabilities and equity
|
$
|
743,871
|
|
|
$
|
741,700
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
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2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
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|
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Revenue
|
|
$
|
196,535
|
|
|
$
|
218,556
|
|
|
$
|
366,470
|
|
|
$
|
415,994
|
|
Cost of revenue
|
|
152,641
|
|
|
163,206
|
|
|
276,745
|
|
|
310,400
|
|
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|
|
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|
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Gross profit
|
|
43,894
|
|
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55,350
|
|
|
89,725
|
|
|
105,594
|
|
||||
Operating expenses:
|
|
|
|
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|
|
|
|
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Selling, general and administrative expenses
|
|
35,851
|
|
|
42,924
|
|
|
77,091
|
|
|
86,048
|
|
||||
Restructuring charges (Note 22)
|
|
1,899
|
|
|
—
|
|
|
6,319
|
|
|
—
|
|
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|
|
|
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|
|
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|
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Income from operations
|
|
6,144
|
|
|
12,426
|
|
|
6,315
|
|
|
19,546
|
|
||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
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Interest expense
|
|
(6,550
|
)
|
|
(7,027
|
)
|
|
(13,299
|
)
|
|
(12,890
|
)
|
||||
Unrealized gain (loss) on investment in equity securities (Note 4)
|
|
11,787
|
|
|
1,533
|
|
|
14,025
|
|
|
(5,968
|
)
|
||||
Other income (expense), net
|
|
528
|
|
|
(3,861
|
)
|
|
902
|
|
|
(2,589
|
)
|
||||
Total other income (expense), net
|
|
5,765
|
|
|
(9,355
|
)
|
|
1,628
|
|
|
(21,447
|
)
|
||||
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|
|
|
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|
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Income (loss) before income taxes and non-controlling interests
|
|
11,909
|
|
|
3,071
|
|
|
7,943
|
|
|
(1,901
|
)
|
||||
Income tax (provision) benefit
|
|
(16,513
|
)
|
|
(816
|
)
|
|
(15,291
|
)
|
|
549
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
(4,604
|
)
|
|
2,255
|
|
|
(7,348
|
)
|
|
(1,352
|
)
|
||||
Net income attributable to non-controlling interests
|
|
(1,240
|
)
|
|
(687
|
)
|
|
(1,680
|
)
|
|
(1,212
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Altisource
|
|
$
|
(5,844
|
)
|
|
$
|
1,568
|
|
|
$
|
(9,028
|
)
|
|
$
|
(2,564
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
Diluted
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
16,214
|
|
|
17,142
|
|
|
16,253
|
|
|
17,260
|
|
||||
Diluted
|
|
16,214
|
|
|
17,553
|
|
|
16,253
|
|
|
17,260
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(4,604
|
)
|
|
$
|
2,255
|
|
|
$
|
(7,348
|
)
|
|
$
|
(1,352
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
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 |
|
—
|
|
|
—
|
|
|
—
|
|
|
(733
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive (loss) income, net of tax
|
|
(4,604
|
)
|
|
2,255
|
|
|
(7,348
|
)
|
|
(2,085
|
)
|
||||
Comprehensive income attributable to non-controlling interests
|
|
(1,240
|
)
|
|
(687
|
)
|
|
(1,680
|
)
|
|
(1,212
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive (loss) income attributable to Altisource
|
|
$
|
(5,844
|
)
|
|
$
|
1,568
|
|
|
$
|
(9,028
|
)
|
|
$
|
(3,297
|
)
|
|
Altisource Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive income (loss)
|
|
Treasury stock, at cost
|
|
Non-controlling interests
|
|
Total
|
|||||||||||||||||
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2017
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
112,475
|
|
|
$
|
626,600
|
|
|
$
|
733
|
|
|
$
|
(426,609
|
)
|
|
$
|
1,373
|
|
|
$
|
339,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,132
|
)
|
|
—
|
|
|
—
|
|
|
525
|
|
|
(3,607
|
)
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(672
|
)
|
|
(672
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
2,201
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,201
|
|
|||||||
Cumulative effect of accounting changes
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,715
|
)
|
|
(733
|
)
|
|
—
|
|
|
—
|
|
|
(10,448
|
)
|
|||||||
Exercise of stock options and issuance of restricted share units and restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,500
|
)
|
|
—
|
|
|
15,117
|
|
|
—
|
|
|
2,617
|
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,994
|
)
|
|
—
|
|
|
(9,994
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2018
|
25,413
|
|
|
25,413
|
|
|
114,676
|
|
|
600,253
|
|
|
—
|
|
|
(421,486
|
)
|
|
1,226
|
|
|
320,082
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,568
|
|
|
—
|
|
|
—
|
|
|
687
|
|
|
2,255
|
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(509
|
)
|
|
(509
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
1,910
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,910
|
|
|||||||
Exercise of stock options and issuance of restricted share units and restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,737
|
)
|
|
—
|
|
|
4,827
|
|
|
—
|
|
|
90
|
|
|||||||
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances and stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
(816
|
)
|
|
—
|
|
|
406
|
|
|
—
|
|
|
(410
|
)
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,127
|
)
|
|
—
|
|
|
(11,127
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2018
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
116,586
|
|
|
$
|
596,268
|
|
|
$
|
—
|
|
|
$
|
(427,380
|
)
|
|
$
|
1,404
|
|
|
$
|
312,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2018
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
122,667
|
|
|
$
|
590,655
|
|
|
$
|
—
|
|
|
$
|
(443,304
|
)
|
|
$
|
1,237
|
|
|
$
|
296,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,184
|
)
|
|
—
|
|
|
—
|
|
|
440
|
|
|
(2,744
|
)
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(620
|
)
|
|
(620
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
2,621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,621
|
|
|||||||
Exercise of stock options and issuance of restricted share units and restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,549
|
)
|
|
—
|
|
|
1,577
|
|
|
—
|
|
|
28
|
|
|||||||
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances and stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,163
|
)
|
|
—
|
|
|
578
|
|
|
—
|
|
|
(585
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2019
|
25,413
|
|
|
25,413
|
|
|
125,288
|
|
|
584,759
|
|
|
—
|
|
|
(441,149
|
)
|
|
1,057
|
|
|
295,368
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,844
|
)
|
|
—
|
|
|
—
|
|
|
1,240
|
|
|
(4,604
|
)
|
|||||||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(518
|
)
|
|
(518
|
)
|
|||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
2,832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,832
|
|
|||||||
Exercise of stock options and issuance of restricted share units and restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,473
|
)
|
|
—
|
|
|
3,680
|
|
|
—
|
|
|
207
|
|
|||||||
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances and stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,402
|
)
|
|
—
|
|
|
689
|
|
|
—
|
|
|
(713
|
)
|
|||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,700
|
)
|
|
—
|
|
|
(6,700
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2019
|
25,413
|
|
|
$
|
25,413
|
|
|
$
|
128,120
|
|
|
$
|
574,040
|
|
|
$
|
—
|
|
|
$
|
(443,480
|
)
|
|
$
|
1,779
|
|
|
$
|
285,872
|
|
|
Six months ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(7,348
|
)
|
|
$
|
(1,352
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
17,315
|
|
|
17,049
|
|
||
Amortization of intangible assets
|
12,191
|
|
|
14,691
|
|
||
Unrealized (gain) loss on investment in equity securities
|
(14,025
|
)
|
|
5,968
|
|
||
Share-based compensation expense
|
5,453
|
|
|
4,111
|
|
||
Bad debt expense
|
131
|
|
|
1,503
|
|
||
Amortization of debt discount
|
327
|
|
|
298
|
|
||
Amortization of debt issuance costs
|
363
|
|
|
502
|
|
||
Deferred income taxes
|
15,846
|
|
|
(1,349
|
)
|
||
Loss on disposal of fixed assets
|
908
|
|
|
558
|
|
||
Loss on debt refinancing (Note 12)
|
—
|
|
|
4,434
|
|
||
Changes in operating assets and liabilities (excludes assets and
liabilities held for sale, see Note 3): |
|
|
|
|
|
||
Accounts receivable
|
(15,789
|
)
|
|
6,923
|
|
||
Short-term investments in real estate
|
39,459
|
|
|
(5,884
|
)
|
||
Prepaid expenses and other current assets
|
5,239
|
|
|
617
|
|
||
Other assets
|
(511
|
)
|
|
967
|
|
||
Accounts payable and accrued expenses
|
(16,587
|
)
|
|
(17,152
|
)
|
||
Other current and non-current liabilities
|
(9,816
|
)
|
|
(8,631
|
)
|
||
Net cash provided by operating activities
|
33,156
|
|
|
23,253
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Additions to premises and equipment
|
(934
|
)
|
|
(2,756
|
)
|
||
Proceeds received from sale of equity securities
|
6,476
|
|
|
—
|
|
||
Other
|
1,087
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
6,629
|
|
|
(2,756
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
407,880
|
|
||
Repayments and repurchases of long-term debt
|
(5,810
|
)
|
|
(421,821
|
)
|
||
Debt issuance costs
|
—
|
|
|
(5,042
|
)
|
||
Proceeds from stock option exercises
|
235
|
|
|
2,707
|
|
||
Purchase of treasury shares
|
(6,700
|
)
|
|
(21,121
|
)
|
||
Distributions to non-controlling interests
|
(1,138
|
)
|
|
(1,181
|
)
|
||
Payments of tax withholding on issuance of restricted share units and restricted shares
|
(1,298
|
)
|
|
(410
|
)
|
||
Net cash used in financing activities
|
(14,711
|
)
|
|
(38,988
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
25,074
|
|
|
(18,491
|
)
|
||
Cash, cash equivalents and restricted cash at the beginning of the period
|
64,046
|
|
|
108,843
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
89,120
|
|
|
$
|
90,352
|
|
|
|
|
|
|
|||
Supplemental cash flow information:
|
|
|
|
|
|
||
Interest paid
|
$
|
11,279
|
|
|
$
|
11,540
|
|
Income taxes (received) paid, net
|
(27
|
)
|
|
2,865
|
|
||
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Net (decrease) increase in payables for purchases of premises and equipment
|
$
|
(25
|
)
|
|
$
|
398
|
|
Acquisition of right-to-use assets with lease obligations
|
6,200
|
|
|
—
|
|
||
Reduction of lease obligations from lease terminations and amendments
|
(3,409
|
)
|
|
—
|
|
(in thousands)
|
|
June 30,
2019 |
||
|
|
|
||
Accounts receivable, net
|
|
$
|
7,404
|
|
Prepaid expenses and other current assets
|
|
1,581
|
|
|
Premises and equipment, net
|
|
12,506
|
|
|
Goodwill
|
|
2,378
|
|
|
Intangible assets, net
|
|
10,846
|
|
|
Other assets
|
|
941
|
|
|
|
|
|
||
Total assets held for sale
|
|
$
|
35,656
|
|
|
|
|
||
Accounts payable and accrued expenses
|
|
$
|
4,792
|
|
Other current liabilities
|
|
2,632
|
|
|
Other non-current liabilities
|
|
7,426
|
|
|
|
|
|
||
Total liabilities held for sale
|
|
$
|
14,850
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Billed
|
|
$
|
39,130
|
|
|
$
|
35,590
|
|
Unbilled
|
|
14,382
|
|
|
11,759
|
|
||
|
|
53,512
|
|
|
47,349
|
|
||
Less: Allowance for doubtful accounts
|
|
(9,265
|
)
|
|
(10,883
|
)
|
||
|
|
|
|
|
||||
Total
|
|
$
|
44,247
|
|
|
$
|
36,466
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Maintenance agreements, current portion
|
|
$
|
2,435
|
|
|
$
|
5,600
|
|
Income taxes receivable
|
|
8,229
|
|
|
7,940
|
|
||
Prepaid expenses
|
|
4,767
|
|
|
7,484
|
|
||
Other current assets
|
|
8,202
|
|
|
9,696
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
23,633
|
|
|
$
|
30,720
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Computer hardware and software
|
|
$
|
169,684
|
|
|
$
|
182,215
|
|
Office equipment and other
|
|
4,006
|
|
|
7,384
|
|
||
Furniture and fixtures
|
|
9,710
|
|
|
13,313
|
|
||
Leasehold improvements
|
|
24,178
|
|
|
29,781
|
|
||
|
|
207,578
|
|
|
232,693
|
|
||
Less: Accumulated depreciation and amortization
|
|
(175,861
|
)
|
|
(187,062
|
)
|
||
Net
|
|
31,717
|
|
|
45,631
|
|
||
|
|
|
|
|
||||
Right-to-use assets under operating leases
|
|
34,503
|
|
|
—
|
|
||
Less: Accumulated depreciation and amortization
|
|
(6,240
|
)
|
|
—
|
|
||
Net right-to-use assets
|
|
28,263
|
|
|
—
|
|
||
|
|
|
|
|
||||
Total premises and equipment, net
|
|
$
|
59,980
|
|
|
$
|
45,631
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
United States
|
|
$
|
27,879
|
|
|
$
|
25,693
|
|
India
|
|
16,269
|
|
|
3,154
|
|
||
Luxembourg
|
|
14,503
|
|
|
14,975
|
|
||
Philippines
|
|
1,094
|
|
|
1,754
|
|
||
Other
|
|
235
|
|
|
55
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
59,980
|
|
|
$
|
45,631
|
|
(in thousands)
|
|
Total
|
||
|
|
|
||
Balance as of December 31, 2018
|
|
$
|
81,387
|
|
Reclassification to assets held for sale (Note 3)
|
|
(2,378
|
)
|
|
|
|
|
||
Balance as of June 30, 2019
|
|
$
|
79,009
|
|
|
|
Weighted average estimated useful life
(in years) |
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net book value
|
||||||||||||||||||
(in thousands)
|
|
|
June 30,
2019 |
|
December 31,
2018 |
|
June 30,
2019 |
|
December 31,
2018 |
|
June 30,
2019 |
|
December 31,
2018 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Definite lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer related intangible assets
|
|
9
|
|
$
|
214,973
|
|
|
$
|
273,172
|
|
|
$
|
(170,756
|
)
|
|
$
|
(207,639
|
)
|
|
$
|
44,217
|
|
|
$
|
65,533
|
|
Operating agreement
|
|
20
|
|
35,000
|
|
|
35,000
|
|
|
(16,501
|
)
|
|
(15,632
|
)
|
|
18,499
|
|
|
19,368
|
|
||||||
Trademarks and trade names
|
|
15
|
|
11,140
|
|
|
11,349
|
|
|
(6,342
|
)
|
|
(6,244
|
)
|
|
4,798
|
|
|
5,105
|
|
||||||
Non-compete agreements
|
|
4
|
|
1,230
|
|
|
1,230
|
|
|
(1,180
|
)
|
|
(1,026
|
)
|
|
50
|
|
|
204
|
|
||||||
Intellectual property
|
|
10
|
|
300
|
|
|
300
|
|
|
(160
|
)
|
|
(145
|
)
|
|
140
|
|
|
155
|
|
||||||
Other intangible assets
|
|
5
|
|
3,745
|
|
|
3,745
|
|
|
(2,833
|
)
|
|
(2,457
|
)
|
|
912
|
|
|
1,288
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
|
$
|
266,388
|
|
|
$
|
324,796
|
|
|
$
|
(197,772
|
)
|
|
$
|
(233,143
|
)
|
|
$
|
68,616
|
|
|
$
|
91,653
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Security deposits
|
|
$
|
3,779
|
|
|
$
|
3,972
|
|
Restricted cash
|
|
3,741
|
|
|
5,752
|
|
||
Other
|
|
2,400
|
|
|
2,682
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
9,920
|
|
|
$
|
12,406
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Accounts payable
|
|
$
|
24,819
|
|
|
$
|
27,853
|
|
Accrued expenses - general
|
|
20,856
|
|
|
27,866
|
|
||
Accrued salaries and benefits
|
|
18,116
|
|
|
31,356
|
|
||
Income taxes payable
|
|
—
|
|
|
165
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
63,791
|
|
|
$
|
87,240
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Unfunded cash account balances
|
|
$
|
6,060
|
|
|
$
|
4,932
|
|
Lease obligation liabilities
|
|
12,255
|
|
|
—
|
|
||
Other
|
|
2,095
|
|
|
2,098
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
20,410
|
|
|
$
|
7,030
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Senior secured term loans
|
|
$
|
333,012
|
|
|
$
|
338,822
|
|
Less: Debt issuance costs, net
|
|
(3,492
|
)
|
|
(3,855
|
)
|
||
Less: Unamortized discount, net
|
|
(3,164
|
)
|
|
(3,491
|
)
|
||
Net long-term debt
|
|
326,356
|
|
|
331,476
|
|
||
Less: Current portion
|
|
(6,502
|
)
|
|
—
|
|
||
|
|
|
|
|
||||
Long-term debt, less current portion
|
|
$
|
319,854
|
|
|
$
|
331,476
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Lease obligation liabilities
|
|
$
|
19,350
|
|
|
$
|
—
|
|
Income tax liabilities
|
|
7,151
|
|
|
7,069
|
|
||
Deferred revenue
|
|
78
|
|
|
19
|
|
||
Other non-current liabilities
|
|
423
|
|
|
2,090
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
27,002
|
|
|
$
|
9,178
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
(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
|
|
$
|
85,379
|
|
|
$
|
85,379
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,294
|
|
|
$
|
58,294
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
3,741
|
|
|
3,741
|
|
|
—
|
|
|
—
|
|
|
5,752
|
|
|
5,752
|
|
|
—
|
|
|
—
|
|
||||||||
Investment in equity securities
|
|
43,730
|
|
|
43,730
|
|
|
—
|
|
|
—
|
|
|
36,181
|
|
|
36,181
|
|
|
—
|
|
|
—
|
|
||||||||
Long-term receivable (
Note 3
)
|
|
2,295
|
|
|
—
|
|
|
—
|
|
|
2,295
|
|
|
2,221
|
|
|
—
|
|
|
—
|
|
|
2,221
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Senior secured term loan
|
|
333,012
|
|
|
—
|
|
|
328,433
|
|
|
—
|
|
|
338,822
|
|
|
—
|
|
|
330,351
|
|
|
—
|
|
|
|
|
|
Six months ended June 30, 2018
|
||||||
|
|
|
|
|
|
Black-Scholes
|
|
Binomial
|
||
|
|
|
|
|
|
|
|
|
||
Risk-free interest rate (%)
|
|
|
|
|
|
2.66 – 2.98
|
|
|
1.64 – 2.83
|
|
Expected stock price volatility (%)
|
|
|
|
|
|
70.31 – 71.86
|
|
|
71.81 – 71.86
|
|
Expected dividend yield
|
|
|
|
|
|
—
|
|
|
—
|
|
Expected option life (in years)
|
|
|
|
|
|
6.00 – 6.25
|
|
|
2.56 – 4.32
|
|
Fair value
|
|
|
|
|
|
$16.17 – $19.06
|
|
|
$14.67 – $18.28
|
|
|
|
Six months ended June 30,
|
||||||
(in thousands, except per share amounts)
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Weighted average grant date fair value of stock options granted per share
|
|
$
|
—
|
|
|
$
|
16.27
|
|
Intrinsic value of options exercised
|
|
34
|
|
|
4,393
|
|
||
Grant date fair value of stock options that vested
|
|
2,752
|
|
|
1,334
|
|
|
Number of options
|
|
Weighted average exercise price
|
|
Weighted average contractual term
(in years)
|
|
Aggregate intrinsic value
(in thousands)
|
|||||
|
|
|
|
|
|
|
|
|||||
Outstanding as of December 31, 2018
|
1,440,566
|
|
|
$
|
30.78
|
|
|
5.04
|
|
$
|
945
|
|
Performance criteria achieved
|
227,849
|
|
|
24.98
|
|
|
|
|
|
|||
Exercised
|
(12,500
|
)
|
|
18.79
|
|
|
|
|
|
|
||
Forfeited
|
(93,210
|
)
|
|
46.27
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||||
Outstanding as of June 30, 2019
|
1,562,705
|
|
|
29.11
|
|
|
4.93
|
|
172
|
|
||
|
|
|
|
|
|
|
|
|||||
Exercisable as of June 30, 2019
|
990,130
|
|
|
26.51
|
|
|
3.30
|
|
166
|
|
|
Number of restricted shares and restricted share units
|
|
|
|
|
Outstanding as of December 31, 2018
|
485,806
|
|
Granted
|
392,579
|
|
Issued
|
(96,432
|
)
|
Forfeited/canceled
|
(85,793
|
)
|
|
|
|
Outstanding as of June 30, 2019
|
696,160
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
190,520
|
|
|
$
|
208,861
|
|
|
$
|
355,519
|
|
|
$
|
397,627
|
|
Reimbursable expenses
|
|
4,775
|
|
|
9,008
|
|
|
9,271
|
|
|
17,155
|
|
||||
Non-controlling interests
|
|
1,240
|
|
|
687
|
|
|
1,680
|
|
|
1,212
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
196,535
|
|
|
$
|
218,556
|
|
|
$
|
366,470
|
|
|
$
|
415,994
|
|
(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
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2019
|
|
$
|
178,949
|
|
|
$
|
12,811
|
|
|
$
|
4,775
|
|
|
$
|
196,535
|
|
Three months ended June 30, 2018
|
|
187,206
|
|
|
22,342
|
|
|
9,008
|
|
|
218,556
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2019
|
|
326,704
|
|
|
30,495
|
|
|
9,271
|
|
|
366,470
|
|
||||
Six months ended June 30, 2018
|
|
354,162
|
|
|
44,677
|
|
|
17,155
|
|
|
415,994
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
36,806
|
|
|
$
|
54,769
|
|
|
$
|
78,174
|
|
|
$
|
109,635
|
|
Outside fees and services
|
|
58,588
|
|
|
68,879
|
|
|
121,169
|
|
|
133,977
|
|
||||
Cost of real estate sold
|
|
40,276
|
|
|
13,320
|
|
|
42,370
|
|
|
16,499
|
|
||||
Technology and telecommunications
|
|
8,317
|
|
|
10,852
|
|
|
16,826
|
|
|
20,303
|
|
||||
Reimbursable expenses
|
|
4,775
|
|
|
9,008
|
|
|
9,271
|
|
|
17,155
|
|
||||
Depreciation and amortization
|
|
3,879
|
|
|
6,378
|
|
|
8,935
|
|
|
12,831
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
152,641
|
|
|
$
|
163,206
|
|
|
$
|
276,745
|
|
|
$
|
310,400
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
15,238
|
|
|
$
|
12,197
|
|
|
$
|
26,591
|
|
|
$
|
25,766
|
|
Amortization of intangible assets
|
|
3,544
|
|
|
7,544
|
|
|
12,191
|
|
|
14,691
|
|
||||
Occupancy related costs
|
|
3,871
|
|
|
7,189
|
|
|
7,779
|
|
|
15,623
|
|
||||
Marketing costs
|
|
2,989
|
|
|
3,978
|
|
|
5,921
|
|
|
7,585
|
|
||||
Professional services
|
|
3,320
|
|
|
4,328
|
|
|
8,796
|
|
|
7,554
|
|
||||
Depreciation and amortization
|
|
4,067
|
|
|
1,950
|
|
|
8,380
|
|
|
4,218
|
|
||||
Other
|
|
2,822
|
|
|
5,738
|
|
|
7,433
|
|
|
10,611
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
35,851
|
|
|
$
|
42,924
|
|
|
$
|
77,091
|
|
|
$
|
86,048
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on debt refinancing
|
|
$
|
—
|
|
|
$
|
(4,434
|
)
|
|
$
|
—
|
|
|
$
|
(4,434
|
)
|
Interest income
|
|
116
|
|
|
100
|
|
|
267
|
|
|
231
|
|
||||
Other, net
|
|
412
|
|
|
473
|
|
|
635
|
|
|
1,614
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
528
|
|
|
$
|
(3,861
|
)
|
|
$
|
902
|
|
|
$
|
(2,589
|
)
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
(in thousands, except per share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Altisource
|
|
$
|
(5,844
|
)
|
|
$
|
1,568
|
|
|
$
|
(9,028
|
)
|
|
$
|
(2,564
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, basic
|
|
16,214
|
|
|
17,142
|
|
|
16,253
|
|
|
17,260
|
|
||||
Dilutive effect of stock options, restricted shares and
restricted share units |
|
—
|
|
|
411
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, diluted
|
|
16,214
|
|
|
17,553
|
|
|
16,253
|
|
|
17,260
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
Diluted
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
•
|
For the
six months ended
June 30, 2019
and
2018
,
0.4 million
and
0.3 million
, respectively (
0.5 million
and
0.3 million
for the
second quarter
of
2019
and
2018
, respectively), stock options were anti-dilutive and have been excluded from the computation of diluted EPS because their exercise price was greater than the average market price of our common stock
|
•
|
For the
six months ended
June 30, 2019
and
2018
,
0.8 million
and
0.5 million
, respectively (
0.8 million
and
0.5 million
for the
second quarter
of
2019
and
2018
, respectively), stock options, restricted shares and restricted share units, which begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and an annualized rate of return to shareholders that have not yet been met, and have been excluded from the computation of diluted EPS
|
•
|
As a result of the net loss attributable to Altisource for the
six months ended
June 30, 2019
and
2018
,
0.3 million
and
0.5 million
, respectively (
0.3 million
for the
second quarter
of
2019
), stock options, restricted shares and restricted share units were excluded from the computation of diluted EPS, as their impacts were anti-dilutive
|
•
|
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
|
|
|
As of
June 30, 2019 |
|
|
|
|
|
Weighted average remaining lease term (in years)
|
|
3.52
|
|
Weighted average discount rate
|
|
7.08
|
%
|
(in thousands)
|
|
Three months ended
June 30, 2019 |
|
Six months ended
June 30, 2019 |
||||
|
|
|
|
|
||||
Operating lease costs:
|
|
|
|
|
||||
Selling, general and administrative expense
|
|
$
|
2,385
|
|
|
$
|
5,265
|
|
Cost of revenue
|
|
670
|
|
|
1,528
|
|
||
|
|
|
|
|
||||
Cash used in operating activities for amounts included in the measurement
of lease liabilities |
|
3,720
|
|
|
8,457
|
|
||
Short-term (less than one year) lease costs
|
|
1,152
|
|
|
2,309
|
|
(in thousands)
|
|
Operating lease liabilities
|
||
|
|
|
||
2019
|
|
$
|
6,933
|
|
2020
|
|
11,589
|
|
|
2021
|
|
7,863
|
|
|
2022
|
|
4,762
|
|
|
2023
|
|
3,339
|
|
|
Thereafter
|
|
1,338
|
|
|
Total lease payments
|
|
35,824
|
|
|
Less interest
|
|
(4,219
|
)
|
|
|
|
|
||
Present value of lease liabilities
|
|
$
|
31,605
|
|
•
|
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 and anticipated expense reductions as a result of Project Catalyst;
|
•
|
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 retain New Residential Investment Corp. (individually, together with one or more of its subsidiaries, or one or more of its subsidiaries individually, “NRZ”) as a customer or our ability to receive the anticipated volume of referrals from NRZ;
|
•
|
our ability to comply with material agreements if a change of control is deemed to have occurred including, among other things, through the formation of a shareholder group, this may cause a termination event or event of default under certain of our agreements;
|
•
|
our ability to execute on our strategic businesses;
|
•
|
our ability to retain our existing customers, expand relationships and attract new customers;
|
•
|
our ability to comply with governmental regulations and policies and any changes in such regulations and policies;
|
•
|
the level of loan delinquencies and charge-offs;
|
•
|
the level of origination volume;
|
•
|
technology incidents, data breaches and cybersecurity risks; and
|
•
|
significant changes in tax regulations and interpretations in the countries, states and local jurisdictions in which we operate.
|
•
|
Property preservation and inspection services, including vendor management, marketplace transaction management, payment management technologies and a vendor management oversight software-as-a-service (“SaaS”) platform
|
•
|
Hubzu
®
online real estate auction platform, real estate auction, real estate brokerage and asset management
|
•
|
Equator
®
, a SaaS based technology to manage real estate owned (“REO”), short sales, foreclosure, bankruptcy and eviction processes
|
•
|
Mortgage origination loan fulfillment, certification and certification insurance services and technologies
|
•
|
Title insurance (as an agent), settlement and valuation services
|
•
|
Residential and commercial construction inspection and risk mitigation services
|
•
|
Management of the Best Partners Mortgage Cooperative, Inc., doing business as Lenders One
®
(“Lenders One”), mortgage banking cooperative
|
•
|
Foreclosure trustee services
|
•
|
Owners.com
®
technology-enabled real estate brokerage and provider of related mortgage brokerage and title services
|
•
|
Pointillist
®
customer journey analytics platform
|
•
|
Financial Services business, including post-charge-off consumer debt and mortgage charge-off collection services and customer relationship management services (sold on July 1, 2019)
|
•
|
Buy-Renovate-Lease-Sell (“BRS”) short-term investments in real estate (this business is being discontinued in 2019)
|
•
|
Residential and commercial loan servicing technologies, loan origination system, document management platform and information technology infrastructure management 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
|
•
|
On March 28, 2019, Altisource entered into a definitive agreement to sell its Financial Services business, consisting of post-charge-off consumer debt and mortgage charge-off collection services and customer relationship management services (the “Financial Services Business”) to Transworld Systems Inc. (“TSI”) for
$44.0 million
consisting of an up-front payment of
$40.0 million
, subject to a working capital adjustment and transaction costs upon closing of the sale, and an additional
$4.0 million
payment on the one year anniversary of the sale closing. As a result, the Company has reclassified the assets and liabilities of the Financial Services Business to assets held for sale and liabilities held for sale on the accompanying condensed consolidated balance sheet as of
June 30, 2019
. The sale of the Financial Services Business to TSI closed on July 1, 2019. The Company currently expects to recognize a pretax gain of approximately $18 million from the sale of the Financial Services Business in the third quarter of 2019. In connection with the transaction, the parties also entered into a transition services agreement to provide for the management and orderly transition of certain
|
•
|
On June 28, 2019, the Company sold the majority of its short-term investments in real estate (“BRS Inventory”) to Lafayette Real Estate for
$38.9 million
. Following this and previous sales, only two homes with a value of $0.4 million remain to be sold. In connection with the sale of the majority of the BRS Inventory, the Company incurred a $1.8 million loss including closing costs.
|
•
|
In May 2019, the Company began selling its investment in Front Yard Residential Corporation (“RESI”) common stock. During the
three and six months ended
June 30, 2019
, the Company sold
0.6 million
shares for net proceeds of approximately
$6.5 million
. As required by the senior secured term loan agreement, the Company is using the net proceeds to repay a portion of its senior secured term loan.
|
•
|
During the
six months ended
June 30, 2019
and
2018
, the Company recognized an unrealized gain (loss) of
$14.0 million
and
$(6.0) million
, respectively (
$11.8 million
and
$1.5 million
for the
second quarter
of
2019
and
2018
, respectively) on its investment in RESI common shares in other income (expense), net in the accompanying condensed consolidated statements of operations and comprehensive income (loss) from a change in the market value of RESI common shares.
|
•
|
Effective January 1, 2019, the Company implemented a new accounting standard on leases which required the recognition of operating leases by companies as lease obligation liabilities on their balance sheets and also required the recognition of right-of-use assets. This resulted in higher depreciation and amortization expense and interest expense and lower occupancy related costs (see Notes 1 and 23 to the condensed consolidated financial statements for additional information regarding this accounting change). Adoption of this new standard resulted in the recognition of
$42.1 million
of right-to-use assets in premises and equipment, net,
$45.5 million
of lease obligation liabilities (
$16.7 million
in other current liabilities and
$28.8 million
in other non-current liabilities) and reduced accrued rent and lease incentives of
$3.4 million
in accounts payable and accrued liabilities and other non-current liabilities on the accompanying condensed consolidated balance sheets. Consequently, occupancy related costs were lower by $8.2 million for the
six months ended
June 30, 2019
and depreciation and amortization expense and interest expense increased by $6.8 million and $1.5 million, respectively (for the second quarter of 2019, occupancy related costs were lower by $3.9 million and depreciation and amortization expense and interest expense increased by $3.1 million and $0.7 million, respectively).
|
•
|
In August 2018, Altisource initiated Project Catalyst, a project intended to optimize its operations and reduce costs to better align its cost structure with its anticipated revenues and improve its operating margins. During the
three and six months ended
June 30, 2019
, Altisource incurred
$1.9 million
and
$6.3 million
, respectively, of severance costs, professional services fees and technology costs related to the reorganization plan (no comparative amount for the
three and six months ended
June 30, 2018
). Altisource expects to incur additional severance costs, professional services fees, technology costs and facility consolidation costs in connection with this internal reorganization, automation and other technology related activities and will expense those costs as incurred. Based on the Company’s analysis, it currently anticipates the future costs relating to Project Catalyst to be in the range of approximately
$12 million
to
$15 million
.
|
•
|
On June 21, 2018, the United States Supreme Court rendered a 5-4 majority decision in South Dakota v. Wayfair, Inc., holding that a state may require a remote seller with no physical presence in the state to collect and remit sales tax on goods and services provided to purchasers in the state, overturning certain existing court precedent. During the three months ended March 31, 2019, the Company completed the analysis of its services for potential exposure to sales tax in various jurisdictions in the United States. The Company recognized a
$2.1 million
loss for the
six months ended
June 30, 2019
(no comparative amounts for the
six months ended
June 30, 2018
and the
second quarter
s of
2019
and 2018) in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss). The Company began invoicing, collecting and remitting sales tax in applicable jurisdictions in 2019. The Company is also in the process of seeking reimbursement for sales tax payments from clients; however, there can be no assurance that the Company will be successful in collecting some or all of such reimbursements. Future changes in our estimated sales tax exposure could result in a material adjustment to our condensed consolidated financial statements which would impact our financial condition and results of operations.
|
•
|
On April 3, 2018, Altisource and its wholly-owned subsidiary, Altisource S.à r.l. entered into a credit agreement (the “Credit Agreement”) with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain lenders, 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. In connection with the refinancing, we recognized a loss of
$4.4 million
from the write-off of unamortized debt issuance costs and debt discount for the six months ended June 30, 2018 and
second quarter
of 2018 (no comparative amounts for the
six months ended
June 30, 2019
and the second quarter 2019).
|
•
|
The effective income tax rate increased to 192.5% for the six months ended June 30, 2019 from 28.9% for the six months ended June 30, 2018 (increased to 138.7% for the second quarter of 2019 from 26.6% for the second quarter of 2018). The effective income tax rate increases for the six months ended June 30, 2019 and second quarter of 2019 were primarily
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands, except per share data)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue
|
|
$
|
190,520
|
|
|
$
|
208,861
|
|
|
(9
|
)
|
|
$
|
355,519
|
|
|
$
|
397,627
|
|
|
(11
|
)
|
Reimbursable expenses
|
|
4,775
|
|
|
9,008
|
|
|
(47
|
)
|
|
9,271
|
|
|
17,155
|
|
|
(46
|
)
|
||||
Non-controlling interests
|
|
1,240
|
|
|
687
|
|
|
80
|
|
|
1,680
|
|
|
1,212
|
|
|
39
|
|
||||
Total revenue
|
|
196,535
|
|
|
218,556
|
|
|
(10
|
)
|
|
366,470
|
|
|
415,994
|
|
|
(12
|
)
|
||||
Cost of revenue
|
|
152,641
|
|
|
163,206
|
|
|
(6
|
)
|
|
276,745
|
|
|
310,400
|
|
|
(11
|
)
|
||||
Gross profit
|
|
43,894
|
|
|
55,350
|
|
|
(21
|
)
|
|
89,725
|
|
|
105,594
|
|
|
(15
|
)
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
35,851
|
|
|
42,924
|
|
|
(16
|
)
|
|
77,091
|
|
|
86,048
|
|
|
(10
|
)
|
||||
Restructuring charges
|
|
1,899
|
|
|
—
|
|
|
N/M
|
|
|
6,319
|
|
|
—
|
|
|
N/M
|
|
||||
Income from operations
|
|
6,144
|
|
|
12,426
|
|
|
(51
|
)
|
|
6,315
|
|
|
19,546
|
|
|
(68
|
)
|
||||
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(6,550
|
)
|
|
(7,027
|
)
|
|
(7
|
)
|
|
(13,299
|
)
|
|
(12,890
|
)
|
|
3
|
|
||||
Unrealized gain (loss) on investment in equity securities
|
|
11,787
|
|
|
1,533
|
|
|
N/M
|
|
|
14,025
|
|
|
(5,968
|
)
|
|
335
|
|
||||
Other income (expense), net
|
|
528
|
|
|
(3,861
|
)
|
|
114
|
|
|
902
|
|
|
(2,589
|
)
|
|
135
|
|
||||
Total other income (expense), net
|
|
5,765
|
|
|
(9,355
|
)
|
|
162
|
|
|
1,628
|
|
|
(21,447
|
)
|
|
108
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and non-controlling interests
|
|
11,909
|
|
|
3,071
|
|
|
288
|
|
|
7,943
|
|
|
(1,901
|
)
|
|
N/M
|
|
||||
Income tax (provision) benefit
|
|
(16,513
|
)
|
|
(816
|
)
|
|
N/M
|
|
|
(15,291
|
)
|
|
549
|
|
|
N/M
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
|
(4,604
|
)
|
|
2,255
|
|
|
(304
|
)
|
|
(7,348
|
)
|
|
(1,352
|
)
|
|
N/M
|
|
||||
Net income attributable to non-controlling interests
|
|
(1,240
|
)
|
|
(687
|
)
|
|
80
|
|
|
(1,680
|
)
|
|
(1,212
|
)
|
|
39
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income attributable to Altisource
|
|
$
|
(5,844
|
)
|
|
$
|
1,568
|
|
|
N/M
|
|
|
$
|
(9,028
|
)
|
|
$
|
(2,564
|
)
|
|
(252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Gross profit/service revenue
|
|
23
|
%
|
|
27
|
%
|
|
|
|
25
|
%
|
|
27
|
%
|
|
|
|
|||||
Income from operations/service revenue
|
|
3
|
%
|
|
6
|
%
|
|
|
|
2
|
%
|
|
5
|
%
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
N/M
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
|
(273
|
)
|
Diluted
|
|
$
|
(0.36
|
)
|
|
$
|
0.09
|
|
|
N/M
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.15
|
)
|
|
(273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
16,214
|
|
|
17,142
|
|
|
(5
|
)
|
|
16,253
|
|
|
17,260
|
|
|
(6
|
)
|
||||
Diluted
|
|
16,214
|
|
|
17,553
|
|
|
(8
|
)
|
|
16,253
|
|
|
17,260
|
|
|
(6
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Field Services
|
|
$
|
64,388
|
|
|
$
|
73,062
|
|
|
(12
|
)
|
|
$
|
134,482
|
|
|
$
|
140,308
|
|
|
(4
|
)
|
Marketplace
|
|
32,603
|
|
|
52,205
|
|
|
(38
|
)
|
|
69,570
|
|
|
102,456
|
|
|
(32
|
)
|
||||
Mortgage and Real Estate Solutions
|
|
26,940
|
|
|
32,681
|
|
|
(18
|
)
|
|
53,353
|
|
|
64,611
|
|
|
(17
|
)
|
||||
Earlier Stage Businesses
|
|
2,544
|
|
|
2,359
|
|
|
8
|
|
|
4,411
|
|
|
3,837
|
|
|
15
|
|
||||
Other
|
|
64,045
|
|
|
48,554
|
|
|
32
|
|
|
93,703
|
|
|
86,415
|
|
|
8
|
|
||||
Total service revenue
|
|
190,520
|
|
|
208,861
|
|
|
(9
|
)
|
|
355,519
|
|
|
397,627
|
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Field Services
|
|
2,478
|
|
|
6,526
|
|
|
(62
|
)
|
|
5,074
|
|
|
12,203
|
|
|
(58
|
)
|
||||
Marketplace
|
|
1,544
|
|
|
1,149
|
|
|
34
|
|
|
2,235
|
|
|
2,295
|
|
|
(3
|
)
|
||||
Mortgage and Real Estate Solutions
|
|
736
|
|
|
1,325
|
|
|
(44
|
)
|
|
1,772
|
|
|
2,635
|
|
|
(33
|
)
|
||||
Other
|
|
17
|
|
|
8
|
|
|
113
|
|
|
190
|
|
|
22
|
|
|
N/M
|
|
||||
Total reimbursable expenses
|
|
4,775
|
|
|
9,008
|
|
|
(47
|
)
|
|
9,271
|
|
|
17,155
|
|
|
(46
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-controlling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage and Real Estate Solutions
|
|
1,240
|
|
|
687
|
|
|
80
|
|
|
1,680
|
|
|
1,212
|
|
|
39
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
196,535
|
|
|
$
|
218,556
|
|
|
(10
|
)
|
|
$
|
366,470
|
|
|
$
|
415,994
|
|
|
(12
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
36,806
|
|
|
$
|
54,769
|
|
|
(33
|
)
|
|
$
|
78,174
|
|
|
$
|
109,635
|
|
|
(29
|
)
|
Outside fees and services
|
|
58,588
|
|
|
68,879
|
|
|
(15
|
)
|
|
121,169
|
|
|
133,977
|
|
|
(10
|
)
|
||||
Cost of real estate sold
|
|
40,276
|
|
|
13,320
|
|
|
202
|
|
|
42,370
|
|
|
16,499
|
|
|
157
|
|
||||
Technology and telecommunications
|
|
8,317
|
|
|
10,852
|
|
|
(23
|
)
|
|
16,826
|
|
|
20,303
|
|
|
(17
|
)
|
||||
Reimbursable expenses
|
|
4,775
|
|
|
9,008
|
|
|
(47
|
)
|
|
9,271
|
|
|
17,155
|
|
|
(46
|
)
|
||||
Depreciation and amortization
|
|
3,879
|
|
|
6,378
|
|
|
(39
|
)
|
|
8,935
|
|
|
12,831
|
|
|
(30
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
|
$
|
152,641
|
|
|
$
|
163,206
|
|
|
(6
|
)
|
|
$
|
276,745
|
|
|
$
|
310,400
|
|
|
(11
|
)
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
15,238
|
|
|
$
|
12,197
|
|
|
25
|
|
|
$
|
26,591
|
|
|
$
|
25,766
|
|
|
3
|
|
Amortization of intangible assets
|
|
3,544
|
|
|
7,544
|
|
|
(53
|
)
|
|
12,191
|
|
|
14,691
|
|
|
(17
|
)
|
||||
Occupancy related costs
|
|
3,871
|
|
|
7,189
|
|
|
(46
|
)
|
|
7,779
|
|
|
15,623
|
|
|
(50
|
)
|
||||
Marketing costs
|
|
2,989
|
|
|
3,978
|
|
|
(25
|
)
|
|
5,921
|
|
|
7,585
|
|
|
(22
|
)
|
||||
Professional services
|
|
3,320
|
|
|
4,328
|
|
|
(23
|
)
|
|
8,796
|
|
|
7,554
|
|
|
16
|
|
||||
Depreciation and amortization
|
|
4,067
|
|
|
1,950
|
|
|
109
|
|
|
8,380
|
|
|
4,218
|
|
|
99
|
|
||||
Other
|
|
2,822
|
|
|
5,738
|
|
|
(51
|
)
|
|
7,433
|
|
|
10,611
|
|
|
(30
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
$
|
35,851
|
|
|
$
|
42,924
|
|
|
(16
|
)
|
|
$
|
77,091
|
|
|
$
|
86,048
|
|
|
(10
|
)
|
(in thousands)
|
|
2019
|
|
2018
|
|
% Increase (decrease)
|
|||||
|
|
|
|
|
|
|
|
||||
Net loss adjusted for non-cash items
|
|
$
|
31,161
|
|
|
$
|
46,413
|
|
|
(33
|
)
|
Changes in operating assets and liabilities
|
|
1,995
|
|
|
(23,160
|
)
|
|
109
|
|
||
Net cash provided by operating activities
|
|
33,156
|
|
|
23,253
|
|
|
43
|
|
||
Net cash provided by (used in) investing activities
|
|
6,629
|
|
|
(2,756
|
)
|
|
341
|
|
||
Net cash used in financing activities
|
|
(14,711
|
)
|
|
(38,988
|
)
|
|
62
|
|
||
Net increase (decrease) in cash, cash equ
ivalents and restricted cash
|
|
25,074
|
|
|
(18,491
|
)
|
|
236
|
|
||
Cash, cash equivalents and restricted cash at the beginn
ing of the period
|
|
64,046
|
|
|
108,843
|
|
|
(41
|
)
|
||
|
|
|
|
|
|
|
|
||||
Cash, cash equivalents and restricted cash at the
end of the period
|
|
$
|
89,120
|
|
|
$
|
90,352
|
|
|
(1
|
)
|
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, 2019
|
|
82,473
|
|
|
$
|
24.33
|
|
|
82,473
|
|
|
3,286,125
|
|
May 1 - 31, 2019
|
|
108,184
|
|
|
22.63
|
|
|
108,184
|
|
|
3,177,941
|
|
|
June 1 - 30, 2019
|
|
115,029
|
|
|
19.43
|
|
|
115,029
|
|
|
3,062,912
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
305,686
|
|
|
$
|
21.89
|
|
|
305,686
|
|
|
3,062,912
|
|
(1)
|
In addition to the repurchases included in the table above,
29,473
common shares were withheld from employees to satisfy tax withholding obligations that arose from the vesting of restricted shares and restricted share units.
|
(2)
|
On May 15, 2018, our shareholders approved the renewal and replacement of the share repurchase program previously approved by the shareholders on May 17, 2017. Under the program, we are authorized to purchase up to
4.3 million
shares of our common stock in the open market, subject to certain parameters, for a period of five years from the date of approval.
|
Exhibit Number
|
|
Exhibit Description
|
|
|
|
10.1
* †
|
|
|
|
|
|
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, 2019 is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2019 and 2018; (iii) Condensed Consolidated Statements of Equity for the six months ended June 30, 2019 and 2018; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018; 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 25, 2019
|
|
By:
|
/s/ Michelle D. Esterman
|
|
|
|
|
Michelle D. Esterman
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(On behalf of the Registrant and as its Principal Financial Officer and Principal Accounting Officer)
|
1.
|
RESTRICTED STOCK UNIT AWARD
|
2.
|
VESTING OF RSU AWARD
|
3.
|
SHAREHOLDER RIGHTS; DIVIDEND EQUIVALENT RIGHTS
|
A.
|
Shareholder Rights
|
B.
|
Dividend Equivalents
|
C.
|
Non-Transferability of the RSU Award
|
4.
|
TERMINATION OF RSU AWARD
|
A.
|
by the Company for Cause or termination of employment by the Employee (other than by reason of Retirement), then the RSU Award shall terminate and all unvested RSUs shall be forfeited by the Employee as of the date of termination of employment or, in the case of the Employee’s resignation, on the date the Employee provides notice of his or her resignation.
|
B.
|
by the Company without Cause (other than by reason of Retirement), then (i) any unvested Type I RSUs that are scheduled to vest within twelve (12) months of such termination of employment under Section 2 above shall vest as of the date of termination of employment, and the remainder of the unvested Type I RSUs (if any) shall be forfeited by the Employee as of the date of termination of employment; and (ii) if the respective performance criteria for Type II RSUs have been satisfied on or prior to the ninety (90) day anniversary of the date of such termination of employment, such Type II RSUs shall vest as of the date the criteria are met, provided, however, that in both cases (i) and (ii) the Employee has been employed by the Company for at least two years as of the date of such termination of employment.
|
C.
|
by reason of Retirement, death or Disability of the Employee, then all unvested Type I RSUs shall vest thirty (30) days after the date of such termination of employment, and all unvested Type II RSUs shall be forfeited unless the performance criteria are achieved within 90 days of such termination, in which case the Type II RSUs shall vest in accordance with Section 2, Subsection B above.
|
D.
|
The Employee’s right to accelerated vesting of RSUs following termination of employment under this Section 4 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years in the case of termination without Cause, Disability or death, or three (3) years in the case of Retirement, unless otherwise determined by the Company in its sole discretion.
|
E.
|
In no event shall the granting of the RSU Award or its acceptance by the Employee give or be deemed to give the Employee any right to continued employment by the Company.
|
5.
|
SETTLEMENT OF RSUs.
|
A.
|
Subject to Section 7.B, each vested RSU shall be settled in one Share (less applicable tax withholdings), as soon as practicable following and no later than the March 15th following the calendar year in which the RSU vests pursuant to Section 2 or 4 of this Agreement.
|
B.
|
Notwithstanding the foregoing or any other provision of this Agreement, and subject in all cases to the terms of the 2009 Plan then in effect, the Company reserves the right to settle your RSUs by a lump sum cash payment equal to the then fair market value (as determined pursuant to Section 7) of the settled Shares (less applicable tax withholdings).
|
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
|
B.
|
For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times to provide information to the Company at the request of the Company’s management with respect to phases of the business with which he/she was actively connected during his/her employment, but such availability shall not be required during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.
|
C.
|
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) RSUs, to the extent then unvested, will be immediately forfeited by the Employee and returned to the Company and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the amount of the market value of any Shares that have been issued to the Employee in settlement of a vested RSU (“Share Value”) at any time (or cash, if applicable) from one hundred eighty (180) days prior to the date of termination of employment to one hundred eighty (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 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. The Employee 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 C above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants. Employee specifically agrees that the subsidiaries and affiliates of Altisource are intended beneficiaries of the restrictions contained in this Paragraph 6 and that those subsidiaries and affiliates have the right to enforce the terms of this Paragraph 6.
|
D.
|
The Employee acknowledges that the Company would not have awarded the RSUs to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.
|
E.
|
The RSUs shall be subject to any claw-back policy implemented by the Board of Directors of the Company or any Successor Entity.
|
7.
|
INCOME TAXES
|
A.
|
Generally
|
B.
|
Section 409A.
|
8.
|
CORPORATE TRANSACTIONS; CHANGE OF CONTROL/RESTRUCTURING EVENT
|
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, by (i) allowing the RSUs to continue in full force and effect in accordance with the terms hereof, (ii) issuing an equivalent award of shares in the Successor Entity as the Board of Directors deems equitable, (iii) cancelling the award for consideration (as the Board of Directors sees as equitable) which may equal the value of the consideration to be paid in the Change of Control/Restructuring Event to holders of Shares, or (iv) providing for vesting and settlement of the RSUs immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event.
|
(3)
|
Notwithstanding any provision of Section 8 Subsection B(1) and B(2) to the contrary, in the event a Change of Control/Restructuring Event occurs, if the RSUs are not assumed or replaced by the acquirer/continuing entity on terms deemed by the Compensation Committee to be appropriate, then the Compensation Committee shall have the right to (i) provide for vesting and settlement of the RSUs immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event or (ii) to the extent the Successor Entity allows the RSUs to stay in place, to make appropriate adjustments to avoid an expansion or reduction in the value of the award.
|
(4)
|
For the avoidance of doubt, in the event the Employee remains employed with the Successor Entity for purposes of this Agreement, he/she will be deemed to remain employed as if he/she continued employment with the Company such that the employment termination provisions applicable to the RSU Award shall not be invoked unless and until his/her employment with such Successor Entity shall terminate.
|
9.
|
PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS
|
10.
|
ADDITIONAL CONDITIONS
|
A.
|
The Employee hereby represents and covenants that (a) any Share acquired upon the vesting of the RSU Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), unless such acquisition has been registered under the Securities Act and any applicable state securities law; (b) any subsequent sale of any such Shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Employee shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of acquisition of any Shares hereunder or (y) is true and correct as of the date of any sale of any such Shares, as applicable. As a further condition precedent to the delivery to the Employee of any Shares subject to the RSU Award, the Employee shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Company shall in its sole discretion deem necessary or advisable.
|
B.
|
The RSU Award is subject to the condition that if the listing, registration or qualification of the Shares subject to the RSU Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting or delivery of the Shares hereunder, the Shares subject to the RSU Award shall not vest or be delivered, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company shall use reasonable efforts to effect or obtain any such listing, registration, qualification, consent or approval.
|
11.
|
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, the term “Cause” shall mean, 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, whether or not committed in the course of the Employee’s employment with the Company. For avoidance of doubt, termination of employment as a result of a business reorganization or reduction in force will be deemed termination without Cause for purposes of the RSU Award.
|
C.
|
As used herein, “Change of Control/Restructuring Date” shall mean either the date 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 the date a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”
|
D.
|
As used herein, a “Change of Control/Restructuring Event” shall mean (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger,
|
E.
|
As used herein, “Confidential Information” means all non-public, commercially valuable information relating to Company, including any of its 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, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.
|
G.
|
As used herein, the term “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 shall have the meanings set forth in the 2009 Plan.
|
12.
|
AMENDMENT
|
13.
|
CONSTRUCTION
|
14.
|
ENTIRE AGREEMENT
|
15.
|
HEADINGS
|
16.
|
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:
|
Performance Metric
|
Initial Earned Award Size As % of Type II RSUs Awarded
|
||||
Type II RSU Award Terminates
|
50% - 99% of
Type II RSU Award
|
100% of
Type II RSU Award
|
101% - 149% of
Type II RSU Award
|
150% of
Type II RSU Award
|
|
Average level of achievement vis-à-vis the corporate budget for adjusted EPS during the Performance Period
|
Achievement of less than 85%
|
Based on % of linear achievement of 85% up to 100%
|
Achievement at 100%
|
Based on % of linear achievement of greater than 100% to 115%
|
Achievement of greater than 115%
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
June 30, 2019
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 25, 2019
|
|
By:
|
/s/ William B. Shepro
|
|
|
|
|
William B. Shepro
|
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
June 30, 2019
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 25, 2019
|
|
By:
|
/s/ Michelle D. Esterman
|
|
|
|
|
Michelle D. Esterman
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and
Principal Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ William B. Shepro
|
|
By:
|
/s/ Michelle D. Esterman
|
|
William B. Shepro
|
|
|
Michelle D. Esterman
|
|
Chairman and Chief Executive Officer
|
|
|
Chief Financial Officer
|
|
(Principal Executive Officer)
|
|
|
(Principal Financial Officer and
|
|
|
|
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Principal Accounting Officer)
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July 25, 2019
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July 25, 2019
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