10-Q 1 clgx-93011x10q.htm FORM 10-Q CLGX-9.30.11-10Q


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
  
x          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission file number 001-13585
  
CoreLogic, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
95-1068610
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
4 First American Way, Santa Ana, California
92707-5913
(Address of principal executive offices)
(Zip Code)
 
(714) 250-6400
(Registrant’s telephone number, including area code)
 
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  x     No   o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting  company
o


1



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On November 1, 2011, there were 106,487,261 shares of common stock outstanding.

2



CoreLogic, Inc.
INFORMATION INCLUDED IN REPORT
 
 
Part  I:
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Part II:
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 5.
 
 
 
Item 6.

Items 3 and 4 of Part II have been omitted because they are not applicable with respect to the current reporting period.

3



PART I: FINANCIAL INFORMATION
Item 1.  Financial Statements.
CoreLogic, Inc.
Condensed Consolidated Balance Sheets (unaudited)
 
(in thousands, except per share value)
September 30,
 
December 31,
Assets
2011
 
2010
Current assets:
 
 
 
Cash and cash equivalents
$
138,668

 
$
426,212

Marketable securities
34,970

 
75,221

Accounts receivable (less allowance for doubtful accounts of $15,437 and $12,314 in 2011 and 2010, respectively)
215,205

 
176,413

Prepaid expenses and other current assets
54,715

 
42,793

Income tax receivable
61,510

 
30,587

Deferred tax asset, current
28,157

 
13,150

Due from FAFC, net
581

 

Assets of discontinued operations
76,111

 
262,275

Total current assets
609,917

 
1,026,651

Property and equipment, net
231,294

 
197,426

Goodwill, net
1,468,663

 
1,289,888

Other intangible assets, net
170,408

 
109,850

Capitalized data and database costs, net
298,887

 
211,331

Investment in affiliates
143,850

 
165,709

Deferred income tax assets, long-term
28,361

 
33,548

Restricted cash
20,924

 
21,095

Other assets
149,800

 
180,882

Total assets
$
3,122,104

 
$
3,236,380

Liabilities and Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and accrued expenses
$
151,763

 
$
123,936

Accrued salaries and benefits
60,629

 
76,212

Income taxes payable
4,288

 

Deferred revenue, current
200,505

 
186,031

Mandatorily redeemable noncontrolling interests

 
72,000

Current portion of long-term debt
62,482

 
233,452

Due to FAFC, net

 
18,097

Liabilities of discontinued operations
42,505

 
40,162

Total current liabilities
522,172

 
749,890

Long-term debt, net of current
848,616

 
487,437

Deferred revenue, net of current
335,322

 
350,827

Deferred income tax liabilities, long term
10,279

 

Other liabilities
136,908

 
101,531

Total liabilities
1,853,297

 
1,689,685


 
 
 
Equity:
 

 
 

CoreLogic, Inc.'s (CoreLogic) stockholders' equity:
 

 
 

Preferred stock, $0.00001 par value; 500 shares authorized, no shares issued or outstanding

 

Common stock, $0.00001 par value; 180,000 shares authorized; 106,481 and 115,499 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively
1

 
1

Additional paid-in capital
1,052,587

 
1,229,806

Retained earnings
246,140

 
298,590

Accumulated other comprehensive (loss)/income
(32,384
)
 
15,943

Total CoreLogic's stockholders' equity
1,266,344

 
1,544,340

Noncontrolling interests
2,463

 
2,355

Total equity
1,268,807

 
1,546,695

Total liabilities and equity
$
3,122,104

 
$
3,236,380

 
See notes to condensed consolidated financial statements.

4



CoreLogic, Inc.
Condensed Consolidated Statements of Income
(unaudited)

 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
(in thousands, except per share amounts)
2011
 
2010
 
2011
 
2010
Operating revenues
$
348,446

 
$
330,146

 
$
993,149

 
$
964,910

External cost of revenues
78,178

 
76,543

 
211,457

 
214,713

Salaries and benefits
131,523

 
133,812

 
414,545

 
406,097

Other operating expenses
76,061

 
50,604

 
209,739

 
191,418

Depreciation and amortization
34,844

 
23,495

 
84,160

 
72,198

Total operating expenses
320,606

 
284,454

 
919,901

 
884,426

Income from continuing operations
27,840

 
45,692

 
73,248

 
80,484

Interest income/(expense), net:
 

 
 

 
 

 
 

Interest income
817

 
1,541

 
4,005

 
2,829

Interest expense
(15,236
)
 
(8,956
)
 
(47,783
)
 
(25,325
)
Total interest expense,  net
(14,419
)
 
(7,415
)
 
(43,778
)
 
(22,496
)
(Loss)/gain on investment and other income
(4,118
)
 
2,072

 
86,783

 
(659
)
Income from continuing operations before equity in earnings of affiliates and income taxes
9,303

 
40,349

 
116,253

 
57,329

Provision/(benefit) for income taxes
20,535

 
(5,580
)
 
76,829

 
4,193

(Loss)/income from continuing operations before equity in earnings of affiliates
(11,232
)
 
45,929

 
39,424

 
53,136

Equity in earnings of affiliates, net of tax
8,340

 
13,507

 
20,393

 
29,593

(Loss)/income from continuing operations
(2,892
)
 
59,436

 
59,817

 
82,729

Loss from discontinued operations, net of tax
(104,220
)
 
(142,479
)
 
(111,125
)
 
(93,688
)
Net loss
(107,112
)
 
(83,043
)
 
(51,308
)
 
(10,959
)
Less:  Net income attributable to noncontrolling interests
78

 
10,372

 
1,142

 
28,629

Net loss attributable to CoreLogic
$
(107,190
)
 
$
(93,415
)
 
$
(52,450
)
 
$
(39,588
)
Amounts attributable to CoreLogic stockholders:
 

 
 

 
 

 
 

(Loss)/income from continuing operations
$
(2,970
)
 
$
49,064

 
$
58,675

 
$
54,100

Loss from discontinued operations, net of tax
(104,220
)
 
(142,479
)
 
(111,125
)
 
(93,688
)
Net loss
$
(107,190
)
 
$
(93,415
)
 
$
(52,450
)
 
$
(39,588
)
Basic (loss)/income per share:
 

 
 

 
 

 
 

(Loss)/income from continuing operations attributable to CoreLogic stockholders
$
(0.03
)
 
$
0.42

 
$
0.53

 
$
0.49

Loss from discontinued operations attributable to CoreLogic stockholders, net of tax
(0.98
)
 
(1.22
)
 
(1.01
)
 
(0.85
)
Net loss attributable to CoreLogic
$
(1.01
)
 
$
(0.80
)
 
$
(0.48
)
 
$
(0.36
)
Diluted (loss)/income per share:
 

 
 

 
 

 
 

(Loss)/income from continuing operations attributable to CoreLogic stockholders
$
(0.03
)
 
$
0.42

 
$
0.53

 
$
0.49

Loss from discontinued operations attributable to Corelogic stockholders, net of tax
(0.98
)
 
(1.22
)
 
(1.01
)
 
(0.85
)
Net (loss)/income attributable to CoreLogic
$
(1.01
)
 
$
(0.80
)
 
$
(0.48
)
 
$
(0.36
)
Weighted-average common shares outstanding:
 

 
 

 
 

 
 

Basic
106,414

 
116,991

 
109,993

 
109,800

Diluted
106,414

 
117,829

 
110,591

 
110,669


See notes to condensed consolidated financial statements.

5



CoreLogic, Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)

 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
(in thousands)
2011
 
2010
 
2011
 
2010
Net loss attributable to CoreLogic
$
(107,190
)
 
$
(93,415
)
 
$
(52,450
)
 
$
(39,588
)
Other comprehensive (loss)/income, net of tax:
 

 
 

 
 

 
 

Unrealized (loss)/gain on marketable securities
(760
)
 
1,754

 
(853
)
 
(2,606
)
Unrealized loss on interest rate swap
(3,165
)
 

 
(5,869
)
 

Foreign currency translation adjustments
(27,789
)
 
469

 
(26,498
)
 
(413
)
Supplemental benefit plans (loss)/income adjustment
(7
)
 
99

 
(85
)
 
(308
)
Investment gain reclassified to net loss

 

 
(15,022
)
 

Total other comprehensive (loss)/income, net of tax
(31,721
)
 
2,322

 
(48,327
)
 
(3,327
)
Comprehensive loss
(138,911
)
 
(91,093
)
 
(100,777
)
 
(42,915
)
Less:  Comprehensive loss/(income) attributable to the noncontrolling interests

 
6

 

 
(6
)
Comprehensive loss attributable to CoreLogic
$
(138,911
)
 
$
(91,099
)
 
$
(100,777
)
 
$
(42,909
)
 
See notes to condensed consolidated financial statements.

6



CoreLogic, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited) 
 
For the Nine Months Ended
 
September 30,
(in thousands)
2011
 
2010
Cash flows from operating activities:
 
 
 
Net loss
$
(51,308
)
 
$
(10,959
)
Less: Loss from discontinued operations
(111,125
)
 
(93,688
)
Income from continuing operations
59,817

 
82,729

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
 

 
 

Depreciation and amortization
84,160

 
72,198

Provision for bad debt and claim losses
19,163

 
18,590

Share-based compensation
9,523

 
11,547

Equity in earnings of affiliates, net of taxes
(20,393
)
 
(29,593
)
Loss on early extinguishment of debt
10,190

 

Deferred income tax
1,352

 
(30,046
)
Net realized investment (gains)/losses and other income
(86,783
)
 
659

Change in operating assets and liabilities, net of acquisitions:
 

 
 

Accounts receivable
(17,403
)
 
(18,795
)
Prepaid expenses and other current assets
(20,596
)
 
229

Accounts payable and accrued expenses
(14,071
)
 
(2,672
)
Deferred revenue
(23,935
)
 
(30,922
)
Due to/from FAFC
(18,678
)
 
9,108

Income taxes
62,063

 
2,949

Dividends received from investments in affiliates
35,215

 
43,991

Other assets and other liabilities
(9,748
)
 
(33,138
)
Net cash provided by operating activities - continuing operations
69,876

 
96,834

Net cash (used in)/provided by operating activities - discontinued operations
(14,051
)
 
1,442

Total cash provided by operating activities
$
55,825

 
$
98,276

Cash flows from investing activities:
 

 
 

Purchase of redeemable noncontrolling interests
(72,000
)
 
(72,000
)
Purchase of subsidiary shares from and other decreases in noncontrolling interests

 
(5,617
)
Purchases of capitalized data and other intangible assets
(19,874
)
 
(18,361
)
Purchases of property and equipment
(33,558
)
 
(45,734
)
Cash paid for acquisitions, net of cash acquired
(214,214
)
 
(90
)
Purchases of investments
(26,898
)
 
(21,819
)
Proceeds from maturities of debt securities

 
298

Proceeds from sale of foreign subsidiary, net of cash on hand and other adjustments
22,754

 

Proceeds from sale of property and equipment
389

 

Proceeds from sale of investments
53,847

 
26,386

Change in restricted cash
2,616

 
(21,095
)
Net cash used in investing activities - continuing operations
(286,938
)
 
(158,032
)
Net cash used in investing activities - discontinued operations
(4,380
)
 
(68,550
)
Total cash used in investing activities
$
(291,318
)
 
$
(226,582
)
Cash flows from financing activities:
 

 
 

Proceeds from long-term debt
857,985

 
634,366

Debt issuance costs
(22,080
)
 
(14,776
)
Repayment of long-term debt
(727,699
)
 
(696,155
)
Proceeds from issuance of stock related to stock options and employee benefit plans
2,425

 
7,375

Share repurchases
(176,512
)
 

Distribution to noncontrolling interests
(4,835
)
 
(18,719
)
Cash dividends

 
(22,657
)
Tax benefit related to stock options
234

 
3,160

Net cash used in financing activities - continuing operations
(70,482
)
 
(107,406
)
Net cash provided by financing activities - discontinued operations
70

 
29,721

Total cash used in financing activities
$
(70,412
)
 
$
(77,685
)
Net decrease in cash and cash equivalents
(305,905
)
 
(205,991
)
Cash and cash equivalents at beginning of period
426,212

 
459,520


7



Change in cash and cash equivalents  - discontinued operations
18,361

 
29,997

Cash and cash equivalents at end of period
$
138,668

 
$
283,526

Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
54,161

 
$
33,540

Cash paid for income taxes
$
35,053

 
$
32,473

Cash refunds from income taxes
$
7,302

 
$
31,019

Non-cash financing activities:
 
 
 
Distribution to stockholders of First American Financial Corporation ("FAFC")
$

 
$
1,661,443

Adjustment of carrying value of mandatorily redeemable noncontrolling interest
$
(3,800
)
 
$
11,336

Non-cash investing activities:
 
 
 
Note payable issued for the acquisition of investment in affiliate
$
12,700

 
$

 
See notes to condensed consolidated financial statements.

8



CoreLogic, Inc.
Condensed Consolidated Statement of Equity
(unaudited)
 
(in thousands)
Common
Stock
Shares
 
Common
Stock
Amount
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Noncontrolling
Interests (1)
 
Total
Balance at December 31, 2010
115,499

 
$
1

 
$
1,229,806

 
$
298,590

 
$
15,943

 
$
2,355

 
$
1,546,695

Net loss for the nine months ended September 30, 2011
 

 
 

 
 

 
(52,450
)
 
 

 
653

 
(51,797
)
Shares issued in connection with share-based compensation
498

 

 
2,425

 

 

 

 
2,425

Share-based compensation

 

 
9,600

 

 

 

 
9,600

Share repurchases
(9,516
)
 
 
 
(176,512
)
 
 
 
 
 
 
 
(176,512
)
Distributions to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
(545
)
 
(545
)
Adjust redeemable noncontrolling interests to redemption value

 

 
(3,800
)
 

 

 

 
(3,800
)
Income tax indemnification adjustment related to Spin-off distribution of FAFC
 
 
 
 
(8,932
)
 
 
 
 
 
 
 
(8,932
)
Other comprehensive loss

 

 

 

 
(48,327
)
 

 
(48,327
)
Balance at September 30, 2011
106,481

 
$
1

 
$
1,052,587

 
$
246,140

 
$
(32,384
)
 
$
2,463

 
$
1,268,807

 
(1) Excludes amounts related to mandatorily redeemable noncontrolling interests included in current liabilities in the condensed consolidated balance sheet at December 31, 2010, which were redeemed in the first quarter of 2011. See Note 12- Redeemable Noncontrolling Interests to the condensed consolidated financial statements for a discussion of redeemable noncontrolling interests.

 
See notes to condensed consolidated financial statements.

9






Note 1 – Basis of Condensed Consolidated Financial Statements

CoreLogic, Inc. and its subsidiaries (collectively "we", "us" or "our") is a leading provider of property, financial, and consumer information, analytics and services to mortgage originators, financial institutions, and other business and governmental entities.

Our condensed consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) including the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Actual amounts may differ from these estimated amounts. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The principles for interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010.
 
The condensed consolidated financial statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments necessary for a fair statement of the consolidated results for the interim periods. Certain prior year amounts have been classified to conform to the current year presentation and to correct errors in classification. Previously presented prior period financial statements have been revised to present the discontinued operations classification of our marketing services, consumer services, transportation services and appraisal management businesses described in Note 15 - Discontinued Operations. Further, the Condensed Consolidated Balance Sheet as of December 31, 2010 has been revised to correct the classification of $21.1 million in restricted cash from current assets to non-current assets and the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2010 has been revised to correct the classification of $14.8 million in debt issuance costs from an operating activity to a financing activity. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Spin-off Transaction

On June 1, 2010, The First American Corporation (“FAC”) completed a transaction (the “Separation”) by which it separated into two independent, publicly traded companies through a distribution (the “Distribution”) of all of the outstanding shares of its subsidiary, First American Financial Corporation (“FAFC”), to the holders of FAC’s common shares, par value $1.00 per share, as of May 26, 2010. After the Distribution, FAFC owned the businesses that comprised FAC’s financial services businesses immediately prior to the Separation and FAC retained its information solutions businesses.

On May 18, 2010, the shareholders of FAC approved a separate transaction pursuant to which FAC changed its place of incorporation from California to Delaware (the “Reincorporation”). The Reincorporation became effective June 1, 2010. To effect the Reincorporation, FAC and CoreLogic, Inc., which was a wholly-owned subsidiary of FAC incorporated in Delaware, entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the Merger Agreement, FAC merged with and into CoreLogic, Inc., with CoreLogic, Inc. continuing as the surviving corporation. Concurrent with the Separation, FAC changed its trading symbol to CLGX.

To effect the Separation, the Company and FAFC entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) that governs the rights and obligations of the Company and FAFC regarding the Distribution. It also governs the on-going relationship between the Company and FAFC subsequent to the completion of the Separation and provides for the allocation between the Company and FAFC of FAC’s assets and liabilities. In connection with the Separation, the Company and FAFC also entered into a tax sharing agreement (the "Tax Sharing Agreement") as described in Note 7 – Income Taxes. The Company and FAFC also entered into a Restrictive Covenants Agreement pursuant to which FAFC is restricted in certain respects from competing with the Company in our tax services business within the United States for a period of ten years from the date of the Separation.  In addition, CoreLogic issued a promissory note to FAFC in the principal amount of $19.9 million relating to certain pension liabilities, which was fully paid as of September 30, 2011. See further discussion at Note 16 - Transactions with FAFC.

While we are a party to the Separation and Distribution Agreement and various other agreements relating to the Separation, we have determined that we have no material continuing involvement in the operations of FAFC. As a result of the Separation, the

10



FAFC businesses are reflected in our condensed consolidated financial statements as discontinued operations in 2010.  See Note 15 – Discontinued Operations for additional disclosures.

As part of the Separation, we are responsible for a portion of FAFC’s contingent and other corporate liabilities. There were no amounts recorded for FAFC liabilities at September 30, 2011.

As part of the Distribution, on May 26, 2010, we issued approximately $250.0 million of shares of our common stock, or 12,933,265 shares, to FAFC. Based on the closing price of our stock on June 1, 2010, the value of the equity issued to FAFC was $242.6 million. As a result, we made a cash payment to FAFC of $7.4 million to arrive at the full value of $250.0 million. FAFC has agreed to dispose of the shares within five years after the Separation or to bear any adverse tax consequences arising out of holding the shares for longer than that period. On April 11, 2011, we purchased 4.0 million shares of our common stock from a wholly-owned subsidiary of FAFC for total consideration of $75.8 million based on a spot market price of our common stock on April 5, 2011 of $18.95 per share. The price per share was agreed upon by the parties during the trading day on April 5, 2011. See further discussion at Note 16 - Transactions with FAFC .

We have included all of the corporate costs of FAC up to the Separation date in our condensed consolidated statement of income. For the nine month period ended September 30, 2010, those net expenses totaled approximately $69.0 million.

In connection with the Separation, we reorganized our reportable segments into three reportable segments to be consistent with how we view and operate our businesses. On December 30, 2010, we completed the sale of our employer and litigation services businesses and as a result we currently have two reportable segments. During the first quarter of 2011, we changed the management oversight for our marketing services group and moved it from the corporate and eliminations group and into the specialty finance component of our data and analytics segment. Prior period financial results have been recast to conform to this presentation.  See Note 17 – Segment Information.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued updated guidance related to the testing of goodwill for impairment. The guidance provides that an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The updated guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Management does not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements.

In June 2011, the FASB issued updated guidance related to the presentation of comprehensive income. The guidance provides that an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updated guidance is effective for annual financial reporting periods beginning after December 15, 2011 and for interim periods within the fiscal year. Management does not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements.

In May 2011, the FASB issued updated guidance related to fair value measurements and disclosures. The update provides amendments to achieve common fair value measurements and disclosure requirements in GAAP and International Financial Reporting Standards. The amendments in this update explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The updated guidance is effective during interim and annual financial reporting periods beginning after December 15, 2011. Management does not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements.

In December 2010, the FASB issued updated guidance which addresses diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.

11



The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

In December 2010, the FASB issued updated guidance related to when to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  The guidance amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

In January 2010, the FASB issued updated guidance related to fair value measurements and disclosures, which requires a reporting entity to disclose separately the amounts of material unobservable inputs (Level 3) information about purchases, sales, issuances and settlements (that is, on a gross basis rather than one net number). The updated guidance is effective for interim or annual financial reporting periods beginning after December 15, 2010 and for interim periods within the fiscal year. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

Note 2 – Investment in Affiliates

Investments in affiliates are accounted for under the equity method of accounting as we are deemed to have significant influence over the affiliate but do not control or have a majority voting interest in the affiliate. The investment is carried at the cost of acquisition, including subsequent capital contributions and loans from us, plus our equity in undistributed earnings or losses since acquisition. We record equity in earnings of affiliates net of tax. For the three and nine months ended September 30, 2011, income tax expense of $5.6 million and $13.6 million, respectively, was recorded on these earnings and for the same periods of the prior year income tax expense of $9.0 million and $19.5 million, respectively, was recorded on these earnings.

One of our subsidiaries owns a 50.1% interest in a joint venture that provides products and services used in connection with loan originations. This investment in an affiliate contributed 85% and 86.9% of our total equity in earnings of affiliates, net of tax, for the three and nine months ended September 30, 2011, respectively. This investment in an affiliate contributed 82.6% and 91.5% of our total equity in earnings of affiliates, net of tax, for the three and nine months ended September 30, 2010, respectively. Based on the terms and conditions of the joint venture agreement, we have significant influence but do not have control of, nor a majority voting interest in, the joint venture. Accordingly, this investment is accounted for under the equity method. Summarized financial information for this investment (assuming a 100% ownership interest) is as follows: 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
(in thousands)
2011
 
2010
 
2011
 
2010
Statement of operations
 
 
 
 
 
 
 
Net revenues
$
105,187

 
$
131,994

 
$
279,500

 
$
347,703

Expenses
81,429

 
94,552

 
220,055

 
257,066

Income before income taxes
$
23,758

 
$
37,442

 
$
59,445

 
$
90,637

Net income
$
23,582

 
$
37,130

 
$
58,974

 
$
90,030

CoreLogic equity in earnings of affiliate
$
11,815

 
$
18,603

 
$
29,546

 
$
45,105


In March 2011, we acquired a 50.1% interest in Speedy Title & Appraisal Review Services LLC ("STARS") for $35.0 million, consisting of an initial cash payment of $20.0 million and a deferred purchase price of $15.0 million payable in three installments of $5.0 million (due on the first, third, and fifth anniversaries of the initial closing), which is non-interest bearing and was discounted to $12.7 million as of March 31, 2011. See Note 6 - Long-Term Debt. We have recorded $30.8 million of basis difference between the purchase price and our interest in the net assets of STARS, which is comprised of an indefinite-lived component of $9.7 million and a finite-lived component of $21.1 million with an estimated weighted average life of 9.3 years. The basis difference is classified as part of the investment in affiliates. Based on the terms and conditions of the joint venture agreement, we have significant influence but do not have control of, nor a majority voting interest in STARS; thus we account for our investment in STARS under the equity method of accounting.

In March and May 2011, we completed our acquisitions of the remaining controlling interest in Dorado Network Systems ("Dorado") and RP Data Limited ("RP Data"), respectively. For Dorado, a loss was previously recognized in the fourth quarter of 2010 and there was no further gain or loss on the acquisition of the controlling interest in 2011. For RP Data, we recorded an

12



investment gain of approximately $58.9 million during the second quarter of 2011. Prior to our acquisition of these controlling interests, we accounted for our investments in Dorado and RP Data using the equity method. See Note 11 - Acquisitions for more information.

On September 22, 2011, we received a notice of intent from Veros Software, Inc. to exercise its option to purchase all of our membership interest in Veros Real Estate Solution, LLC. Although, as of September 30, 2011, we had not yet finalized the sale of the membership interest, the exercise value was below the net book value of our membership interest and we recorded an impairment charge of $0.8 million for the three and nine months ended September 30, 2011. In October 2011, we completed the sale of our interest and received proceeds of $8.0 million.

Note 3 – Marketable Securities

We classify our publicly traded debt and equity securities as available-for-sale and carry them at fair value with unrealized gains or losses classified as a component of accumulated other comprehensive income (loss). Debt securities consist primarily of investments in obligations of various corporations and mortgage-backed securities. Equity securities consist primarily of investments in marketable common and preferred stock.
 
In January 2011, we sold our equity investment in DealerTrack Holdings, Inc., which was classified as available for sale with a carrying value of $51.3 million and a gross unrealized gain in other comprehensive income of $24.0 million, or $14.8 million net of tax, at December 31, 2010 for gross proceeds of $51.9 million and a realized pre-tax gain of $24.9 million.  
Marketable securities consist of the following:

 
September 30,
 
December 31,
(in thousands)
2011
 
2010
Non-agency mortgage-backed and asset-backed securities
$

 
$
1,791

Total investments in debt securities

 
1,791

 
 
 
 
Common stock
13,948

 
51,255

Preferred stock
21,022

 
22,175

Total investments in equity securities
34,970

 
73,430

Total marketable securities
$
34,970

 
$
75,221


Sales of debt and equity securities resulted in a realized gain of $24.9 million for the nine months ended September 30, 2011. There were no realized gains or losses for the three months ended September 30, 2011. Sales of debt and equity securities resulted in a realized loss of $0.1 million and a realized gain of $0.4 million for the three and nine months ended September 30, 2010, respectively.


13



Note 4 – Goodwill

A reconciliation of the changes in the carrying amount of goodwill and accumulated impairment losses, by reportable segment, for the nine months ended September 30, 2011, is as follows:
 
(in thousands)
Data and
Analytics
 
Business and
Information Services
 
Consolidated
Balance at December 31, 2010
 
 
 
 
 
Goodwill
$
603,516

 
$
693,897

 
$
1,297,413

Accumulated impairment losses
(600
)
 
(6,925
)
 
(7,525
)
Goodwill, net
$
602,916

 
$
686,972

 
$
1,289,888

Acquisitions
176,231

 
18,898

 
195,129

Translation adjustments
(16,354
)
 

 
(16,354
)
Balance at September 30, 2011
 

 
 

 
 

Goodwill, net
$
762,793

 
$
705,870

 
$
1,468,663


After the Separation, our reporting units consisted of mortgage origination services, default and technology services, specialty finance solutions, risk and fraud analytics, employer services, litigation services and marketing services. After the sale of the employer and litigation services businesses and the closure of our marketing services business, our reporting units, for purposes of applying the provisions of accounting guidance related to goodwill, are risk and fraud analytics, specialty finance solutions, mortgage origination services and default and technology services.

During the nine months ended September 30, 2011, we recorded $18.9 million of goodwill in connection with our acquisition of the remaining interest in Dorado in March 2011, $162.7 million of goodwill in connection with our acquisition of the remaining interest in RP Data in May 2011 and $13.5 million in connection with our acquisition of Tarasoft Corporation ("Tarasoft") in September 2011. We have reclassified $31.8 million and $155.1 million of goodwill, net, to assets of discontinued operations as of September 30, 2011 and December 31, 2010, respectively.

As of September 30, 2011, we closed our marketing services reporting unit (Leadclick), which resulted in a $123.3 million non-cash impairment charge as a component of loss from discontinued operations, net of tax. Our policy is to perform an annual goodwill impairment test for each reporting unit in the fourth quarter; using September 30 as our valuation date. In addition to our annual impairment test, we periodically assess whether events or circumstances occurred that potentially indicate that the carrying amounts of these assets may not be recoverable. Due to weak market demand, the market price of our common stock declined during the quarter ended September 30, 2011, and therefore we performed an interim goodwill impairment analysis as of August 31, 2011. Based on the analysis, we noted no risk of impairment of any other reporting unit, other than in the marketing services reporting unit as discussed above.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. Key assumptions used to determine the fair value of our reporting units in our testing were: (a) expected cash flow for the period from 2011 to 2019; (b) an average discount rate of 12.0%, which was based on management's best estimate of the after-tax weighted average cost of capital; and (c) a 19% control premium. It is reasonably possible that changes in the facts, judgments, assumptions and estimates used in assessing the fair value of the goodwill could cause a reporting unit to become impaired.


14



Note 5 – Other Intangible Assets, net

Other intangible assets consist of the following:
 
 
September 30,
 
December 31,
(in thousands)
2011
 
2010
Customer lists
$
274,156

 
$
209,004

Noncompete agreements
7,960

 
8,033

Trade names and licenses
23,251

 
9,543

Other
521

 

 
305,888

 
226,580

Less accumulated amortization
(135,480
)
 
(116,730
)
Other identifiable intangible assets, net
$
170,408

 
$
109,850


Amortization expense for finite-lived intangible assets was $8.3 million and $4.8 million for the three months ended September 30, 2011 and 2010, respectively and $19.3 million and $14.9 million for the nine months ended September 30, 2011 and 2010, respectively. We have reclassified $2.8 million and $22.8 million of other intangible assets, net, to assets of discontinued operations as of September 30, 2011 and December 31, 2010, respectively, and recorded a non-cash impairment charge of $18.4 million, of which $17.1 million was a component of loss from discontinued operations, net of tax, for the three and nine months ended September 30, 2011.
 
Estimated amortization expense relating to finite-lived intangible asset balances as of September 30, 2011, is expected to be as follows for the next five years:
 
(in thousands)                                     
 
Remainder of 2011
$
8,247

2012
27,448

2013
25,623

2014
18,489

2015
17,049

Thereafter
73,552

 
$
170,408



15



Note 6 – Long-Term Debt

Our long-term debt consists of the following:
 
 
 
September 30,
 
December 31,
(in thousands)
2011
 
2010
Acquisition related notes:
 
 
 
 
Weighted average interest rate of 5.27% at December 31, 2010, with maturities through 2013
$

 
$
44,624

 
Non-interest bearing acquisition note due in $5 million installments March 2012, 2014 and 2016
13,039

 

Notes:
 
 

 
 

 
7.25% senior notes due June 2021
400,000

 

 
5.7% senior debentures due August 2014
1,175

 
1,175

 
7.55% senior debentures due April 2028
59,645

 
59,645

 
8.5% deferrable interest subordinated notes due April 2012
34,768

 
34,768

Bank debt:
 
 

 
 

 
Revolving line of credit borrowings due March 2016, weighted average interest rate of 6.8%
48,310

 

 
Term loan facility borrowings through March 2016, weighted average interest rate of 4.0%
345,625

 

 
Revolving line of credit borrowings due July 2012, weighted average interest rate of 3.63%, extinguished in May 2011

 
200,000

 
Term loan facility borrowings due April 2016, weighted average interest rate of 4.75%, extinguished in May 2011

 
348,250

Other debt:
 
 

 
 

 
6.52% Promissory Note due to First American Financial Corporation (See Note 15)

 
18,787

 
Various interest rates with maturities through 2013
8,536

 
13,640

Total long-term debt
911,098

 
720,889

Less current portion of long-term debt
62,482

 
233,452

Long-term debt, net of current portion
$
848,616

 
$
487,437


Senior Notes

On May 20, 2011, we issued $400.0 million aggregate principal amount of 7.25% senior notes due June 21, 2021 (the "Notes"). The Notes are guaranteed on a senior unsecured basis by each of our existing and future direct and indirect subsidiaries that guarantee our Credit Agreement. The Notes bear interest at 7.25% per annum and mature on June 1, 2021. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2011.

The Notes are our senior unsecured obligations and: (i) rank equally with any of our existing and future senior unsecured indebtedness; (ii) rank senior to all our existing and future subordinated indebtedness; (iii) are subordinated to any of our secured indebtedness (including indebtedness under our credit facility) to the extent of the value of the assets securing such indebtedness; and (iv) are structurally subordinated to all of the existing and future liabilities (including trade payables) of each of our subsidiaries that do not guarantee the Notes. The guarantees will: (i) rank equally with any existing and future senior unsecured indebtedness of the guarantors; (ii) rank senior to all existing and future subordinated indebtedness of the guarantors; and (iii) are subordinated in right of payment to any secured indebtedness of the guarantors (including the guarantee of our credit facility) to the extent of the value of the assets securing such indebtedness.

The Notes are redeemable by us, in whole or in part on or after June 1, 2016 at a price up to 103.63% of the aggregate principal amount of the Notes, plus accrued and unpaid interest, if any, to the applicable redemption date, subject to other limitations. We may also redeem up to 35.0% of the original aggregate principal amount of the Notes at any time prior to June 1, 2014 with the proceeds from certain equity offerings at a price equal to 107.25% of the aggregate principal amount of the Notes, together with

16



accrued and unpaid interest, if any, to the applicable redemption date, subject to certain other limitations. We may also redeem some or all of the Notes before June 1, 2016 at a redemption price equal to 100.0% of the aggregate principal amount of the Notes, plus a "make-whole premium," plus accrued and unpaid interest, if any, to the redemption date.

Upon the occurrence of specific kinds of change of control events, holders of the Notes have the right to cause us to purchase some or all of the Notes at 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

The indenture governing the Notes contains restrictive covenants that limit, among other things, our ability and that of our restricted subsidiaries to incur additional indebtedness or issue certain preferred equity, pay dividends or make other distributions or other restricted payments, make certain investments, create restrictions on distributions from restricted subsidiaries, create liens on properties and certain assets to secure debt, sell certain assets, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets, enter into certain transactions with affiliates and designate our subsidiaries as unrestricted subsidiaries. The indenture also contains customary events of default, including upon the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy certain covenants and specified events of bankruptcy and insolvency.

Credit Agreement

On May 23, 2011, the Company, CoreLogic Australia Pty Limited and the guarantors entered into a senior secured credit facility agreement (the "Credit Agreement") with Bank of America, N.A. as administrative agent and other financial institutions. The Credit Agreement provides for a $350.0 million five-year term loan facility (the "Term Facility") and a $550.0 million revolving credit facility (the "Revolving Facility"). The Revolving Facility includes a $100.0 million multicurrency revolving sub-facility and a $50.0 million letter of credit sub-facility. The Credit Agreement also provides for the ability to increase the Term Facility and Revolving Facility commitments provided that the total credit exposure under the Credit Agreement does not exceed $1.4 billion in the aggregate.

The loans under the Credit Agreement bear interest, at our election, at (i) the Alternate Base Rate (as defined in the Credit Agreement) plus the Applicable Rate (as defined in the Credit Agreement) or (ii) the London interbank offering rate for Eurocurrency borrowings, or the LIBO Rate, adjusted for statutory reserves, or the Adjusted LIBO Rate plus the Applicable Rate. The initial Applicable Rate for Alternate Base Rate borrowings is 1.00% and for Adjusted LIBO Rate borrowings is 2.00%. Starting with the full fiscal quarter after the closing date, the Applicable Rate will vary depending on our leverage ratio. The minimum Applicable Rate for Alternate Base Rate borrowings will be 0.75% and the maximum will be 1.75%. The minimum Applicable Rate for Adjusted LIBO Rate borrowings will be 1.75% and the maximum will be 2.75%. The Credit Agreement also requires us to pay commitment fees for the unused portion of the Revolving Facility, which will be a minimum of 0.30% and a maximum of 0.50%, depending on our leverage ratio.

The obligations under the Credit Agreement are our and the guarantors' senior secured obligations, collateralized by a lien on substantially all of our and the guarantors' personal property assets and mortgages or deeds of trust on our and the guarantors' real property with a fair market value of $10.0 million or more (collectively, the "Collateral") and rank senior to any of our and the guarantors' unsecured indebtedness (including the Notes) to the extent of the value of the Collateral.

The Credit Agreement provides that loans under the Term Facility shall be repaid in equal quarterly installments, commencing on September 30, 2011 and continuing on each three-month anniversary thereafter until and including March 31, 2016 in an amount equal to $4.4 million on each repayment date from September 30, 2011 through June 30, 2013, $8.8 million on each repayment date from September 30, 2013 through June 30, 2014 and $13.1 million on each repayment date from September 30, 2014 through March 31, 2016. The outstanding balance of the term loan will be due on the fifth anniversary of the closing date of the Credit Agreement. The Term Facility is also subject to prepayment from (i) the net cash proceeds of certain debt incurred or issued by us and the guarantors and (ii) the net cash proceeds received by us or the guarantors from certain assets sales and recovery events, subject to certain reinvestment rights.

The Credit Agreement contains financial maintenance covenants, including a (i) maximum total leverage ratio, (ii) a minimum interest coverage ratio and (iii) a maximum senior secured leverage ratio.

The Credit Agreement also contains restrictive covenants that limit, among other things, our ability and that of our subsidiaries, to incur additional indebtedness or issue certain preferred equity, pay dividends or make other distributions or other restricted payments, make certain investments, create restrictions on distributions from subsidiaries, to enter into sale leaseback transactions, amend the terms of certain other indebtedness, create liens on certain assets to secure debt, sell certain assets, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and enter into certain transactions with affiliates. The Credit Agreement also contains customary events of default, including upon the failure to make timely payments

17



under the Term Facility and the Revolving Facility or other material indebtedness, the failure to satisfy certain covenants, the occurrence of a change of control and specified events of bankruptcy and insolvency.

At September 30, 2011, we had borrowing capacity under the revolving lines of credit of $501.7 million, and were in compliance with the financial and restricted covenants of our loan agreements.

Acquisition-Related Notes

In March 2011, we entered into a new settlement services joint venture called STARS. Our initial investment in STARS was $20.0 million and we also issued a note payable for an additional $15.0 million of consideration, which is non-interest bearing and was discounted to $12.7 million as of March 31, 2011.

Promissory Note Due to First American

On June 1, 2010, we issued a promissory note to FAFC in the amount of $19.9 million that accrued interest at a rate of 6.52% annually. Interest was first due on July 1, 2010 and quarterly thereafter. The note approximated the unfunded portion of the benefit obligation attributable to participants in the FAC defined benefit pension plan that were our employees. The balance outstanding on the note was $18.8 million at December 31, 2010 and was paid in full as of September 30, 2011.

Debt Issuance Costs

In connection with issuing the Notes and entering into the Credit Agreement and the related extinguishment of our previously outstanding bank debt, we fully expensed $10.2 million of unamortized debt issuance costs related to our extinguished bank debt facilities to interest expense in the accompanying consolidated statements of income. In addition, we capitalized $22.1 million of debt issuance costs, included in other assets in the accompanying balance sheet, and will amortize these costs to interest expense over the term of the Notes and Credit Agreement.

Interest Rate Swaps
 
In June 2011, we entered into amortizing interest rate swap transactions (“Swaps”) that have a termination date of May 2016. The Swaps are for an initial balance of $200.0 million, with a fixed interest rate of 1.73% and amortizes quarterly by $2.5 million through March 31, 2016 with a remaining balance of $107.5 million due on May 16, 2016. Previous swaps entered in October 2010 of $348.3 million were terminated with a realized gain of $0.4 million for the nine months ended September 30, 2011 upon full repayment of the underlying debt.
 
We entered into the Swaps in order to convert a portion of our interest rate exposure on the Term Facility floating rate borrowings from variable to fixed. We have designated the Swaps as cash flow hedges. The estimated fair value of these cash flow hedges resulted in a liability of $5.2 million at September 30, 2011 and an asset of $5.2 million at December 31, 2010, respectively, which is included in the accompanying condensed consolidated balance sheets as a component of other assets.
 
For the three and nine months ended September 30, 2011, unrealized losses of $3.2 million (net of $2.1 million in deferred taxes) and $5.9 million (net of $4.0 million in deferred taxes), respectively, were recognized in other comprehensive loss related to these Swaps.
 
It is our policy to execute such instruments with creditworthy banks and not to enter into derivative financial instruments for speculative purposes. As of September 30, 2011, we believe the counterparties in the Swaps will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the Swaps such that the occurrence of future hedge cash flows remains probable.

Note 7 – Income Taxes

The effective income tax rate (total income tax expense related to income from continuing operations as a percentage of income from continuing operations before income taxes) was 220.7% and 66.1% for the three and nine months ended September 30, 2011, respectively, and (13.8)% and 7.3% respectively, for the same periods of the prior year. The change in the effective rate for both periods is primarily attributable to the provision of income taxes on former partnership income that was attributable to noncontrolling interests for which no income taxes were provided in the quarter ended March 31, 2010, the $14.0 million reversal of deferred taxes related to our interest in Dorado when it was held as an equity method investment, non-deductible transaction costs incurred in connection with the Separation during the quarter ended September 30, 2010 and excess tax gain

18



on the sale of CoreLogic Global Services Private Limited ("CoreLogic India"). Effective January 1, 2011, income from the former partnership is wholly attributable to CoreLogic and income taxes are provided on all of the income generated in the third quarter of 2011. Income taxes included in equity in earnings of affiliates were $5.6 million and $9.0 million for the three months ended September 30, 2011 and 2010. Income taxes included in equity in earnings of affiliates were $13.6 million and $19.5 million for the nine months ended September 30, 2011 and 2010.  For the purpose of segment reporting, these amounts are not reflected at the segment level but are recorded as a component of the corporate and elimination group.
 
As of September 30, 2011, the liability for income taxes associated with uncertain tax positions was $14.0 million. This liability can be reduced by $10.4 million of offsets for amounts subject to indemnification from FAFC under the Tax Sharing Agreement, state income taxes and timing adjustments. The net amount of $3.6 million, if recognized, would favorably affect the Company's effective tax rate.
 
Our continuing practice is to recognize interest and penalties, if any, related to uncertain tax positions in tax expense. As of September 30, 2011, we had accrued $4.3 million of interest (net of tax benefit) and penalties related to uncertain tax positions. This liability can be reduced by $3.6 million of offsets subject to indemnification from FAFC under the Tax Sharing Agreement.
 
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various non-U.S. jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, and non-U.S. income tax examinations by taxing authorities for years prior to 2005.
 
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions could significantly increase or decrease within the next 12 months. These changes may be the result of items such as ongoing audits, competent authority proceedings related to transfer pricing, or the expiration of federal and state statutes of limitation for the assessment of taxes.
 
We entered into a Tax Sharing Agreement with FAFC in connection with the Separation. The Tax Sharing Agreement governs ours and FAFC’s respective rights, responsibilities and obligations after the Distribution with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the Distribution to qualify as a tax-free distribution for U.S. federal income tax purposes within the meaning of Section 355 of the Internal Revenue Code of 1986, as amended, and taxes incurred in connection with certain internal transactions undertaken in anticipation of the Separation. Our rights, responsibilities and obligations under the Tax Sharing Agreement are discussed in our Annual Report on Form 10-K filed with the SEC on March 14, 2011.


19



Note 8 – (Loss)/Earnings Per Share
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Numerator for basic and diluted net (loss)/income per share:
 
 
 
 
 
 
 
(Loss)/income from continuing operations attributable to CoreLogic stockholders
$
(2,970
)
 
$
49,064

 
$
58,675

 
$
54,100

Loss from discontinued operations attributable to CoreLogic stockholders, net of tax
(104,220
)
 
(142,479
)
 
(111,125
)
 
(93,688
)
Loss attributable to CoreLogic
$
(107,190
)
 
$
(93,415
)
 
$
(52,450
)
 
$
(39,588
)
Denominator:
 

 
 

 
 

 
 

Weighted-average shares for basic (loss)/earnings per share
106,414

 
116,991

 
109,993

 
109,800

Dilutive effect of stock options and restricted stock units

 
838

 
598

 
869

Weighted-average shares for diluted (loss)/earnings per share
106,414

 
117,829

 
110,591

 
110,669

(Loss)/earnings per share
 

 
 

 
 

 
 

Basic:
 

 
 

 
 

 
 

(Loss)/income from continuing operations attributable to CoreLogic stockholders
$
(0.03
)
 
$
0.42

 
$
0.53

 
$
0.49

Loss from discontinued operations attributable to CoreLogic stockholders, net of tax
(0.98
)
 
(1.22
)
 
(1.01
)
 
(0.85
)
Loss income attributable to CoreLogic per share
$
(1.01
)
 
$
(0.80
)
 
$
(0.48
)
 
$
(0.36
)
Diluted:
 

 
 
 
 
 
 
(Loss)/income from continuing operations attributable to CoreLogic stockholders
$
(0.03
)
 
$
0.42

 
$
0.53

 
$
0.49

Loss from discontinued operations attributable to CoreLogic stockholders, net of tax
(0.98
)
 
(1.22
)
 
(1.01
)
 
(0.85
)
Net (loss)/income attributable to CoreLogic per share
$
(1.01
)
 
$
(0.80
)
 
$
(0.48
)
 
$
(0.36
)

Basic (loss)/earnings per share is computed by dividing (loss)/income available to common stockholders by the weighted average number of common shares available during the period. Diluted (loss)/earnings per share reflects the effect of potentially dilutive securities, principally the incremental shares assumed issued under the Company’s stock incentive plans.

For the three and nine months ended September 30, 2011, 7.1 million and 5.5 million stock options and restricted stock units, respectively, were excluded from the computation of diluted (loss)/earnings per share due to their antidilutive effect. For the three and nine months ended September 30, 2010, 4.4 million and 3.8 million stock options and restricted stock units, respectively, were excluded from the computation of diluted (loss)/earnings per share due to their antidilutive effect.

Note 9 – Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.
 
The market approach is applied for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value balances are classified based on the observability of those inputs.
 
A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable

20



inputs (Level 3 measurement). Level 2 measurements utilize observable inputs in markets other than active markets.

In estimating the fair value of the financial instruments presented, we used the following methods and assumptions:

Cash and cash equivalents

For cash and cash equivalents, we believe that the carrying value is a reasonable estimate of fair value due to the short-term nature of the instruments.

Restricted cash

Restricted cash is comprised of certificates of deposit, we believe that the carrying value is a reasonable estimate of fair value due to the nature of these instruments.

Marketable securities

Equity and debt securities are classified as available-for-sale securities and are valued using quoted prices in active markets.

Long-term debt

The fair value of long-term debt was estimated based on the current rates available to us for debt of the same remaining maturities and consideration of our default and credit risk.

Interest rate swap agreements and foreign currency purchase agreements
 
The fair value of the interest rate swap agreements and forward currency purchase agreements were estimated based on market value quotes received from the counter parties to the agreements.

The fair values of our financial instruments as of September 30, 2011 are presented in the following table:

 
Fair Value Measurements Using
 
 
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
138,668

 
$

 
$

 
$
138,668

Restricted cash

 
20,924

 

 
20,924

Equity securities
34,970

 

 

 
34,970

Total Financial Assets
$
173,638

 
$
20,924

 
$

 
$
194,562

 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
Total debt

 
838,032

 

 
838,032

Total Financial Liabilities
$

 
$
838,032

 
$

 
$
838,032

 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
Interest rate swap agreements
$

 
$
(5,209
)
 
$

 
$
(5,209
)

21



The fair values of our financial instruments as of December 31, 2010 are presented in the following table:

 
Fair Value Measurements Using
 
 
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
426,212

 
$

 
$

 
$
426,212

Restricted cash

 
21,095

 

 
21,095

Debt securities
1,791

 

 

 
1,791

Equity securities
73,430

 

 

 
73,430

Total Financial Assets
$
501,433

 
$
21,095

 
$

 
$
522,528

 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
Total debt

 
727,440

 

 
727,440

Total Financial Liabilities
$

 
$
727,440

 
$

 
$
727,440

 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
Interest rate swap agreements
$

 
$
5,156

 
$

 
$
5,156

Foreign currency forward purchase agreements, net
$

 
$
(971
)
 
$

 
$
(971
)

Note 10 – Stock-Based Compensation

We issue equity awards under the CoreLogic, Inc. 2011 Performance Incentive Plan (the “Plan”) which was approved by our stockholders at our Annual Meeting, held on May 19, 2011. The Plan permits the grant of stock options, restricted stock units (“RSUs”), performance units and other stock-based awards. Prior to the approval of the Plan, we issued equity awards under the CoreLogic, Inc. 2006 Incentive Plan (the “2006 Plan”). The Plan was adopted, in part, to make an additional 18,000,000 shares of the Company's common stock available for award grants, so that the Company will have sufficient authority and flexibility to adequately provide for future incentives. In connection with the Separation, on June 1, 2010, each FAC stock option held by a CoreLogic employee was converted into an adjusted CoreLogic stock option. The exercise prices of the adjusted CoreLogic stock options and the number of shares subject to each such stock option reflects a mechanism that was intended to preserve the intrinsic value of the original stock option. The resulting CoreLogic stock options are subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the FAC stock options immediately prior to the Separation.

Also, in connection with the Separation, on June 1, 2010, any unvested FAC RSUs granted to CoreLogic employees were converted into CoreLogic RSUs.  The RSU grants were converted in a manner that was intended to preserve the fair market value of the FAC awards. The resulting CoreLogic RSU grants are subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the FAC RSU grants immediately prior to the Separation.

FAC stock options and RSUs held by FAFC employees were canceled at the date of the Separation.

We primarily utilize stock options and RSUs as our stock-based compensation for employees and directors. The fair value of any RSU grant is based on the market value of our shares on the date of grant and is recognized as compensation expense over the vesting period.

For the nine months ended September 30, 2011, we awarded 733,207 RSUs, of which 432,198 were performance-based restricted stock units (“PBRSUs”) with an estimated value of $12.7 million. The PBRSU awards will vest based on the attainment of certain performance goals relating to our adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) and earnings per share for the year ending December 31, 2013. There was $1.6 million and $5.3 million in expense recognized for RSUs, excluding PBRSUs, in the three and nine months ended September 30, 2011, respectively.

In connection with the Separation, we awarded PBRSUs to certain key employees pursuant to the 2006 Plan, and subject to certain conditions in the grant agreement. A total of 366,154 PBRSUs were issued at an estimated value of $6.9 million. These awards will vest based on the attainment of certain performance goals relating to our adjusted EBITDA for the years ending December 31, 2011 through 2014 and 2015. There was $1.3 million and $2.2 million in expense recognized for PBRSUs in the

22



three and nine months ended September 30, 2011, respectively.

As part of our acquisition of Dorado in March 2011, we assumed the acquired company's restricted stock unit plan and outstanding PBRSUs with an estimated value of $6.8 million. These awards will vest based on the attainment of certain performance goals relating to the acquired entity's revenues and EBITDA for the years ending December 31, 2011, 2012 and 2013.

RSU activity for the nine months ended September 30, 2011, is as follows:

 
Number of
 
Weighted
Average
Grant-Date
(in thousands, except weighted average fair value prices)
Shares
 
Fair Value
Nonvested restricted stock units outstanding at December 31, 2010
1,558

 
$
18.40

Restricted stock units granted
733

 
$
17.34

Performance stock units granted
432

 
$
17.28

Restricted stock units forfeited
(225
)
 
$
17.63

Restricted stock units vested
(291
)
 
$
18.57

Nonvested restricted stock units outstanding at September 30, 2011
2,207

 
$
17.86


As of September 30, 2011, there was $25.0 million of total unrecognized compensation cost related to nonvested RSUs that is expected to be recognized over a weighted-average period of 2.4 years. The fair value of RSUs is based on the market value of the Company's shares on the date of grant.

In 2011 and 2010, we issued CoreLogic stock options as incentive compensation for certain key employees. The exercise price of each stock option is the closing market price of our common stock on the date of grant. The stock options issued in 2011 generally vest equally over three years from the date of issuance and expire ten years after the date of grant. The stock options issued in 2010 generally vest equally over a four-year period (33% on the second, third, and fourth anniversaries) and expire ten years after the grant date. The fair values of these stock options were estimated using the Black-Scholes valuation model with the following weighted-average assumptions:

Expected dividend yield
%
Risk-free interest rate (1)
1.85
%
Expected volatility (2)
33.10
%
Expected life (3)
5.5


(1)
The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(2)
The expected volatility is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate based primarily on our and our peers' historical data.

(3)
The expected life is the period of time, on average, that participants are expected to hold their options before exercise based primarily on  our historical data.


23



Option activity for the nine months ended September 30, 2011, is as follows:

(in thousands, except weighted average price)
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual Term
 
Aggregate
Intrinsic
Value
Options outstanding at December 31, 2010
5,129

 
$
21.27

 
 
 
 
Options granted
679

 
$
16.41

 
 
 
 
Options exercised
(160
)
 
$
17.13

 
 
 
 
Options canceled
(768
)
 
$
21.63

 
 
 
 
Options outstanding at September 30, 2011
4,880

 
$
20.68

 
4.8

 
$

Options vested and expected to vest at September 30, 2011
4,857

 
$
20.69

 
4.8

 
$
12

Options exercisable at September 30, 2011
3,344

 
$
22.03

 
2.8

 
$
12


As of September 30, 2011, there was $7.2 million of total unrecognized compensation cost related to nonvested CoreLogic stock options that is expected to be recognized over a weighted-average period of 2.7 years.

In addition to stock options and RSUs, we had an employee stock purchase plan ("ESPP") that allowed eligible employees to purchase common stock of the Company at 85.0% of the closing price on the last day of each quarter. We recognized an expense in the amount equal to the discount. The ESPP was a ten year long plan and expired by its terms on August 1, 2011.

The following table sets forth the stock-based compensation expense recognized for the three and nine months ended September 30, 2011 and 2010.
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
(in thousands)
2011
 
2010
 
2011
 
2010
Stock options
$
578

 
$
536

 
$
1,719

 
$
952

Restricted stock
2,860

 
2,092

 
7,504

 
10,172

Employee stock purchase plan
109

 

 
300

 
423

 
$
3,547

 
$
2,628

 
$
9,523

 
$
11,547


Total stock-based compensation expense for the nine months ended September 30, 2010 includes expense related to FAFC totaling $2.6 million.

Note 11 - Acquisitions.

In March 2011, we completed our acquisition of the remaining interest in Dorado for $31.6 million in cash. Dorado is included as a component of the default and technology services reporting unit of the business and information services segment. We previously held a 39.0% equity method investment in this entity and as a result of the purchase price paid, we recognized a loss of $14.5 million on our existing investment in the fourth quarter of 2010. The purchase price was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis which included Level 3 inputs. We have recorded $18.9 million of goodwill, $20.4 million of customer lists with an estimated average life of 12 years, and $3.2 million of tradenames with an estimated average life of 5 years. The business combination did not have a material impact on our condensed consolidated financial statements.

In May 2011, we completed our acquisition of the remaining interest in RP Data for a cash purchase price of A$147.2 million or $157.2 million. RP Data is included as a component of the risk and fraud analytics reporting unit of the data and analytics segment. We previously held a 40.2% equity method investment in this entity and as a result of the purchase price paid and the change in control, we recognized a gain of $58.9 million on our existing investment in the second quarter of 2011. The purchase price was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis which included Level 3 inputs. We have recorded $162.7 million of goodwill, $46.7 million of of customer lists with an estimated average life of 8 years and $11.7 million of tradenames with an estimated average life of 10

24



years. The business combination did not have a material impact on our condensed consolidated financial statements.

We entered into forward purchase agreements totaling A$180.3 million to economically hedge a portion of the foreign currency exchange rate risk associated with the acquisition of RP Data. We recorded a gain of $1.8 million during the second quarter of 2011 when the agreements were terminated upon the closing of the acquisition in May 2011.

In September 2011, we completed our acquisition of Tarasoft, a Canadian provider of multiple listing services ("MLS"), for a cash purchase price of C$30.0 million or $30.3 million. Tarasoft is included as a component of the specialty finance solutions group of the data and analytics segment. The purchase price was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis which included Level 3 inputs. We have preliminarily recorded $13.5 million of goodwill, $2.7 million of customer lists with an estimated average life of 10 years, $0.4 million of tradenames with an estimated average life of 10 years and $0.2 million of noncompete agreements with an estimated average life of 5 years. We are in the process of finalizing the purchase price allocation and as a result, these allocations may change. The business combination did not have a material impact on our condensed consolidated financial statements.

Note 12 – Redeemable Noncontrolling Interests

In April 2010, we exercised our call option related to Experian Information Solutions Inc.’s ownership interest in the CoreLogic Real Estate Solutions, LLC joint venture.  We paid the remaining purchase price of $313.8 million on December 31, 2010. We made a final profit distribution of $4.2 million and a tax distribution (based on the fourth quarter of 2010 profitability of the joint venture) of $0.1 million in the first quarter of 2011.

In March 2010, we entered into an agreement to acquire the 18% redeemable noncontrolling interest in CoreLogic Information Solutions Holdings, Inc.  On March 29, 2010, we acquired half of the noncontrolling interests (approximately 9% of the total outstanding noncontrolling interests) in exchange for a cash payment of $72.0 million and agreed to acquire the remaining half of the noncontrolling interests in 2011 in exchange for additional consideration of $72.0 million. In February 2011, we agreed to pay all of the additional consideration in cash and we closed the transaction.

Note 13 – Commitments and Contingencies

Lease Commitments

We lease certain office facilities, automobiles and equipment under operating leases, which, for the most part, are renewable. The majority of these leases also provide that the Company is responsible for insurance and taxes.

Operational Commitments

On July 26, 2011, we entered into a definitive agreement with Cognizant Technology Solutions Corporation ("Cognizant"), under which an affiliate of Cognizant acquired CoreLogic India, our India-based captive operations. The purchase price for CoreLogic India was $50.0 million. As part of the transaction, we entered into a Master Professional Services Agreement ("Services Agreement") and supplement ("Supplement") with Cognizant under which Cognizant will provide a range of business process and information technology services to us. The Supplement has an initial term of seven years and we have the unilateral right to extend the term for up to three one-years periods. During the first five years of the agreement, we are subject to a net total minimum commitment of approximately $303.5 million, plus applicable inflation adjustments. In connection with the sale, we recorded $27.1 million of deferred gain on sale which is being recognized over the commitment period of five years.

Note 14 – Litigation and Regulatory Contingencies

We have been named in various lawsuits. In cases where we have determined that a loss is both probable and reasonably estimable, we have recorded a liability representing our best estimate of our financial exposure based on known facts. While the ultimate disposition of each such pending lawsuit is not yet determinable, we do not believe that the ultimate resolution of these cases, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.

In addition, we may from time to time be subject to audit or investigation by governmental agencies. Currently, governmental agencies are auditing or investigating certain of our operations, none of which are believed to be material at this time. We are also in litigation with governmental agencies regarding certain appraisal matters. With respect to matters where we have determined that a loss is both probable and reasonably estimable, we have recorded a liability representing our best estimate of

25



the financial exposure based on known facts. While the ultimate disposition of each such audit or investigation is not yet determinable, we do not believe that the ultimate resolution of these matters either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.

At September 30, 2011, we have $5.4 million reserved for litigation and regulatory contingency matters.

FDIC

On May 9, 2011, the Federal Deposit Insurance Corporation (the “FDIC”), as Receiver of Washington Mutual Bank (“WaMu”), filed a complaint in the United States District Court for the Central District of California against CoreLogic Valuation Services, LLC, f/k/a eAppraiseIT, LLC (“eAppraiseIT”) and several of its current and former affiliates.
The FDIC complaint alleges that eAppraiseIT was grossly negligent and breached its contract with WaMu in the provision of appraisal services in 2006 and 2007 relating to 194 residential mortgage loans and seeks to recover losses of at least $129.0 million that WaMu allegedly suffered. The FDIC complaint asserts claims against eAppraiseIT's parent corporations, including CoreLogic, Inc., pursuant to alter ego theories of liability. On August 1, 2011, all defendants filed a Motion to Dismiss the complaint in its entirety on a number of grounds, including that the FDIC's allegations in the complaint fail to state a plausible claim. We intend to defend against these claims vigorously; however, we may not be successful. At this time, we cannot predict the ultimate outcome of this claim or the potential range of damages, if any.
Class Action
On June 30, 2011, a purported class action was filed in the United States District Court for the Northern District of Illinois against Teletrack, Inc. ("Teletrack"), one of our subsidiaries. The complaint alleges that Teletrack has been furnishing consumer reports to third parties who did not have a permissible purpose to obtain them in violation of the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq., and seeks to recover actual, punitive and statutory damages, as well as attorneys fees, litigation expenses and cost of suit. On September 20, 2011, we filed a Motion to Dismiss the complaint in its entirety. We intend to defend against this claim vigorously; however, we may not be successful. At this time, we cannot predict the ultimate outcome of this claim or the potential range of damages, if any.

Separation

As part of the Separation, we are responsible for a portion of FAFC’s contingent and other corporate liabilities.  There were no amounts recorded at September 30, 2011.

In the Separation and Distribution Agreement, we agreed with FAFC to share equally in the cost of resolution of a small number of corporate-level lawsuits, including certain consolidated securities litigation matters from which we have since been dropped. There were no liabilities incurred in connection with the consolidated securities matters.  Responsibility to manage each case has been assigned to either FAFC or us, with the managing party required to update the other party regularly and consult with the other party prior to certain important decisions such as settlement.  The managing party will also have primary responsibility for determining the ultimate total liability, if any, related to the applicable case.  We will record our share of any such liability when the responsible party determines a reserve is necessary in accordance with GAAP. At September 30, 2011, no reserves were considered necessary.

In addition, the Separation and Distribution Agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of FAC’s financial services business with FAFC and financial responsibility for the obligations and liabilities of FAC’s information solutions business with us. Specifically, each party will, and will cause its subsidiaries and affiliates to, indemnify, defend and hold harmless the other party, its respective affiliates and subsidiaries and each of its respective officers, directors, employees and agents for any losses arising out of or otherwise in connection with the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement; and any breach by such party of the Separation and Distribution Agreement.

Note 15 – Discontinued Operations

As of September 30, 2011, we closed our marketing services business (LeadClick) and concluded we would actively pursue the sale of our consumer services (Consumer Credit Monitoring Services), transportation services (comprised of our American Driving Records and CompuNet Credit Services business units) and our wholly-owned appraisal management services businesses. As a result, each of these businesses is reflected in our condensed consolidated financial statements as discontinued operations and the results of these businesses in the prior years have been reclassified to conform to current periods.

26




Due to the closure of our marketing services business, we incurred total impairment charges of $139.5 million, of which $123.3 million was for goodwill, and $16.2 million was for intangibles. In addition, we incurred bad debt expense of $8.9 million for accounts receivable we deemed to be uncollectible. Finally, we incurred $1.8 million in expense to write-off various other assets and to accrue for expenses related to the closure of this business.

On December 22, 2010, the Company and STG-Fairway Holdings, LLC (the “Purchaser”), which is owned by affiliates of Symphony Technology Group, entered into a Purchase Agreement, pursuant to which we sold our employer and litigation services businesses ("ELI") to the purchaser. We also agreed to provide certain transition services to the Purchaser for up to one year following the closing. As a result of the sale, the businesses are reflected in our condensed consolidated financial statements as discontinued operations and the results of the businesses in the prior years have been reclassified to conform to the 2010 classification.

The businesses distributed as part of the Separation are presented within the condensed consolidated financial statements as discontinued operations. The net income from discontinued operations in the nine months ended September 30, 2010 includes an allocation of the income tax expense or benefit originally allocated to income from continuing operations. The amount of tax allocated to discontinued operations is the difference between the tax originally allocated to continuing operations and the tax allocated to the restated amount of income from continuing operations in each period.


27



Summarized below are the components of our income (loss) from discontinued operations for the three and nine months ended September 30, 2011 and 2010:

(in thousands)
 
 
 
 
 
Data and Analytics
 
Business Information
 
 
For the three months ended September 30, 2011
 
FAFC
 
ELI
 
Marketing
 
Consumer
 
Transportation
 
Appraisal
 
Total Discontinued Operations
Operating revenue
 
$

 
$

 
$
6,431

 
$
22,877

 
$
16,838

 
$
12,463

 
$
58,609

(Loss)/income from discontinued operations before income taxes
 

 

 
(152,675
)
 
(13,384
)
 
157

 
(3,066
)
 
(168,968
)
Income tax expense/(benefit)
 

 

 
(58,300
)
 
(5,318
)
 
58

 
(1,188
)
 
(64,748
)
(Loss)/income, net of tax
 

 

 
(94,375
)
 
(8,066
)
 
99

 
(1,878
)
 
(104,220
)
Less:  Net income attributable to noncontrolling interests
 

 

 

 

 

 

 

(Loss)/income from discontinued operations, net of tax
 
$

 
$

 
$
(94,375
)
 
$
(8,066
)
 
$
99

 
$
(1,878
)
 
$
(104,220
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended September 30, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$

 
$
64,383

 
$
12,873

 
$
22,255

 
$
17,119

 
$
37,527

 
$
154,157

(Loss)/income from discontinued operations before income taxes
 

 
(168,885
)
 
(1,380
)
 
3,493

 
411

 
2,777

 
(163,584
)
Income tax expense/(benefit)
 

 
(23,303
)
 
(552
)
 
1,397

 
164

 
1,111

 
(21,183
)
(Loss)/income, net of tax
 

 
(145,582
)
 
(828
)
 
2,096

 
247

 
1,666

 
(142,401
)
Less:  Net income attributable to noncontrolling interests
 

 
78

 

 

 

 

 
78

(Loss)/income from discontinued operations, net of tax
 
$

 
$
(145,660
)
 
$
(828
)
 
$
2,096

 
$
247

 
$
1,666

 
$
(142,479
)


28



 
 
 
 
 
 
Data and Analytics
 
Business Information
 
 
For the nine months ended September 30, 2011
 
FAFC
 
ELI
 
Marketing
 
Consumer
 
Transportation
 
Appraisal
 
Total Discontinued Operations
Operating revenue
 
$

 
$

 
$
29,399

 
$
73,443

 
$
51,448

 
$
60,012

 
$
214,302

(Loss)/income from discontinued operations before income taxes
 

 

 
(166,342
)
 
(7,603
)
 
1,210

 
(7,741
)
 
(180,476
)
Income tax expense/(benefit)
 

 

 
(63,768
)
 
(3,004
)
 
479

 
(3,058
)
 
(69,351
)
(Loss)/income, net of tax
 

 

 
(102,574
)
 
(4,599
)
 
731

 
(4,683
)
 
(111,125
)
Less:  Net income attributable to noncontrolling interests
 

 

 

 

 

 

 

(Loss)/income from discontinued operations, net of tax
 
$

 
$

 
$
(102,574
)
 
$
(4,599
)
 
$
731

 
$
(4,683
)
 
$
(111,125
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended September 30, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
1,490,501

 
$
172,063

 
$
33,325

 
$
68,143

 
$
51,908

 
$
110,479

 
$
1,926,419

(Loss)/income from discontinued operations before income taxes
 
76,323

 
(170,642
)
 
(5,070
)
 
8,874

 
3,100

 
8,859

 
(78,556
)
Income tax benefit
 
33,222

 
(23,975
)
 
(2,029
)
 
3,549

 
1,240

 
3,544

 
15,551

Income/(loss), net of tax
 
43,101

 
(146,667
)
 
(3,041
)
 
5,325

 
1,860

 
5,315

 
(94,107
)
Less:  Net loss attributable to noncontrolling interests
 
(419
)
 

 

 

 

 

 
(419
)
Income/(loss) from discontinued operations, net of tax
 
$
43,520

 
$
(146,667
)
 
$
(3,041
)
 
$
5,325

 
$
1,860

 
$
5,315

 
$
(93,688
)



29



Summarized below are certain assets and liabilities classified as discontinued operation as of September 30, 2011 and December 31, 2010:

(in thousands)
 
 
 
 
 
Data Analytics
 
Business Information
 
 
As of September 30, 2011
 
FAFC
 
ELI
 
Marketing
 
Consumer
 
Transportation
 
Appraisal
 
Total Discontinued Operations
Current assets
 
$

 
$

 
$
7,347