Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

Segment Information

3.	Segment Information
	The Company is organized into two separately managed segments: the Reis Services segment and the discontinued Residential Development Activities segment. The following tables present condensed balance sheet and operating data for these segments:

(amounts in thousands)
Condensed Balance Sheet Data	Reis		Discontinued
September 30, 2011	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	18,227	$	—		$	4,041		$	22,268
Restricted cash and investments		215		—			—			215
Receivables, prepaid and other assets		4,777		—			157			4,934
Assets attributable to discontinued operations		—		—			—			—
Total current assets		23,219		—			4,198			27,417
Furniture, fixtures and equipment, net		901		—			45			946
Intangible assets, net		17,626		—			—			17,626
Goodwill		57,203		—			(2,378	)		54,825
Other assets		123		—			—			123
Total assets	$	99,072	$	—		$	1,865		$	100,937
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	7,080	$	—		$	—		$	7,080
Accrued expenses and other liabilities		1,837		—			1,221			3,058
Deferred revenue		12,368		—			—			12,368
Liabilities attributable to discontinued operations		—		846			—			846
Total current liabilities		21,285		846			1,221			23,352
Other long-term liabilities		687		—			—			687
Deferred tax liability, net		13,450		—			(13,384	)		66
Total liabilities		35,422		846			(12,163	)		24,105
Total stockholders’ equity		63,650		(846	)		14,028			76,832
Total liabilities and stockholders’ equity	$	99,072	$	—		$	1,865		$	100,937
Condensed Balance Sheet Data	Reis		Discontinued
December 31, 2010	Services		Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15,912	$	21		$	4,231		$	20,164
Restricted cash and investments		214		—			—			214
Receivables, prepaid and other assets		9,230		—			116			9,346
Assets attributable to discontinued operations		—		2,438			—			2,438
Total current assets		25,356		2,459			4,347			32,162
Furniture, fixtures and equipment, net		957		—			1			958
Intangible assets, net		18,577		—			—			18,577
Goodwill		57,203		—			(2,378	)		54,825
Other assets		166		—			—			166
Total assets	$	102,259	$	2,459		$	1,970		$	106,688
Liabilities and stockholders’ equity
Current liabilities:
Current portion of Bank Loan and other debt	$	5,559	$	—		$	—		$	5,559
Accrued expenses and other liabilities		1,900		—			1,077			2,977
Deferred revenue		15,446		—			—			15,446
Liabilities attributable to discontinued operations		—		1,964			—			1,964
Total current liabilities		22,905		1,964			1,077			25,946
Non-current portion of Bank Loan		5,691		—			—			5,691
Other long-term liabilities		693		—			—			693
Deferred tax liability, net		11,785		—			(11,719	)		66
Total liabilities		41,074		1,964			(10,642	)		32,396
Total stockholders’ equity		61,185		495			12,612			74,292
Total liabilities and stockholders’ equity	$	102,259	$	2,459		$	1,970		$	106,688

(A)	Includes the assets and liabilities of the Company’s discontinued Residential Development Activities segment, to the extent that such assets and liabilities existed at the date presented.
(B)	Includes cash, other assets and liabilities not specifically attributable to or allocable to a specific operating segment.

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,747		$	—	$	—		$	6,747
Cost of sales of subscription revenue		1,550			—		—			1,550
Gross profit		5,197			—		—			5,197
Operating expenses:
Sales and marketing		1,656			—		—			1,656
Product development		574			—		—			574
General and administrative expenses		1,563			—		1,070			2,633
Total operating expenses		3,793			—		1,070			4,863
Other income (expenses):
Interest and other income		18			—		2			20
Interest expense		(65	)		—		—			(65	)
Total other income (expenses)		(47	)		—		2			(45	)
Income (loss) before income taxes and discontinued operations	$	1,357		$	—	$	(1,068	)	$	289
Income from discontinued operations, before income taxes	$	—		$	1	$	—		$	1
Condensed Operating Data for the	Reis			Discontinued
Three Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	6,013		$	—	$	—		$	6,013
Cost of sales of subscription revenue		1,403			—		—			1,403
Gross profit		4,610			—		—			4,610
Operating expenses:
Sales and marketing		1,369			—		—			1,369
Product development		419			—		—			419
General and administrative expenses		1,496			—		1,064			2,560
Total operating expenses		3,284			—		1,064			4,348
Other income (expenses):
Interest and other income		24			—		5			29
Interest expense		(96	)		—		—			(96	)
Total other income (expenses)		(72	)		—		5			(67	)
Income (loss) before income taxes and discontinued operations	$	1,254		$	—	$	(1,059	)	$	195
Income (loss) from discontinued operations, before income taxes	$	—		$	1	$	(2	)	$	(1	)

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

Segment Information (continued)

(amounts in thousands)
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2011	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	20,201		$	—	$	—		$	20,201
Cost of sales of subscription revenue		4,623			—		—			4,623
Gross profit		15,578			—		—			15,578
Operating expenses:
Sales and marketing		4,989			—		—			4,989
Product development		1,562			—		—			1,562
General and administrative expenses		4,739			—		3,646			8,385
Total operating expenses		11,290			—		3,646			14,936
Other income (expenses):
Interest and other income		57			—		5			62
Interest expense		(215	)		—		—			(215	)
Total other income (expenses)		(158	)		—		5			(153	)
Income (loss) before income taxes and discontinued operations	$	4,130		$	—	$	(3,641	)	$	489
Income from discontinued operations, before income taxes	$	—		$	1,253	$	—		$	1,253
Condensed Operating Data for the	Reis			Discontinued
Nine Months Ended September 30, 2010	Services			Operations (A)		Other (B)			Consolidated
Subscription revenue	$	18,031		$	—	$	—		$	18,031
Cost of sales of subscription revenue		4,402			—		—			4,402
Gross profit		13,629			—		—			13,629
Operating expenses:
Sales and marketing		4,360			—		—			4,360
Product development		1,353			—		—			1,353
General and administrative expenses		4,369			—		3,493			7,862
Total operating expenses		10,082			—		3,493			13,575
Other income (expenses):
Interest and other income		87			—		15			102
Interest expense		(318	)		—		—			(318	)
Total other income (expenses)		(231	)		—		15			(216	)
Income (loss) before income taxes and discontinued operations	$	3,316		$	—	$	(3,478	)	$	(162	)
Income (loss) from discontinued operations, before income taxes	$	—		$	512	$	(272	)	$	240

(A)	Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the period presented.
(B)	Includes interest and other income, depreciation expense and general and administrative expenses that have not been allocated to the operating segments.

Reis Services

See Note 1 for a description of Reis Services’s business and products at September 30, 2011.

No individual customer accounted for more than 4.9% and 2.5% of Reis Services’s revenues for the nine months ended September 30, 2011 and 2010, respectively.

Segment Information (continued)

The balance of outstanding accounts receivable of Reis Services at September 30, 2011 and December 31, 2010, follows:

	September 30,			December 31,
	2011			2010
Accounts receivable	$	4,534,000		$	9,065,000
Allowance for doubtful accounts		(44,000	)		(103,000	)
Accounts receivable, net	$	4,490,000		$	8,962,000

Eight subscribers accounted for an aggregate of approximately 40.8% of Reis Services’s accounts receivable at September 30, 2011, with the largest representing 13.0%. As of October 31, 2011, the Company had received payments of approximately $1,307,000, or 28.8%, against the September 30, 2011 accounts receivable balance.

At September 30, 2011, no subscriber accounted for more than 4.4% of deferred revenue.

Discontinued Operations – Residential Development Activities

Income (loss) from discontinued operations is comprised of the following:

(amounts in thousands)

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2011		2010			2011			2010
Revenue from sales of real estate	$	—	$	160		$	1,800		$	3,378
Cost of sales of real estate		—		(96	)		(558	)		(3,051	)
Other income (expense), net		1		(65	)		11			(87	)
Income (loss) from discontinued operations before income tax		1		(1	)		1,253			240
Income tax expense on discontinued operations		—		—			—			97
Income (loss) from discontinued operations, net of income tax expense	$	1	$	(1	)	$	1,253		$	143

East Lyme

Prior to its sale in April 2011, the Company’s last remaining residential development was The Orchards, a single family home development in East Lyme, Connecticut, zoned for 161 single family homes on 224 acres (“East Lyme”).

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing, after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. As a result of this transaction, the Company recorded a gain in the second quarter of 2011 of approximately $1,242,000, which is included in income from discontinued operations. The Company sold two lots during the three months ended September 30, 2010 and sold two lots and one home during the nine months ended September 30, 2010.

Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. Remediation would have been required prior to the development of those lots. The remediation plan, the cost of which was estimated by management to be approximately $1,000,000, had been approved by the health inspector for the municipality and the town planner. The estimated remediation cost was recognized in prior years and was reflected in liabilities attributable to discontinued operations in the December 31, 2010 consolidated balance sheet. As a result of the sale, the Company was indemnified from any financial obligation related to the environmental remediation and reversed this liability, which amount is included in the gain reported in the second quarter of 2011, as referred to above.

Segment Information (continued)

Claverack

Prior to its sale in February 2010, the Company owned approximately 235 acres in Claverack, New York, which was subdivided into 48 developable single family home lots. In February 2010, the Company sold the Claverack project in a bulk transaction for a gross sales price of $2,750,000, which included two model homes, amenities, 46 additional lots and $450,000 of cash collateralizing certain road completion obligations. Net cash received at closing, after expenses, aggregated approximately $2,187,000. The remaining $450,000 of the purchase price was payable by the purchaser in February 2011 and had been secured by the outstanding road bond and a mortgage on the property. As a result of this transaction, the Company recorded a gain of approximately $263,000 in the first quarter of 2010, which is included in income from discontinued operations. In February 2011, the Company received cash of approximately $455,000 in full satisfaction of the mortgage note and accrued interest thereon.

Real Estate Contingencies

Reis has purchased insurance with respect to construction defect and completed operations at its past real estate projects, including those projects described above. Reis is, from time to time, exposed to various claims associated with the development, construction and sale of condominium units, single family homes or lots. The impact of these claims on the Company has not been material to date. However, claims related to dissatisfaction by homeowners and homeowners’ associations with the construction of condominiums, homes and amenities by us and/or our developer partners in any condominium or subdivision development, or other matters, may result in litigation costs, remediation costs, warranty expenses or settlement costs which could be material to the Company’s reportable discontinued operating income (loss), or its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.

In October 2010, the homeowners’ association at the Company’s former Gold Peak condominium project (located outside of Denver, Colorado), brought suit against the Company, two of its subsidiaries, and other contractors and individuals alleging design and construction defects. In October 2011, experts for the plaintiff delivered a report alleging a cost to repair of approximately $19 million. Trial is scheduled for February 2012. In connection with the development of Gold Peak, the Company purchased a commercial general liability “wrap” insurance policy covering the Company, the general contractor and the subcontractors. The Company is taking action to ensure that all applicable insurance policies maintained by co-defendants or others are brought into the case. The Company believes that it and its co-defendants have valid defenses to some or all of the plaintiff’s allegations, that insurance (subject to limited self insurance retainage/deductibles (“SIRs”)) will cover some or all of any eventual settlement or judgment, and that the defendants other than the Company will likely be liable for some or all of any remaining settlement judgment amount.

At this time, based on advice of counsel and the Company’s experience with similar prior actions, the low end of the expected range of exposure is believed to be equal to the amount of the Company’s SIRs plus other costs. Accordingly, the Company is maintaining a reserve of approximately $280,000, which liability is included in liabilities attributable to discontinued operations on the September 30, 2011 balance sheet. Although the Company does not believe that it will be required to pay any amount above the reserved amount, it is possible that a settlement or judgment in this matter could involve the payment by the Company of an amount that could be material to the Company’s reportable discontinued operating income (loss), its consolidated financial position or cash flows. It would not have any effect on the Company’s income from continuing operations.