x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland (State or Other Jurisdiction of Incorporation or Organization) | 74-2830661 (I.R.S. Employer Identification No.) |
2114 Central Street, Suite 600, Kansas City, MO (Address of Principal Executive Office) | 64108 (Zip Code) |
Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company |
o | o | o | x |
Financial Information | ||
Other Information | ||
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 20,477 | $ | 16,362 | |||
Service fee receivable, net of allowance of $288 and $204, respectively | 8,747 | 8,336 | |||||
Restricted cash | 1,094 | 1,158 | |||||
Mortgage securities | 3,402 | 3,906 | |||||
Deferred income tax asset, net | 586 | 1,941 | |||||
Notes receivable, net of allowance of $0 and $1,054, respectively | 262 | 581 | |||||
Other current assets | 2,135 | 2,565 | |||||
Total current assets | 36,703 | 34,849 | |||||
Non-Current Assets | |||||||
Property and equipment, net of accumulated depreciation | 5,653 | 6,192 | |||||
Goodwill | 3,170 | 3,170 | |||||
Deferred income tax asset, net | 34,914 | 61,159 | |||||
Other | 1,785 | 1,374 | |||||
Total non-current assets | 45,522 | 71,895 | |||||
Total assets | $ | 82,225 | $ | 106,744 | |||
Liabilities and Shareholders' Equity (Deficit) | |||||||
Liabilities: | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 8,087 | $ | 9,605 | |||
Accrued expenses | 10,199 | 8,255 | |||||
Deferred revenue | 1,501 | 2,314 | |||||
Note payable to related party | 1,250 | 1,000 | |||||
Other | 385 | 248 | |||||
Total current liabilities | 21,422 | 21,422 | |||||
Non-Current Liabilities | |||||||
Senior notes | 82,779 | 81,728 | |||||
Note payable to related party | 3,113 | 3,613 | |||||
Other | 3,392 | 2,005 | |||||
Total non-current liabilities | 89,284 | 87,346 | |||||
Total liabilities | 110,706 | 108,768 | |||||
Commitments and contingencies (Note 10) | |||||||
Shareholders' equity (deficit): | |||||||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized: | |||||||
Common stock, 91,479,519 shares issued and outstanding as of both June 30, 2013 and December 31, 2012 | 915 | 915 | |||||
Additional paid-in capital | 738,539 | 740,171 | |||||
Accumulated deficit | (770,050 | ) | (744,213 | ) | |||
Accumulated other comprehensive income | 2,828 | 3,301 | |||||
Total Novation Companies, Inc. (“NCI”) shareholders' equity | (27,768 | ) | 174 | ||||
Noncontrolling interests | (713 | ) | (2,198 | ) | |||
Total shareholders' deficit | (28,481 | ) | (2,024 | ) | |||
Total liabilities and shareholders' deficit | $ | 82,225 | $ | 106,744 | |||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Income and Revenues: | |||||||||||||||
Service fee income | $ | 92,680 | $ | 93,525 | $ | 44,818 | $ | 43,795 | |||||||
Interest income – mortgage securities | 2,405 | 3,245 | 1,488 | 1,846 | |||||||||||
Total | 95,085 | 96,770 | 46,306 | 45,641 | |||||||||||
Costs and Expenses: | |||||||||||||||
Cost of services | 75,105 | 78,511 | 37,250 | 38,236 | |||||||||||
Selling, general and administrative expense | 17,461 | 14,243 | 8,593 | 7,389 | |||||||||||
Total | 92,566 | 92,754 | 45,843 | 45,625 | |||||||||||
Other income (expense) | 1,937 | (56 | ) | 722 | 758 | ||||||||||
Interest expense | (1,590 | ) | (1,535 | ) | (802 | ) | (800 | ) | |||||||
Income (loss) before income taxes | 2,866 | 2,425 | 383 | (26 | ) | ||||||||||
Income tax expense (benefit) | 27,666 | (63,107 | ) | 26,528 | 31 | ||||||||||
Net (loss) income from continuing operations | (24,800 | ) | 65,532 | (26,145 | ) | (57 | ) | ||||||||
Loss from discontinued operations, net of income taxes | (1,114 | ) | (1,170 | ) | (424 | ) | (406 | ) | |||||||
Net (loss) income | (25,914 | ) | 64,362 | (26,569 | ) | (463 | ) | ||||||||
Less: Net (loss) income attributable to noncontrolling interests | (77 | ) | (394 | ) | 24 | (429 | ) | ||||||||
Net (loss) income attributable to Novation | $ | (25,837 | ) | $ | 64,756 | $ | (26,593 | ) | $ | (34 | ) | ||||
(Loss) Earnings Per Share attributable to Novation: | |||||||||||||||
Basic | $ | (0.28 | ) | $ | 0.72 | $ | (0.29 | ) | $ | — | |||||
Diluted | $ | (0.28 | ) | $ | 0.71 | $ | (0.29 | ) | $ | — | |||||
Weighted average basic shares outstanding | 90,716,933 | 90,469,585 | 90,716,933 | 90,566,933 | |||||||||||
Weighted average diluted shares outstanding | 90,716,933 | 91,488,030 | 90,716,933 | 91,736,314 | |||||||||||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) income | $ | (25,914 | ) | $ | 64,362 | $ | (26,569 | ) | $ | (463 | ) | ||||
Other comprehensive (loss) income: | |||||||||||||||
Change in unrealized gain on mortgage securities – available-for-sale (Note 11) | (473 | ) | 517 | 146 | 275 | ||||||||||
Total comprehensive (loss) income | (26,387 | ) | 64,879 | (26,423 | ) | (188 | ) | ||||||||
Comprehensive (loss) income attributable to noncontrolling interests: | |||||||||||||||
Less: Net (loss) income attributable to noncontrolling interests | (77 | ) | (394 | ) | 24 | (429 | ) | ||||||||
Total comprehensive (loss) income attributable to Novation | $ | (26,310 | ) | $ | 65,273 | $ | (26,447 | ) | $ | 241 | |||||
Total NCI Shareholders’ Equity (Deficit) | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total Shareholders’ Equity (Deficit) | ||||||||||||||||||
Balance, December 31, 2012 | $ | 915 | $ | 740,171 | $ | (744,213 | ) | $ | 3,301 | $ | (2,198 | ) | $ | (2,024 | ) | ||||||||
Compensation recognized under stock compensation plans | — | 231 | — | — | — | 231 | |||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | 83 | 83 | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (384 | ) | (384 | ) | |||||||||||||||
Acquisition of noncontrolling interests | — | (1,863 | ) | — | — | 1,863 | — | ||||||||||||||||
Net loss | — | — | (25,837 | ) | — | (77 | ) | (25,914 | ) | ||||||||||||||
Other comprehensive loss | — | — | — | (473 | ) | — | (473 | ) | |||||||||||||||
Balance, June 30, 2013 | $ | 915 | $ | 738,539 | $ | (770,050 | ) | $ | 2,828 | $ | (713 | ) | $ | (28,481 | ) | ||||||||
Total NCI Shareholders’ Equity (Deficit) | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total Shareholders’ Equity (Deficit) | ||||||||||||||||||
Balance, December 31, 2011 | $ | 913 | $ | 746,276 | $ | (803,400 | ) | $ | 3,267 | $ | 188 | $ | (52,756 | ) | |||||||||
Compensation recognized under stock compensation plans | — | 151 | — | — | — | 151 | |||||||||||||||||
Issuance of nonvested shares, 225,866 shares | 2 | (2 | ) | — | — | — | — | ||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | 195 | 195 | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (216 | ) | (216 | ) | |||||||||||||||
Acquisition of noncontrolling interests | — | (6,110 | ) | — | — | (3 | ) | (6,113 | ) | ||||||||||||||
Other changes in noncontrolling interests | — | (105 | ) | — | — | 105 | — | ||||||||||||||||
Net income (loss) | — | — | 64,756 | — | (394 | ) | 64,362 | ||||||||||||||||
Other comprehensive income | — | — | — | 517 | — | 517 | |||||||||||||||||
Balance, June 30, 2012 | $ | 915 | $ | 740,210 | $ | (738,644 | ) | $ | 3,784 | $ | (125 | ) | $ | 6,140 | |||||||||
See notes to condensed consolidated financial statements. |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (25,914 | ) | $ | 64,362 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Accretion of mortgage securities | (373 | ) | (513 | ) | |||
Provision for bad debt, net | (893 | ) | 457 | ||||
Amortization of deferred debt issuance costs and senior debentures discount | 1,051 | 1,025 | |||||
Fair value adjustments | (624 | ) | — | ||||
Loss on disposal of fixed assets | 7 | 2 | |||||
Compensation recognized under stock compensation plans | 231 | 151 | |||||
Depreciation expense | 1,977 | 1,269 | |||||
Deferred taxes | 27,600 | (63,101 | ) | ||||
Changes in: | |||||||
Service fee receivable | (572 | ) | (925 | ) | |||
Restricted cash | 64 | (4,553 | ) | ||||
Other current assets and liabilities, net | 1,267 | 2,301 | |||||
Other noncurrent assets and liabilities, net | 335 | (78 | ) | ||||
Deferred revenue | (813 | ) | 957 | ||||
Accounts payable and accrued expenses | 1,077 | 4,398 | |||||
Net cash provided by operating activities | 4,420 | 5,752 | |||||
Cash flows from investing activities: | |||||||
Proceeds from paydowns of mortgage securities | 404 | 502 | |||||
Restricted cash, net | — | 31 | |||||
Proceeds from paydowns of notes receivable | 1,663 | 1,700 | |||||
Issuance of notes receivable | (200 | ) | (55 | ) | |||
Purchases of property and equipment | (1,453 | ) | (1,309 | ) | |||
Net cash provided by investing activities | 414 | 869 | |||||
Cash flows from financing activities: | |||||||
Contributions from noncontrolling interests | 83 | 195 | |||||
Distributions to noncontrolling interests | (384 | ) | (216 | ) | |||
Acquisition of noncontrolling interest | — | (500 | ) | ||||
Principal payments under capital leases | (168 | ) | — | ||||
Paydowns of note payable to related party | (250 | ) | (500 | ) | |||
Net cash used in financing activities | (719 | ) | (1,021 | ) | |||
Net increase in cash and cash equivalents | 4,115 | 5,600 | |||||
Cash and cash equivalents, beginning of period | 16,362 | 11,503 | |||||
Cash and cash equivalents, end of period | $ | 20,477 | $ | 17,103 |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash paid for interest | $ | 278 | $ | 510 | |||
Cash paid for income taxes, net of refunds | 21 | 1,974 | |||||
Cash received on mortgage securities – available-for-sale with no cost basis | 2,032 | 2,732 | |||||
Non-cash investing and financing activities: | |||||||
Acquisition of noncontrolling interest for note payable | — | 5,613 | |||||
Acquisition of noncontrolling interest for extinguishment of intercompany debt | 1,863 | — | |||||
Assets acquired under capital lease | 442 | — | |||||
See notes to condensed consolidated financial statements. |
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Service fee income | $ | 376 | $ | 2,615 | 4 | $ | 2,012 | ||||||||
Cost of services | 791 | 2,361 | (24 | ) | 1,626 | ||||||||||
Selling, general and administrative expense | 699 | 1,396 | (48 | ) | 795 | ||||||||||
Other (expense) income, net | — | (28 | ) | — | 3 | ||||||||||
Net (loss) income from discontinued operations before income taxes | (1,114 | ) | (1,170 | ) | 76 | (406 | ) | ||||||||
Income tax expense | — | — | 500 | — | |||||||||||
Net loss from discontinued operations, net of income taxes | $ | (1,114 | ) | $ | (1,170 | ) | $ | (424 | ) | $ | (406 | ) | |||
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 13 | $ | 49 | |||
Service fee receivable, net | — | 111 | |||||
Other current assets | 64 | 66 | |||||
Total current assets | 77 | 226 | |||||
Non-Current Assets | |||||||
Property and equipment, net of accumulated depreciation | — | 372 | |||||
Other | — | 109 | |||||
Total non-current assets | — | 481 | |||||
Total assets | $ | 77 | $ | 707 | |||
Liabilities | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 33 | $ | 133 | |||
Accrued expenses (A) | 67 | 439 | |||||
Due to Novation (B) | 699 | 776 | |||||
Other | — | 28 | |||||
Total current liabilities | 799 | 1,376 | |||||
Non-Current Liabilities | |||||||
Other | — | 11 | |||||
Total non-current liabilities | — | 11 | |||||
Total liabilities | $ | 799 | $ | 1,387 | |||
(A) | Accrued expenses as of June 30, 2013 consist primarily of accruals for customer damage claims. |
(B) | Amounts due to Novation are eliminated upon consolidation. As such, these amounts are not included in the condensed, consolidated balance sheets for any periods presented. |
Total | |||
Assets: | |||
Cash | $ | 505 | |
Service fee receivable | 23 | ||
Property and equipment | 500 | ||
Liabilities: | |||
Accounts payable | (51 | ) | |
Accrued expenses | (21 | ) | |
Noncontrolling interests | (118 | ) | |
Total consideration | $ | 838 | |
Cost Basis | Unrealized Gain | Estimated Fair Value | Average Yield (A) | |||||||||||
June 30, 2013 | $ | 574 | $ | 2,828 | $ | 3,402 | 127.0 | % | ||||||
December 31, 2012 | 605 | 3,301 | 3,906 | 176.0 | ||||||||||
(A) | The average yield is calculated from the cost basis of the mortgage securities and does not give effect to changes in fair value that are reflected as a component of shareholders' equity (deficit). |
Size/Principal Outstanding (A) | Assets on Balance Sheet (B) | Liabilities on Balance Sheet | Maximum Exposure to Loss(C) | Year to Date Loss on Sale | Year to Date Cash Flows (D) | ||||||||||||||||||
June 30, 2013 | $ | 5,080,793 | $ | 3,402 | $ | — | $ | 3,402 | $ | — | $ | 2,436 | |||||||||||
December 31, 2012 | 5,432,562 | 3,906 | — | 3,906 | — | 3,234 | |||||||||||||||||
(A) | Size/principal outstanding reflects the estimated principal of the underlying assets held by the VIE. |
(B) | Assets on balance sheet are securities issued by the entity and are recorded in the mortgage securities line item of the condensed consolidated balance sheets. |
(C) | The maximum exposure to loss includes the assets held by the Company and assumes a total loss on the referenced assets held by the VIE. |
(D) | Year to date cash flows are for the six months ended June 30, 2013 and 2012, respectively. |
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Balance, beginning of period | $ | 1,054 | $ | — | $ | — | $ | 1,054 | |||||||
(Recovery of) provision for credit losses | (1,054 | ) | 1,054 | — | — | ||||||||||
Balance, end of period | $ | — | $ | 1,054 | $ | — | $ | 1,054 | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Furniture, fixtures and office equipment | $ | 900 | $ | 993 | |||
Hardware and computer equipment | 5,055 | 4,358 | |||||
Software | 8,612 | 8,765 | |||||
Leasehold improvements | 736 | 1,216 | |||||
Total Cost | 15,303 | 15,332 | |||||
Less: Accumulated depreciation and amortization | (9,650 | ) | (9,140 | ) | |||
Property and equipment, net | $ | 5,653 | $ | 6,192 | |||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | Fair Value at June 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Mortgage securities – available-for-sale | $ | 3,402 | $ | — | $ | — | $ | 3,402 | ||||||||
Liabilities: | ||||||||||||||||
Contingent consideration (A) | $ | 475 | $ | — | $ | — | $ | 475 | ||||||||
(A) | The contingent consideration represents the estimated fair value of the additional potential amounts payable in connection with our acquisition of Corvisa. |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | Fair Value at December 31, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Mortgage securities – available-for-sale | $ | 3,906 | $ | — | $ | — | $ | 3,906 | ||||||||
Liabilities: | ||||||||||||||||
Contingent consideration (A) | $ | 1,099 | $ | — | $ | — | $ | 1,099 | ||||||||
(A) | The contingent consideration represents the estimated fair value of the additional potential amounts payable in connection with our acquisitions of Mango and Corvisa, $0.2 million and $0.9 million, respectively. |
Description | Valuation Techniques | Significant Unobservable Inputs | Range | |||
Assets: | ||||||
Mortgage securities – available-for-sale | Present value analysis | Prepayment rates | 8.7% – 12.0% | |||
Weighted average life (years) | 2.0 – 2.0 | |||||
Liabilities: | ||||||
Contingent consideration | Present value analysis | Revenue growth | 0.0% – 14.0% | |||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Balance, beginning of period | $ | 3,906 | $ | 3,878 | $ | 3,295 | $ | 4,085 | |||||||
Increases (decreases) to mortgage securities – available-for-sale: | |||||||||||||||
Accretion of income (A) | 373 | 513 | 93 | 264 | |||||||||||
Proceeds from paydowns of securities (A) | (404 | ) | (502 | ) | (132 | ) | (218 | ) | |||||||
Mark-to-market value adjustment | (473 | ) | 517 | 146 | 275 | ||||||||||
Net increase (decrease) to mortgage securities – available-for-sale | (504 | ) | 528 | 107 | 321 | ||||||||||
Balance, end of period | $ | 3,402 | $ | 4,406 | $ | 3,402 | $ | 4,406 | |||||||
(A) | Cash received on mortgage securities with no cost basis was $2.0 million and $1.4 million for the six and three months ended June 30, 2013, respectively, and $2.7 million and $1.6 million for the six and three months ended June 30, 2012, respectively. |
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Balance, beginning of period | $ | 1,099 | $ | 1,154 | $ | 1,020 | $ | 1,154 | |||||||
Fair value adjustment | (624 | ) | — | (545 | ) | — | |||||||||
Balance, end of period | $ | 475 | $ | 1,154 | $ | 475 | $ | 1,154 | |||||||
Fair Value Adjustments | ||||||||||||||||||||
For the Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||
Asset or Liability Measured at Fair Value | Fair Value Measurement Frequency | 2013 | 2012 | 2013 | 2012 | Statement of Operations Line Item Impacted | ||||||||||||||
Contingent consideration (A) | Recurring | (624 | ) | — | (545 | ) | — | Other income (expense) | ||||||||||||
Total fair value gains (B) | $ | (624 | ) | $ | — | $ | (545 | ) | $ | — | ||||||||||
(A) | The contingent consideration represents the estimated fair value of the additional potential earn-out opportunity payable in connection with the acquisition of Corvisa that is contingent and based upon certain future earnings targets. |
(B) | The Company did not have any impairments relating to mortgage securities – available-for-sale or the six and three months ended June 30, 2013 and 2012. |
As of June 30, 2013 | As of December 31, 2012 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Financial assets: | |||||||||||||||
Restricted cash | $ | 2,151 | $ | 2,101 | $ | 2,215 | $ | 2,150 | |||||||
Mortgage securities – available-for-sale | 3,402 | 3,402 | 3,906 | 3,906 | |||||||||||
Financial liabilities: | |||||||||||||||
Senior notes | $ | 82,779 | $ | 11,898 | $ | 81,728 | $ | 11,527 | |||||||
Note payable to related party | 4,363 | 3,148 | 4,613 | 3,064 | |||||||||||
Corporate | Appraisal Management | Financial Intermediary | Eliminations | Discontinued Operations (C) | Total | ||||||||||||||||||
For the Six Months Ended June 30, 2013 | |||||||||||||||||||||||
Service fee income | $ | 4,452 | $ | 84,310 | $ | 8,091 | $ | (4,173 | ) | $ | — | $ | 92,680 | ||||||||||
Interest income | 2,725 | — | — | (320 | ) | — | 2,405 | ||||||||||||||||
Interest expense | 1,583 | 19 | 308 | (320 | ) | — | 1,590 | ||||||||||||||||
Depreciation and amortization expense (A) | 413 | 1,055 | 127 | — | 382 | 1,977 | |||||||||||||||||
(Loss) income from continuing operations before income tax expense | (3,156 | ) | 5,618 | 633 | (229 | ) | — | 2,866 | |||||||||||||||
Additions to long-lived assets | 1,577 | 146 | 162 | — | 10 | 1,895 | |||||||||||||||||
As of June 30, 2013 | |||||||||||||||||||||||
Total assets (B) | $ | 66,290 | $ | 22,759 | $ | 3,405 | $ | (10,306 | ) | $ | 77 | $ | 82,225 | ||||||||||
(A) | Amounts are included in the cost of services and selling, general and administrative expense line items of the condensed consolidated statements of operations. |
(B) | Appraisal Management segment includes goodwill of $3.2 million resulting from the acquisition of StreetLinks. |
(C) | See Note 3 for additional information regarding the financial position and operating results of discontinued operations. |
(D) | Amount includes assets acquired under capital leases. |
Corporate | Appraisal Management | Financial Intermediary | Eliminations | Discontinued Operations (C) | Total | ||||||||||||||||||
For the Six Months Ended June 30, 2012 | |||||||||||||||||||||||
Service fee income | $ | 4,333 | $ | 84,529 | $ | 9,007 | $ | (4,344 | ) | $ | — | $ | 93,525 | ||||||||||
Interest income | 3,736 | — | — | (491 | ) | — | 3,245 | ||||||||||||||||
Interest expense | 1,535 | 19 | 472 | (491 | ) | — | 1,535 | ||||||||||||||||
Depreciation and amortization expense (A) | 136 | 921 | 47 | — | 165 | 1,269 | |||||||||||||||||
(Loss) income from continuing operations before income tax benefit | (587 | ) | 3,110 | 436 | (534 | ) | — | 2,425 | |||||||||||||||
Additions to long-lived assets | 547 | 550 | 73 | — | 139 | 1,309 | |||||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||||
Total assets (B) | $ | 93,097 | $ | 22,772 | $ | 2,349 | $ | (12,331 | ) | $ | 857 | $ | 106,744 | ||||||||||
(A) | Amounts are included in the cost of services and selling, general and administrative expense line items of the condensed consolidated statements of operations. |
(B) | Appraisal Management segment includes goodwill of $3.2 million resulting from the acquisition of StreetLinks. |
(C) | See Note 3 for additional information regarding the financial position and operating results of discontinued operations. |
Corporate | Appraisal Management | Financial Intermediary | Eliminations | Discontinued Operations (B) | Total | ||||||||||||||||||
For the Three Months Ended June 30, 2013 | |||||||||||||||||||||||
Service fee income | $ | 2,250 | $ | 43,165 | $ | 1,471 | $ | (2,068 | ) | $ | — | $ | 44,818 | ||||||||||
Interest income | 1,546 | — | — | (58 | ) | — | 1,488 | ||||||||||||||||
Interest expense | 799 | 9 | 52 | (58 | ) | — | 802 | ||||||||||||||||
Depreciation and amortization expense (A) | 230 | 521 | 68 | — | (13 | ) | 806 | ||||||||||||||||
(Loss) income from continuing operations before income tax expense | (2,055 | ) | 3,090 | (652 | ) | — | — | 383 | |||||||||||||||
Additions to long-lived assets | 326 | 65 | 79 | — | (12 | ) | 458 | ||||||||||||||||
(A) | Amounts are included in the cost of services and selling, general and administrative expense line items of the condensed consolidated statements of operations. |
(B) | See Note 3 for additional information regarding the financial position and operating results of discontinued operations. |
(C) | Amount includes assets acquired under capital leases. |
Corporate | Appraisal Management | Financial Intermediary | Eliminations | Discontinued Operations (B) | Total | ||||||||||||||||||
For the Three Months Ended June 30, 2012 | |||||||||||||||||||||||
Service fee income | $ | 1,989 | $ | 42,792 | $ | 1,014 | $ | (2,000 | ) | $ | — | $ | 43,795 | ||||||||||
Interest income | 2,096 | — | — | (250 | ) | — | 1,846 | ||||||||||||||||
Interest expense | 800 | 9 | 241 | (250 | ) | — | 800 | ||||||||||||||||
Depreciation and amortization expense (A) | 79 | 465 | 25 | — | 72 | 641 | |||||||||||||||||
(Loss) income from continuing operations before income tax expense | (111 | ) | 1,538 | (1,136 | ) | (317 | ) | — | (26 | ) | |||||||||||||
Additions to long-lived assets | 258 | 249 | 49 | — | 117 | 673 | |||||||||||||||||
(A) | Amounts are included in the cost of services and selling, general and administrative expense line items of the condensed consolidated statements of operations. |
(B) | See Note 3 for additional information regarding the financial position and operating results of discontinued operations. |
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Numerator: | |||||||||||||||
Net (loss) income from continuing operations | $ | (24,800 | ) | $ | 65,532 | $ | (26,145 | ) | $ | (57 | ) | ||||
Loss from discontinued operations | (1,114 | ) | (1,170 | ) | (424 | ) | (406 | ) | |||||||
Net (loss) income | (25,914 | ) | 64,362 | (26,569 | ) | (463 | ) | ||||||||
Less (loss) income attributable to noncontrolling interests | (77 | ) | (394 | ) | 24 | (429 | ) | ||||||||
(Loss) income available to common shareholders | $ | (25,837 | ) | $ | 64,756 | $ | (26,593 | ) | $ | (34 | ) | ||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding – basic | 90,716,933 | 90,469,585 | 90,716,933 | 90,566,933 | |||||||||||
Weighted average common shares outstanding – dilutive: | |||||||||||||||
Weighted average common shares outstanding – basic | 90,716,933 | 90,469,585 | 90,716,933 | 90,566,933 | |||||||||||
Stock options | — | 596,928 | — | 814,455 | |||||||||||
Nonvested shares | — | 421,517 | — | 354,926 | |||||||||||
Weighted average common shares outstanding – dilutive | 90,716,933 | 91,488,030 | 90,716,933 | 91,736,314 | |||||||||||
Basic earnings per share: | |||||||||||||||
Net (loss) income from continuing operations | $ | (0.27 | ) | $ | 0.72 | $ | (0.29 | ) | $ | (0.01 | ) | ||||
Loss from discontinued operations | (0.01 | ) | (0.01 | ) | — | — | |||||||||
Net (loss) income | (0.28 | ) | 0.71 | (0.29 | ) | (0.01 | ) | ||||||||
Less (loss) income attributable to noncontrolling interests | — | (0.01 | ) | — | (0.01 | ) | |||||||||
Net (loss) income available to common shareholders | $ | (0.28 | ) | $ | 0.72 | $ | (0.29 | ) | $ | — | |||||
Diluted earnings per share: | |||||||||||||||
Net (loss) income from continuing operations | $ | (0.27 | ) | $ | 0.71 | $ | (0.29 | ) | $ | (0.01 | ) | ||||
Loss from discontinued operations | (0.01 | ) | (0.01 | ) | — | — | |||||||||
Net (loss) income | (0.28 | ) | 0.70 | (0.29 | ) | (0.01 | ) | ||||||||
Less (loss) income attributable to noncontrolling interests | — | (0.01 | ) | — | (0.01 | ) | |||||||||
Net (loss) income available to common shareholders | $ | (0.28 | ) | $ | 0.71 | $ | (0.29 | ) | $ | — | |||||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Number of stock options | 8,362 | 6,311 | 8,578 | 7,131 | |||||||||||
Weighted average exercise price of stock options | $ | 0.69 | $ | 1.11 | $ | 0.68 | $ | 0.79 | |||||||
• | Corporate Overview, Background and Strategy – a brief overview of our business, current strategy, and significant recent events. |
• | Critical Accounting Policies – an update, since December 31, 2012, of our discussion of accounting policies that impact our financial statements and involve a high degree of judgment or complexity. This section also includes the impact of new accounting standards. |
• | Consolidated Results of Operations – an analysis of our results of operations for the six and three months ended June 30, 2013 as presented in our unaudited Condensed Consolidated Financial Statements. |
• | Segment Results of Operations – an analysis of our results of operations for the six and three months ended June 30, 2013 as presented in our unaudited Condensed Consolidated Financial Statements for our reporting segments. |
• | Liquidity and Capital Resources – an analysis of our cash flows and financial commitments. |
• | Lender Plus, the core appraisal management service, for which StreetLinks manages the full appraisal process for lenders; |
• | Lender X, the technology solution that facilitates lenders managing their own appraisal process; and |
• | Appraisal QX, introduced in the fourth quarter of 2012, an automated appraisal risk management product. |
• | generating income and long-term value for our shareholders, and |
• | maintaining and/or generating adequate liquidity to sustain us and allow us to take advantage of acquisition opportunities. |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Net (loss) income available to common shareholders per diluted share | $ | (0.28 | ) | $ | 0.71 | ||
As of | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Unrestricted cash and cash equivalents | $ | 20,477 | $ | 16,362 | |||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Total | % | Total | % | Total | % | Total | % | ||||||||||||||||||||
Service fee income: | |||||||||||||||||||||||||||
Full service appraisal management | $ | 82,509 | 97.9 | % | $ | 83,827 | 99.2 | % | $ | 42,107 | 97.5 | % | $ | 42,396 | 99.1 | % | |||||||||||
Other valuation services and transactions | 854 | 1.0 | 702 | 0.8 | 474 | 1.1 | 396 | 0.9 | |||||||||||||||||||
Automated examination and valuation services | 947 | 1.1 | — | — | 584 | 1.4 | — | — | |||||||||||||||||||
Total service fee income | 84,310 | 100.0 | 84,529 | 100.0 | 43,165 | 100.0 | 42,792 | 100.0 | |||||||||||||||||||
Cost of services | 72,602 | 86.1 | 75,714 | 89.6 | 37,198 | 86.2 | 38,288 | 89.5 | |||||||||||||||||||
Selling, general and administrative expense and other | 6,563 | 7.8 | 5,709 | 6.8 | 3,429 | 7.9 | 2,970 | 6.8 | |||||||||||||||||||
Total expenses | 79,165 | 93.9 | 81,423 | 96.3 | 40,627 | 94.1 | 41,258 | 96.3 | |||||||||||||||||||
Other income (expense), net | 473 | 0.6 | 4 | — | 552 | 1.3 | 4 | 0.1 | |||||||||||||||||||
Net income before income taxes | $ | 5,618 | 6.7 | % | $ | 3,110 | 3.7 | % | $ | 3,090 | 7.2 | % | $ | 1,538 | 3.6 | % | |||||||||||
Completed orders: | |||||||||||||||||||||||||||
Full service appraisal management | 203,838 | 218,878 | 103,844 | 111,260 | |||||||||||||||||||||||
Other valuation services and transactions | 50,743 | 38,002 | 27,769 | 21,077 | |||||||||||||||||||||||
Automated examination and valuation services | 63,930 | — | 38,388 | — | |||||||||||||||||||||||
For the Six Months Ended June 30, | For the Three Months Ended June 30, | ||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Total | % | Total | % | Total | % | Total | % | ||||||||||||||||||||
Service fee income: | |||||||||||||||||||||||||||
Settlement | $ | 6,782 | 83.8 | % | $ | 8,074 | 89.6 | % | $ | 1,173 | 79.7 | % | $ | 793 | 78.2 | % | |||||||||||
Bank account distribution | 1,309 | 16.2 | 933 | 10.4 | 298 | 20.3 | 221 | 21.8 | |||||||||||||||||||
Total service fee income | 8,091 | 100.0 | 9,007 | 100.0 | 1,471 | 100.0 | 1,014 | 100.0 | |||||||||||||||||||
— | |||||||||||||||||||||||||||
Cost of services | 4,867 | 60.2 | 4,880 | 54.2 | 1,182 | 80.4 | 1,003 | 98.9 | |||||||||||||||||||
Selling, general and administrative expense | 2,398 | 29.6 | 2,207 | 24.5 | 1,025 | 69.7 | 906 | 89.3 | |||||||||||||||||||
Guaranty fees - NCI | — | — | 1,012 | 11.2 | — | — | — | — | |||||||||||||||||||
Total expenses | 7,265 | 89.8 | 8,099 | 89.9 | 2,207 | 150.0 | 1,909 | — | |||||||||||||||||||
Other income (expense), net | 115 | 1.4 | — | — | 136 | 9.2 | — | — | |||||||||||||||||||
Interest expense - NCI | (308 | ) | (3.7 | ) | (472 | ) | (5.2 | ) | (52 | ) | (3.5 | ) | (241 | ) | (23.8 | ) | |||||||||||
Net income (loss) before income taxes | $ | 633 | 7.8 | % | $ | 436 | 4.8 | % | $ | (652 | ) | (44.3 | )% | $ | (1,136 | ) | (112.0 | )% | |||||||||
Settlements of federal income tax refunds (A) | 436,959 | 569,167 | 54,192 | 51,571 | |||||||||||||||||||||||
Bank accounts enrolled (B) | 73,061 | 42,280 | 9,552 | 3,412 | |||||||||||||||||||||||
(A) | Advent processes both federal and state income tax refunds. However, many taxpayers have no state refund and others may have more than one state tax refund. For this analysis, the number of state refunds have not been included. The number of federal income tax refunds generally represents the number of individual taxpayers using Advent services. |
(B) | Includes all accounts opened regardless of whether the account was used and/or generated fees. |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Consolidated Statements of Cash Flows: | |||||||
Cash provided by operating activities | $ | 4,420 | $ | 5,752 | |||
Cash flows provided by investing activities | 414 | 869 | |||||
Cash flows used in financing activities | (719 | ) | (1,021 | ) | |||
Issuer Purchases of Equity Securities | ||||||||||||
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (A) | |||||||||
April 1, 2013 - April 30, 2013 | — | — | — | $ | 1,020 | |||||||
May 1, 2013 - May 31, 2013 | — | — | — | $ | 1,020 | |||||||
June 1, 2013 - June 30, 2013 | — | — | — | $ | 1,020 | |||||||
(A) | A current report on Form 8-K was filed on October 2, 2000 announcing that the Board of Directors authorized the Company to repurchase its common shares, bringing the total authorization to $9 million. The Company has repurchased $8.0 million to date, leaving approximately $1.0 million of shares that may yet be purchased under the plan. |
Exhibit No. | Description of Document | |
11.1 (1) | Statement Regarding Computation of Per Share Earnings | |
31.1 | Chief Executive Officer Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Principal Financial Officer Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Chief Executive Officer Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Principal Financial Officer Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial information from Novation Companies, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language) includes: (i) Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (ii) Consolidated Statements of Operations for the six and three months ended June 30, 2013 and 2012, (iii) Consolidated Statements of Comprehensive Income for the six and three months ended June 30, 2013 and 2012, (iv) Consolidated Statements of Shareholders' Equity for the six months ended June 30, 2013 and 2012, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012, and (vi) the Notes to Consolidated Financial Statements. In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise this Exhibit 101 shall be deemed “furnished” and not “filed.” | |
(1) See Note 14 to the condensed consolidated financial statements. |
NOVATION COMPANIES, INC. | |||
DATE: | August 6, 2013 | /s/ W. Lance Anderson | |
W. Lance Anderson, Chairman of the Board of Directors and Chief Executive Officer | |||
(Principal Executive Officer) | |||
DATE: | August 6, 2013 | /s/ Rodney E. Schwatken | |
Rodney E. Schwatken, Chief Financial Officer | |||
(Principal Financial Officer) | |||
DATE: | August 6, 2013 | /s/ Brett A. Monger | |
Brett A. Monger, Vice President and Chief Accounting Officer | |||
(Principal Accounting Officer) |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
Date: | August 6, 2013 | /s/ W. Lance Anderson | |||
W. Lance Anderson | |||||
Chairman of the Board of Directors and Chief Executive Officer |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
Date: | August 6, 2013 | /s/ Rodney E. Schwatken | |||
Rodney E. Schwatken | |||||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 6, 2013 | /s/ W. Lance Anderson | |
W. Lance Anderson | |||
Chairman of the Board of Directors and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 6, 2013 | /s/ Rodney E. Schwatken | |
Rodney E. Schwatken | |||
Chief Financial Officer |
Borrowings
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Borrowings [Abstract] | |
Borrowings | Borrowings Senior Notes – The Company has outstanding unsecured senior notes pursuant to three indentures (collectively, the “Senior Notes”) with an aggregate principal balance of $85.9 million. The Senior Notes were created through an exchange of the Company's previously outstanding junior subordinated notes that occurred prior to 2012. This exchange was considered a modification of a debt instrument for accounting purposes, therefore the Company uses the effective interest method to accrete from the existing balances of $82.8 million and $81.7 million as of June 30, 2013 and December 31, 2012, respectively to the aggregate principal balance of $85.9 million. The Senior Notes accrue interest at a rate of 1.0% until the earlier of (a) the completion of an equity offering by the Company or its subsidiaries that results in proceeds of $40 million or more or (b) January 1, 2016. Thereafter, the Senior Notes will accrue interest at a rate of three-month LIBOR plus 3.5% (the “Full Rate”). Interest on the Senior Notes is paid on a quarterly basis and no principal payments are due until maturity on March 30, 2033. The indentures governing the Senior Notes (the “Indentures”) contain certain restrictive covenants (the “Negative Covenants”) subject to certain exceptions in the Indentures, including written consent of the holders of the Senior Notes. The Negative Covenants prohibit the Company and its subsidiaries, from among other things, incurring debt, permitting any lien upon any of its property or assets, making any cash dividend or distribution or liquidation payment, acquiring shares of the Company or its subsidiaries, making payment on debt securities of the Company that rank pari passu or junior to the Senior Notes, or disposing of any equity interest in its subsidiaries or all or substantially all of the assets of its subsidiaries. The Negative Covenants remain in effect until both of the following conditions are met: 1) the Senior Notes begin accruing interest at the Full Rate, and 2) the Company satisfies certain financial covenants (the “Financial Covenants”). Satisfaction of the Financial Covenants requires the Company to demonstrate on a consolidated basis that (1) its Tangible Net Worth is equal to or greater than $40 million, and (2) either (a) the Interest Coverage Ratio is equal to or greater than 1.35x, or (b) the Leverage Ratio is not greater than 95%. As the Senior Notes were not accruing interest at the Full Rate, the Negative Covenants, as defined above, were still in effect as of June 30, 2013 and December 31, 2012. As such, the Company was under no obligation to comply with the Financial Covenants during these periods. The Company was in compliance with all Negative Covenants as of June 30, 2013 and December 31, 2012. Note Payable to Related Party – As discussed in Note 4 to the condensed consolidated financial statements, Steve Haslam sold all of his membership units of StreetLinks to the Company, approximately 5%, on March 8, 2012. The total purchase price was $6.1 million, of which $1.5 million was paid during 2012. Approximately $0.3 million was paid during the six months ended June 30, 2013. The remainder of this obligation is payable as follows: $0.3 million on the last day of each quarter until March 8, 2016, on which date the unpaid principal balance of $1.6 million is to be paid, plus interest on the unpaid balance at the rate of 4.0% per annum, compounded quarterly. The Company's obligation is secured by the StreetLinks' interest purchased. Capital Leases – The Company leases hardware and computer equipment under capital leases. These capital leases are payable in 36 monthly installments and mature between August 2014 and June 2016. As of June 30, 2013 and December 31, 2012, current maturities of obligations under capital leases were approximately $0.4 million and $0.3 million, respectively. Noncurrent maturities of obligations under capital leases were approximately $0.5 million and $0.4 million, as of June 30, 2013 and December 31, 2012, respectively. Due to the immaterial nature of these obligations with regard to the Company's financial statements as a whole, current maturities and noncurrent maturities of capital leases are included in the other current liabilities and other liabilities line items, respectively, in the Company's condensed consolidated balance sheets. |
Fair Value Accounting - Contingent Consideration Liabilities (Details) (Fair Value, Inputs, Level 3 [Member], Fair Value, Measurements, Recurring [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|||||
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
|
||||||||
Contingent Consideration [Roll Forward] | ||||||||
Balance, beginning of period | $ 1,020 | $ 1,154 | $ 1,099 | [1] | $ 1,154 | |||
Fair value adjustments | (545) | 0 | (624) | 0 | ||||
Balance, end of period | $ 475 | [1] | $ 1,154 | $ 475 | [1] | $ 1,154 | ||
|
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income and Revenues: | ||||
Service fee income | $ 44,818 | $ 43,795 | $ 92,680 | $ 93,525 |
Interest income - mortgage securities | 1,488 | 1,846 | 2,405 | 3,245 |
Total | 46,306 | 45,641 | 95,085 | 96,770 |
Costs and Expenses: | ||||
Cost of services | 37,250 | 38,236 | 75,105 | 78,511 |
Selling, general and administrative expense | 8,593 | 7,389 | 17,461 | 14,243 |
Total | 45,843 | 45,625 | 92,566 | 92,754 |
Other income (expense) | 722 | 758 | 1,937 | (56) |
Interest expense | (802) | (800) | (1,590) | (1,535) |
Income (loss) before income taxes | 383 | (26) | 2,866 | 2,425 |
Income tax expense (benefit) | 26,528 | 31 | 27,666 | (63,107) |
Net (loss) income from continuing operations | (26,145) | (57) | (24,800) | 65,532 |
Loss from discontinued operations, net of taxes | (424) | (406) | (1,114) | (1,170) |
Net (loss) income | (26,569) | (463) | (25,914) | 64,362 |
Less: Net (loss) income attributable to noncontrolling interests | 24 | (429) | (77) | (394) |
Net (loss) income attributable to Novation | $ (26,593) | $ (34) | $ (25,837) | $ 64,756 |
Earnings Per Share attributable to Novation: | ||||
Basic, in dollars per share | $ (0.29) | $ 0.00 | $ (0.28) | $ 0.72 |
Diluted, in dollars per share | $ (0.29) | $ 0.00 | $ (0.28) | $ 0.71 |
Weighted average basic shares outstanding, in shares | 90,716,933 | 90,566,933 | 90,716,933 | 90,469,585 |
Weighted average diluted shares outstanding, in shares | 90,716,933 | 91,736,314 | 90,716,933 | 91,488,030 |
New Accounting Pronouncements
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In July 2012, the FASB issued ASU 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which amends the guidance in ASC 350-30 on testing indefinite-lived intangible assets, other than goodwill, for impairment. The FASB issued the ASU in response to feedback on ASU 2011-08, which amended the goodwill impairment testing requirements by allowing an entity to perform a qualitative impairment assessment before proceeding to the two-step impairment test. Similarly, under ASU 2012-02, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative assessment before calculating the fair value of the asset. Although ASU 2012-02 revises the examples of events and circumstances that an entity should consider in interim periods, it does not revise the requirements to test (1) indefinite-lived intangible assets annually for impairment and (2) between annual tests if there is a change in events or circumstances. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, and did not have a material impact on the Company's consolidated financial statements. In January 2013, the FASB issued ASU 2013-1, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. This guidance is effective for fiscal years beginning on or after January 1, 2013, and did not have a significant impact on the Company's financial statements. In February 2013, the FASB issued ASU 2013-2, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (AOCI). This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012, and did not have a significant impact on the Company's financial statements. In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force), which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB's objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date and is effective for fiscal years beginning after December 15, 2013, and interim periods within those years. This guidance is not expected to have a significant impact on the Company's financial statements. |
Discontinued Operations (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block] | The results of operations for the Company's Logistics segment and any related eliminations have been classified as discontinued operations for all periods presented and are summarized below.
The major classes of assets and liabilities for the Company's Logistics segment as of June 30, 2013 and December 31, 2012 are detailed below. Unless otherwise noted below, these amounts are included in the respective line items within the condensed consolidated balance sheets for all periods presented.
|
Fair Value Accounting - Narrative (Details)
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6 Months Ended | 0 Months Ended |
---|---|---|
Jun. 30, 2013
StreetLinks LLC [Member]
|
Mar. 22, 2011
Post-Modification Notes [Member]
Interest Rate, Post-Trigger [Member]
Senior Notes [Member]
|
|
Debt Instrument [Line Items] | ||
Variable rate, description | three-month LIBOR | |
Basis spread on variable rate | 3.50% | |
Interest rate | 4.00% |
Commitments and Contingencies
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
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Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In conjunction with the acquisition of Corvisa, LLC in 2011, the Company is obligated to make payments in the future to the former minority owners of Corvisa of up to $1.2 million if revenue targets are achieved. During the three months ended June 30, 2013, the Company, based on management's estimates of the probability of the earnings targets being achieved, released approximately $0.5 million of the recorded liability pertaining to this obligation. As of June 30, 2013, the remaining recorded liability related to the Corvisa contingent consideration obligation was $0.5 million, all of which is recorded in other noncurrent liabilities. As of December 31, 2012, the Company had recorded a liability of $0.9 million related to this contingency, with approximately $0.5 million recorded in the accrued expense line of the condensed consolidated balance sheet and $0.4 million recorded in the other noncurrent liabilities. The Company has received indemnification and loan repurchase demands with respect to alleged violations of representations and warranties (“defects”) made in loan sale and securitization agreements. These demands have been received substantially beginning in 2006 and have continued into 2013. Prior to the Company ceasing the origination of loans in its mortgage lending business, it sold loans to securitization trusts and other third parties and agreed to repurchase a loan due to missing documentation or breaches of representations or warranties made in sale documents that materially adversely affected the value of the loan. Beginning in 1997 and ending in 2007, affiliates of the Company sold loans to securitization trusts and third parties with the potential of such repurchase obligations. The aggregate original principal balance of these loans was $43.1 billion at the time of sale or securitization. The remaining principal balance of these loans is not available as these loans are serviced by third parties and may have been refinanced, sold or liquidated. Between 2011 and 2013, the Company received claims to repurchase loans with original principal balances of approximately $31.1 million. These claims have not been acknowledged as valid by the Company. In some cases, claims were made against affiliates of the Company that have ceased operations and have no or limited assets. The Company has not repurchased any loans between 2011 and 2013. Historically, repurchases of loans or indemnification of losses where a loan defect has been alleged have been insignificant and any future losses for alleged loan defects have not been deemed to be probable or reasonably estimable; therefore, the Company has recorded no reserves related to these claims. The Company does not use internal groupings for purposes of determining the status of these loans. The Company is unable to develop an estimate of the maximum potential amount of future payments related to repurchase demands because the Company does not have access to information relating to loans sold and securitized and the number or amount of claims deemed probable of assertion is not known nor is it reasonably estimated. Further, the validity of claims received remains questionable. Also, considering that the Company completed its last sale or securitization of loans during 2007, the Company believes that it will be difficult for a claimant to successfully validate any additional repurchase demands. Management does not expect that the potential impact of claims will be material to the Company's financial statements. Pending Litigation. The Company is a party to various legal proceedings. Except as set forth below, these proceedings are of an ordinary and routine nature. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than the active proceedings described in detail below, proceedings and actions against the Company should not, individually, or in the aggregate, have a material effect on the Company's financial condition, operations and liquidity. Furthermore, due to the uncertainty of any potential loss as a result of pending litigation and due to the Company's belief that an adverse ruling is not probable, the Company has not accrued a loss contingency related to the following matters in its consolidated financial statements. However, a material outcome in one or more of the active proceedings described below could have a material impact on the results of operations in a particular quarter or fiscal year. On May 21, 2008, a purported class action case was filed in the Supreme Court of the State of New York, New York County, by the New Jersey Carpenters' Health Fund, on behalf of itself and all others similarly situated. Defendants in the case included NovaStar Mortgage Funding Corporation (“NMFC”) and its individual directors, several securitization trusts sponsored by the Company ("affiliated defendants") and several unaffiliated investment banks and credit rating agencies. The case was removed to the United States District Court for the Southern District of New York. On June 16, 2009, the plaintiff filed an amended complaint. The plaintiff seeks monetary damages, alleging that the defendants violated sections 11, 12 and 15 of the Securities Act of 1933, as amended, by making allegedly false statements regarding mortgage loans that served as collateral for securities purchased by the plaintiff and the purported class members. On August 31, 2009, the Company filed a motion to dismiss the plaintiff's claims, which the court granted on March 31, 2011, with leave to amend. The plaintiff filed a second amended complaint on May 16, 2011, and the Company again filed a motion to dismiss. On March 29, 2012, the court dismissed the plaintiff's second amended complaint with prejudice and without leave to replead. The plaintiff filed an appeal. On March 1, 2013, the appellate court reversed the judgment of the lower court, which had dismissed the case. Also, the appellate court vacated the judgment of the lower court which had held that the plaintiff lacked standing, even as a class representative, to sue on behalf of investors in securities in which plaintiff had not invested, and the appellate court remanded the case back to the lower court for further proceedings. On April 23, 2013 the plaintiff filed its memorandum with the lower court seeking a reconsideration of the earlier dismissal of plaintiff's claims as to five offerings in which plaintiff was not invested. Given the early stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes that the affiliated defendants have meritorious defenses to the case and expects them to defend the case vigorously. On June 20, 2011, the National Credit Union Administration Board, as liquidating agent of U.S. Central Federal Credit Union, filed an action against NMFC and numerous other defendants in the United States District Court for the District of Kansas, claiming that the defendants issued or underwrote residential mortgage-backed securities pursuant to allegedly false or misleading registration statements, prospectuses, and/or prospectus supplements. On October 12, 2011, the complaint was served on NMFC. On December 20, 2011, NMFC filed a motion to dismiss the plaintiff's complaint and to strike certain paragraphs of the complaint. On July 25, 2012, the court granted the motion in part and denied the motion in part. The plaintiff was granted leave to amend the complaint. On August 24, 2012, the plaintiff filed an amended complaint making essentially the same claims against NMFC. On October 29, 2012, NMFC filed a motion to dismiss the amended complaint, which motion remains pending. The defendants had claimed that the case should be dismissed based upon a statute of limitations and sought an appeal of the court's denial of this defense. An interlocutory appeal of this issue was allowed, and oral argument on the appeal occurred May 8, 2013. This litigation is in an early stage, and the Company cannot provide an estimate of the range of any loss. The Company believes that NMFC has meritorious defenses to the case and expects it to defend the case vigorously. On May 30, 2012, Woori Bank filed an action against NovaStar ABS CDO I, Inc. and NovaStar ABS CDO I, Ltd. (collectively, “NCDO”) and certain other unrelated entities in the United States District Court for the Southern District of New York, claiming common law fraud, negligent misrepresentation and unjust enrichment based on allegations that defendants knew that NCDO securities purchased by the plaintiff involved more risk than their ratings suggested. The plaintiff dismissed, without prejudice, NovaStar ABS CDO I, Ltd., and on August 20, 2012, the plaintiff filed an amended complaint against NovaStar ABS CDO I, Inc. and other, unrelated entities. The amended complaint alleged the same claims against NovaStar ABS CDO I, Inc. On September 12, 2012, NovaStar ABS CDO I, Inc. filed a motion to dismiss the amended complaint. On December 27, 2012, the court dismissed the claims against all defendants without granting the plaintiff leave to amend its complaint. However, the court gave the plaintiff the opportunity, until March 1, 2013, to write a letter to the court explaining how it would amend to correct the noted deficiencies in its complaint if granted leave. In response, the plaintiff, on January 23, 2013, filed a motion for leave to file an amended complaint and to alter, amend or vacate the judgment of dismissal. On March 8, 2013 the court denied plaintiff's motion and made its dismissal final. The plaintiff appealed. This litigation is in an early stage, and the Company cannot provide an estimate of the range of any loss. On February 28, 2013 the Federal Housing Finance Agency, as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac) and on behalf of the Trustee of the NovaStar Mortgage Funding Trust, Series 2007-1 filed a summons with notice in the Supreme Court of the State of New York, County of New York against Novation Companies, Inc. and NovaStar Mortgage, Inc. The notice provides that this is a breach of contract action with respect to certain, unspecified mortgage loans and defendant's failure to repurchase such loans under the applicable agreements. Plaintiff alleges that defendants, from the closing date of the transaction that created the Trust that mortgage loans that were sold to the Trust, were aware of the breach of the representations and warranties made and failed to notice and cure such breaches, and due to the failure of defendants to cure any breach, notice to defendants would have been futile. The summons with notice was not served until June 28, 2013. By letter dated June 24, 2013, the Trustee of the NovaStar Mortgage Funding Trust, Series 2007-1 forwarded a notice from Freddie Mac alleging breaches of representations and warranties with respect to 43 loans, as more fully set forth in included documentation. The 43 loans had an aggregate, original principal balance of about $6.5 million. This litigation is in an early stage, and the Company cannot provide an estimate of the range of any loss. The Company believes that it has meritorious defenses to the case and expects to defend the case vigorously. |
Borrowings - Capital Leases (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Debt Instrument [Line Items] | ||
Capital Leases, Maturity Date Range, Start | Aug. 20, 2014 | |
Capital Leases, Maturity Date Range, End | Jun. 20, 2016 | |
Capital Lease Obligations, Current | $ 0.4 | $ 0.3 |
Capital Lease Obligations, Noncurrent | $ 0.5 | $ 0.4 |
Income Taxes - Income Tax Expense (Benefit) (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Operating Loss Carryforwards [Line Items] | ||
Income Tax Expense (Benefit), Continuing Operations | $ 27.7 | $ (63.1) |
Mortgage Securities - Available-for-Sale (Details) (Mortgage-backed Securities, Issued by Private Enterprises [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
||||
---|---|---|---|---|---|---|
Mortgage-backed Securities, Issued by Private Enterprises [Member]
|
||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||
Cost basis | $ 574 | $ 605 | ||||
Unrealized gain | 2,828 | 3,301 | ||||
Estimated fair value | $ 3,402 | $ 3,906 | ||||
Average yield, percentage calculated from cost basis | 127.00% | [1] | 176.00% | [1] | ||
|
Notes Receivable and Allowance for Doubtful Accounts (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses on Financing Receivables | Activity in the allowance for credit losses on notes receivable is as follows for the six and three months ended June 30, 2013 and 2012 (dollars in thousands):
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Mortgage Securities (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale Securities | The following table presents certain information on the Company's portfolio of mortgage securities – available-for-sale as of June 30, 2013 and December 31, 2012 (dollars in thousands):
|
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Schedule of Variable Interest Entities | The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust, a variable interest entity or VIE (dollars in thousands):
|
Borrowings - Senior Notes (Details) (USD $)
|
0 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Post-Modification Notes [Member]
|
Dec. 31, 2012
Post-Modification Notes [Member]
|
Mar. 22, 2011
Senior Notes [Member]
Post-Modification Notes [Member]
|
Mar. 22, 2011
Senior Notes [Member]
Post-Modification Notes [Member]
Interest Rate, Pre-Trigger [Member]
|
Mar. 22, 2011
Senior Notes [Member]
Post-Modification Notes [Member]
Modification Trigger, One [Member]
|
Mar. 22, 2011
Senior Notes [Member]
Post-Modification Notes [Member]
Interest Rate, Post-Trigger [Member]
|
Mar. 22, 2011
Restriction Release Trigger, One [Member]
Senior Notes [Member]
Post-Modification Notes [Member]
|
Mar. 22, 2011
Restriction Release Trigger, Two [Member]
Senior Notes [Member]
Post-Modification Notes [Member]
|
|
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 85,900,000 | |||||||||
Senior notes | 82,779,000 | 81,728,000 | 82,800,000 | 81,700,000 | ||||||
Interest rate | 1.00% | |||||||||
Proceeds from equity offering, minimum | 40,000,000 | |||||||||
Variable rate, description | three-month LIBOR | |||||||||
Basis spread on variable rate | 3.50% | |||||||||
Tangible net worth, minimum | $ 40,000,000 | |||||||||
Interest coverage ratio, minimum | 1.35 | |||||||||
Leverage ratio, maximum | 95.00% |
Discontinued Operations - Balance Sheet (Details) (Logistics [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
||||||
---|---|---|---|---|---|---|---|---|
Logistics [Member]
|
||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Cash and cash equivalents | $ 13 | $ 49 | ||||||
Service fee receivable, net | 0 | 111 | ||||||
Other current assets | 64 | 66 | ||||||
Total current assets | 77 | 226 | ||||||
Property and equipment, net of accumulated depreciation | 0 | 372 | ||||||
Other noncurrent assets | 0 | 109 | ||||||
Total noncurrent assets | 0 | 481 | ||||||
Total assets | 77 | 707 | ||||||
Accounts payable | 33 | 133 | ||||||
Accrued expenses | 67 | [1] | 439 | |||||
Due to Novation | 699 | [2] | 776 | [2] | ||||
Other current liabilities | 0 | 28 | ||||||
Total current liabilities | 799 | 1,376 | ||||||
Other noncurrent liabilities | 0 | 11 | ||||||
Total noncurrent liabilities | 0 | 11 | ||||||
Total liabilities | $ 799 | $ 1,387 | ||||||
|
Notes Receivable and Allowance for Doubtful Accounts - Narrative (Details) (USD $)
|
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Mar. 31, 2013
|
Dec. 31, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Recovery of credit losses | $ 1,100,000 | |||||||
(Recovery) of provision for credit losses | 0 | 0 | (1,054,000) | 1,054,000 | ||||
Paydowns of notes receivable | 1,663,000 | 1,700,000 | ||||||
Allowance for credit losses | 0 | 1,054,000 | 0 | 1,054,000 | 0 | 1,054,000 | 1,054,000 | 0 |
Notes receivable outstanding, net | 262,000 | 262,000 | 581,000 | |||||
Notes Receivable [Member]
|
||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Notes receivable outstanding, net | 300,000 | 300,000 | 600,000 | |||||
ITS Financial, LLC [Member] | Notes Receivable [Member]
|
||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Allowance for credit losses | $ 1,100,000 | $ 1,100,000 |
Commitments and Contingencies (Details) (USD $)
|
24 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2012
Securities-Related Contingencies [Member]
|
Dec. 31, 2007
Securities-Related Contingencies [Member]
|
Jun. 30, 2013
Corvisa, LLC [Member]
Contingent Consideration [Member]
StreetLinks LLC [Member]
|
Dec. 31, 2012
Corvisa, LLC [Member]
Contingent Consideration [Member]
StreetLinks LLC [Member]
|
Nov. 10, 2011
Corvisa, LLC [Member]
Contingent Consideration [Member]
StreetLinks LLC [Member]
|
|
Loss Contingencies [Line Items] | |||||
Contingent consideration, potential cash payment | $ 1,200,000 | ||||
Contingent consideration, fair value adjustment | 500,000 | ||||
Contingent consideration, fair value | 500,000 | 900,000 | |||
Accrual for loss contingency, current | 500,000 | ||||
Accrual for loss contingency, noncurrent | 474,000 | 400,000 | |||
Aggregate original principal balance of loans sold to securitization trusts and third parties | 43,100,000,000 | ||||
Loss contingency, original principal balances of loans subject to repurchase claims | $ 31,100,000 |
Earnings per Share (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per share for the six and three months ended June 30, 2013 and 2012 (dollars in thousands, except share and per share amounts) are as follows:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average stock options to purchase shares of Common Stock were outstanding during each period presented, but were not included in the computation of diluted earnings per share because the number of shares assumed to be repurchased, as calculated was greater than the number of shares to be obtained upon exercise, therefore, the effect would be antidilutive (in thousands, except exercise prices):
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Property and Equipment, Net - Schedule of Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
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---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 15,303 | $ 15,332 |
Less: Accumulated depreciation and amortization | (9,650) | (9,140) |
Property and equipment, net | 5,653 | 6,192 |
Furniture, Fixtures and Office Equipment [Member]
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Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 900 | 993 |
Hardware and Computer Equipment [Member]
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||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,055 | 4,358 |
Software [Member]
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Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 8,612 | 8,765 |
Leasehold Improvements [Member]
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Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 736 | $ 1,216 |
Business Combinations and Consolidation (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | A summary of the aggregate amounts of the assets acquired and liabilities assumed and the aggregate consideration paid for Cloud during 2012 follows (dollars in thousands):
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Discontinued Operations (Notes)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Discontinued Operations Because of continued capital demands and difficulties generating positive cash flows or earnings, effective February 27, 2013, the Company committed to a plan to abandon the operations of Mango, which comprised the Company's entire Logistics segment. The run-off operations of Mango ceased during the first quarter of 2013, and the Company will not have any significant continuing involvement in Mango. The results of operations for the Company's Logistics segment and any related eliminations have been classified as discontinued operations for all periods presented and are summarized below.
The Company recorded a loss on abandonment of discontinued operation, net of income taxes of $1.1 million for the six months ended June 30, 2013 and $0.4 million for the three months ended June 30, 2013. The year to date amount includes one-time employee termination benefits of $0.1 million and depreciation expense of $0.4 million, which largely represents the revision of depreciation estimates to reflect the use of the Logistics segment's fixed assets over their shortened useful lives through the date of abandonment. The quarter to date amount is due primarily to the reversal of the income tax benefit recognized during the first quarter of 2013. See Note 12 for additional discussion regarding the second quarter income tax activity. The major classes of assets and liabilities for the Company's Logistics segment as of June 30, 2013 and December 31, 2012 are detailed below. Unless otherwise noted below, these amounts are included in the respective line items within the condensed consolidated balance sheets for all periods presented.
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Financial Statement Presentation
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6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation Description of Operations – Novation Companies, Inc. (“NCI” or the “Company”) acquires and operates technology-enabled service businesses, with a focus on building and growing these businesses to create long term value. The Company owns 91% of StreetLinks LLC (“StreetLinks”), a national residential appraisal and mortgage real estate valuation management services company. The majority of StreetLinks' business is generated from managing the process of fulfilling an appraisal order and performing a quality control review of all appraisals. StreetLinks also provides other real estate valuation management services, such as field reviews, value validation, and automated appraisal risk management. StreetLinks charges a fee for these services which is collected from lenders and borrowers. The Company now owns 100% of Advent Financial Services LLC (“Advent”) as compared to 78% as of December 31, 2012. For discussion regarding the change in ownership interest, see Note 4 to the condensed consolidation financial statements. Advent, along with its distribution partners, provides financial settlement services, mainly for income tax preparation businesses, and also provides access to tailored banking accounts and related services via its prepaid debit card designed to meet the needs of low and moderate-income level individuals. Advent is not a bank, but it acts as an intermediary for banking products on behalf of other banking institutions. The primary distribution channel for Advent is by way of settlement services to electronic income tax return originators. Advent provides a process for the originators to collect refunds from the Internal Revenue Service, distribute fees to various service providers and deliver the net refund to individuals. Individuals may elect to have the net refund dollars deposited into Advent's prepaid debit card. Individuals also have the option to have the net refund dollars paid by check or to an existing bank account. Regardless of the settlement method, Advent receives a fee from the originator for providing the settlement service. If the refund is deposited to the prepaid debit card offered by Advent, Advent earns additional fee income. The Company owns 67% of Mango Moving, LLC ("Mango"), which was formerly a third-party logistics provider within the household goods industry. However, as a result of continued capital demands and difficulties generating positive cash flows or earnings, the Company and non-controlling owners agreed to dissolve Mango and abandon its operations during the three months ended March 31, 2013. As discussed further in Note 3, the operations of Mango have been classified as discontinued operations for all periods presented. On October 2, 2012, the Company acquired 85% of the membership interests in IVR Central, LLC ("IVR"). Subsequent to the acquisition, IVR changed its name to Corvisa Cloud LLC ("Cloud"). Cloud is a technology company in the call center communications industry, whose primary products include interactive voice response, automated call distribution, call dialing and call recording using cloud technology. See Note 4 to the condensed consolidated financial statements for additional information. Prior to 2008, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, we acquired mortgage securities that continue to be a source of our earnings and cash flow. Financial Statement Presentation – The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the period. The Company uses estimates and judgments in establishing the fair value of its mortgage securities, notes receivable, goodwill, and accounting for income taxes, including the determination of the timing of the establishment or release of the valuation allowance related to the deferred tax asset balances and reserves for uncertain tax positions. While the condensed consolidated financial statements and footnotes reflect the best estimates and judgments of management at the time, actual results could differ significantly from those estimates. Cash equivalents consist of liquid investments with an original maturity of three months or less. Amounts due from banks and credit card companies of $0.5 million and $0.3 million for the settlement of credit card transactions are included in cash and cash equivalents as of June 30, 2013 and December 31, 2012, respectively, as they are generally collected within three business days. Cash equivalents are stated at cost, which approximates fair value. The condensed consolidated financial statements of the Company include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments have been made, which were of a normal and recurring nature, for a fair presentation of the condensed consolidated financial statements. The Company's condensed consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012. |
Notes Receivable and Allowance for Doubtful Accounts - Allowance for Credit Losses (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||||
Balance, beginning of period | $ 0 | $ 1,054 | $ 1,054 | $ 0 |
(Recovery) of provision for credit losses | 0 | 0 | (1,054) | 1,054 |
Balance, end of period | $ 0 | $ 1,054 | $ 0 | $ 1,054 |
Property and Equipment, Net (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | The following table shows the Company's property and equipment, net as of June 30, 2013 and December 31, 2012 (dollars in thousands):
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Financial Statement Presentation (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
StreetLinks LLC [Member]
|
Mar. 31, 2012
StreetLinks LLC [Member]
|
Jun. 30, 2013
Advent Financial Services LLC [Member]
|
Dec. 31, 2012
Advent Financial Services LLC [Member]
|
Jun. 30, 2013
Mango Moving, LLC (Formerly Build My Move, LLC) [Member]
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Oct. 02, 2012
Corvisa Cloud LLC [Member]
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Operations [Line Items] | ||||||||
Ownership percentage | 91.00% | 93.00% | 100.00% | 78.00% | 67.00% | 85.00% | ||
Equity ownership interest acquired, percent | 85.00% | |||||||
Purchase price | $ 0.8 | |||||||
Due from banks and credit card companies | $ 0.5 | $ 0.3 |
Business Combinations and Consolidation - Assets Acquired and Liabilities Assumed (Details) (Corvisa Cloud LLC [Member], USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
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Corvisa Cloud LLC [Member]
|
|
Assets: | |
Cash | $ 505 |
Service fee receivable | 23 |
Property and equipment | 500 |
Liabilities: | |
Accounts payable | (51) |
Accrued expenses | (21) |
Noncontrolling interests | (118) |
Total cash consideration | $ 838 |