Segment Information

9 Months Ended

Sep. 30, 2012

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 September 30, 2012	Reis Services		Discontinued Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	14,829	$	—		$	130		$	14,959
Restricted cash and investments		216		—			—			216
Accounts receivable, net		5,755		—			—			5,755
Prepaid and other assets		273		—			307			580
Assets attributable to discontinued operations		—		—			—			—
Total current assets		21,073		—			437			21,510
Furniture, fixtures and equipment, net		733		—			36			769
Intangible assets, net		16,524		—			—			16,524
Deferred tax asset, net		—		—			3,928			3,928
Goodwill		57,203		—			(2,378	)		54,825
Other assets		80		—			—			80
Total assets	$	95,613	$	—		$	2,023		$	97,636
Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—		$	—		$	—
Accrued expenses and other liabilities		1,948		—			852			2,800
Liability for option cancellations		—		—			364			364
Deferred revenue		14,435		—			—			14,435
Liabilities attributable to discontinued operations		—		12,276			171			12,447
Total current liabilities		16,383		12,276			1,387			30,046
Other long-term liabilities		614		—			—			614
Deferred tax liability, net		15,174		—			(15,174	)		—
Total liabilities		32,171		12,276			(13,787	)		30,660
Total stockholders’ equity		63,442		(12,276	)		15,810			66,976
Total liabilities and stockholders’ equity	$	95,613	$	—		$	2,023		$	97,636

(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 Balance Sheet Data December 31, 2011	Reis Services		Discontinued Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	18,505	$	—		$	3,648		$	22,153
Restricted cash and investments		215		—			—			215
Accounts Receivable, net		8,597		—			—			8,597
Prepaid and other assets		198		—			428			626
Assets attributable to discontinued operations		—		3,000			—			3,000
Total current assets		27,515		3,000			4,076			34,591
Furniture, fixtures and equipment, net		821		—			42			863
Intangible assets, net		17,155		—			—			17,155
Deferred tax asset, net		—		—			3,685			3,685
Goodwill		57,203		—			(2,378	)		54,825
Other assets		99		—			—			99
Total assets	$	102,793	$	3,000		$	5,425		$	111,218
Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	5,691	$	—		$	—		$	5,691
Accrued expenses and other liabilities		2,257		—			1,095			3,352
Liability for option cancellations		—		—			241			241
Deferred revenue		15,707		—			—			15,707
Liabilities attributable to discontinued operations		—		8,032			17			8,049
Total current liabilities		23,655		8,032			1,353			33,040
Other long-term liabilities		668		—			—			668
Deferred tax liability, net		13,151		—			(13,151	)		—
Total liabilities		37,474		8,032			(11,798	)		33,708
Total stockholders’ equity		65,319		(5,032	)		17,223			77,510
Total liabilities and stockholders’ equity	$	102,793	$	3,000		$	5,425		$	111,218

(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 Three Months Ended September 30, 2012	Reis Services			Discontinued Operations (A)		Other (B)			Consolidated
Subscription revenue	$	7,827		$	—	$	—		$	7,827
Cost of sales of subscription revenue		1,476			—		—			1,476
Gross profit		6,351			—		—			6,351
Operating expenses:
Sales and marketing		1,908			—		—			1,908
Product development		661			—		—			661
General and administrative expenses		1,691			—		1,246			2,937
Total operating expenses		4,260			—		1,246			5,506
Other income (expenses):
Interest and other income		16			—		—			16
Interest expense		(1	)		—		—			(1	)
Total other income (expenses)		15			—		—			15
Income (loss) before income taxes and discontinued operations	$	2,106		$	—	$	(1,246	)	$	860
Income (loss) from discontinued operations, before income taxes	$	—		$	2	$	(196	)	$	(194	)

Condensed Operating Data for the Three Months Ended September 30, 2011	Reis Services			Discontinued 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

(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.

(amounts in thousands)
Condensed Operating Data for the Nine Months Ended September 30, 2012	Reis Services			Discontinued Operations (A)			Other (B)			Consolidated
Subscription revenue	$	22,647		$	—		$	—		$	22,647
Cost of sales of subscription revenue		5,007			—			—			5,007
Gross profit		17,640			—			—			17,640
Operating expenses:
Sales and marketing		5,459			—			—			5,459
Product development		1,741			—			—			1,741
General and administrative expenses		5,013			—			3,853			8,866
Total operating expenses		12,213			—			3,853			16,066
Other income (expenses):
Interest and other income		47			—			1			48
Interest expense		(128	)		—			—			(128	)
Total other income (expenses)		(81	)		—			1			(80	)
Income (loss) before income taxes and discontinued operations	$	5,346		$	—		$	(3,852	)	$	1,494
(Loss) from discontinued operations, before income taxes	$	—		$	(12,648	)	$	(196	)	$	(12,844	)

Condensed Operating Data for the Nine Months Ended September 30, 2011	Reis Services			Discontinued 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

(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, 2012.

No individual customer accounted for more than 4.4% and 4.9% of Reis Services’s revenues for the nine months ended September 30, 2012 and 2011, respectively.

The balance of outstanding accounts receivable of Reis Services at September 30, 2012 and December 31, 2011 follows:

(amounts in thousands)	September 30, 2012			December 31, 2011
Accounts receivable	$	5,817		$	8,629
Allowance for doubtful accounts		(62	)		(32	)
Accounts receivable, net	$	5,755		$	8,597

Ten subscribers accounted for an aggregate of approximately 41.9% of Reis Services’s accounts receivable at September 30, 2012, including two subscribers in excess of 5.0% with the largest representing 10.3%. Through October 25, 2012, the Company received payments of approximately $2,079,000 or 35.7% against the September 30, 2012 accounts receivable balance.

At September 30, 2012, no subscribers accounted for more than 3.5% 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 September 30,					For the Nine Months  Ended September 30,
	2012			2011		2012			2011
Revenue from sales of real estate	$	—		$	—	$	—		$	1,800
Cost of sales of real estate		—			—		—			(558	)
Litigation charge		—			—		(12,260	)		—
Other income (expense), net		(194	)		1		(584	)		11
(Loss) income from discontinued operations before income tax		(194	)		1		(12,844	)		1,253
Income tax expense on discontinued operations		—			—		—			—
(Loss) income from discontinued operations, net of income tax expense	$	(194	)	$	1	$	(12,844	)	$	1,253

Gold Peak

In September 2009, the Company sold the final unit at Gold Peak, the final phase of Palomino Park, a five phase multifamily residential development in Highlands Ranch, Colorado. Gold Peak was a 259 unit condominium project on the remaining 29 acre land parcel at Palomino Park. On March 13, 2012, in connection with litigation regarding construction defects at the Gold Peak project, a jury rendered its verdict, whereby Reis, one of its subsidiaries (Gold Peak at Palomino Park LLC, the developer of the project (“GP LLC”)), two former senior officers of Reis (Jeffrey H. Lynford, who was also previously a director of the Company, and David M. Strong) and the construction manager/general contractor for the project (Tri-Star Construction West, LLC (“Tri-Star”)) were found jointly and severally liable for an aggregate of $18,200,000, plus other costs of approximately $756,000. The Company recorded a charge of $14,216,000 during the first quarter of 2012. On June 20, 2012, Reis reached a settlement with the plaintiff, the Gold Peak homeowners association, providing for a total payment by Reis of $17,000,000. Of this amount, $5,000,000 was paid on August 3, 2012 and the remaining $12,000,000 was paid on October 15, 2012, in accordance with the

settlement terms. As a result of the settlement, in the second quarter of 2012 the Company reversed $1,956,000 of the previously recorded charge, resulting in the net litigation charge for the nine months ended September 30, 2012 of $12,260,000. For additional information pertaining to the Gold Peak litigation, see Note 11.

Completed Real Estate Projects

In April 2011, the Company sold The Orchards, a single family home development in East Lyme, Connecticut (“East Lyme”), in a bulk transaction for a gross sales price of $1,800,000 for the 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.

Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. Remediation was 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. As a result of the sale, the Company was indemnified from any financial obligation related to the environmental remediation.

In February 2011, the Company received cash of approximately $455,000 in satisfaction of a mortgage note and accrued interest thereon from the sale of property in Claverack, New York in February 2010.