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 December 31, 2013	Reis Services		Discontinued Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	10,347	$	—		$	213		$	10,560
Restricted cash and investments		217		—			—			217
Accounts receivable, net		11,386		—			—			11,386
Prepaid and other assets		187		—			2,601			2,788
Assets attributable to discontinued operations		—		—			9			9

Total current assets		22,137		—			2,823			24,960
Furniture, fixtures and equipment, net		829		—			24			853
Intangible assets, net		15,687		—			—			15,687
Deferred tax asset, net		285		—			21,032			21,317
Goodwill		57,203		—			(2,378	)		54,825
Other assets		225		—			—			225

Total assets	$	96,366	$	—		$	21,501		$	117,867

Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—		$	—		$	—
Accrued expenses and other liabilities		2,623		—			956			3,579
Liability for option cancellations		—		—			268			268
Deferred revenue		20,284		—			—			20,284
Liabilities attributable to discontinued operations		—		271			71			342

Total current liabilities		22,907		271			1,295			24,473
Other long-term liabilities		523		—			—			523
Deferred tax liability, net		18,957		—			(18,957	)		—

Total liabilities		42,387		271			(17,662	)		24,996
Total stockholders’ equity		53,979		(271	)		39,163			92,871

Total liabilities and stockholders’ equity	$	96,366	$	—		$	21,501		$	117,867

(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, 2012	Reis Services		Discontinued Operations (A)			Other (B)			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	4,212	$	—		$	749		$	4,961
Restricted cash and investments		216		—			—			216
Accounts receivable, net		10,694		—			—			10,694
Prepaid and other assets		219		—			1,220			1,439

Total current assets		15,341		—			1,969			17,310
Furniture, fixtures and equipment, net		705		—			33			738
Intangible assets, net		16,333		—			—			16,333
Deferred tax asset, net		—		—			8,557			8,557
Goodwill		57,203		—			(2,378	)		54,825
Other assets		271		—			—			271

Total assets	$	89,853	$	—		$	8,181		$	98,034

Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	—	$	—		$	—		$	—
Accrued expenses and other liabilities		2,556		—			1,346			3,902
Liability for option cancellations		—		—			297			297
Deferred revenue		18,230		—			—			18,230
Liabilities attributable to discontinued operations		—		271			189			460

Total current liabilities		20,786		271			1,832			22,889
Other long-term liabilities		588		—			—			588
Deferred tax liability, net		15,786		—			(15,786	)		—

Total liabilities		37,160		271			(13,954	)		23,477
Total stockholders’ equity		52,693		(271	)		22,135			74,557

Total liabilities and stockholders’ equity	$	89,853	$	—		$	8,181		$	98,034

(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.


Condensed Operating Data for the Year Ended December 31, 2013	Reis Services			Discontinued Operations (A)			Other (B)			Consolidated
Subscription revenue	$	34,721		$	—		$	—		$	34,721
Cost of sales of subscription revenue		6,974			—			—			6,974

Gross profit		27,747			—			—			27,747

Operating expenses:
Sales and marketing		8,350			—			—			8,350
Product development		3,122			—			—			3,122
General and administrative expenses		6,989			—			4,920			11,909

Total operating expenses		18,461			—			4,920			23,381
Other income (expenses):
Interest and other income		10			—			—			10
Interest expense		(113	)		—			—			(113	)

Total other income (expenses)		(103	)		—			—			(103	)

Income (loss) before income taxes and discontinued operations	$	9,183		$	—		$	(4,920	)	$	4,263

(Loss) from discontinued operations, before income taxes	$	—		$	(9	)	$	(557	)	$	(566	)

(A)

Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods 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 Year Ended December 31, 2012	Reis Services			Discontinued Operations (A)			Other (B)			Consolidated
Subscription revenue	$	31,229		$	—		$	—		$	31,229
Cost of sales of subscription revenue		6,617			—			—			6,617

Gross profit		24,612			—			—			24,612

Operating expenses:
Sales and marketing		7,643			—			—			7,643
Product development		2,485			—			—			2,485
General and administrative expenses		6,696			—			5,098			11,794

Total operating expenses		16,824			—			5,098			21,922
Other income (expenses):
Interest and other income		50			—			1			51
Interest expense		(155	)		—			—			(155	)

Total other income (expenses)		(105	)		—			1			(104	)

Income (loss) before income taxes and discontinued operations	$	7,683		$	—		$	(5,097	)	$	2,586

(Loss) from discontinued operations, before income taxes	$	—		$	(393	)	$	(11,904	)	$	(12,297	)


Condensed Operating Data for the Year Ended December 31, 2011	Reis Services			Discontinued Operations (A)			Other (B)			Consolidated
Subscription revenue	$	27,180		$	—		$	—		$	27,180
Cost of sales of subscription revenue		6,305			—			—			6,305

Gross profit		20,875			—			—			20,875

Operating expenses:
Sales and marketing		6,704			—			—			6,704
Product development		2,093			—			—			2,093
General and administrative expenses		6,376			—			4,719			11,095

Total operating expenses		15,173			—			4,719			19,892
Other income (expenses):
Interest and other income		72			—			5			77
Interest expense		(274	)		—			—			(274	)

Total other income (expenses)		(202	)		—			5			(197	)

Income (loss) before income taxes and discontinued operations	$	5,500		$	—		$	(4,714	)	$	786

(Loss) from discontinued operations, before income taxes	$	—		$	(2,975	)	$	—		$	(2,975	)

(A)

Includes the results of the Company’s discontinued Residential Development Activities segment, to the extent that such operations existed during the periods 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 December 31, 2013.

The Company’s largest individual subscriber accounted for 3.4%, 4.2% and 4.9% of Reis Services’s revenue for the years ended December 31, 2013, 2012 and 2011, respectively.

The following table presents the accounts receivable balances of Reis Services at December 31, 2013 and 2012:


	December 31,
	2013			2012
Accounts receivable	$	11,465,000		$	10,763,000
Allowance for doubtful accounts		(79,000	)		(69,000	)

Accounts receivable, net	$	11,386,000		$	10,694,000

Twenty-five subscribers accounted for an aggregate of approximately 59.1% of Reis Services’s accounts receivable at December 31, 2013, including four subscribers in excess of 4.0% with the largest representing 10.4%. Through February 27, 2014, the Company received payments of approximately $9,079,000 or 79.2% against the December 31, 2013 accounts receivable balance. Twenty-four subscribers accounted for an aggregate of approximately 58.2% of Reis Services’s accounts receivable at December 31, 2012, including two subscribers in excess of 5.0% with the largest representing 11.1%.

At December 31, 2013 and 2012, the largest individual subscriber accounted for 5.9% and 6.6%, respectively, of deferred revenue.

Discontinued Operations – Residential Development Activities

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


	For the Years Ended December 31,
	2013			2012			2011
Revenue from sales of real estate	$	—		$	—		$	1,800,000
Cost of sales of real estate		—			—			(288,000	)
Litigation charge, net of recoveries (see Note 10)		80,000			(11,547,000	)		(4,460,000	)
Other income (expense), net		(646,000	)		(750,000	)		(27,000	)

(Loss) from discontinued operations before income tax		(566,000	)		(12,297,000	)		(2,975,000	)
Income tax benefit from discontinued operations		(230,000	)		—			—

(Loss) from discontinued operations, net of income tax benefit	$	(336,000	)	$	(12,297,000	)	$	(2,975,000	)

East Lyme

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

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing, after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. Certain of the lots at East Lyme required remediation of pesticides which were used on the property when it was an apple orchard. As a result of the April 2011 bulk sale, the Company was indemnified from any financial obligation related to the environmental remediation. The Company recorded a gain on this transaction in the second quarter of 2011 of approximately $1,242,000, which is included in income (loss) from discontinued operations.

A bank initially provided a $3,000,000 letter of credit to a municipality in connection with the construction of public roads at the East Lyme project. In connection with the April 2011 sale of East Lyme, the Company was released from the letter of credit by the municipality and the cash collateral at that time of $400,000 was fully released.

Claverack

In February 2011, the Company received cash of approximately $455,000 in full satisfaction of a mortgage note and accrued interest thereon related to the February 2010 bulk sale of 235 acres in Claverack, New York.

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”)), 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, following denial of all of the defendants’ post-trial motions, Reis and its subsidiaries reached a settlement with the plaintiff, the Gold Peak homeowners association, providing for a total payment 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. In December 2012, the Company recovered $712,500, which offset a portion of the previously recorded charge, resulting in the net litigation charge for the year ended December 31, 2012 of approximately $11,547,000. During the year ended December 31, 2013, the Company recovered $80,000. For additional information pertaining to the Gold Peak litigation, see Note 10.