NOTE 3 — ACQUISITIONS

On March 29, 2013, we acquired certain fee-based businesses associated with Ocwen’s acquisition of Homeward. As part of the acquisition, Ocwen agreed not to develop similar fee-based businesses that would directly or indirectly compete with services provided by Altisource relative to the Homeward servicing portfolio. Additionally, the terms of certain service agreements between Altisource and Ocwen were amended to extend the term from 2020 to August 2025 (see Note 2). We paid $87.0 million, subject to a working capital and net income adjustment within 90 days, for the Homeward fee-based businesses.

Management has prepared a preliminary purchase price allocation and assigned associated asset lives based upon available information at the time of closing. This preliminary allocation and assessment of asset lives will be revised as additional information about the fair value of assets and liabilities becomes available but will not exceed 12 months from the acquisition date.

The preliminary allocation of the purchase price is estimated as follows:

(in thousands)

Cash	$	4,500
Accounts receivable	7,221
Receivable from Ocwen	318
Prepaid expenses and other current assets	347
Premises and equipment	9
Customer relationship	80,388
	92,783
Accounts payable and accrued expenses	(3,352		)
Payable to Ocwen	(2,481		)
Purchase price	$	86,950

(in thousands)		Estimated life (in years)

Premises and equipment		2 - 5
Customer relationship		7

The following tables present the unaudited pro forma condensed consolidated results of operations as if the acquisition had occurred at the beginning of the periods presented.

	Three months ended March 31, 2013
(in thousands, except per share amounts)	As reported		Pro forma
Revenue	$	148,827	$	170,485
Net income attributable to Altisource	27,518		32,815
Earnings per share — diluted	1.10		1.31

	Three months ended March 31, 2012
(in thousands, except per share amounts)	As reported		Pro forma
Revenue	$	139,066	$	163,695
Net income attributable to Altisource	25,229		32,868
Earnings per share — diluted	1.02		1.32

The unaudited pro forma information presents the combined operating results of Altisource and Homeward. The Homeward operating results were derived from its historical financial statements for the most comparable periods available. The results prior to the acquisition date have been adjusted to include the pro forma impact of the adjustment of amortization of the acquired intangible asset based on the preliminary purchase price allocation, the adjustment of interest expense reflecting the portion of our $200.0 million senior secured term loan (the “Senior Secured Term Loan”) used in the Homeward acquisition (i.e., the pro forma impact of borrowing $87.0 million for the three months ended March 31, 2012) and to reflect the impact of income taxes on the pro forma adjustments utilizing Altisource’s effective income tax rate in each period presented.

The unaudited pro forma results are presented for illustrative purposes only and do not reflect additional revenue opportunities, the realization of any potential cost savings and any related integration costs. It is management’s intent to transition the majority of the Homeward fee-based businesses to Altisource’s platform. Certain revenue opportunities and cost savings may result from the transaction and the conversion to the Altisource model; however, there can be no assurance that these revenue opportunities and cost savings will be achieved. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the transaction occurred as of the beginning of each of the periods presented, nor does the pro forma data intend to be a projection of results that may be obtained in the future.