Discontinued Operations

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

In July 2020, we announced our intentions to pursue the sale of our reseller businesses focused on mortgage credit and borrower verification and multi-family tenant screening. Although market leaders in their respective business areas, these reseller businesses are not compatible with our long-term strategic imperatives. The divestiture of these operations is expected to improve our revenue growth trends, revenue mix, and significantly enhance profit margins. In October 2020, we consummated the sale of a component of RPS for $9.0 million, which resulted in a gain on sale of discontinued operations of $2.7 million, net of tax. In February 2021, we sold the remainder of RPS for $51.2 million. We expect to sell the remainder of these businesses to third parties during the next fiscal year. RPS was included within the PIRM reporting unit and CS was included within the UWS reporting unit prior to the RPS and CS disposal groups being presented as discontinued operations.

For the year ended December 31, 2020, we recorded $1.3 million in costs directly related to the sale of these reseller businesses. Each of these businesses is reflected in our accompanying consolidated financial statements as discontinued operations.

In September 2014, we completed the sale of our collateral solutions and field services businesses, which were included in the former reporting segment Asset Management and Processing Solutions ("AMPS"). In connection with the sale of our Employer and Litigation Services businesses (“ELI”) in December 2010, we retained certain liabilities and, in September 2016, a jury returned an unfavorable verdict against this discontinued operating unit, which we appealed. In August 2019, the verdict was upheld on appeal. We were unable to secure further review of the appellate decision and paid $23.0 million to satisfy the judgement in December 2019.

Summarized below are certain assets and liabilities classified as discontinued operations as of December 31, 2020, and 2019:


(in thousands)
December 31, 2020	PIRM		UWS		AMPS		ELI		Total
Cash and cash equivalents	$	971	$	1,501	$	—	$	—	$	2,472
Accounts receivable and other assets	4,063		42,806		268		—		47,137

Property and equipment, net	5,586		24,651		—		—		30,237
Goodwill, net	24,272		79,931		—		—		104,203
Capitalized data and database costs, net	17,377		991		—		—		18,368

Total assets	$	52,269	$	149,880	$	268	$	—	$	202,417

Accounts payable and accrued expenses	$	2,584	$	24,048	$	240	$	1	$	26,873

Deferred income tax and other liabilities	10,686		6,725		—		393		17,804

Total liabilities	$	13,270	$	30,773	$	240	$	394	$	44,677

December 31, 2019
Cash and cash equivalents	$	711	$	313	$	—	$	—	$	1,024
Accounts receivable and other assets	4,136		36,152		268		20		40,576
Income tax receivable	—		—		—		6,166		6,166
Property and equipment, net	4,831		21,520		—		—		26,351
Goodwill, net	29,269		79,931		—		—		109,200
Capitalized data and database costs, net	17,781		888		—		—		18,669

Total assets	$	56,728	$	138,804	$	268	$	6,186	$	201,986

Accounts payable and accrued expenses	$	1,772	$	18,276	$	240	$	22	$	20,310

Deferred income tax and other liabilities	8,662		13,343		—		393		22,398

Total liabilities	$	10,434	$	31,619	$	240	$	415	$	42,708

In connection with our intent to exit our reseller businesses, we allocated $29.3 million and $79.9 million of goodwill from our PIRM and UWS reporting units, respectively, to the RPS and CS disposal groups, respectively. The allocated amounts were determined by calculating the relative fair values between the disposal group and its respective reporting unit using a combination of the income and market approaches. Determining the fair value of a disposal group and reporting unit is judgmental and requires assumptions and estimates of many critical factors, including revenue growth rates, cost of services, selling, general and administrative expenses, market multiples, discount rates, and indicative fair market values from potential participants at the time of valuation. The estimated fair values supported the net book value of our disposal groups.

Summarized below are the components of our income/(loss) from discontinued operations, net of tax for the years ended December 31, 2020, 2019 and 2018:


(in thousands)
For the Year Ended December 31, 2020	PIRM		UWS		AMPS		ELI		Total
Operating revenue	$	35,860	$	338,448	$	—	$	—	$	374,308
Cost of services (exclusive of depreciation and amortization)	17,591		278,566		—		—		296,157
Selling, general, administrative and other expenses	13,502		13,163		1		(19)		26,647
Depreciation and amortization	4,906		3,770		—		—		8,676
Gain on investments and other, net	—		(3,803)		—		—		(3,803)
Income/(loss) from discontinued operations before income taxes	(139)		46,752		(1)		19		46,631
Provision/(benefit) for income taxes	(35)		12,298		—		5		12,268
Income/(loss) from discontinued operations, net of tax	$	(104)	$	34,454	$	(1)	$	14	$	34,363

For the Year Ended December 31, 2019
Operating revenue	$	43,756	$	277,606	$	—	$	—	$	321,362
Cost of services (exclusive of depreciation and amortization)	21,835		226,181		—		—		248,016
Selling, general, administrative and other expenses	10,859		6,371		(245)		23,521		40,506
Depreciation and amortization	7,724		4,892		—		—		12,616

Gain on investments and other, net	—		(577)		—		—		(577)
Income/(loss) from discontinued operations before income taxes	3,338		40,739		245		(23,521)		20,801
Provision/(benefit) for income taxes	833		10,166		61		(5,869)		5,191
Income/(loss) from discontinued operations, net of tax	$	2,505	$	30,573	$	184	$	(17,652)	$	15,610

For the Year Ended December 31, 2018
Operating revenue	$	51,519	$	300,489	$	—	$	—	$	352,008
Cost of services (exclusive of depreciation and amortization)	22,403		236,733		400		—		259,536
Selling, general, administrative and other expenses	9,220		7,550		(35)		414		17,149
Depreciation and amortization	7,395		3,459		—		—		10,854

Gain on investments and other, net	—		703		—		—		703
Income/(loss) from discontinued operations before income taxes	12,501		52,044		(365)		(414)		63,766
Provision/(benefit) for income taxes	3,121		12,985		(91)		(103)		15,912
Income/(loss) from discontinued operations, net of tax	$	9,380	$	39,059	$	(274)	$	(311)	$	47,854

Litigation Matters

In the RPS sale transaction, we retained liabilities relating to pending litigation involving RPS.

Fair Credit Reporting Act Class Actions

In July 2017, CoreLogic Rental Property Solutions, LLC (“RPS LLC”) was named as a defendant in Claudinne Feliciano, et. al., v. CoreLogic SafeRent, LLC, a putative class action lawsuit in the US District Court for the Southern District of New York. The named plaintiff alleges that RPS LLC prepared a background screening report about her that contained a record of a New York Housing Court action without noting that the action had previously been dismissed. On this basis, she seeks damages under the Fair Credit Reporting Act and the New York Fair Credit Reporting Act on behalf of herself and a class of similarly situated consumers with respect to reports issued during the period of July 2015 to the present. In July 2019, the District Court issued an order certifying a class of approximately 2,000 consumers. In June 2020, we reached an agreement to resolve the case. At a hearing on February 23, 2021, the District Court granted final approval of the settlement. The settlement amount was recorded during the quarter ended June 30, 2020.

In May 2020, RPS LLC was named as a defendant in Terry Brown v. CoreLogic Rental Property Solutions, LLC, a putative class action lawsuit filed in the US District Court for the Eastern District of Virginia. The named plaintiff alleges that RPS LLC prepared a background screening report about him that included a sex offender record that did not relate to him. He seeks damages under the Fair Credit Reporting Act on behalf of himself and a class of similarly situated consumers, as well as a subclass of consumers for whom misattributed sex offender records were removed following a dispute. The Company intends to vigorously defend itself in the litigation.

In June 2020, CoreLogic Credco, LLC (“Credco”) was named as a defendant in Marco Fernandez v. CoreLogic Credco, LLC, a putative class action lawsuit filed in California Superior Court in San Diego County. The named plaintiff alleges that Credco provided a lender with a consumer report about him that erroneously indicated he is on the Office of Foreign Asset Control’s list of Specially Designated Nationals and Blocked Persons (“OFAC List”). He further alleges that Credco failed to provide him with a copy of the OFAC List designation upon request, failed to notify him of what entities had received such a notification in the past, and failed to respond to his effort to dispute the item. He seeks to represent three classes and four subclasses based upon these allegations, and asserts seven claims under the Fair Credit Reporting Act, the California Credit Reporting Agencies Act, and California’s Unfair Competition law. The Company has removed the case to the US District Court for the Southern District of California, where the case remains pending.

Fair Value on Contingent Consideration

In connection with the 2017 acquisitions related to our discontinued operations, we entered into a contingent consideration agreement for up to $17.5 million in cash payable in 2022 upon the achievement of certain revenue targets ending fiscal year 2021. This contingent payment was originally recorded at a fair value of $4.4 million using the Monte-Carlo simulation model. The contingent payment is remeasured at fair value quarterly, and changes are recorded within income/(loss) from discontinued operations, net of tax, in our consolidated statements of operations. During the years ended December 31, 2020 and 2019 we decreased the fair value of our contingent consideration by $3.8 million and $0.6 million, respectively; and for the year ended December 31, 2018 we increased the fair value of our contingent consideration by $0.7 million.