2014 ANNUAL REPORT
TO OUR STOCKHOLDERS:
Our vision at CoreLogic is to deliver unique property-level insights that power the global real estate economy. Over the past
few years, we have pursued the realization of our vision by executing a strategic transformation program centered on our
unique, market-leading solutions, which are based on gold-standard data assets, patent-protected analytics and “must-have”
data-enabled services. Our strategic plan consists of the following five pillars:
• Build out unique, market-leading, data-driven solution sets in our Data & Analytics (D&A) and Technology and
•
Processing Solutions (TPS) segments;
Enhance and grow existing core mortgage-related services and build meaningful scale in insurance, geo-spatial
solutions and international businesses;
• Drive operational excellence and progressive margin expansion;
•
Continue investment in the Technology Transformation Initiative (TTI) to support future growth and efficiency;
and
• Build financial flexibility and consistently return capital to our stockholders.
By almost every measure, CoreLogic has become a higher-growth, higher-margin enterprise over the past three years. We
have focused relentlessly on building unique, data-enabled insights and services as well as excellence in our operating
segments. Our D&A segment is a global leader in residential property data, analytics and related workflow services. Our TPS
segment is the acknowledged gold standard in data-enabled services focused on origination and underwriting services,
property tax payment processing, compliance and mortgage technology solutions. Our market-leading property insights and
solutions are deeply embedded in our clients’ most critical workflows. This positions CoreLogic to help our clients build their
business and assess and manage risk twenty-four hours a day, seven days a week.
We have achieved this success at a time of significant macro-economic pressures and market-specific headwinds in the U.S.
housing and mortgage industries. During 2014, U.S. mortgage volumes contracted by approximately 40 percent as the
industry transitioned from a refinancing-driven to a purchase-driven market cycle. Despite these headwinds, CoreLogic
revenues remained constant compared to 2013, and we continued to advance many important elements of our strategic plan.
Importantly, we have set the stage for accelerating our growth and additional stockholder value creation in the future.
During 2014, we made significant progress on our long-established goal of growing the D&A segment to over 50 percent of
our total revenues. For the full year of 2014, D&A accounted for approximately 46 percent of total revenues. Over the past
year, the D&A segment grew at double-digit rates as we added significant scale in our insurance and geo-spatial operations
and our international businesses.
Growing our insurance and geo-spatial revenues adds adjacent vertical strength to our leadership presence in mortgage and
real estate markets and helps us mitigate real estate-related cyclicality. The acquisition of Marshall & Swift/Boeckh (MSB)
early in 2014 added property-related replacement cost data and analytics to our data assets for the insurance and housing
industry. The addition of MSB more than doubles our revenues in the insurance vertical. In 2014, CoreLogic revenues from
geo-spatial and insurance-related businesses accounted for almost 8 percent of our total revenues.
We also expanded our international operations, which are primarily D&A-focused, through product innovation and growth in
market share among lenders and real estate brokers. In 2014, our international revenues increased approximately 40 percent
and now account for 10 percent of our total revenues — up from about 5 percent just three years ago.
Our TPS segment continued to gain market share in 2014 and, as a result, revenue trends significantly outperformed overall
mortgage market volumes. More than half of the mortgages originated in the U.S. over the past year utilized our credit
reporting, flood zone determination or escrow tax payment processing services. Many participants in the mortgage market,
faced with continued regulatory scrutiny and market-related pressures, are increasingly seeking out strategic partners with
the resources to invest heavily in compliance infrastructure, automation, quality and data-enabled services. Our strong
reputation for quality and service excellence and regulatory compliance has helped make us the preferred partner for many
financial services and insurance firms.
We are continuing to drive margin expansion through ongoing cost management programs and the roll out of the TTI.
Building on our successful Project 30 program, we reduced our annual expense run rates by $30 million in 2014. With regard
to the TTI, we are well positioned to complete Phase I — our data center migration or DCM — by mid-2015. Upon
completion, the DCM is expected to improve operating performance and generate $30 million in annualized cost efficiencies.
As part of Phase II of the TTI, we are building out the CoreLogic Innovation Labs and our next-generation technology platform,
which should help drive market penetration and future growth.
Finally, we are continuing to build our financial flexibility. In 2014, we generated a record level of free cash flow. We
reinvested those funds in product and service development, productivity-related investments including the TTI, progressive
debt retirement and the return of capital to our stockholders by repurchasing common shares. Regarding the last point, we
repurchased three million of our common shares during 2014.
CoreLogic delivered a strong operating result in 2014. We finished the year with accelerating momentum and believe we are
well positioned to deliver another strong operating performance in 2015 despite a low-to-no growth U.S. mortgage market
environment. With a streamlined and higher-margin set of businesses, we are delivering against an aggressive business plan
which positions CoreLogic to capitalize on the opportunities presented by a gradually improving U.S. housing market.
As we move forward, we will continue to transform through a focused strategy that leverages the market-leading positions of
our core operations, our unique data assets, and the scale of our data-enabled services businesses. Our focus on fundamental
value drivers positions us to execute on our strategic vision. In closing, I would like to thank all of our employees, clients and
stockholders for their support. I am excited about our future and believe we are a great partner for our clients and a value-
growth opportunity for our long-term investors.
Anand Nallathambi
President and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2014
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ____________ to ____________
Commission file number 001-13585
__________________
CoreLogic, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or
organization)
95-1068610
(I.R.S. Employer Identification No.)
40 Pacifica, Irvine, California, 92618-7471
(Address of principal executive offices) (Zip Code)
(949) 214-1000
Registrant’s telephone number, including area code
__________________
Securities registered pursuant to Section 12(b) of the Act:
Common
(Title of each class)
New York Stock Exchange
(Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
__________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30,
2014, the last business day of the registrant's most recently-completed second fiscal quarter was $2,745,030,000.
On February 20, 2015, there were 89,790,478 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement with respect to the 2015 annual meeting of the stockholders are
incorporated by reference in Part III of this report. The definitive proxy statement or an amendment to this Form 10-K will be
filed no later than 120 days after the close of the registrant’s fiscal year.
CoreLogic Inc.
Table of Contents
PART I.
Item 1. Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Signatures
Exhibit Index
3
3
13
20
20
20
20
21
21
24
26
39
41
100
100
100
101
101
101
101
101
101
102
102
103
105
2
Item 1. Business
The Company
PART I
Our vision is to deliver unique property-level insights that power the global real estate economy, differentiated by
superior data, analytics and data-enabled solutions. Our mission is to empower our clients to make smarter decisions through
data-driven insights.
We are a leading global property information, analytics and data-enabled services provider operating in North
America, Western Europe and Asia Pacific. Our combined data from public, contributory and proprietary sources provides
detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related
performance information. The markets we serve include real estate and mortgage finance, insurance, capital markets and the
public sector. We deliver value to clients through unique data, analytics, workflow technology, advisory and managed services.
Clients rely on us to help identify and manage growth opportunities, improve performance and mitigate risk. We are also a
party to several joint ventures under which we share control of the management of the operations with the other partner.
We offer our clients among the most comprehensive national databases of public, contributory and proprietary data
covering real property and mortgage information, judgments and liens, building and replacement costs, parcel and geospatial
data, criminal background records, eviction information, non-prime lending records, credit information, and tax information,
among other data types. Our databases include over 880 million historical property transactions, over 93 million mortgage
applications and property-specific data covering approximately 99% of U.S. residential properties exceeding 148 million
records. We believe the quality of the data we offer is distinguished by our broad range of data sources and our expertise in
aggregating, organizing, normalizing, processing and delivering data to our clients.
With our data as a foundation, we have built strong analytics capabilities and a variety of value-added business
services to meet our clients’ needs for mortgage and automotive credit reporting, property tax, property valuation, tenancy,
hazard risk, property risk and replacement cost, flood plain location determination and other geospatial data and related
services.
We were originally incorporated in California in 1894, and were reincorporated in Delaware on June 1, 2010. Before
June 1, 2010, we operated as The First American Corporation (“First American” or “FAC”) but, in connection with a
transaction in which we spun off our financial services businesses (referred to as the "Separation"), we changed our name to
CoreLogic, Inc. and began trading on the New York Stock Exchange under the symbol “CLGX.” As used herein, the terms
"CoreLogic," the "Company," "we," "our" and "us" refer to CoreLogic, Inc. and our consolidated subsidiaries, except where it
is clear that the terms mean only CoreLogic, Inc. and not our subsidiaries. Our executive offices are located at 40 Pacifica,
Irvine, California, 92618-7471, our telephone number is (949) 214-1000, and our website is www.corelogic.com.
Corporate Events
Acquisitions
In January 2014, we completed our acquisition of Terralink International Limited ("Terralink") for NZD$14.5 million,
or $11.9 million, which is included as a component of our Data & Analytics ("D&A") reporting segment.
In March 2014, we completed the acquisition of all of the issued and outstanding equity interests of Marshall & Swift/
Boeckh ("MSB") and DataQuick Information Systems ("DataQuick"). In addition, we acquired the credit, flood and automated
valuation model assets of DataQuick Lending Solutions, and certain intellectual property assets of Decision Insight Information
Group S.a.r.l., collectively referred to as "MSB/DataQuick." The total consideration paid in connection with the transaction
referenced above was approximately $652.5 million in cash, which was funded through borrowings. The operations of MSB's
and DataQuick's data licensing and analytics units are reported within our D&A segment and DataQuick's flood zone
determination and credit servicing operations are reported within our Technology and Processing Solutions (“TPS”) segment.
In November 2014, we completed the acquisition of the assets of Bank of America's mortgage-related credit reporting
operation for $19.6 million, which is included as a component of the TPS segment.
3
Divestiture of Non-Core Businesses
As of December 31, 2013, we concluded that we would actively pursue the sale of our Asset Management and
Processing Solutions ("AMPS") reporting segment, which was comprised of collateral solutions, field services, technology
solutions, solutions express and outsourcing services. As a result, beginning in the fourth quarter of 2013, these businesses were
reflected in our consolidated financial statements as discontinued operations.
On September 30, 2014, we completed the sale of our collateral solutions and field services businesses, which were
previously included in our AMPS reporting segment, for total consideration of $29.1 million, subject to working capital
adjustments, as well as additional contingent consideration of up to $20.0 million. Further, during the third quarter of 2014, we
determined to cease pursuing the sale of the remaining product lines that were previously included in our AMPS reporting
segment and reflected as discontinued operations. These remaining product lines, which included our technology solutions,
solutions express and outsourcing services businesses, have been reclassified to continuing operations and are included in our
TPS segment reporting disclosures for all periods presented.
Our Data
Our data is the foundation of many of our products, analytics and services. Our data can generally be categorized as
real property information, mortgage information and consumer information. We obtain our data from a variety of sources,
including data gathered from public sources, data contributed by our clients and data obtained from data aggregators.
We gather a variety of data from public sources, including data and documents from federal, state and local
governments. We enhance our public record information with the data we collect from other public and non-public sources to
create comprehensive textual and geospatial views of each property within our coverage areas, including physical property
characteristics, boundaries and tax values, current and historical ownership, voluntary and involuntary liens, tax assessments
and delinquencies, replacement cost, property risk including environmental, flood and hazard information, criminal data,
building permits, local trends, summary statistics and household demographics.
For data contributed by our clients, we generally enter into agreements with our clients that govern our use of the data
they contribute. These contractual arrangements often permit our clients to use our solutions which incorporate their data. We
structure our agreements with our clients to specify the particular uses of the data they contribute and to provide the levels of
data privacy and protection required by the contributing party. Our contributed data includes loan performance information
(from loan servicers, trustees, securitizers, issuers and others), mortgage, auto, property rental and under-banked loan
applications from various loan originators, landlords and property owners.
In addition, we gather property listing and tenant/landlord rental information from Boards of Realtors®, real estate
agents, brokers, landlords, and owners of multi-tenant properties. We collect appraisals and property valuations from appraisers
and we license consumer credit history information from credit reporting agencies, lenders and auto dealers.
Business Segments and Solutions
We have organized our business into the following two segments: D&A and TPS. The following table sets forth the
key solutions we offer in each of these two segments:
Business Segments
Solutions
D&A
TPS
Property Information, Analytics and Advisory
Insurance and Spatial Solutions
Multifamily Services
Property Tax Processing (residential and commercial)
Origination and Underwriting Services (credit,
verification and flood)
Compliance and Technology Solutions
4
We believe that we hold the leading market position for many of our solutions, including:
(cid:127)
(cid:127)
(cid:127)
payment processing property tax services, based on the number of loans under service;
flood zone determinations, based on the number of flood zone certification reports issued;
credit and income verification services to the United States mortgage lending industry, based on the number
of credit reports issued;
property information based on the number of inquiries received;
valuation solution to validate reconstruction estimates for personal and commercial property insurance; and
(cid:127)
(cid:127)
(cid:127) multiple listing services ("MLS"), based on the number of active desktops using our technology.
Financial information regarding each of the Company’s business segments is included in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and
Supplementary Data of Part II of this report. Financial information regarding the collateral solutions and field services
businesses within our former AMPS reporting segment are reflected as discontinued operations for all historical periods
presented herein.
Data & Analytics
Our D&A segment owns or licenses data assets including loan information, criminal and eviction records, employment
verification, property sales and characteristic information, property risk and replacement cost, and information on mortgage-
backed securities. We both license our data directly to our clients and provide our clients with analytical products and workflow
solutions for risk management, MLS, insurance underwriting, collateral assessment, loan quality reviews and fraud assessment.
We are also a provider of geospatial proprietary software and databases combining geographic mapping and our data assets.
Our primary clients are commercial banks, mortgage lenders and brokers, investment banks, fixed-income investors, real estate
agents, MLS companies, property and casualty insurers, title insurance companies and government agencies and sponsored
enterprises.
The following provides a more detailed description of our key D&A products and services:
Property Information Analytics and Advisory. We are a leading provider of fraud detection, collateral and
mortgage performance analytics and real estate and mortgage-backed securities information. We use our data to link
property location and characteristics, real estate transactions and consumer and loan information to provide useful
insights and analysis for our clients. Our clients span many industries, including mortgage lending, government,
capital markets, property and casualty insurance, direct marketing, utilities and retail. Our products and services
include:
Data licensing and query. We obtain, normalize and aggregate real estate property and loan data and
make this data available to our clients with a standard format over the web or in bulk data form. Additionally,
we offer tools that enable our clients to take proactive steps with respect to their mortgage-backed securities,
loan and real property portfolios. Using our data and proprietary technology, we offer a number of value-
added services that help our clients assess risk, determine property values and track market performance. We
also provide advisory services that allow holders of mortgage-backed securities, loan and real property
portfolios to gain insight on the value, quality and attributes of those assets.
Valuation and fraud analytics. We offer our clients a host of property valuation services in an effort
to assist them in assessing their risk of loss with alternative forms of property valuations, depending upon
their needs and regulatory requirements. These include automated valuation models ("AVMs"), collateral risk
scores, appraisal review services and valuation reconciliation services. We also provide solutions designed to
assist our clients in detecting and preventing mortgage fraud and managing risk through a combination of
patented predictive analytics and proprietary and contributed data. We also provide verification of applicant
income and identity against Internal Revenue Service and Social Security Administration databases as well as
provide certain employment verification services.
Realtor Solutions. We are the leading provider of real estate listing software systems, with more than
50% of all U.S. and Canadian real estate agents having access to our products and services. Our flagship
software platform is customizable to meet our clients’ needs while maintaining a single code base. We
integrate client data with our robust property information, resulting in a comprehensive historical record on
almost all residential properties in the U.S.
5
Insurance and Spatial Solutions. We are a leading provider of property valuation and risk management solutions
to the insurance, governmental and financial service markets. Our solutions are based on proprietary data, algorithms
and platforms that aggregate customer property data to provide estimate replacement and repair cost, advanced
analytics to quantify property hazard risks and replacement cost, natural hazard risk management and information
solutions with premium locational accuracy and spatial datasets. We enable our customers to gain a comprehensive
view of each property risk in their portfolio, which enables better risk selection, underwriting performance and pricing
sophistication. We provide claims management solutions with advanced routing to automate the workflow in the
claims estimation process. In addition to the industry's first parcel-based geocoder and a proprietary parcel database
covering more than 130 million parcels across the U.S., we maintain critical, accurate and up-to-date information
across multiple hazard databases including information on damaging winds and sinkholes, flood data and the location
of fire stations. We also offer specialized data and analytical models including Wildfire Risk Score, Coastal Risk
Score, Flood Risk Score, and Earthquake and Fire Protection Class. Our analytics and hazard data are delivered to
clients through multiple methods, including the RiskMeter OnlineTM platform, a leading software-as-a-service
platform targeted to insurance industry participants.
Multifamily Services. We are a leading provider of screening and risk management services for the multifamily
housing industry. We conduct applicant screening and generate consumer reports containing information that may
include landlord-tenant court records, lease and payment performance history, credit history and criminal records
history primarily for residential property managers and owners throughout the U.S. We believe that we have the
largest landlord-tenant court record database in the U.S. and we access criminal records databases to create client-
configured, criminal background decision analytics. We provide statistically-validated applicant scoring models,
developed exclusively for the multifamily housing industry, which assess the risk of payment default by a prospective
renter.
Technology and Processing Solutions
We provide property tax monitoring, flood zone certification and monitoring, credit services, mortgage loan
administration and production services, lending solutions, mortgage-related business process outsourcing, technology solutions
and compliance-related services. The segment’s primary clients are large, national mortgage lenders and servicers, but we also
serve regional mortgage lenders and brokers, credit unions, commercial banks, government agencies and casualty insurance
companies. In addition, we are party to several joint ventures that provide settlement services in connection with residential
mortgage loans.
Property Tax Processing. We believe that we are currently the largest provider of property tax services in the U.S.
We procure and aggregate property tax information from over 20,000 taxing authorities. We use this information to
advise mortgage originators and servicers of the property tax payment status on their loans and to monitor that status
for the life of the loans. If a mortgage lender requires tax payments to be impounded on behalf of its borrowers, we
can also monitor and oversee the transfer of these funds to the taxing authorities and provide the lender with payment
confirmation.
Origination and Underwriting Services. We are a leading provider of credit and income verification services and
flood zone determinations. Our clients include mortgage lenders, originators or servicers, auto lenders and under-
banked consumer and specialty borrowers. Our products and services include:
Credit and Income Verification Services. We believe that we are a leading provider of credit services
in the U.S. mortgage and transportation markets, providing comprehensive solutions that help our clients
meet their lending, leasing and other consumer credit automation needs. We are also a leading reseller of
credit information and provide merged credit reports with information from each of the three nationwide
credit bureaus.
Flood Data Services. We believe that we are currently the largest provider of flood zone
determinations within the U.S. Federal legislation passed in 1994 requires that most mortgage lenders obtain
a determination of the current flood zone status at the time each loan is originated and obtain applicable
updates during the life of the loan. We primarily provide flood zone determinations to mortgage lenders. We
typically furnish a mortgage originator or servicer with a report as to whether a property lies within a
governmentally delineated flood hazard area and then monitor the property for flood hazard status changes
for as long as the loan is active.
6
Under-Banked Credit Services. We are a leading provider of credit reports for under-banked
consumer and specialty borrowers. Our clients range in size from sole proprietorships to major credit card
issuers.
Compliance and Technology Solutions. We are a leading provider of electronic-based lending solutions. Our
products and services include:
Compliance and Management Services. We provide a suite of compliance solutions including post-
closing services and document retrieval services. In addition we provide custom fulfillment, advisory and
other services that allow our clients to benefit from our specialists and their knowledge of our data to provide
project-based or client-customized reports.
Mortgage Technology Solutions. We provide cloud computing-based lending solutions to the financial
services market through a comprehensive suite of enterprise lending automation services. Our solutions
automate lending activities, consolidate functions and connect lenders with their partners and consumers in a
collaborative, real-time environment in order to help lenders price, originate, fulfill and service consumer
loans.
Corporate
In addition to our two reporting segments, we also have a corporate group, which includes costs and expenses not
allocated to our segments.
The following table sets forth our operating revenue for the last three years from our segments:
% of
Total
Operating
Revenue
% of
Total
Operating
Revenue
2013
2012
46.1% $
54.6
—
(0.7)
572,169
843,887
631
(12,286)
100.0% $ 1,404,401
40.7% $
60.1
—
(0.9)
544,753
800,890
640
(12,804)
100.0% $ 1,333,479
% of
Total
Operating
Revenue
40.9%
60.1
—
(1.0)
100.0%
2014
$
647,264
767,567
30
(9,821)
$ 1,405,040
(in thousands)
D&A
TPS
Corporate
Eliminations
Operating revenue
Clients
We focus our marketing efforts on the largest U.S. mortgage originators and servicers. We also provide our services to
financial institutions, investment banks, fixed-income investors, title insurance companies, commercial banks, government
agencies and government-sponsored enterprises, property and casualty insurers, credit unions, real estate agents and other real
estate professionals.
Our more significant client relationships tend to be long-term in nature and we typically provide a number of different
services to each client. Because of the depth of these relationships, we derive a significant portion of our aggregate revenue
from our largest clients with 29.8% of our 2014 operating revenues being generated by our ten largest clients.
Competition
We offer a diverse array of specialized products and services that compete directly and indirectly with similar products
and services offered by national and local providers. We believe there is no single competitor who offers the same combination
of products and services that we do. Therefore, we find that we compete with a broad range of entities.
Our D&A segment competes with entities that provide access to data or data-based analytical products and services as
part of their product offerings, including Black Knight Financial Services, a business of Fidelity National Financial, Inc.,
RealPage, Inc., Risk Management Solutions, Verisk Analytics, Inc. and Yardi Systems, Inc.
7
We compete based on the breadth and quality of our data sets, the exclusive nature of some of our key data sets, the
quality and effectiveness of our products and the integration of our platforms into client systems. We believe the data we offer
is distinguished by quality, the broad range of our data sources, including non-public sources, the volume of records we
maintain and our ability to provide data spanning a historical period of time that, we believe with respect to certain data sets,
exceeds comparable data sets of most of our competitors.
Our TPS segment competes with third-party providers such as Black Knight Financial Services, which provides
multiple product lines, Nationwide Title Clearing, a provider of document retrieval and post-closing services, specialty
providers of tax and flood services such as Lereta LLC, as well as credit report providers such as Equifax, Inc. and Kroll
Factual Data. With these services, we compete largely based on the quality of the products and services we provide, our ability
to provide scalable services at competitive prices and our ability to provide integrated platforms. We also compete with
departments within financial institutions that utilize internal resources to provide similar services on a captive basis. We
generally compete with captive providers based on the quality of our products and services, the scalability of our services, cost
efficiencies and our ability to provide some level of risk mitigation.
Sales and Marketing
Our sales strategy is primarily client-focused and resources are assigned based on client size. For our largest clients,
we assign a dedicated sales executive whose sole responsibility is to manage the overall client relationship. For our remaining
large and mid-sized clients, a sales executive is assigned to multiple clients, the number of which is dependent on the size of
that sales executive’s portfolio. Each of our sales executives develops and maintains key relationships within each client’s
business units and plays an important role in relationship management as well as prospecting for new business. Our sales
executives understand the current marketplace environment and demonstrate extensive knowledge of our clients’ internal
operating structure and business needs. The depth and breadth of this relationship between us and our clients allows us to
develop and implement solutions that are tailored to the specific needs of each client in a prompt and efficient manner.
Smaller clients, measured by revenue or geographic coverage, are primarily managed through our telesales operations,
which is responsible for working with mortgage and real estate brokers, appraisers, real estate agents, correspondents and other
lenders.
Several of our business units have sales teams and subject matter experts that specialize in specific products and
services. These sales teams and subject matter experts work collaboratively with our sales executives and our telesales
operations to assist with client sales by combining our data, products and data-enabled services to meet the specific needs of
each client. They may be assigned to assist with sales in targeted markets, for certain categories of clients or for particular
service groups.
Our marketing strategy is to build trusted relationships with our clients by delivering value through superior data,
analytics and data-enabled solutions. We use the most efficient methods available to successfully identify, target, educate and
engage potential and existing clients to build awareness, familiarity and interest in our business solutions, demand for our
products and services, and accelerate the velocity and expand the number of sales opportunities. Our marketing activities
include direct marketing, advertising, public relations, events marketing, social media and other targeted activities.
Acquisitions and Divestitures
Historically, we have accelerated our growth into new markets, products and services through acquisitions. We
continually evaluate our business mix and opportunistically seek to optimize our business portfolio through acquisitions and
divestitures. Further, we are party to several joint ventures under which we share control of the management of the operations
with the other partner. Some joint ventures provide products used in connection with loan originations, including title
insurance, appraisal services and other settlement services. Our joint ventures are reflected as investments in affiliates on our
consolidated balance sheets and our share of the income is reflected as equity in earnings of affiliates in our consolidated
statement of operations.
Intellectual Property
We own significant intellectual property rights, including patents, copyrights, trademarks and trade secrets. We
consider our intellectual property to be proprietary and we rely on a combination of statutory (e.g., copyright, trademark, trade
secret and patent) and contractual safeguards in an intellectual property enforcement program to protect our intellectual
property rights.
8
We have 46 issued patents in the U.S. covering business methods, software and systems patents, principally relating to
automated valuation, fraud detection, data gathering, flood detection, MLS technology and property monitoring. We also have
approximately 89 patent applications pending in these and other areas in the U.S. In addition, we have a number of issued
patents and pending patent applications internationally, including in Canada and Australia. We believe the protection of our
proprietary technology is important to our success and we intend to continue to seek to protect those intellectual property assets
for which we have expended substantial research and development capital and which are material to our business.
In addition, we own more than 422 trademarks in the U.S. and foreign countries, including the names of our products
and services and our logos and tag lines, many of which are registered. We believe many of our trademarks, trade names,
service marks and logos are material to our business as they assist our clients in identifying our products and services and the
quality that stands behind them.
We own more than 1,185 registered copyrights in the U.S., covering computer programs, reports and manuals. We also
have other literary works, including marketing materials, handbooks, presentations and website contents that are protected
under common law copyright. We believe our written materials are essential to our business as they provide our clients with
insight into various areas of the financial and real estate markets in which we operate.
Our research and development activities focus primarily on the design and development of our analytical tools,
software applications, and data sets (for example, new sources, data derived by linking across existing sources or metadata). We
expect to continue our practice of investing to develop new software applications and systems in response to the market and
client needs we identify through client input collected in meetings, phone calls and web surveys. We also assess opportunities
to cross-link existing data sets to enhance our products' effectiveness.
In order to maintain control of our intellectual property, we enter into license agreements with our clients, granting
rights to use our products and services, including our software and databases. We also audit our clients from time to time to
ensure compliance with our agreements. This helps to maintain the integrity of our proprietary intellectual property and to
protect the embedded information and technology contained in our solutions. As a general practice, employees, contractors and
other parties with access to our proprietary information sign agreements that prohibit the unauthorized use or disclosure of our
proprietary rights, information and technology.
Information Technology
Technology Transformation Initiative ("TTI"). In July 2012, we embarked on a technology transformation initiative
designed to provide us with new functionality, increased performance and reduced application management and development
costs. The TTI encompasses two phases. The first phase is designed to transform our existing technology infrastructure to run
in a private, dedicated cloud computing environment hosted in Dell's technology center located in Quincy, WA. We have
successfully transitioned all of the data and systems that previously operated in our own Westlake, TX data center and we
expect to complete the migration of the remaining data center, based in Santa Ana, CA, by mid 2015.
The second phase of the TTI, launched in 2014, involves the creation of a next generation technology platform
designed to augment and eventually replace portions of our legacy systems. We laid the foundations with the selection of
Pivotal Labs' ("Pivotal") Platform as a Service ("PaaS") operating system, which will operate in our new private, dedicated
cloud computing environment hosted by Dell. Additionally in 2014, we successfully completed the development of two pilot
products, which are already being on-boarded by clients, using PaaS. In December 2014, we announced the formation of
CoreLogic Innovation Labs in collaboration with Pivotal to develop next generation technology platforms, applications,
analytical models and solutions. CoreLogic Innovation Labs will be co-located with Pivotal in Santa Monica, CA. As a result,
we are well positioned to take full advantage of this next generation platform and development capability in 2015, leveraging
social media, mobility, voice and other capabilities via a delivery portal driven by a common data warehouse.
Technology. Our new private, dedicated cloud computing environment hosted by Dell will enable us to deliver secure
and compliant data, analytics and services to support client needs. A secure and certified network of systems, combined
with enterprise-level service operations, positions us as the leading property insights provider to the financial services
market. Additionally, our platform stores, processes and delivers our data and our proprietary technologies that are the
foundation of our business and the development of our solutions. We operate a computing technology environment intended to
allow us to operate flexible systems at all times and enables us to deliver increased capacity as needed or when client needs
demand increased speed of delivery. Additionally, our unified network architecture allows us to operate multiple systems as a
single resource capable of delivering our applications, data and analytics as a solution to our clients.
9
Data Centers. We currently utilize two data centers - one in Santa Ana, CA and one in Quincy, WA. As of July 2013,
we transitioned full operational management of these data centers to Dell as the first step in our TTI and are in the process of
completing the transition of the Santa Ana, CA data center data and systems to Dell's Quincy, WA facility. The data centers we
use are designed to provide high levels of connectivity and performance to support the day-to-day workflows of the leading
mortgage origination and servicing companies as well as clients in financial services, real estate, transportation, government,
insurance and other industries we serve.
Security. We have deployed a wide range of physical and technology security measures, along with a formal
governance program, designed to secure our information technology infrastructure, personnel and data. Our governance
program is based on extensive corporate information security policies, an information security awareness training program
along with an enterprise compliance program. Both our technology managers and Dell’s technology infrastructure managers are
Information Technology Infrastructure Library certified. Dell is contractually obligated to comply with our information security
policies and procedures. Our digital security framework provides layered protection designed to secure both active and inactive
virtual machines in the data centers we use. This approach enables dedicated virtual machines to regularly scan all of our
systems. These measures help to detect and prevent intrusions, monitor firewall integrity, inspect logs, catch and quarantine
malware and prevent data breaches. Our physical and virtual security solutions run in tandem, enabling us to better identify
suspicious activities and implement preventive measures.
Regulation
Various aspects of our businesses are subject to federal and state regulation. Our failure to comply with any applicable
laws and regulations could result in restrictions on our ability to provide certain services, as well as the possible imposition of
civil fines and criminal penalties. Among the more significant areas of regulation for our business are the following:
Privacy and Protection of Consumer Data
Because our business involves the collection, processing and distribution of personal public and non-public data,
certain of our solutions and services are subject to regulation under federal, state and local laws in the United States and, to a
lesser extent, foreign countries. These laws impose requirements regarding the collection, protection, use and distribution of
some of the data we have, and provide for sanctions and penalties in the event of violations of these requirements.
The Fair Credit Reporting Act ("FCRA") governs the practices of consumer reporting agencies that are engaged in the
business of collecting and analyzing certain types of information about consumers, including credit eligibility information. The
FCRA also governs the submission of information to consumer reporting agencies, the access to and use of information
provided by consumer reporting agencies and the ability of consumers to access and dispute information held about them. A
number of our databases and services are subject to regulation under the FCRA. The Fair and Accurate Credit Transactions Act
of 2003 ("FACT Act") amended the FCRA to add a number of additional requirements. These include requirements concerning
free annual credit reports, consumers' rights to include fraud alerts on their credit files, the development of procedures to
combat identity theft, procedures for the accuracy and integrity of the information reported to consumer reporting agencies,
notices in connection with credit pricing decisions based on credit report information and restrictions on the use of information
shared among affiliates for marketing purposes. Certain of the FACT Act requirements apply to our businesses.
The Gramm-Leach-Bliley Act ("GLBA") regulates the sharing of non-public personal financial information held by
financial institutions and applies indirectly to companies that provide services to financial institutions. In addition to regulating
the information sharing, the GLBA requires that non-public personal financial information be safeguarded using physical,
administrative and technological means. Certain of the non-public personal information we hold is subject to protection under
the GLBA.
The Drivers Privacy Protection Act prohibits the public disclosure, use or resale by any state's department of motor
vehicles of personal information about an individual that was obtained by the department in connection with a motor vehicle
record, except for a “permissible purpose.”
Other federal and state laws also impose requirements relating to the privacy of information held by us. Certain state
laws require consumer reporting agencies to implement “credit file freezes” at an individual's request, which allows those
individuals - particularly victims of identity theft - to place and lift a “freeze” on access to the credit file. A number of states
also have enacted security breach notification legislation, which requires companies to notify affected consumers in the event
of security breaches.
10
The privacy and protection of consumer information remains a developing area and we continue to monitor legislative
and regulatory developments at the federal, state and local level.
Regulation of Credit Reporting Businesses
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act") gave the Consumer
Financial Protection Bureau ("CFPB") supervisory authority over “larger participants” in the market for consumer financial
services, as the CFPB defines by rule. In July 2012, the CFPB finalized its regulation regarding larger participants in the
consumer reporting market. Under the regulation, certain of our credit businesses are considered larger participants. As a result,
the CFPB has the authority to conduct examinations of the covered credit businesses, and we will be examined by the CFPB as
part of this authority.
Regulation of Settlement Services
The Real Estate Settlement Procedures Act ("RESPA") is enforced by the CFPB. RESPA generally prohibits the
payment or receipt of fees or any other item of value for the referral of real estate-related settlement services. RESPA also
prohibits fee shares or splits or unearned fees in connection with the provision of residential real estate settlement services,
such as mortgage brokerage and real estate brokerage. Notwithstanding these prohibitions, RESPA permits payments for goods
furnished or for services actually performed, so long as those payments bear a reasonable relationship to the market value of the
goods or services provided. Our mortgage origination-related businesses that supply credit reports, flood and tax services and
AVM reports to residential mortgage lenders and, as applicable, our joint venture relationships, are structured and operated in a
manner intended to comply with RESPA and related regulations.
Regulation of Property Valuation Activities
Real estate appraisals and AVMs are subject to federal and/or state regulation. The Dodd-Frank Act and implemented
rules and guidance thereunder, and interagency guidance jointly issued by the federal financial institution regulators, have
expanded regulation of these activities. Among the ways these activities are regulated are the following:
(cid:127) Appraisals, AVMs and other forms of home value estimates are now subject to more explicit and detailed quality
control requirements, and creditors will be required to disclose to applicants information about the purpose, and
provide consumers with a free copy, of any appraisal, AVM or other estimate of a home's value developed in
connection with a residential real estate mortgage loan application; and
(cid:127) The increased regulation of AVMs has created opportunities for expanded use of these tools in the residential
mortgage lending industry. (We have introduced new products to pursue these opportunities.)
Regulation and Potential Examination by Consumer Financial Protection Bureau and Federal Financial Institution Regulators
The CFPB now serves as the principal federal regulator of providers of consumer financial products and services. As
such, the CFPB has significant rulemaking authority under existing federal statutes (including the FCRA, the GLBA, and
RESPA), as well as the authority to conduct examinations of certain providers of financial products and services. As discussed
above, under the CFPB's authority to supervise larger market participants of the credit reporting market, the CFPB has the
authority to conduct examinations of us. The CFPB also has the authority to initiate an investigation of our other businesses if it
believes that a federal consumer financial law is being violated. Additionally, in early 2013, the CFPB issued several
regulations that, although not directly applicable to us, potentially could present regulatory risk to us in our role as a service
provider to providers of financial products and services. These regulations include the CFPB's Ability to Repay and Qualified
Mortgage Standards, Mortgage Servicing Rules, Escrow Requirements for Higher-Priced Mortgage Loans, Appraisal
Requirements for Higher-Priced Mortgage Loans, Loan Originator Compensation Requirements, Disclosure and Delivery
Requirements for Copies of Appraisals and Other Written Valuations, and High-Cost Mortgage and Homeownership
Counseling Requirements. The CFPB issued additional regulations in December 2013 that mandate integrated mortgage
disclosures under the Truth in Lending Act and RESPA beginning in August 2015. We are in the process of evaluating the
impact of these regulations on the services we provide and, where necessary, adjusting our products and services to conform to
the new requirements.
TheBank Service Company Act permits the regulators of federal financial institutions to examine vendors, such as us,
that provide outsourced services to their regulated entities. Similarly, the CFPB can conduct examinations of service providers
to institutions under the supervision of the CFPB if that service provider provides a “material service” to the institution. As a
result, most of our businesses could be examined by the CFPB or a federal banking regulator as a service provider to banks and
other financial institutions.
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In addition, settlement agreements entered into between the Office of the Comptroller of the Currency ("OCC") and a
number of our largest clients related to mortgage servicing practices increase the likelihood that providers of certain outsourced
services will be examined by the OCC. This increased level of scrutiny may cause an increase in the cost of compliance for us.
Enhanced regulation in the area of financial as well as personal data privacy is possible and could significantly impact
some of our business practices because this is an area where both the FTC and the CFPB have jurisdiction. It is too early to
assess the financial and operational impact to our business of this heightened regulation.
In addition to the foregoing areas of regulation, several of our other businesses are subject to regulation, including the
following:
(cid:127) Our tenant screening business is subject to certain landlord-tenant laws;
(cid:127) Our loan document business must monitor state laws applicable to our clients relating to loan documents and fee
limitations as well as Fannie Mae and Freddie Mac requirements to develop and maintain compliant loan
documents and other instruments; and
(cid:127) Our activities in foreign jurisdictions are subject to the requirements of the Foreign Corrupt Practices Act and
comparable foreign laws.
We do not believe that compliance with current and future laws and regulations related to our businesses, including
consumer protection laws and regulations, will have a material adverse effect on us, but such activities will likely increase our
compliance costs.
Other Regulations
The Fair Debt Collection Practices Act and similar state laws apply to loss mitigation activities and lien release
statutes affect some document processing we conduct on behalf of servicers. In February 2012, 49 state attorneys general and
the federal government announced a joint state-federal settlement with the country's five largest mortgage servicers known as
the National Mortgage Settlement. As part of the settlement, the affected mortgage servicers agreed to a set of strict servicing
standards that require, among other things, a single point of contact for delinquent consumers, adequate staffing levels and
training, better communication with borrowers, and appropriate standards for executing documents in foreclosure cases, ending
improper fees, and ending dual-track foreclosures for many loans. The CFPB has codified the majority of these standards in its
Mortgage Servicing Rules issued in final form on January 17, 2013. We must comply with these rules, which became effective
on January 10, 2014, when supplying certain services to our servicer clients.
Employees
As of December 31, 2014, we had approximately 4,820 full-time employees, of which approximately 4,243 were
employed in the U.S. and 577 outside the U.S.
Available Information
We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S.
Securities and Exchange Commission ("SEC"). The public may read and copy any materials that we file with the SEC at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC at http://www.sec.gov.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements
and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended (the Exchange Act), are also available free of charge through the "Investors" page on our Internet site at http://
www.corelogic.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other
filings with the SEC.
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Item 1A. Risk Factors.
Risks Related to Our Business
1. We depend on our ability to access data from external sources to maintain and grow our businesses. If we are
unable to access needed data from these sources or if the prices charged for these services increase, the quality,
pricing and availability of our products and services may be adversely affected, which could have a material
adverse impact on our business, financial condition and results of operations.
We rely extensively upon data from a variety of external sources to maintain our proprietary and non-proprietary
databases, including data from third-party suppliers, various government and public record sources and data contributed by our
clients. Our data sources could cease providing or reduce the availability of their data to us, increase the price we pay for their
data, or limit our use of their data for a variety of reasons, including legislatively- or judicially-imposed restrictions on use. If a
number of suppliers are no longer able or are unwilling to provide us with certain data, or if our public record sources of data
become unavailable or too expensive, we may need to find alternative sources. If we are unable to identify and contract with
suitable alternative data suppliers and efficiently and effectively integrate these data sources into our service offerings, we
could experience service disruptions, increased costs and reduced quality of our services. Moreover, some of our suppliers
compete with us in certain product offerings, which may make us vulnerable to unpredictable price increases from them.
Significant price increases could have a material adverse effect on our operating margins and our financial position, in
particular if we are unable to arrange for substitute sources of data on more favorable economic terms. Loss of such access or
the availability of data in the future on commercially reasonable terms or at all may reduce the quality and availability of our
services and products, which could have a material adverse effect on our business, financial condition and results of operations.
2. Our clients and we are subject to various governmental regulations, and a failure to comply with government
regulations or changes in these regulations could result in penalties, restrict or limit our or our clients' operations
or make it more burdensome to conduct such operations, any of which could have a material adverse effect on our
revenues, earnings and cash flows.
Many of our and our clients' businesses are subject to various federal, state, local and foreign laws and regulations.
Our failure to comply with applicable laws and regulations could restrict our ability to provide certain services or result in the
imposition of civil fines and criminal penalties, substantial regulatory and compliance costs, litigation expense, adverse
publicity and loss of revenue.
In addition, our businesses are subject to an increasing degree of compliance oversight by regulators and by our
clients. Specifically, the CFPB has authority to write rules affecting the business of credit reporting agencies and also to
supervise, conduct examinations of, and enforce compliance as to federal consumer financial protection laws and regulations
with respect to certain “non-depository covered persons” determined by the CFPB to be “larger participants” that offer
consumer financial products and services. Two of our credit businesses - CoreLogic Credco and Teletrack - are subject to the
CFPB non-bank supervision program. The CFPB and the prudential financial institution regulators such as the OCC also have
the authority to examine us in our role as a service provider to large financial institutions, although it is yet unclear how broadly
they will apply this authority going forward. In addition, several of our largest bank clients are subject to consent orders with
the OCC and/or are parties to the National Mortgage Settlement, both of which require them to exercise greater oversight and
perform more rigorous audits of their key vendors such as us.
These laws and regulations (as well as laws and regulations in the various states or in other countries) could limit our
ability to pursue business opportunities we might otherwise consider engaging in, impose additional costs or restrictions on us,
result in significant loss of revenue, impact the value of assets we hold, or otherwise significantly adversely affect our business.
In addition, this increased level of scrutiny may increase our compliance costs.
Our operations could be negatively affected by changes to laws and regulations and enhanced regulatory oversight of
our clients and us. These changes may compel us to increase our prices in certain situations or decrease our prices in other
situations, may restrict our ability to implement price increases, and may limit the manner in which we conduct our business or
otherwise may have a negative impact on our ability to generate revenues, earnings and cash flows. If we are unable to adapt
our products and services to conform to the new laws and regulations, or if these laws and regulations have a negative impact
on our clients, we may experience client losses or increased operating costs, and our business and results of operations could be
negatively affected.
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3. Regulatory developments with respect to use of consumer data and public records could have a material adverse
effect on our business, financial condition and results of operations.
Because our databases include certain public and non-public personal information concerning consumers, we are
subject to government regulation and potential adverse publicity concerning our use of consumer data. We acquire, store, use
and provide many types of consumer data and related services that are subject to regulation under the FCRA, the GLBA, and
the Driver's Privacy Protection Act and, to a lesser extent, various other federal, state, and local laws and regulations. These
laws and regulations are designed to protect the privacy of consumers and to prevent the unauthorized access and misuse of
personal information in the marketplace. Our failure to comply with these laws, or any future laws or regulations of a similar
nature, could result in substantial regulatory penalties, litigation expense and loss of revenue.
In addition, some of our data suppliers face similar regulatory requirements and, consequently, they may cease to be
able to provide data to us or may substantially increase the fees they charge us for this data which may make it financially
burdensome or impossible for us to acquire data that is necessary to offer our products and services. Further, many consumer
advocates, privacy advocates and government regulators believe that existing laws and regulations do not adequately protect
privacy or ensure the accuracy of consumer-related data. As a result, they are seeking further restrictions on the dissemination
or commercial use of personal information to the public and private sectors as well as contemplating requirements relative to
data accuracy and the ability of consumers to opt to have their personal data removed from databases such as ours. Any future
laws, regulations or other restrictions limiting the dissemination or use of personal information may reduce the quality and
availability of our products and services, which could have a material adverse effect on our business, financial condition and
results of operations.
4.
If we are unable to protect our information systems against data corruption, cyber-based attacks or network
security breaches, or if we are unable to provide adequate security in the electronic transmission of sensitive data,
it could have a material adverse effect on our business, financial condition and results of operations.
We are highly dependent on information technology networks and systems, including the Internet, to securely process,
transmit and store electronic information. In particular, we depend on our information technology infrastructure for business-to-
business and business-to-consumer electronic commerce. Security breaches of this infrastructure, including physical or
electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or
unauthorized disclosure of confidential information, including non-public personal information and consumer data.
Unauthorized access, including through use of fraudulent schemes such as "phishing" schemes, could jeopardize the security of
information stored in our systems. In addition, malware or viruses could jeopardize the security of information stored or used in
a user's computer. If we are unable to prevent such security or privacy breaches, our operations could be disrupted, or we may
suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated information, including
sensitive consumer data.
Likewise, our clients are increasingly imposing more stringent contractual obligations on us relating to our
information security protections. If we are unable to maintain protections and processes at a level commensurate with that
required by our large clients, it could negatively affect our relationships with those clients or increase our operating costs,
which could harm our business or reputation.
5. Systems interruptions may impair the delivery of our products and services, causing potential client and revenue
loss.
System interruptions may impair the delivery of our products and services, resulting in a loss of clients and a
corresponding loss in revenue. In August 2012, as part of our TTI, we entered into an agreement to outsource our technology
infrastructure management services, including the hosting of our data centers, to Dell. Although the TTI has begun to provide
new functionality, increased performance and a reduction in application management and development costs, the project is
complex and longer-term in nature and we cannot be sure that we will ultimately be successful in achieving our technology and
cost-savings objectives on the timeframe we set forth, or at all. In addition, we depend heavily upon the computer systems and
our existing technology infrastructure located in our remaining Santa Ana, CA data center, which we expect will be moved
under the Dell arrangement to Dell's Quincy, WA data center by the end of the second quarter of 2015. Certain systems
interruptions or events beyond our control could interrupt or terminate the delivery of our products and services to our clients.
These interruptions also may interfere with our suppliers' ability to provide necessary data to us and our employees' ability to
attend to work and perform their responsibilities. Any of these possible outcomes could result in a loss of clients or a loss in
revenue, which could have an adverse effect on our business or operations.
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6. Because our revenue from clients in the mortgage, consumer lending and real estate industries is affected by the
strength of the economy and the housing market generally, including the volume of real estate transactions, a
negative change in any of these conditions could materially adversely affect our business and results of
operations.
A significant portion of our revenue is generated from solutions we provide to the mortgage, consumer lending and
real estate industries and, as a result, a weak economy or housing market may adversely affect our business. The volume of
mortgage origination and residential real estate transactions is highly variable. Reductions in these transaction volumes could
have a direct impact on certain portions of our revenues and may materially adversely affect our business, financial condition
and results of operations. Moreover, negative economic conditions could affect the performance and financial condition of
some of our clients in many of our businesses, which may lead to negative impacts on our revenue, earnings and liquidity in
particular if these clients go bankrupt or otherwise exit certain businesses.
7. We do not solely control the operations and dividend policies of our partially-owned affiliates, including our joint
ventures. A decrease in earnings of or dividends from these joint ventures could have a negative impact on our
earnings and cash flow.
In our joint ventures with some of our largest clients, we share control of the management of the operations of the joint
venture with the other partner. As a result, we cannot solely dictate the ventures' business strategy, operations or dividend
policies without the cooperation of the respective partners. These joint ventures are impacted by many of the same regulatory
and economic factors that affect our business. A decrease in earnings and dividends derived from these joint ventures could
have a negative impact on our earnings and cash flow. In addition, our joint venture partners could decide to exit the joint
venture or otherwise terminate the operations at their discretion, which could have a material adverse effect on our business and
results of operations.
8. We rely on our top ten clients for a significant portion of our revenue and profit, which makes us susceptible to the
same macro-economic and regulatory factors that our clients face. If these clients are negatively impacted by
current economic or regulatory conditions or otherwise experience financial hardship or stress, or if the terms of
our relationships with these clients change, our business, financial condition and results of operations could be
adversely affected.
Our ten largest clients generated 29.8% of our operating revenues for the year ended December 31, 2014. These clients
face continued pressure in the current economic and regulatory climate. Many of our relationships with these clients are long-
standing and are important to our future operating results, but there is no guarantee that we will be able to retain or renew
existing agreements or maintain our relationships on acceptable terms or at all. Deterioration in or termination of any of these
relationships, including through mergers or consolidations among our clients, could significantly reduce our revenue and could
adversely affect our business, financial condition and results of operations. In addition, certain of our businesses have higher
client concentration than our company as a whole. As a result, these businesses may be disproportionately affected by declining
revenue from, or loss of, a significant client.
9. We rely upon proprietary technology and information rights, and if we are unable to protect our rights, our
business, financial condition and results of operations could be harmed.
Our success depends, in part, upon our intellectual property rights. We rely primarily on a combination of patents,
copyrights, trade secrets, and trademark laws and nondisclosure and other contractual restrictions on copying, distribution and
creation of derivative products to protect our proprietary technology and information. This protection is limited, and our
intellectual property could be used by others without our consent. In addition, patents may not be issued with respect to our
pending or future patent applications, and our patents may not be upheld as valid or may not prevent the development of
competitive products. Any infringement, disclosure, loss, invalidity of, or failure to protect our intellectual property could
negatively impact our competitive position, and ultimately, our business. Moreover, litigation may be necessary to enforce or
protect our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary
rights of others. Such litigation could be time-consuming, result in substantial costs and diversion of resources and could harm
our business, financial condition, results of operations and cash flows.
10. If our products or services are found to infringe on the proprietary rights of others, we may be required to change
our business practices and may also become subject to significant costs and monetary penalties.
As we continue to develop and expand our products and services, we may become increasingly subject to infringement
claims from third parties such as non-practicing entities, software providers or suppliers of data. Likewise, if we are unable to
15
maintain adequate controls over how third-party software and data are used we may be subject to claims of infringement. Any
claims, whether with or without merit, could:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
be expensive and time-consuming to defend;
cause us to cease making, licensing or using applications that incorporate the challenged intellectual property;
require us to redesign our applications, if feasible;
divert management's attention and resources; and
require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies.
11. The acquisition and integration of businesses by us may involve increased expenses, and may not produce the
desired financial or operating results contemplated at the time of the transaction. In addition, we may not be able
to successfully consummate proposed divestitures.
We have acquired and expect to continue to acquire, on an opportunistic basis, companies, businesses, products and
services. These activities may increase our expenses, and the expected benefits, synergies and growth from these initiatives
may not materialize as planned. In addition, we may have difficulty integrating our completed or any future acquisitions into
our operations, including implementing at the acquired companies controls, procedures and policies in line with our controls,
procedures and policies. If we fail to properly integrate acquired businesses, products, technologies and personnel, it could
impair relationships with employees, clients and strategic partners, distract management attention from our core businesses,
result in control failures and otherwise disrupt our ongoing business and harm our results of operations. We also may not be
able to retain key management and other critical employees after an acquisition. In addition, although part of our business
strategy may include growth through strategic acquisitions, we may not be able to identify suitable acquisition candidates,
obtain the capital necessary to pursue acquisitions or complete acquisitions on satisfactory terms.
In addition, our profitability may be impacted by gains or losses on any sales of businesses, or lost operating income
or cash flows from such businesses. We also may be required to record asset impairment or restructuring charges related to
divested businesses, or indemnify buyers for liabilities, which may reduce our profitability and cash flows. We may also not be
able to negotiate such divestitures on terms acceptable to us. If we are not successful in divesting such businesses, our business
could be harmed.
12. Our reliance on outsourcing arrangements subjects us to risk and may disrupt or adversely affect our operations.
In addition, we may not realize the full benefit of our outsourcing arrangements, which may result in increased
costs, or may adversely affect our service levels for our clients.
Over the last few years, we have outsourced various business process and information technology services to third
parties, including the outsourcing arrangements we entered into with a subsidiary of Cognizant Technology Solutions and the
technology infrastructure management services agreement we entered into with Dell. Although we have service-level
arrangements with our providers, we do not ultimately control their performance, which may make our operations vulnerable to
their performance failures. In addition, the failure to adequately monitor and regulate the performance of our third-party
vendors could subject us to additional risk. Reliance on third parties also makes us vulnerable to changes in the vendors'
business, financial condition and other matters outside of our control, including their violations of laws or regulations which
could increase our exposure to liability or otherwise increase the costs associated with the operation of our business. The failure
of our outsourcing partners to perform as expected or as contractually required could result in significant disruptions and costs
to our operations and to the services we provide to our clients, which could materially and adversely affect our business, client
relationships, financial condition, operating results and cash flow.
13. Our international outsourcing service providers and our own international operations subject us to additional
risks, which could have an adverse effect on our results of operations. Dependence on these operations, in
particular our outsourcing arrangements, may impair our ability to operate effectively.
Over the last few years, we have reduced our costs by utilizing lower-cost labor outside the U.S. in countries such as
India and the Philippines through outsourcing arrangements. These countries are subject to higher degrees of political and
social instability than the U.S. and may lack the infrastructure to withstand political unrest or natural disasters. Such disruptions
can impact our ability to deliver our products and services on a timely basis, if at all, and to a lesser extent can decrease
efficiency and increase our costs. Weakness of the U.S. dollar in relation to the currencies used and higher inflation rates
experienced in these countries may also reduce the savings we planned to achieve. Furthermore, the practice of utilizing labor
based in foreign countries has come under increased scrutiny in the United States and, as a result, many of our clients may
16
require us to use labor based in the U.S. We may not be able to pass on the increased costs of higher-priced U.S.-based labor to
our clients, which ultimately could have an adverse effect on our results of operations.
In addition, the foreign countries in which we have outsourcing arrangements or operate could adopt new legislation
or regulations that would adversely affect our business by making it difficult, more costly or impossible for us to continue our
foreign activities as currently being conducted. In addition, in many foreign countries, particularly in those with developing
economies, it is common to engage in business practices that are prohibited by laws and regulations applicable to us, such as
the Foreign Corrupt Practices Act ("FCPA"). Any violations of FCPA or local anti-corruption laws by us, our subsidiaries or our
local agents, could have an adverse effect on our business and reputation and result in substantial financial penalties or other
sanctions.
14. Our level of indebtedness could adversely affect our financial condition and prevent us from complying with our
covenants and obligations under our outstanding debt instruments. In addition, the instruments governing our
indebtedness subject us to various restrictions that could limit our operating flexibility.
As of December 31, 2014, our total debt was approximately $1.3 billion, and we have unused commitments of
approximately $465.0 million under our credit facilities.
Subject to the limitations contained in the credit agreement governing our credit facilities, the indenture governing the
7.25% senior notes and our other debt instruments, we may incur substantial additional debt from time to time to finance
working capital, capital expenditures, investments or acquisitions, or for other general corporate purposes. If we do so, the risks
related to our level of debt could intensify.
The indenture governing the notes and the credit agreement governing our credit facilities each impose operating and
financial restrictions on our activities. These restrictions include the financial covenants in our credit facilities which require
on-going compliance with certain financial tests and ratios, including a minimum interest coverage ratio and maximum
leverage ratio. The operating and financial restrictions in the indenture or the credit agreement could limit or prohibit our ability
to, among other things:
create, incur or assume additional debt;
create, incur or assume certain liens;
redeem and/or prepay certain subordinated debt we might issue in the future;
pay dividends on our stock or repurchase stock;
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127) make certain investments and acquisitions, including joint ventures;
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us;
enter into new lines of business;
engage in consolidations, mergers and acquisitions;
engage in specified sales of assets; and
enter into transactions with affiliates.
These restrictions on our ability to operate our business could impact our business by, among other things, limiting our
ability to take advantage of financing, merger and acquisition or other corporate opportunities that might otherwise be
beneficial to us. Our failure to comply with these restrictions could result in an event of default which, if not cured or waived,
could result in the acceleration of substantially all our debt.
15. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other
actions to satisfy our obligations under our outstanding debt instruments, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and
operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business,
legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating
activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. Our inability to generate
sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at
all, would materially and adversely affect our financial position and results of operations. If we cannot make scheduled
payments on our debt, we will be in default and holders of the notes or the lenders under our credit facilities could declare all
outstanding principal and interest to be due and payable, and the lenders under our credit facilities could terminate their
revolving commitments to loan money and foreclose against the assets securing their borrowings, and we could be forced into
bankruptcy or liquidation.
17
16. We operate in a competitive business environment, and if we are unable to compete effectively our results of
operations and financial condition may be adversely affected.
The markets for our products and services are intensely competitive. Our competitors vary in size and in the scope and
breadth of the services they offer. We compete for existing and new clients against both third parties and the in-house
capabilities of our clients. Many of our competitors have substantial resources. Some have widely-used technology platforms
that they seek to use as a competitive advantage to drive sales of other products and services. In addition, we expect that the
markets in which we compete will continue to attract new competitors and new technologies. These competitors and new
technologies may be disruptive to our existing technology or service offerings, resulting in operating inefficiencies and
increased competitive pressure. We cannot assure you that we will be able to compete successfully against current or future
competitors. Any competitive pressures we face in the markets in which we operate could materially adversely affect our
business, financial condition and results of operations.
17. We may not be able to attract and retain qualified management or develop current management to assist in or
lead company growth, which could have an adverse effect on our ability to maintain or expand our product and
service offerings.
We rely on skilled management and our success depends on our ability to attract, train and retain a sufficient number
of such individuals. If our attrition rate increases, our operating efficiency and productivity may decrease. We compete for
talented individuals not only with other companies in our industry but also with companies in other industries, such as software
services, engineering services and financial services companies, and there is a limited pool of individuals who have the skills
and training needed to grow our company, especially in the increasingly-regulated environment in which we operate. Increased
attrition or competition for qualified management could have an adverse effect on our ability to expand our business and
product offerings, as well as cause us to incur greater personnel expenses and training costs.
18. We have substantial investments in recorded goodwill as a result of prior acquisitions and an impairment of these
investments would require a write-down that would reduce our net income.
Goodwill is assessed for impairment annually or sooner if circumstances indicate a possible impairment. Factors that
could lead to impairment of goodwill include significant under-performance relative to historical or projected future operating
results, a significant decline in our stock price and market capitalization and negative industry or economic trends. In the event
that the book value of goodwill is impaired, any such impairment would be charged to earnings in the period of impairment. In
the event of significant volatility in the capital markets or a worsening of current economic conditions, we may be required to
record an impairment charge, which would negatively impact our results of operations. Possible future impairment of goodwill
may have a material adverse effect on our business, financial condition and results of operations.
19. We may not be able to effectively achieve our growth strategies, which could adversely affect our financial
condition or results of operations.
Our growth strategies, including revenue growth and margin expansion, depend in part on maintaining our competitive
advantage with current solutions in new and existing markets, as well as our ability to develop new technologies and solutions
to serve such markets. There can be no assurance that we will be able to compete successfully in new markets or continue to
compete effectively in our existing markets. In addition, development of new technologies and solutions may require
significant investment by us. If we fail to introduce new technologies or solutions effectively or on a cost-effective or timely
basis, or if we are not successful in introducing or obtaining regulatory or market acceptance for new solutions, we may lose
market share and our results of operations or cash flows could be adversely affected.
20. We share responsibility with First American Financial Corporation ("FAFC") for certain income tax liabilities for
tax periods prior to and including the date of the Separation.
Under the Tax Sharing Agreement we entered into in connection with the Separation transaction, we are generally
responsible for taxes attributable to our business, assets and liabilities and FAFC is generally responsible for all taxes
attributable to members of the FAFC group of companies and the assets, liabilities or businesses of the FAFC group of
companies. Generally, any liabilities arising from tax adjustments to consolidated tax returns for tax periods prior to and
including date of Separation will be shared in proportion to each company's percentage of the tax liability for the relevant year
(or partial year with respect to 2010), unless the adjustment is attributable to either party, in which case the adjustment will
generally be for the account of such party. In addition to this potential liability associated with adjustments for prior periods, if
FAFC were to fail to pay any tax liability it is required to pay under the Tax Sharing Agreement, we could be legally liable
18
under applicable tax law for such tax liabilities and required to make additional tax payments. Accordingly, under certain
circumstances, we may be obligated to pay amounts in excess of our agreed-upon share of tax liabilities.
21. If certain transactions, including internal transactions, undertaken in anticipation of the Separation are
determined to be taxable for U.S. federal income tax purposes, we, our stockholders that are subject to U.S.
federal income tax and FAFC will incur significant U.S. federal income tax liabilities.
In connection with the Separation we received a private letter ruling from the Internal Revenue Service ("IRS") to the
effect that, among other things, certain internal transactions undertaken in anticipation of the Separation will qualify for
favorable treatment under the Internal Revenue Code, and the contribution by us of certain assets of the financial services
businesses to FAFC and the pro-rata distribution to our shareholders of the common stock of FAFC will, except for cash
received in lieu of fractional shares, qualify as a tax-free transaction for U.S. federal income tax purposes under Sections 355
and 368(a)(1)(D) of the Internal Revenue Code. In addition, we received opinions of tax counsel to similar effect. The ruling
and opinions relied on certain facts, assumptions, representations and undertakings from us and FAFC regarding the past and
future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations or
undertakings is incorrect or not otherwise satisfied, we and our stockholders may not be able to rely on the ruling or the
opinions of tax counsel and could be subject to significant tax liabilities. Notwithstanding the private letter ruling and opinions
of tax counsel, the IRS could determine on audit that the Separation is taxable if it determines that any of these facts,
assumptions, representations or undertakings were not correct or have been violated or if it disagrees with the conclusions in
the opinions that were not covered by the private letter ruling, or for other reasons, including as a result of certain significant
changes in the stock ownership of us or FAFC after the Separation. If the Separation is determined to be taxable for U.S.
federal and state income tax purposes, we and our stockholders that are subject to income tax could incur significant income tax
liabilities.
In addition, under the terms of the Tax Sharing Agreement, in the event a transaction were determined to be taxable
and such determination were the result of actions taken after the Separation by us or FAFC, the party responsible for such
failure would be responsible for all taxes imposed on us or FAFC as a result thereof.
Moreover, the Tax Sharing Agreement generally provides that each party thereto is responsible for any taxes imposed
on the other party as a result of the failure of the distribution to qualify as a tax-free transaction under the Code if such failure is
attributable to post-Separation actions taken by or in respect of the responsible party or its stockholders, regardless of when the
actions occur after the Separation, and the other party consents to such actions or such party obtains a favorable letter ruling or
opinion of tax counsel as described above.
22. In connection with the Separation, we entered into a number of agreements with FAFC setting forth rights and
obligations of the parties post-Separation. In addition, certain provisions of these agreements provide protection
to FAFC in the event of a change of control of us, which could reduce the likelihood of a potential change of
control that our stockholders may consider favorable.
In connection with the Separation, we and FAFC entered into a number of agreements that set forth certain rights and
obligations of the parties post-Separation, including the Separation and Distribution Agreement, the Tax Sharing Agreement,
the Restrictive Covenants Agreement, certain transition services agreements and leases for our data center and former
headquarters facilities in Santa Ana, CA. We possess certain rights under those agreements, including without limitation
indemnity rights from certain liabilities allocated to FAFC. The failure of FAFC to perform its obligations under the agreements
could have an adverse effect on our financial condition, results of operations and cash flows.
In addition, the Separation and Distribution Agreement gives FAFC the right to purchase the equity or assets of our
entity or entities directly or indirectly owning the real property databases that we currently own upon the occurrence of certain
triggering events. The triggering events include the direct or indirect purchase of the databases by a title insurance underwriter
(or its affiliate) or an entity licensed as a title insurance underwriter, including a transaction where a title insurance underwriter
(or its affiliate) acquires 25% or more of us. Such a triggering event also triggers the ability of FAFC to terminate our Santa
Ana, CA data center upon 30 days' notice. The purchase right expires June 1, 2020. Until the expiration of the purchase right,
this provision could have the effect of limiting or discouraging an acquisition of us or preventing a change of control that our
stockholders might consider favorable. Likewise, if a triggering event occurs, the loss of ownership of our real property
database could have a material adverse effect on our financial condition, business and results of operations.
19
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2014, our real estate portfolio of 1.7 million square feet is comprised of leased property
throughout 25 states in the U.S. at approximately 1.6 million square feet and 100,000 square feet in the aggregate in Australia,
Canada, India, France, Mexico, New Zealand and the United Kingdom. Our properties range in size from a single property
under 1,000 square feet to our large, multiple-building complex in Westlake, TX totaling 600,000 square feet. The Westlake
property lease expires in March 2017. Our corporate headquarters are located in Irvine, CA, where we occupy 170,000 square
feet pursuant to a lease that expires in July 2021.
All properties are primarily used as offices and have multiple expiration dates. The office facilities we occupy are, in
all material respects, in good condition and adequate for their intended use.
Item 3. Legal Proceedings
For a description of our legal proceedings, see Note 15 - Litigation and Regulatory Contingencies of the Notes to
Consolidated Financial Statements included in Item 8 - Financial Statements and Supplementary Data of this Annual Report on
Form 10-K, which is incorporated by reference in response to this item.
Item 4. Mine Safety Disclosures.
Not applicable.
20
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock Market Prices and Dividends
Our common stock is listed on the New York Stock Exchange and trades under the symbol "CLGX". The approximate
number of record holders of our common stock on February 20, 2015 was 2,817. High and low stock prices for the last two
years were as follows:
Quarter ended March 31,
Quarter ended June 30,
Quarter ended September 30,
Quarter ended December 31,
2014
2013
High
Low
High
Low
$
$
$
$
35.96 $
31.03 $
31.04 $
33.71 $
29.12
26.58
26.47
25.54
$
$
$
$
29.00 $
28.68 $
29.05 $
36.19 $
24.48
21.40
23.69
26.10
We did not declare dividends for the years ended December 31, 2014 and 2013 and have not declared dividends since
we changed our name to CoreLogic on June 1, 2010 and began trading on the New York Stock Exchange under the symbol
“CLGX.” We do not expect to pay regular quarterly cash dividends, and any future dividends will be dependent on future
earnings, financial condition, compliance with agreements governing our outstanding debt and capital requirements. In
addition, the amount of dividends we could pay may be limited by the restricted payments covenant in the indenture governing
our 7.25% senior notes, as amended, and by the terms of our credit agreement.
Unregistered Sales of Equity Securities
During the quarter ended December 31, 2014, we did not issue any unregistered shares of our common stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table describes purchases by us of shares of our common stock which settled during each period set
forth in the table below. In December 2013, the Board of Directors canceled all prior repurchase authorizations and established
a new share repurchase authorization of up to $350.0 million. As of December 31, 2014, we have $215.3 million in value of
shares that may yet be purchased under the plans or programs. The stock repurchase plan has no expiration date. Repurchases
under our stock repurchase plan may be made in the open market or in privately negotiated transactions and may be made
under a Rule 10b5-1 plan.
Under our credit agreement, our stock repurchase capacity is restricted to $150.0 million per fiscal year, with the
ability to undertake an additional amount of repurchases in such fiscal year provided that, on a pro forma basis after giving
effect to the stock repurchase, our total leverage ratio does not exceed 3.50:1.0. In addition, our stock repurchase capacity is
limited by the restricted payments covenant in the indenture governing our 7.25% senior notes, as amended. While we continue
to preserve the capacity to execute share repurchases under our existing share repurchase authorization, going forward we will
consider the repurchase of shares of our common stock and retirement of outstanding debt on an opportunistic basis.
21
Issuer Purchases of Equity Securities
Period
October 1 to October 31, 2014
November 1 to November 30, 2014
December 1 to December 31, 2014
Total
(1) Calculated inclusive of commissions.
Stock Performance Graph
Total Number
of Shares
Purchased
Average Price
Paid per Share(1)
—
32.09
32.08
32.09
— $
$
$
$
468,101
114,500
582,601
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
— $
$
$
468,101
114,500
582,601
234,003,212
218,981,851
215,308,691
The following performance graph and related information shall not be deemed “soliciting material” or “filed” with
the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, or the
Securities Exchange Act of 1934, each as amended, except to the extent that it is specifically incorporated by reference into
such filing.
The following graph compares the yearly percentage change in the cumulative total stockholder return on our common
stock with corresponding changes in the cumulative total returns of the Standard & Poor's Midcap 400 Index, the Standard &
Poor's 500 Index, the Standard & Poor's Midcap 400 Data Processing Outsourced Services Index and our Peer Group index.
The comparison assumes an investment of $100 at the close of business on December 31, 2009 and reinvestment of dividends.
This historical performance is not indicative of future performance.
On June 1, 2010, we completed the Separation in which we spun off the financial services businesses into a new,
publicly-traded, New York Stock Exchange-listed company called FAFC through a distribution (the “Distribution”) of all of the
outstanding shares of FAFC to the holders of our common shares, par value $1.00 per share, as of May 26, 2010. For purposes
of calculating the cumulative total return on our stock, it is assumed that each share of FAFC received in the Distribution on
June 1, 2010 was immediately sold for its market value and the proceeds reinvested in additional shares of our common stock.
The value of our common stock in periods subsequent to the Distribution therefore includes the value of the distributed shares
but not the separate performance of those securities since June 1, 2010.
22
The Peer Group, which was also used by the Board's Compensation Committee for 2014 compensation decisions,
consisted of: Acxiom Corporation, Alliance Data Systems Corporation, Broadridge Financial Solutions, Inc., CIBER Inc., CSG
Systems International Inc., DST Systems, Inc., The Dun & Bradstreet Corporation, Equifax, Inc., Fair Isaac Corporation,
Fidelity National Information Services, Inc., Fiserv, Inc., Gartner, Inc., IHS Inc., Jack Henry & Associates, Inc., Sapient Corp.,
Syntel, Inc., and Verisk Analytics, Inc. This peer group is the same as that used in 2013, except that Lender Processing Services
has been removed due to its acquisition by Fidelity National Financial, Inc.
23
Item 6. Selected Financial Data
The selected consolidated financial data for the Company for the five-year period ended December 31, 2014 has been
derived from the consolidated financial statements. The selected consolidated financial data should be read in conjunction with
the consolidated financial statements and notes thereto, “Item 1—Business—Corporate Events—Acquisitions” and “Item 7—
Management’s Discussion and Analysis of Financial Condition and Consolidated Results of Operations.” The consolidated
statements of operations data for the years ended December 31, 2011 and 2010 and the consolidated balance sheet data as of
December 31, 2012, 2011, and 2010 have been derived from financial statements not included herein.
Before June 1, 2010, we operated as The First American Corporation. On June 1, 2010, we completed the Separation
in which we spun-off the financial services businesses into a new, publicly-traded, New York Stock Exchange-listed company
called FAFC. In December 2010, we sold our employer and litigation services businesses. In September 2011, we closed our
marketing services business. In August 2012, we completed the disposition of American Driving Records ("ADR") within our
transportation services business. In September 2012, we completed the wind down of our consumer services business and our
wholly-owned appraisal management company business. In September 2014, we completed the sale of our collateral solutions
and field services businesses. Therefore, these results of operations are all reflected as discontinued operations. See Note 18 –
Discontinued Operations of the Notes to Consolidated Financial Statements included in Item 8. Financial Statements and
Supplementary Data of Part II of this report for additional disclosures.
24
(in thousands, except per share amounts)
Income Statement Data:
2014
For the Year Ended December 31,
2012
2011
2013
2010
$1,405,040
$1,404,401
$1,333,479
$ 1,100,086
$1,025,868
Operating revenue
Operating income
Equity in earnings of affiliates, net of tax
Amounts attributable to CoreLogic:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net
of tax
Net income/(loss)
Balance Sheet Data:
Assets of discontinued operations
Total assets
$
$
$
$
$ 169,758
$ 142,142
$ 170,402
14,120
$
27,361
89,741
(16,653)
$ 100,313
14,423
112
73,200
(7,008)
$ 107,728
$
$
35,983
96,065
12,387
3,841
$
$
$
46,576
30,270
26,637
(101,246)
$
$
$
68,595
41,641
18,847
(18,985)
$ 112,293
$
—
(56,161)
(74,609) $ (56,299)
4,267
$
38,926
$
50,187
$ 106,575
$ 321,899
$3,516,362
$3,003,131
$3,027,497
$ 3,115,822
$3,240,021
Long-term debt, excluding discontinued operations
$1,330,563
$ 839,930
$ 792,426
$ 908,287
$ 720,875
Total equity
Dividends on common shares
Amounts attributable to CoreLogic:
Basic income/(loss) per share:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net
of tax
Net income/(loss)
Diluted income/(loss) per share:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net
of tax
Net income/(loss)
Weighted average shares outstanding
$1,014,167
$1,044,373
$1,170,945
$ 1,244,820
$1,545,141
$
$
$
$
$
— $
— $
— $
— $
22,657
0.99
(0.18)
—
0.81
0.97
(0.18)
—
0.79
$
$
$
$
1.05
0.15
(0.07)
1.13
1.03
0.15
(0.07)
1.11
$
$
$
$
0.93
0.12
0.04
1.09
0.92
0.12
0.04
1.08
$
$
$
$
$
0.24
(0.93)
—
(0.69) $
$
0.24
(0.92)
—
(0.68) $
0.17
(0.17)
(0.50)
(0.50)
0.17
(0.17)
(0.50)
(0.50)
Basic
Diluted
90,825
92,429
95,088
97,109
102,913
104,050
109,122
109,712
111,529
112,363
25
Item 7. Management’s Discussion and Analysis of Financial Condition and Consolidated Results of Operations
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and certain information incorporated herein by reference contain forward-looking
statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included
or incorporated by reference in this Annual Report, other than statements that are purely historical, are forward-looking
statements. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “should,” “would,”
“could,” “may,” and similar expressions also identify forward-looking statements. The forward-looking statements include,
without limitation, statements regarding our future operations, financial condition and prospects,operating results, revenues
and earnings liquidity, our estimated income tax rate, unrecognized tax positions, amortization expenses, impact of recent
accounting pronouncements, our TTI program, our acquisition and divestiture strategy and our growth plans, expectations
regarding our recent acquisitions, share repurchases, the level of aggregate U.S. mortgage originations and inventory of
delinquent mortgage loans and loans in foreclosure and the reasonableness of the carrying value related to specific financial
assets and liabilities.
Our expectations, beliefs, objectives, intentions and strategies regarding future results are not guarantees of future
performance and are subject to risks and uncertainties that could cause actual results to differ materially from results
contemplated by our forward-looking statements. These risks and uncertainties include, but are not limited to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
limitations on access to or increase in prices for data from external sources, including government and public
record sources;
changes in applicable government legislation, regulations and the level of regulatory scrutiny affecting our
clients or us, including with respect to consumer financial services and the use of public records and
consumer data;
compromises in the security of our data, including cyber-based attacks, the transmission of confidential
information or systems interruptions;
the inability to control the dividend policies of our partially-owned affiliates;
difficult conditions in the mortgage and consumer lending industries and the economy generally;
our ability to protect proprietary technology rights;
our ability to realize the anticipated benefits of certain acquisitions and/or divestitures and the timing thereof;
risks related to the outsourcing of services and international operations;
our growth strategies and our ability to effectively and efficiently implement them;
the level of our indebtedness, our ability to service our indebtedness and the restrictions in our various debt
agreements;
intense competition in the market against third parties and the in-house capabilities of our customers;
our ability to attract and retain qualified management;
impairments in our goodwill or other intangible assets; and
the remaining tax sharing arrangements and other obligations associated with the spin off of FAFC.
We urge you to carefully consider these risks and uncertainties and review the additional disclosures we make
concerning risks and uncertainties that may materially affect the outcome of our forward-looking statements and our future
business and operating results, including those made in Item 1A, “Risk Factors” in this 10-K, as such risk factors may be
amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange
Commission. We assume no obligation to update any forward-looking statements, whether as a result of new information,
future events, or otherwise. You are cautioned not to place undue reliance on forward-looking statements, which speak only as
of the date of the filing of this Annual Report on Form 10-K.
Business Overview
We are a leading global property information, analytics and data-enabled services provider operating in North
America, Western Europe and Asia Pacific. Our combined data from public, contributory and proprietary sources provides
detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related
performance information. We have more than one million users who rely on our data and predictive decision analytics to reduce
risk, enhance transparency and improve the performance of their businesses.
We offer our clients among the most comprehensive national databases of public, contributory and proprietary data
covering real property and mortgage information, judgments and liens, building and replacement costs, parcel and geospatial
data, criminal background records, eviction information, non-prime lending records, credit information, and tax information,
26
among other data types. Our databases include over 880 million historical property transactions, over 93 million mortgage
applications and property-specific data covering approximately 99% of U.S. residential properties exceeding 148 million
records. We believe the quality of the data we offer is distinguished by our broad range of data sources and our expertise in
aggregating, organizing, normalizing, processing and delivering data to our clients.
With our data as a foundation, we have built strong analytics capabilities and a variety of value-added business
services to meet our clients’ needs for mortgage and automotive credit reporting, property tax, property valuation, tenancy,
hazard risk, property risk and replacement cost, flood plain location determination and other geospatial data and related
services.
Overview of Business Environment and Company Developments
Business Environment
The volumes of U.S. mortgage loan originations serve as a key market driver for more than half our business. We
believe the volume of real estate and mortgage transactions is primarily affected by real estate prices, the availability of funds
for mortgage loans, mortgage interest rates, employment levels and the overall state of the U.S. economy. We believe mortgage
originations, expressed in dollars, decreased significantly by approximately 40.0% over the course of the year in 2014 relative
to the same period of 2013 primarily due to increases in interest rates, which began in the middle of 2013, and transitioned the
industry from a refinancing-driven to a purchase-driven market cycle. We expect 2015 origination unit volumes will be
comparable to 2014 levels.
We generate the majority of our revenues from clients with operations in the U.S. residential real estate, mortgage
origination and mortgage servicing markets. Approximately 29.8% of our operating revenues for the year ended December 31,
2014 were generated from our ten largest clients which consist of the largest U.S. mortgage originators and servicers.
Recent Company Developments
Acquisitions
In January 2014, we completed our acquisition of Terralink for NZD$14.5 million, or $11.9 million, which is included
as a component of our D&A reporting segment.
In March 2014, we completed the acquisition of all of the issued and outstanding equity interests of MSB/DataQuick.
The total consideration paid in connection with the transaction referenced above was approximately $652.5 million in cash,
which was funded through borrowings - see Liquidity and Capital Resources for further information. The operations of MSB's
and DataQuick's data licensing and analytics units are reported within our D&A segment and DataQuick's flood zone
determination and credit servicing operations are reported within our TPS segment.
In November 2014, we completed the acquisition of the assets of Bank of America's mortgage-related credit reporting
operation for $19.6 million, which is included as a component of the TPS segment.
Divestiture of Non-Core Businesses
In December 2013, we concluded the businesses comprising the AMPS segment were not core to our long-term
strategy and we would actively pursue the sale of the AMPS reporting segment. On September 30, 2014, we completed the sale
of our collateral solutions and field services businesses, which were previously included in our AMPS reporting segment for
consideration of $29.1 million, subject to working capital adjustments, as well as contingent consideration of up to $20.0
million. As a result, these businesses were reflected in our consolidated financial statements as discontinued operations.
Further, we concluded to cease pursuing the sale of our remaining product lines previously included in our AMPS reporting
segment. These remaining product lines included our technology solutions, solutions express and outsourcing services product
lines. These product lines were previously reflected as discontinued operations and are now reflected as part of continuing
operations within our TPS segment reporting disclosures for all periods presented.
27
Technology Transformation Initiative
In July 2012, as part of our on-going cost efficiency programs, we announced the launch of our TTI, which is a major
technology transformation initiative designed to provide us with new functionality, increased performance and reduced
application management and development costs. The TTI encompasses two phases. The first phase is designed to transform our
existing technology infrastructure to run in a private dedicated cloud environment hosted in Dell’s technology center located in
Quincy, WA. The transition of our existing data and systems infrastructure to Dell’s Quincy technology center is expected to be
completed in mid-2015. The second phase of the TTI involves the creation of a next-generation technology platform to leverage
data monetization and analytics, social media, mobility, voice and other capabilities via a delivery portal driven by a common
data repository. Progressive deployment of our next generation platform is currently expected to occur in several phases
commencing in 2015. For the year ended December 31, 2014, we incurred expenses of $15.6 million and capitalized
expenditures of $8.2 million related to the TTI.
Unless otherwise indicated, the Management’s Discussion and Analysis of Financial Condition and Results of
Operations in this Annual Report on Form 10-K relate solely to the discussion of our continuing operations.
28
Consolidated Results of Operations
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Operating Revenues
Our consolidated operating revenues were $1.4 billion for the year ended December 31, 2014, an increase of $0.6
million when compared to 2013, and consisted of the following:
(in thousands, except percentages)
2014
2013
$ Change % Change
D&A
TPS
Corporate and eliminations
Operating revenues
$
647,264
$
572,169
$
767,567
(9,791)
$ 1,405,040
843,887
(11,655)
$ 1,404,401
75,095
(76,320)
1,864
$
639
13.1%
(9.0)
(16.0)
—%
Our D&A segment revenues increased by $75.1 million, or 13.1%, when compared to 2013. Acquisition activity
accounted for $107.0 million of the increase in 2014. Excluding acquisition activity, the decrease of $31.9 million was
primarily due to lower property information, analytics and advisory revenues of $22.1 million, which included the exit of a
non-core product line and the impact of unfavorable foreign currency exchange fluctuations of $6.3 million. The decrease was
also impacted by lower rental market volumes which reduced multifamily services revenues by $4.1 million, partially offset by
higher insurance and spatial solutions revenues of $0.6 million.
Our TPS revenues decreased by $76.3 million, or 9.0%, when compared to 2013. Acquisition activity accounted for
$20.7 million of additional revenues in 2014. Excluding acquisition activity, the decrease of $97.0 million is primarily due to
the significant decline in mortgage loan origination volumes, which decreased our origination and underwriting services
revenues by $37.9 million, our compliance and technology solutions revenues by $30.7 million and our property tax processing
revenues by $28.4 million.
Our corporate and eliminations revenues were comprised of intercompany revenue eliminations between our operating
segments.
Cost of Services (exclusive of depreciation and amortization below)
Our consolidated cost of services were $740.3 million for the year ended December 31, 2014, an increase of $23.1
million, or 3.2%, when compared to 2013. Acquisition activity accounted for $66.8 million of the increase in December 31,
2014. Excluding acquisition activity, the decrease of $43.7 million was primarily due to the significant decline in mortgage loan
origination volumes, which decreased cost of services by approximately $64.8 million, partially offset by unfavorable product
mix of $21.1 million primarily in our TPS segment.
Selling, General and Administrative Expense
Our consolidated selling, general and administrative expenses were $351.6 million for the year ended December 31,
2014, a decrease of $22.7 million, or 6.1%, when compared to 2013. Acquisition activity contributed $25.8 million of expense
in 2014. Excluding acquisition activity, the decrease of $48.5 million was primarily due to a $13.9 million gain on sale of real
estate assets and cost reductions from our ongoing cost efficiency programs, which lowered salaries and benefits by $29.8
million, facility and lease equipment costs by $9.6 million, professional fees by $4.8 million, marketing fees by $1.0 million
and other expenses by $8.1 million; partially offset by lower capitalized costs of $18.7 million.
Depreciation and Amortization
Our consolidated depreciation and amortization expense was $138.4 million for the year ended December 31, 2014, an
increase of $12.1 million, or 9.5%, when compared to 2013. Acquisition activity accounted for $22.7 million of the increase in
2014. Excluding acquisition activity, the decrease of $10.6 million was primarily due to assets that were fully depreciated in the
prior year primarily in the TPS segment.
29
Impairment Loss
Our impairment loss was $5.0 million for the year ended December 31, 2014, a decrease of $39.5 million, or 88.8%,
when compared to 2013. The variance was primarily due to higher goodwill impairment charges related to our technology
solutions, solutions express and outsourcing services businesses in the fourth quarter of the prior year.
Operating Income
Our consolidated operating income was $169.8 million for the year ended December 31, 2014, an increase of $27.6
million, or 19.4%, when compared to 2013, and consisted of the following:
(in thousands, except percentages)
D&A
TPS
Corporate and eliminations
Operating income
2014
2013
$ Change % Change
$
97,654
$
100,963
$
139,168
(67,064)
169,758
$
137,225
(96,046)
142,142
$
$
(3,309)
1,943
28,982
27,616
(3.3)%
1.4
(30.2)
19.4 %
Our D&A segment operating income decreased by $3.3 million, or 3.3%, when compared to 2013. Acquisition activity
contributed $1.6 million of higher losses in 2014 due to higher depreciation and amortization expense and higher integration
costs. Excluding acquisition activity, operating income decreased $1.7 million primarily due to lower volumes and unfavorable
product mix. Operating margins increased 75 basis points due to lower costs from the impact of on-going cost efficiency
programs.
Our TPS operating income increased by $1.9 million, or 1.4%, when compared to 2013. Acquisition activity
accounted for $13.9 million of the increase in 2014. Excluding acquisition activity, operating income decreased $12.0 million
primarily due to the significant decline in origination volumes; partially offset by lower goodwill impairment charges related to
our technology solutions, solutions express and outsourcing services businesses recorded in the prior year. Operating margins
increased 75 basis points and were also favorably impacted by lower costs from our on-going cost efficiency programs.
Corporate and eliminations operating loss decreased $29.0 million, or 30.2%, due to lower selling, general and
administrative expenses from on-going cost efficiency programs.
Total Interest Expense, Net
Our consolidated total interest expense, net was $67.0 million for the year ended December 31, 2014, an increase of
$19.4 million, or 40.7%, when compared to 2013. The increase was due to higher average outstanding debt balances and higher
fees of $1.0 million related to the new borrowings in connection with our acquisition of MSB/DataQuick in March of 2014.
Gain on Investments and Other, Net
Our consolidated gain on investments and other income, net was $3.9 million for the year ended December 31, 2014, a
decrease of $8.2 million when compared to 2013. The decrease was primarily due to a $6.6 million gain, recorded in the prior
year, related to the acquisition of a controlling interest in an investment in affiliate, a $4.1 million loss from the termination of
an interest rate swap agreement in connection with the refinancing of our outstanding debt, lower realized gains on investments
of $3.2 million and a $0.3 million write-off of an investment in affiliate, partially offset by a $6.0 million distribution from a
previously impaired investment in affiliate.
Provision for Income Taxes
Our consolidated provision for income taxes from continuing operations was $29.8 million and $33.7 million for the
years ended December 31, 2014 and 2013, respectively. Our effective income tax rate was 28.2% and 31.6% for the years
ended December 31, 2014 and 2013, respectively. The change in the income tax was primarily attributable to foreign rate
differentials in jurisdictions with tax rates lower than the U.S. as well as valuation allowance released in certain foreign
jurisdictions.
30
Equity in Earnings of Affiliates, Net of Tax
Our consolidated equity in earnings of affiliates, net of tax was $14.1 million for the year ended December 31, 2014, a
decrease of $13.2 million, or 48.4%, when compared to 2013. We have equity interests in various affiliates which primarily
provide settlement services in connection with residential mortgage loans. The decrease in equity in earnings was primarily due
to declining mortgage loan origination volumes.
(Loss)/Income from Discontinued Operations, Net of Tax
Our consolidated loss from discontinued operations, net of tax was $16.7 million for the year ended December 31,
2014, an unfavorable variance of $31.1 million when compared to 2013. The variance is primarily due to legal settlements of
$21.9 million, on a pre-tax basis, as well as declining default market volumes which impacted revenues and net income
associated with our collateral solutions and field services businesses.
Gain/(Loss) from Sale of Discontinued Operations, Net of Tax
Our consolidated gain from sale of discontinued operations, net of tax was $0.1 million for the year ended
December 31, 2014, a favorable variance of $7.1 million when compared to 2013. The variance was primarily related to the
settlement of tax contingencies of $7.4 million from the sale of a business line within our AMPS segment in the prior year.
Net Income/(Loss) Attributable to Noncontrolling Interests
Our consolidated net income attributable to noncontrolling interests was $1.3 million for the year ended December 31,
2014, an increase of $1.3 million, or 2,490.6%, when compared to 2013. The variance was primarily due to the step-up
acquisition of a previously held noncontrolling interest in the third quarter of 2013.
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Operating Revenues
Our consolidated operating revenues were $1.4 billion for the year ended December 31, 2013, an increase of $70.9
million, or 5.3%, when compared to 2012, and consisted of the following:
(in thousands, except percentages)
2013
2012
$ Change % Change
D&A
TPS
Corporate and eliminations
Operating revenues
$
572,169
843,887
(11,655)
$ 1,404,401
$
544,753
800,890
(12,164)
$ 1,333,479
$
$
27,416
42,997
509
70,922
5.0%
5.4
(4.2)
5.3%
Our D&A segment revenues increased by $27.4 million, or 5.0%, when compared to 2012. Acquisition activity
accounted for $27.0 million of the increase in 2013. Excluding acquisition activity, the increase of $0.4 million was primarily
due to higher property information, analytics and advisory revenues of $7.7 million due to growth in valuation and fraud
analytics services and higher insurance and spatial solutions revenues of $0.5 million. This was partially offset by lower rental
market volumes which reduced multifamily services revenues by $2.0 million and the impact of unfavorable foreign exchange
of $5.7 million.
Our TPS revenues increased by $43.0 million, or 5.4%, when compared to 2012. Acquisition activity accounted for
$39.1 million of the increase in 2013. Excluding acquisition activity, the increase of $3.9 million was primarily due to market
share gains which increased our property tax processing revenues by $30.9 million and our origination and underwriting
services revenues by $1.2 million. This was partially offset by lower compliance and technology solutions revenues of $28.3
million due to lower volumes.
Our corporate and eliminations revenues were comprised of intercompany revenue eliminations between our operating
segments.
31
Cost of Services (exclusive of depreciation and amortization below)
Our consolidated cost of services was $717.2 million for the year ended December 31, 2013, an increase of $47.7
million, or 7.1%, when compared to 2012. Acquisition activity accounted for $30.3 million of the increase in 2013. Excluding
acquisition activity, the increase of $17.4 million was primarily due to higher revenues, which increased cost of services by
approximately $2.4 million, higher credit services-related costs from credit bureau of $13.1 million and higher other expenses
of $2.4 million. The increase was partially offset by favorable foreign exchange impact of $0.5 million.
Selling, General and Administrative Expense
Our consolidated selling, general and administrative expenses was $374.3 million for the year ended December 31,
2013, an increase of $17.7 million, or 5.0%, when compared to 2012. Acquisition activity accounted for $26.8 million of the
increase in 2013. Excluding acquisition activity, the decrease of $9.1 million was primarily due to our on-going cost efficiency
programs, which lowered facility and lease equipment costs by $7.2 million and lowered software expense by $6.0 million. We
also experienced higher capitalized costs of $5.7 million, the impact of favorable foreign exchange of $3.4 million and other
expense of $4.5 million. The decrease was partially offset by higher external service costs of $11.6 million and higher
professional fees of $6.2 million.
Depreciation and Amortization
Our consolidated depreciation and amortization expense was $126.3 million for the year ended December 31, 2013, an
increase of $9.2 million, or 7.9%, when compared to 2012. Acquisition activity accounted for $8.1 million of the increase in
2013. Excluding acquisition activity, the increase of $1.1 million was primarily due to the write-off of non-performing assets in
the current year.
Impairment Loss
Our impairment losses was $44.4 million for the year ended December 31, 2013, an increase of $24.6 million, or
123.5%, when compared to 2012. The variance was primarily due to a $42.2 million goodwill impairment charge related to our
technology solutions, solutions express and outsourcing services businesses, partially offset by higher write-offs of non-
performing assets in the prior year.
Operating Income
Our consolidated operating income was $142.1 million for the year ended December 31, 2013, a decrease of $28.3
million, or 16.6%, when compared to 2012, and consisted of the following:
(in thousands, except percentages)
D&A
TPS
Corporate and eliminations
Operating income
2013
2012
$ Change % Change
$
$
100,963
137,225
(96,046)
142,142
$
$
96,519
189,700
(115,817)
170,402
$
$
4,444
(52,475)
19,771
(28,260)
4.6 %
(27.7)
(17.1)
(16.6)%
Our D&A segment operating income increased by $4.4 million, or 4.6%, when compared to 2012. Acquisition activity
accounted for $6.6 million of the increase in 2013. Excluding acquisition activity, operating income decreased $2.2 million and
operating margins decreased 41 basis points as a prior year $7.0 million benefit related to the favorable litigation settlement of
patent and other intellectual property rights was partially offset by favorable revenue mix in 2013.
Our TPS segment operating income decreased by $52.5 million, or 27.7%, when compared to 2012. Acquisition
activity accounted for $5.7 million of higher operating losses in 2013. Excluding acquisition activity, operating income
decreased $46.8 million and operating margins decreased 592 basis points primarily due to higher goodwill impairment charges
of $42.2 million related to our technology solutions, solutions express and outsourcing services businesses incurred in 2013.
Corporate and eliminations operating loss decreased $19.8 million, or 17.1%, due to lower selling, general and
administrative expenses from on-going cost efficiency programs.
32
Total Interest Expense, Net
Our consolidated total interest expense, net was $47.6 million for the year ended December 31, 2013, a decrease of
$4.9 million, or 9.3%, when compared to 2012. The decrease was due to lower average outstanding debt balances as a result of
the principal prepayments under the term loan facility of our credit agreement and lower applicable interest rates.
Gain on Investments and Other, Net
Our consolidated gain on investments and other income, net was $12.0 million for the year ended December 31, 2013,
an increase of $7.0 million when compared to 2012. The variance was primarily due to a 2013 acquisition of a controlling
interest in an investment in an affiliate, resulting in a change in equity interest and the recognition of a gain of approximately
$6.6 million and higher realized gains on investments of $0.4 million.
Provision for Income Taxes
Our consolidated provision for income taxes from continuing operations was $33.7 million and $63.5 million for the
years ended December 31, 2013 and 2012, respectively. Our effective income tax rate was 31.6% and 51.4% for the years
ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2013, we recorded an income tax
benefit related to research and development credits, which favorably impacted our tax rate. For the year ended December, 31,
2012, we recorded out-of-period adjustments primarily for periods prior to 2010, which unfavorably impacted our tax rate.
Further in 2012, we increased our valuation allowance on federal and state capital loss carryovers, state net operating loss
carryovers, and foreign deferred tax assets and net operating loss carryovers principally as a result of valuation allowances
provided on a foreign subsidiary.
Equity in Earnings of Affiliates, Net of Tax
Our consolidated equity in earnings of affiliates, net of tax were $27.4 million for the year ended December 31, 2013,
an decrease of $8.6 million, or 24.0%, when compared to 2012. The decrease was primarily due to declining mortgage
origination volumes, which lowered our equity in earnings of affiliates, net by $3.4 million. The remaining variance was due to
the disposal and dissolution of various investments in affiliates.
Income from Discontinued Operations, Net of Tax
Our consolidated income from discontinued operations, net of tax was $14.4 million for the year ended December 31,
2013, a favorable variance of $2.0 million when compared to 2012. The variance is primarily due to lower losses from the
wind-down of our appraisal management company of $12.4 million, partially offset by a pre-tax non-cash impairment of $9.6
million to goodwill associated with our AMPS business recorded in the fourth quarter of 2013.
(Loss)/Gain from Sale of Discontinued Operations, Net of Tax
Our consolidated loss from discontinued operations, net of tax was $7.0 million, for the year ended December 31,
2013, an unfavorable variance of $10.8 million, when compared to 2012. The variance was primarily related to estimated tax
liabilities associated with audits of disposed subsidiaries.
Net Loss Attributable to Noncontrolling Interests
Our consolidated net loss attributable to noncontrolling interests was $0.1 million for the year ended December 31,
2013, a decrease of $0.6 million, or 91.8%, when compared to 2012. The variance was primarily due to the divestiture of our
noncontrolling interests in 2013.
Liquidity and Capital Resources
Cash and cash equivalents totaled $104.7 million and $134.4 million as of December 31, 2014 and 2013, respectively,
representing a decrease of $29.7 million compared to 2013. Furthermore, cash and cash equivalents decreased $15.1 million in
2013 compared to 2012.
We hold our cash balances inside and outside of the U.S. Our cash balances held outside of the U.S. are primarily
related to our international operations. At December 31, 2014, we held $34.8 million in foreign jurisdictions. Most of the
amounts held outside of the U.S. could be repatriated to the U.S. but, under current law, would be subject to U.S. federal
33
income taxes, less applicable foreign tax credits. We plan to maintain significant cash balances outside the U.S. for the
foreseeable future.
Restricted cash of $12.4 million and $12.1 million at December 31, 2014 and 2013, respectively, represents cash
pledged for various letters of credit provided in the ordinary course of business to certain vendors including in connection with
obtaining insurance and real property leases.
Cash Flow
Operating Activities. Cash provided by operating activities reflects net income adjusted for certain non-cash items and
changes in operating assets and liabilities. Total cash provided by operating activities was $321.9 million, $353.8 million and
$363.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. The decrease in cash provided by
operating activities in 2014 relative to 2013 was primarily due to lower cash provided by operating activities from our
discontinued operations of $39.3 million resulting from declining default market volumes, the sale of our collateral solutions
and field services businesses in September of 2014 and a legal settlement in 2014. This decrease was partially offset by higher
cash provided by operating activities from our continuing operations of $7.4 million due to higher dividends received from
investments in affiliates and the timing of payments for accounts payable and accrued expenses.
The decrease in cash provided by operating activities in 2013 relative to 2012 was primarily due to lower cash
provided by operating activities from our continuing operations of $8.4 million related to the timing of payments for accounts
payable and accrued expenses and lower dividends received from investments in affiliates.
Investing Activities. Total cash used in investing activities consists primarily of capital expenditures, acquisitions and
dispositions. Cash used in investing activities was approximately $741.5 million, $186.8 million, and $147.3 million for the
years ended December 31, 2014, 2013 and 2012, respectively.
Cash used in investing activities from continuing operations during 2014 was primarily related to cash paid for
acquisitions, including Bank of America's credit services operations for $19.6 million in November 2014, MSB/DataQuick for
$652.5 million in March 2014, Terralink for $11.9 million in January 2014 and other acquisitions for $11.0 million, net of cash
acquired, that were not significant. Further, we had investments in property and equipment and capitalized data of $52.0 million
and $35.1 million, respectively; which was partially offset by proceeds from sale of discontinued operations of $25.4 million
and proceeds from the sale of property and equipment of $13.9 million.
Cash used in investing activities from continuing operations during 2013 was primarily related to to cash paid for
acquisitions, including Bank of America's flood zone determination and tax processing services operations for $62.5 million in
July 2013, an additional 10% interest in PIQ for $2.6 million in September 2013 and EQECAT for $22.2 million in December
2013. We also acquired two other businesses for $10.0 million that were not significant. Further, we had investments in
property and equipment and capitalized data of $68.7 million and $37.8 million, respectively; partially offset by favorable
changes in restricted cash of $10.1 million.
Cash used in investing activities from continuing operations during 2012 was primarily related to cash paid for CDS
Mapping of $78.8 million and investments in property and equipment and capitalized data of $51.5 million and $32.2 million,
respectively, which was partially offset by net proceeds of $10.0 million from the sale of subsidiaries and proceeds of $8.0
million from the sale of our investment in Lone Wolf Real Estate Technologies.
For the year ending December 31, 2015, the Company anticipates investing in the aggregate between $85 million and
$95 million in capital expenditures for property and equipment and capitalized data. Capital expenditures are expected to be funded
by existing cash balances, cash generated from operations or additional borrowings.
Financing Activities. Total cash used in financing activities was approximately $390.5 million, $179.9 million and
$332.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Net cash used in financing activities during 2014 was primarily comprised of proceeds from debt issuance of $690.0
million, partially offset by repayment of long-term debt of $200.0 million, share repurchases of $91.5 million, debt issuance
costs of $14.0 million and net settlement from stock-based compensation related transactions of $6.0 million.
Net cash used in financing activities during 2013 was primarily comprised of $241.2 million in repurchases of our
common stock, $10.4 million of debt issuance costs and $4.7 million of repayments of long-term debt. This was partially offset
34
by proceeds from the issuance of long-term debt of $51.6 million and net settlement from stock-based compensation related
transactions of $24.7 million.
Net cash used in financing activities during 2012 was primarily comprised of $226.6 million repurchases of our
common stock and $166.7 million of repayments of long-term debt, which was partially offset by proceeds from issuance of
long-term debt of $50.0 million to replace our A$50.0 million borrowed under the multicurrency revolving sub-facility and net
settlement from stock-based compensation related transactions of $11.0 million.
Financing and Financing Capacity
We had total debt outstanding of $1.3 billion and $839.9 million as of December 31, 2014 and 2013, respectively. Our
significant debt instruments are described below.
Senior Notes
On May 20, 2011, CoreLogic, Inc. issued $400.0 million aggregate principal amount of 7.25% senior notes due 2021
(the "Notes"). For a detailed description of the Notes, see Note 8 - Long-Term Debt of the Notes to Consolidated Financial
Statements included in Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
The indenture governing the Notes contains a financial covenant for the incurrence of additional indebtedness that
requires that the interest coverage ratio be at least 2.00 to 1.00 on a pro forma basis after giving effect to any new indebtedness.
There are carve-outs that permit us to incur certain indebtedness notwithstanding satisfaction of this ratio, but they are limited.
Based on our EBITDA and interest charges as of December 31, 2014, we would be able to incur additional indebtedness
without breaching the limitation on indebtedness covenant contained in the indenture and we are in compliance with all of our
covenants under the indenture.
Credit Agreement
For a detailed description of our senior secured credit facility (the "Credit Agreement"), see Note 8 - Long-Term Debt
of the Notes to Consolidated Financial Statements included in Item 8 - Financial Statements and Supplementary Data of this
Annual Report on Form 10-K. The Credit Agreement provides for an $850.0 million five-year term loan facility (the "Term
Facility") and a $550.0 million revolving credit facility (the "Revolving Facility"). The Revolving Facility includes a $100.0
million multicurrency revolving sub-facility and a $50.0 million letter of credit sub-facility. The Credit Agreement also
provides for the ability to increase the Term Facility and Revolving Facility by up to $500.0 million in the aggregate.
The Credit Agreement contains customary financial maintenance covenants, including a (i) maximum total leverage
ratio as of the last date of any fiscal quarter not to exceed 4.00 to 1.00 with a step down to 3.50 to 1.00 starting in the second
quarter of 2015; and (ii) a minimum interest coverage ratio of at least 3.00 to 1.00.
For the year ended December 31, 2014, we prepaid $31.9 million of outstanding indebtedness under the Term Facility.
This prepayment was applied to the most current portion of the term loan amortization schedule. At December 31, 2014, we
had additional borrowing capacity under the Revolving Facility of $465.0 million, and were in compliance with the financial
and restrictive covenants of the Credit Agreement. However, if we have a significant increase in our outstanding debt or if our
EBITDA decreases significantly, we may be unable to incur additional indebtedness, and the lenders under the Credit
Agreement may be unwilling to permit us to amend the financial or restrictive covenants described above to provide additional
flexibility.
As of December 31, 2014 and December 31, 2013, we have recorded $9.2 million and $4.6 million, respectively, of
accrued interest expense.
Interest Rate Swaps
In May 2014, we entered into amortizing interest rate swap transactions ("Swaps"). The Swaps became effective on
December 31, 2014 and terminate in March 2019. The Swaps are for an initial notional balance of $500.0 million, with a fixed
interest rate of 1.57%, and amortize quarterly by $12.5 million through December 31, 2017 and $25.0 million through
December 31, 2018, with a remaining notional amount of $250.0 million.
35
Liquidity and Capital Strategy
We believe that cash flow from operations and current cash balances, together with currently available lines of credit,
will be sufficient to meet operating requirements through the next twelve months. Cash available from operations could be
affected by any general economic downturn or any decline or adverse changes in our business such as a loss of clients,
competitive pressures or other significant change in business environment.
We strive to pursue a balanced approach to capital allocation and will consider the repurchase of common shares, the
retirement of outstanding debt and the pursuit of strategic acquisitions on an opportunistic basis.
During the year ended December 31, 2014, we repurchased approximately 3.1 million shares of our common stock for
$91.5 million including commission costs.
Availability of Additional Capital
Our access to additional capital fluctuates as market conditions change. There may be times when the private capital
markets and the public debt or equity markets lack sufficient liquidity or when our securities cannot be sold at attractive prices,
in which case we would not be able to access capital from these sources. Based on current market conditions and our financial
condition (including our ability to satisfy the conditions contained in our debt instruments that are required to be satisfied to
permit us to incur additional indebtedness), we believe that we have the ability to effectively access these liquidity sources for
new borrowings. However, a weakening of our financial condition, including a significant decrease in our profitability or cash
flows or a material increase in our leverage, could adversely affect our ability to access these markets and/or increase our cost
of borrowings.
Contractual Obligations
A summary, by due date, of our total contractual obligations at December 31, 2014, is as follows:
(in thousands)
Operating leases
Long-term debt (1)
Interest payments related to debt (2)
Service agreement (3)
Total (4)
Less than 1
Year
1-3 Years
3-5 Years
More than
5 Years
$
$
32,280
11,352
56,436
59,068
159,136
$
$
44,449
197,466
108,644
34,456
385,015
$
$
23,724
669,476
84,944
—
778,144
$
$
13,483
452,645
81,016
—
547,144
Total
$
113,936
1,330,939
331,040
93,524
$ 1,869,439
(1) Includes the acquisition related remaining note payable of $5.0 million, which is non-interest bearing and discounted
to $4.6 million.
(2) Estimated interest payments are calculated assuming current interest rates over minimum maturity periods specified in
debt agreements.
(3) Net minimum commitment with Cognizant.
(4) Excludes a net tax liability of $12.7 million related to uncertain tax positions and deferred compensation of $34.2
million due to uncertainty of payment period.
Critical Accounting Policies and Estimates
Our significant accounting policies are discussed in Note 2 - Significant Accounting Policies of the Notes to
Consolidated Financial Statements included in Item 8 - Financial Statements and Supplementary Data. We consider the
accounting policies described below to be critical in preparing our consolidated financial statements. These policies require us
to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related
disclosures of contingencies. Our assumptions, estimates and judgments are based on historical experience, current trends and
other factors that we believe to be relevant at the time we prepare the consolidated financial statements. Although we believe
that our estimates and assumptions are reasonable, we cannot determine future events. Consequently, actual results could differ
materially from our assumptions and estimates.
36
Revenue recognition. We derive our revenues principally from U.S. mortgage originators and servicers with good
creditworthiness. Our product and service deliverables are generally comprised of data or other related services. Our revenue
arrangements with our clients generally include a work order or written agreement specifying the data products or services to
be delivered and related terms of sale including payment amounts and terms. The primary revenue recognition-related
judgments we exercise are to determine when all of the following criteria have been met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered; (3) our price to the buyer is fixed or
determinable; and (4) collectability is reasonably assured.
For products or services where delivery occurs at a point in time, we recognize revenue upon delivery. These products
or services include sales of tenancy data and analytics, credit solutions for mortgage and automotive industries, under-banked
credit services, flood and data services, claims management and default services.
For products or services where delivery occurs over time, we recognize revenue ratably on a subscription basis over
the contractual service period once initial delivery has occurred. Generally these service periods range from one to three years.
Products or services recognized on a license or subscription basis include information and analytic products, flood database
licenses, realtor solutions, and lending solutions.
Tax service revenues are comprised of periodic loan fees and life-of-loan fees. For periodic loans, we generate
monthly fees at a contracted fixed rate for as long as we service the loan. Loans serviced with a one-time, life-of-loan fee are
billed once the loan is boarded to our tax servicing system in accordance with a client tax servicing agreement. Life-of-loan
fees are then deferred and recognized ratably over the expected service period. The rates applied to recognize revenues assume
a 10-year expected life and are adjusted to reflect prepayments. We review the tax service contract portfolio quarterly to
determine if there have been material changes in the expected lives, deferred on-boarding costs, expected service period, and/or
changes in the number and/or timing of prepayments. Accordingly, we may adjust the rates to reflect current trends.
Purchase Accounting. The purchase method of accounting requires companies to assign values to assets and liabilities
acquired based upon their fair values at the acquisition date. In most instances there are not readily defined or listed market
prices for individual assets and liabilities acquired in connection with a business, including intangible assets. The determination
of fair value for assets and liabilities in many instances requires a high degree of estimation. The valuation of intangible assets,
in particular, is very subjective. We generally obtain third-party valuations to assist us in estimating fair values. The use of
different valuation techniques and assumptions could change the amounts and useful lives assigned to the assets and liabilities
acquired and related amortization expense.
Goodwill and other intangible assets. We perform an annual impairment test for goodwill and other indefinite-lived
intangible assets for each reporting unit every fourth quarter. In addition, we periodically assess whether events or
circumstances have occurred that potentially indicate the carrying amounts of these assets may not be recoverable. In assessing
the overall carrying value of our goodwill and other intangibles, we first assess qualitative factors to determine whether the
existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit
is less than its carrying amount. Examples of such events or circumstances include the following: cost factors, financial
performance, legal and regulatory factors, entity specific events, industry and market factors, macroeconomic conditions and
other considerations.
If, after assessing the totality of events or circumstances, we determine that it is more likely than not the fair value of a
reporting unit is less than its carrying value, then our impairment testing process may include two additional steps. The first
step (“Step 1”) compares the fair value of each reporting unit to its book value. The fair value of each reporting unit is
determined by using discounted cash flow analysis and market approach valuations. If the fair value of the reporting unit
exceeds its book value, then goodwill is not considered impaired and no additional analysis is required. However, if the book
value is greater than the fair value, a second step (“Step 2”) must be completed to determine if the implied fair value of the
goodwill exceeds the book value of the goodwill.
Step 2 involves calculating an implied fair value of goodwill for each reporting unit for which Step 1 indicated
impairment. The implied fair value of goodwill is determined in a manner similar to the amount of goodwill calculated in a
business combination, by measuring the excess of the estimated fair value of the reporting unit, as determined in Step 1, over
the aggregate estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was
being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned
to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied
fair value of the goodwill, an impairment loss is recorded for the excess. An impairment loss cannot exceed the carrying value
of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill
impairment losses is not permitted. The valuation of goodwill requires assumptions and estimates of many critical factors
37
including revenue growth, cash flows, market multiples and discount rates. Forecasts of future operations are based, in part, on
operating results and our expectations as to future market conditions. These types of analysis contain uncertainties because they
require us to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future
business strategies. However, if actual results are not consistent with our estimates and assumptions, we may be exposed to an
additional impairment loss that could be material.
These tests utilize a variety of valuation techniques, all of which require us to make estimates and judgments. Fair
value is determined by employing an expected present value technique, which utilizes multiple cash flow scenarios that reflect
a range of possible outcomes and an appropriate discount rate. The use of comparative market multiples compares the reporting
unit to other comparable companies (if such comparables are present in the marketplace) based on valuation multiples to arrive
at a fair value. We also use certain of these valuation techniques in accounting for business combinations, primarily in the
determination of the fair value of acquired assets and liabilities. In assessing the fair value, we utilize the results of the
valuations and consider the range of fair values determined under all methods and the extent to which the fair value exceeds the
book value of the equity.
In December 2013, we concluded the businesses comprising the AMPS segment were not core to our long term
strategy and we would actively pursue the sale of the AMPS reporting segment. On September 30, 2014, we completed the sale
of our collateral solutions and field services businesses, which were previously included in our AMPS reporting segment.
Further, we determined to cease pursuing the sale of our remaining product lines, previously included in our AMPS reporting
segment. These remaining product lines are comprised of our technology solutions, solutions express and outsourcing services
product lines. These product lines were previously reflected as discontinued operations and are now reflected as part of
continuing operations within our TPS segment.
During 2013, as part of the process of marketing the sale of these businesses, we developed long-term projections and
obtained indicative fair market values from potential participants. The level of indicative values was below the net book value
of the businesses being marketed; therefore, we recorded a pre-tax non-cash impairment of $42.2 million related to our retained
product lines, which is currently within continuing operations, and a pre-tax non-cash impairment of $9.6 million related to the
businesses sold within discontinued operations. During the second quarter of 2014, we identified and corrected an error which
understated the 2013 goodwill impairment charge by $3.9 million related to the retained product lines within continuing
operations. We recorded an out-of-period adjustment to correct the error in the quarter ended June 30, 2014. We assessed the
materiality of this error in accordance with the SEC's Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108, and
concluded the error was not material to the results of operations or financial condition for the prior annual, interim periods or
the full year results for fiscal year 2014.
As of September 30, 2014, we allocated the former AMPS reporting unit goodwill between the businesses sold and the
retained product lines based on their relative fair value and also evaluated the retained goodwill of $73.7 million at the TPS
reporting unit level, noting no additional impairment indicators. Further, in September 2014, we transferred our under-banked
credit services business from our D&A segment to our TPS segment due to changes in our management structure and internal
reporting. As a result of the transfer, we revised our reporting for segment disclosure purposes and reassessed our reporting
units for purposes of evaluating the carrying value of our goodwill. This assessment required us to perform a third quarter
reassignment of our goodwill to each reporting unit impacted using the relative fair value approach, based on the fair values of
the reporting units as of August 31, 2014. As of December 31, 2014 and December 31, 2013, the assessment resulted in $8.7
million and $9.0 million, respectively, of goodwill allocated to our TPS reporting unit from D&A.
As of December 31, 2014, our reporting units related to continuing operations are D&A and TPS. During the fourth
quarter of 2014, we performed a Step 1 analysis on our reporting units. Determining the fair value of a reporting unit is
judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating
margins, discount rates and future market conditions, among others. Key assumptions used to determine the fair value of our
reporting units in our testing were: (a) expected cash flow for the period from 2015 to 2020; and (b) a discount rate ranging
from 9.0% to 9.5%, which was based on management's best estimate of the after-tax weighted average cost of capital. We noted
no indicators of impairment on our reporting units related to continuing operations through our Step 1 analysis. It is reasonably
possible that changes in the facts, judgments, assumptions and estimates used in assessing the fair value of the goodwill could
cause a reporting unit to become impaired.
Income taxes. We account for income taxes under the asset and liability method, whereby we recognize deferred tax
assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases as well as expected benefits of utilizing net operating
loss and credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates we expect to apply in the
38
years in which we expect to recover or settle those temporary differences. We recognize in income the effect of a change in tax
rates on deferred tax assets and liabilities in the period that includes the enactment date.
We recognize the effect of income tax positions only if sustaining those positions is more likely than not. We reflect
changes in recognition or measurement of uncertain tax positions in the period in which a change in judgment occurs. We
recognize interest and penalties, if any, related to uncertain tax positions within income tax expense. Accrued interest and
penalties are included within the related tax liability line in the consolidated balance sheet.
We evaluate the need to establish a valuation allowance based upon expected levels of taxable income, future reversals
of existing temporary differences, tax planning strategies and recent financial operations. We establish a valuation allowance to
reduce deferred tax assets to the extent we believe it is more likely than not that some or all of the deferred tax assets will not
be realized.
Stock-based compensation. We measure the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. The cost is recognized over the period during which an employee is
required to provide services in exchange for the award. We used the binomial lattice option-pricing model to estimate the fair
value for any options granted after December 31, 2005 through December 31, 2009. For the options granted subsequent to
December 31, 2009, we used the Black-Scholes model to estimate the fair value. We utilize the Monte-Carlo simulation to
estimate the fair value for any performance-based restricted stock units (“PBRSUs”) granted. We utilize the straight-line single
option method of attributing the value of stock-based compensation expense unless another expense attribution model is
required. As stock-based compensation expense recognized in results of operations is based on awards ultimately expected to
vest, stock-based compensation expense has been reduced for estimated forfeitures. Forfeitures are estimated at the time of
grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We apply the long-form
method for determining the pool of windfall tax benefits.
Currently, our primary means of providing stock-based compensation is granting restricted stock units (“RSUs”),
PBRSUs and stock options. The fair value of any grant is based on the market value of our shares on the date of grant and is
generally recognized as compensation expense over the vesting period. Shares granted to certain key employees have graded
vesting and have a service and performance requirement and are therefore expensed using the accelerated multiple-option
method to record stock-based compensation expense. All other awards have graded vesting and service is the only requirement
to vest in the award and are therefore generally expensed using the straight-line single option method to record stock-based
compensation expense.
In addition, we have an employee stock purchase plan that allows eligible employees to purchase common stock of the
Company at 85.0% of the closing price on the first or last day of each quarter, whichever is lower (which was updated for 2014
from the closing price on the last day of each quarter). We recognize an expense in the amount equal to the estimated fair value
of the discount. The 2001 employee stock purchase plan expired in September 2011. Our 2012 employee stock purchase plan
was approved by our stockholders at our 2012 annual meeting of stockholders and the first offering period commenced in
October 2012.
Recent Accounting Pronouncements
For a description of recently issued and adopted accounting pronouncements, including the respective dates of
adoption and expected effects on our results of operations and financial condition, see Note 2 - Significant Accounting Policies
of the Notes to Consolidated Financial Statements included in Item 8 - Financial Statements and Supplementary Data of this
Annual Report on Form 10-K, which is incorporated by reference in response to this item.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Our primary exposure to market risk relates to interest-rate risk associated with certain financial instruments. We
monitor our risk associated with fluctuations in interest rates and currently use derivative financial instruments to hedge some
of these risks. Until March 2014, we had an outstanding interest rate swap that we entered into in June 2011, which partially
converted the interest rate exposure of our floating rate debt from variable to fixed rate. In connection with our full repayment
of the underlying debt associated with the termination of our previously-held credit facility in March 2014, that interest rate
swap agreement terminated.
In May 2014, we entered into the Swaps, which became effective on December 31, 2014 and terminate in March
2019. The Swaps are for an initial notional balance of $500.0 million, with a fixed interest rate of 1.57%, and amortize
quarterly by $12.5 million through December 31, 2017 and $25.0 million through December 31, 2018, with a remaining
39
notional amount of $250.0 million. We entered into the Swaps in order to convert a portion of our interest rate exposure on the
Term Facility floating rate borrowings from variable to fixed. We have designated the Swaps as cash flow hedges.
As of December 31, 2014, we had approximately $1.3 billion in long-term debt outstanding, of which approximately
$871.3 million was variable-interest-rate debt. A hypothetical 1% increase or decrease in interest rates could result in an
approximately $0.9 million change to interest expense on a quarterly basis.
We are also subject to equity price risk related to our equity securities portfolio. At December 31, 2014, we had equity
securities with a cost and fair value of $22.3 million.
Although we are subject to foreign currency exchange rate risk as a result of our operations in certain foreign
countries, the foreign exchange exposure related to these operations, in the aggregate, is not material to our financial condition
or results of operations.
40
Item 8. Financial Statements and Supplementary Data
We have one significant equity method investment. The audited financials of our significant subsidiary are included as
an exhibit to this Form 10-K.
INDEX
Report of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive/(Loss) Income
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
Page No.
42
43
44
45
46
47
49
99
Financial statement schedules not listed are either omitted because they are not applicable or the required information is
shown in the consolidated financial statements or in the notes thereto.
41
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
CoreLogic, Inc.:
In our opinion, the consolidated financial statements listed in the accompanying index, present fairly, in all material respects,
the financial position of CoreLogic, Inc. and its subsidiaries at December 31, 2014 and December 31, 2013, and the results of
their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for these financial statements and financial statement schedules, for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the
Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement
and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, management has
excluded Marshall & Swift/Boeckh and DataQuick Information Systems from its assessment of internal control over financial
reporting as of December 31, 2014 because they were acquired by the Company in a purchase business combination during
2014. We have also excluded Marshall & Swift/Boeckh and DataQuick Information Systems from our audit of internal control
over financial reporting. Marshall & Swift/Boeckh and DataQuick Information Systems are wholly-owned subsidiaries whose
total assets and total revenues represent 16.0% and 4.8%, respectively, of the related consolidated financial statement amounts
as of and for the year ended December 31, 2014.
/s/ PricewaterhouseCoopers LLP
Orange County, California
February 26, 2015
42
CoreLogic, Inc.
Consolidated Balance Sheets
As of December 31, 2014 and 2013
(in thousands, except par value)
Assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable (less allowance for doubtful accounts of $10,826 and $13,045 in 2014 and
2013, respectively)
Prepaid expenses and other current assets
Income tax receivable
Deferred income tax assets, current
Assets of discontinued operations
Total current assets
Property and equipment, net
Goodwill, net
Other intangible assets, net
Capitalized data and database costs, net
Investment in affiliates, net
Restricted cash
Other assets
Total assets
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses
Accrued salaries and benefits
Deferred revenue, current
Current portion of long-term debt
Liabilities of discontinued operations
Total current liabilities
Long-term debt, net of current
Deferred revenue, net of current
Deferred income tax liabilities, long-term
Other liabilities
Total liabilities
Redeemable noncontrolling interests
2014
2013
$
104,677
22,264
$
134,419
22,220
214,344
51,375
13,357
90,341
4,267
500,625
368,614
1,780,758
278,270
333,265
103,598
12,360
138,872
$ 3,516,362
$
170,418
99,786
255,330
11,352
13,704
550,590
1,319,211
389,308
63,979
161,084
2,484,172
215,020
50,829
13,516
86,487
38,926
561,417
197,542
1,468,290
175,808
330,188
95,343
12,050
162,493
$ 3,003,131
$
156,937
104,781
223,603
28,154
20,616
534,091
811,776
377,855
76,969
147,865
1,948,556
18,023
10,202
Equity:
CoreLogic, Inc.'s ("CoreLogic") stockholders' equity:
Preferred stock, $0.00001 par value; 500 shares authorized, no shares issued or outstanding
Common stock, $0.00001 par value; 180,000 shares authorized; 89,343 and 91,254 shares
issued and outstanding as of December 31, 2014 and 2013, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total CoreLogic stockholders' equity
Total liabilities and equity
—
—
1
605,511
492,441
(83,786)
1,014,167
$ 3,516,362
1
672,165
425,796
(53,589)
1,044,373
$ 3,003,131
The accompanying notes are an integral part of these consolidated financial statements.
43
CoreLogic, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands, except per share amounts)
Operating revenue
Cost of services (exclusive of depreciation and amortization below)
Selling, general and administrative expenses
Depreciation and amortization
Impairment loss
Total operating expenses
Operating income
Interest expense:
Interest income
Interest expense
Total interest expense, net
Gain on investments and other, net
Income from continuing operations before equity in earnings of affiliates and
income taxes
Provision for income taxes
Income from continuing operations before equity in earnings of affiliates
Equity in earnings of affiliates, net of tax
Net income from continuing operations
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income
Less: Net income/(loss) attributable to noncontrolling interests
Net income attributable to CoreLogic
Amounts attributable to CoreLogic:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
Basic income/(loss) per share:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
Diluted income/(loss) per share:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
Weighted-average common shares outstanding:
Basic
Diluted
2014
$ 1,405,040
740,301
351,617
138,394
4,970
1,235,282
169,758
2013
$ 1,404,401
717,205
374,289
126,332
44,433
1,262,259
142,142
2012
$ 1,333,479
669,484
356,605
117,108
19,880
1,163,077
170,402
4,110
71,092
(66,982)
3,882
106,658
29,770
76,888
14,120
91,008
(16,653)
112
74,467
1,267
73,200
89,741
(16,653)
112
73,200
0.99
(0.18)
—
0.81
0.97
(0.18)
—
0.79
$
$
$
$
$
$
$
4,748
52,350
(47,602)
12,032
106,572
33,673
72,899
27,361
100,260
14,423
(7,008)
107,675
(53)
107,728
100,313
14,423
(7,008)
107,728
1.05
0.15
(0.07)
1.13
1.03
0.15
(0.07)
1.11
$
$
$
$
$
$
$
3,051
55,524
(52,473)
4,996
122,925
63,488
59,437
35,983
95,420
12,387
3,841
111,648
(645)
112,293
96,065
12,387
3,841
112,293
0.93
0.12
0.04
1.09
0.92
0.12
0.04
1.08
90,825
92,429
95,088
97,109
102,913
104,050
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
44
CoreLogic, Inc.
Consolidated Statements of Comprehensive Income/(Loss)
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands)
Net income
2014
2013
2012
$
74,467
$ 107,675
$ 111,648
Other comprehensive (loss)/income:
Market value adjustments to marketable securities, net of tax
Market value adjustments on interest rate swap, net of tax
Reclassification adjustments for gains on terminated interest rate swap included in
net income
Foreign currency translation adjustments
Supplemental benefit plans adjustments, net of tax
Total other comprehensive (loss)/income
Comprehensive income
Less: Comprehensive income/(loss) attributable to the noncontrolling interests
27
(2,408)
2,555
(26,673)
(3,698)
(30,197)
44,270
1,267
Comprehensive income attributable to CoreLogic
$
43,003
$
32
1,526
—
(43,337)
3,704
(38,075)
69,600
(53)
69,653
742
(905)
—
5,921
(956)
4,802
116,450
(645)
$ 117,095
The accompanying notes are an integral part of these consolidated financial statements.
45
4
6
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CoreLogic, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands)
Cash flows from operating activities:
Net income
Less: (Loss)/income from discontinued operations, net of tax
Less: Gain/(loss) from sale of discontinued operations, net of tax
Income from continuing operations, net of tax
Adjustments to reconcile net income from continuing operations to net cash provided
by operating activities:
Depreciation and amortization
Impairment loss
Provision for bad debts and claim losses
Share-based compensation
Tax benefit related to stock options
Equity in earnings of investee, net of taxes
(Gain)/loss on sale of property and equipment
Loss on early extinguishment of debt
Deferred income tax
Gain on investments and other, net
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Deferred revenue
Income taxes
Dividends received from investments in affiliates
Other assets and other liabilities
Net cash provided by operating activities - continuing operations
Net cash (used in)/provided by operating activities - discontinued operations
Total cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Purchases of capitalized data and other intangible assets
Cash paid for acquisitions, net of cash acquired
Cash received from sale of subsidiary, net
Purchases of investments
Proceeds from sale of property and equipment
Proceeds from sale of investments
Change in restricted cash
Net cash used in investing activities - continuing operations
Net cash provided by/(used in) investing activities - discontinued operations
Total cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt
Debt issuance costs
47
2014
2013
2012
$
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(16,653)
112
91,008
$ 107,675
$ 111,648
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3,841
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138,394
126,332
117,108
4,970
11,825
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(14,120)
(13,866)
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44,433
13,345
26,901
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(27,361)
—
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19,880
20,027
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34,476
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13,151
1,231
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16,010
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38,655
28,260
335,593
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48,125
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36,680
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328,220
25,600
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10,830
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70,666
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336,651
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25,366
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2,263
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1,536
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50,000
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Repayments of long-term debt
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Tax benefit related to stock options
Net cash provided by/(used in) financing activities - continuing operations
Net cash used in financing activities - discontinued operations
Total cash provided by/(used in) financing activities
Effect of Exchange Rate on cash
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Less: Change in cash and cash equivalents of discontinued operations
Plus: Cash swept (to)/from discontinued operations
Cash and cash equivalents at end of year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income taxes
Cash refunds from income taxes
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities
6,791
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(91,475)
15,213
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—
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(241,161)
28,232
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(226,629)
13,497
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935
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$ (179,903) $ (332,467)
(153)
$ (29,727) $ (14,992) $ (116,817)
258,116
149,568
5,146
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—
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390,518
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—
134,419
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$ 104,677
27,462
21,212
27,305
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$ 134,419
$ 149,568
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27,545
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71,055
14,096
2,339
$
$
$
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71,283
18,330
2,287
The accompanying notes are an integral part of these consolidated financial statements.
48
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 1 - Description of the Company
We are a leading global property information, analytics and data-enabled services provider operating in North
America, Western Europe and Asia Pacific. Our combined data from public, contributory and proprietary sources provides
detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related
performance information. The markets we serve include real estate and mortgage finance, insurance, capital markets and the
public sector. We deliver value to clients through unique data, analytics, workflow technology, advisory and managed services.
Clients rely on us to help identify and manage growth opportunities, improve performance and mitigate risk. We are also a party
to several joint ventures under which we share control of the management of the operations with the other partner.
We were originally incorporated in California in 1894, and were reincorporated in Delaware on June 1, 2010
immediately following a transaction that spun-off our financial services businesses, which we refer to as "the Separation" as
more fully described below. Before June 1, 2010, we operated as The First American Corporation (“First American” or “FAC”).
In connection with the Separation, we changed our name to CoreLogic, Inc. and began trading on the New York Stock
Exchange under the symbol “CLGX.” As used herein, the terms "CoreLogic," the Company," "we," "our" and "us" refer to
CoreLogic, Inc. and our consolidated subsidiaries, except where it is clear that the terms mean only CoreLogic, Inc. and not our
subsidiaries.
Divestiture of Non-Core Businesses
As of December 31, 2013, we concluded that we would actively pursue the sale of our Asset Management and
Processing Solutions ("AMPS") reporting segment, which was comprised of collateral solutions, field services, technology
solutions, solutions express and outsourcing services. As a result, these businesses were reflected in our consolidated financial
statement as discontinued operations.
On September 30, 2014, we completed the sale of our collateral solutions and field services businesses, which were
previously included in our AMPS reporting segment, for consideration of $29.1 million, subject to working capital adjustments,
as well as contingent consideration of up to $20.0 million, which will be recognized when realized. Further, we concluded to
cease pursuing the sale of our remaining product lines, previously included in our AMPS reporting segment. These remaining
product lines included our technology solutions, solutions express and outsourcing services product lines and were previously
reflected as discontinued operations and are now reflected as part of continuing operations within our Technology Processing
Solutions ("TPS") segment reporting disclosures for all periods presented. The impact of the reclassification to our consolidated
statements of operations includes goodwill impairment of $3.9 million and $42.2 million for the years ended December 31,
2014 and 2013, respectively, and is as follows:
Operating revenues
Net income from continuing operations
Basic income per share from continuing operations
Diluted income per share from continuing operations
Reporting Segments
2014
2013
$
$
$
$
66,560
4,584
0.05
0.05
$
$
$
$
73,775
(19,022)
(0.20)
(0.20)
In September 2014, we transferred our under-banked credit services business from our Data & Analytics ("D&A")
segment to our TPS segment to combine this operation within our credit and income verification services and leverage the core
business capabilities of the TPS segment. All segment reporting disclosures presented herein reflect this transfer.
49
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Separation Transaction
On June 1, 2010, we completed the Separation under which we spun-off our financial services businesses into a new,
publicly-traded, New York Stock Exchange-listed company called First American Financial Corporation (“FAFC”) through a
distribution (the “Distribution”) of all of the outstanding shares of FAFC to the holders of our common shares, par value $1.00
per share, as of May 26, 2010. After the Distribution, we retained the information solutions businesses which we renamed
CoreLogic Inc. as noted above.
To effect the Separation, we entered into a Separation and Distribution Agreement (the “Separation and Distribution
Agreement”) that governs the rights and obligations of the Company and FAFC regarding the Distribution. It also governs the
on-going relationship between the Company and FAFC subsequent to the completion of the Separation and provides for the
allocation of assets and liabilities between FAFC and the Company. In addition, we also entered into a Tax Sharing Agreement
(the “Tax Sharing Agreement”) as described in Note 9 – Income Taxes.
While we are a party to the Separation and Distribution Agreement and various other agreements relating to the
Separation, we have determined that we have no material continuing involvement in the operations of FAFC.
Note 2 - Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all controlled subsidiaries. All
significant intercompany transactions and balances have been eliminated. Equity investments in which we exercise significant
influence, do not control, and are not the primary beneficiary, are accounted for using the equity method. Investments in which
we do not exercise significant influence over the investee are accounted for under the cost method.
Out-of-Period Adjustment
During the second quarter of 2014, we identified an error which understated a 2013 goodwill impairment charge by
$3.9 million ($3.3 million, net of tax) see Note 6 – Goodwill, Net for further discussion. We recorded an out-of-period
adjustment to correct the error in the quarter ended June 30, 2014 and reduced basic and diluted net income per share by $0.04
for the year ended December 31, 2014. We assessed the materiality of this error in accordance with the SEC’s Staff Accounting
Bulletin (“SAB”) No. 99 and SAB No. 108, and concluded the error was not material to the results of operations or financial
condition for the prior annual, interim periods or the full year results for fiscal year 2014.
Use of Estimates
The preparation of financial statements in accordance with general accepted accounting policies ("GAAP") requires
management to make estimates and assumptions that affect the financial statements. Actual results could differ from the
estimates and assumptions used.
Cash Equivalents
We consider cash equivalents to be all short-term investments that have an initial maturity of 90 days or less and are
not restricted.
Accounts Receivable
Accounts receivable are generally due from mortgage originators and servicers, financial institutions, insurers, and
other businesses, government and government-sponsored enterprises located throughout the United States and abroad. Credit is
extended based on an evaluation of the client’s financial condition, and generally, collateral is not required.
The allowance for doubtful accounts for all probable uncollectible receivables is based on a combination of historical
data, cash payment trends, specific client issues, write-off trends, general economic conditions and other factors. These factors
are continuously monitored by management to arrive at the estimate for the amount of accounts receivable that may be
ultimately uncollectible. In circumstances where we are aware of a specific client’s inability to meet its financial obligations,
we record a specific allowance for doubtful accounts against amounts due to reduce the net recognized receivable to the amount
50
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
we reasonably believe will be collected. Management believes the balances for allowance for doubtful accounts at
December 31, 2014 and 2013 are reasonably stated.
Marketable Securities
Debt securities are carried at fair value and consist primarily of investments in obligations of various corporations and
mortgage-backed securities. Equity securities are carried at fair value and consist primarily of investments in marketable
common and preferred stock. We classify our publicly traded debt and equity securities as available-for-sale and carry them at
fair value with unrealized gains or losses classified as a component of accumulated other comprehensive income/(loss). As of
December 31, 2014 and 2013, our marketable securities consist primarily of investments in preferred stock of $22.3 million and
$22.2 million, respectively.
Property and Equipment
Property and equipment are recorded at cost. Property and equipment includes computer software acquired or
developed for internal use and for use with our products. Software development costs include certain payroll-related costs of
employees directly associated with developing software and payments to third parties for completed or developing software.
We begin capitalizing qualifying software development costs on a project when the preliminary project stage is completed and
management has authorized further funding for completion. Capitalization ends once a project is substantially complete and the
software is ready for its intended use. Costs incurred in the planning and post-implementation phases of software developing
are expensed as incurred.
Depreciation on buildings and on furniture and equipment is computed using the straight-line method over estimated
useful lives of 25 to 40, and 3 to 10 years, respectively. Capitalized software costs are amortized using the straight-line method
over estimated useful lives of 3 to 10 years. Leasehold improvements are amortized over useful lives that are consistent with the
lease terms.
Capitalized Data and Database Development Costs, Net
Capitalized data and database development costs represent our cost to acquire or develop the proprietary databases of
information for client use. The costs are capitalized from the time the third party data is acquired until the information is ready
for use, assuming both the preliminary project stage is complete and management has authorized funding for the completion of
the data project. Property and eviction data costs are amortized using the straight-line method over estimated useful lives of 5 to
20 years.
The carrying value for the flood data zone certification is $55.4 million as of December 31, 2014 and 2013. Because
properly maintained flood zone databases have indefinite lives and do not diminish in value with the passage of time, no
provision has been made for depreciation or amortization. We periodically analyze our assets for impairment. This analysis
includes, but is not limited to, the effects of obsolescence, duplication, demand and other economic factors. See further
discussion in Note 4 – Capitalized Data and Database Development Costs, Net.
Restricted Cash
Restricted cash is comprised of certificates of deposit that are pledged for various letters of credit secured by the
Company. We deem the carrying value to be a reasonable estimate of fair value due to the nature of these instruments.
Purchase Accounting
The purchase method of accounting requires companies to assign values to assets and liabilities acquired based upon
their fair values at the acquisition date. In most instances, there are not readily defined or listed market prices for individual
assets and liabilities acquired in connection with a business, including intangible assets. The determination of fair value for
assets and liabilities in many instances requires a high degree of estimation. The valuation of intangible assets, in particular, is
very subjective. We generally obtain third-party valuations to assist us in estimating fair values. The use of different valuation
techniques and assumptions could change the amounts and useful lives assigned to the assets and liabilities acquired and related
amortization expense.
51
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Goodwill
We perform an annual impairment test for goodwill and other indefinite-lived intangible assets for each reporting unit
every fourth quarter. In addition, we periodically assess whether events or circumstances have occurred that potentially indicate
the carrying amounts of these assets may not be recoverable. In assessing the overall carrying value of our goodwill and other
intangibles, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Examples of
such events or circumstances include the following: cost factors, financial performance, legal and regulatory factors, entity
specific events, industry and market factors, macroeconomic conditions and other considerations.
If, after assessing the totality of events or circumstances, we determine that it is more likely than not the fair value of a
reporting unit is less than its carrying value, then our impairment testing process may include two additional steps. The first
step (“Step 1”) compares the fair value of each reporting unit to its book value. The fair value of each reporting unit is
determined by using discounted cash flow analysis and market approach valuations. If the fair value of the reporting unit
exceeds its book value, then goodwill is not considered impaired and no additional analysis is required. However, if the book
value is greater than the fair value, a second step (“Step 2”) must be completed to determine if the implied fair value of the
goodwill exceeds the book value of the goodwill.
Step 2 involves calculating an implied fair value of goodwill for each reporting unit for which Step 1 indicated
impairment. The implied fair value of goodwill is determined in a manner similar to the amount of goodwill calculated in a
business combination, by measuring the excess of the estimated fair value of the reporting unit, as determined in Step 1, over
the aggregate estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was
being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned
to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied
fair value of the goodwill, an impairment loss is recorded for the excess. An impairment loss cannot exceed the carrying value
of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill
impairment losses is not permitted. The valuation of goodwill requires assumptions and estimates of many critical factors
including revenue growth, cash flows, market multiples and discount rates. Forecasts of future operations are based, in part, on
operating results and our expectations as to future market conditions. These types of analysis contain uncertainties because they
require us to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future
business strategies. However, if actual results are not consistent with our estimates and assumptions, we may be exposed to an
additional impairment loss that could be material.
These tests utilize a variety of valuation techniques, all of which require us to make estimates and judgments. Fair
value is determined by employing an expected present value technique, which utilizes multiple cash flow scenarios that reflect a
range of possible outcomes and an appropriate discount rate. The use of comparative market multiples compares the reporting
unit to other comparable companies (if such comparables are present in the marketplace) based on valuation multiples to arrive
at a fair value. We also use certain of these valuation techniques in accounting for business combinations, primarily in the
determination of the fair value of acquired assets and liabilities. In assessing the fair value, we utilize the results of the
valuations and consider the range of fair values determined under all methods and the extent to which the fair value exceeds the
book value of the equity. See further discussion in Note 6 – Goodwill, Net.
Other Intangible Assets
Our intangible assets consist of covenants not to compete, client lists and trade names. Each of these intangible assets
is amortized on a straight-line basis over its useful life ranging from 2 to 20 years and is subject to impairment tests on a
periodic basis.
Long-Lived Assets
Long-lived assets held and used include investment in affiliates, property and equipment, capitalized software and
other intangible assets. Management uses estimated future cash flows (undiscounted and excluding interest) to measure the
recoverability of long-lived assets held and used, at the asset group level, whenever events or changes in circumstances indicate
that the carrying value of an asset may not be fully recoverable. If the undiscounted cash flow analysis indicates a long-lived
asset is not recoverable, the impairment loss recorded is the excess of the carrying amount of the asset over its fair value.
52
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
In addition, we carry long-lived assets held for sale at the lower of cost or market as of the date that certain criteria
have been met.
Revenue Recognition
We derive our revenues principally from U.S. mortgage originators and servicers with good creditworthiness. Our
product and service deliverables are generally comprised of data or other related services. Our revenue arrangements with our
clients generally include a work order or written agreement specifying the data products or services to be delivered and related
terms of sale including payment amounts and terms. The primary revenue recognition-related judgments we exercise are to
determine when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) our price to the buyer is fixed or determinable; and (4) collectability is reasonably
assured.
For products or services where delivery occurs at a point in time, we recognize revenue upon delivery.
These products or services include sales of tenancy data and analytics, credit solutions for mortgage and automotive
industries, under-banked credit services, flood data and services, claims management and default services.
For products or services where delivery occurs over time, we recognize revenue ratably on a subscription
basis over the contractual service period once initial delivery has occurred. Generally these service periods range
from one to three years. Products or services recognized on a license or subscription basis include information and
analytic products, flood database licenses, realtors solutions and lending solutions. For certain of our products or
services, clients may also pay us upfront set-up fees, which we defer and recognize into revenue over the longer of
the contractual term or expected client relationship period.
Tax service revenues are comprised of periodic loan fees and life-of-loan fees. For periodic loans, we generate
monthly fees at a contracted fixed rate for as long as we service the loan. Loans serviced with a one-time, life-of-loan fee are
billed once the loan is boarded to our tax servicing system in accordance with a client tax servicing agreement. Life-of-loan fees
are then deferred and recognized ratably over the expected service period. The rates applied to recognize revenues assume a 10-
year expected life and are adjusted to reflect prepayments. We review the tax service contract portfolio quarterly to determine if
there have been material changes in the expected lives, deferred on-boarding costs, expected service period and/or changes in
the number and/or timing of prepayments. Accordingly, we may adjust the rates to reflect current trends.
Cost of Services
Cost of services represents direct costs incurred in the creation and delivery of our products and services. Cost of
services consists primarily of data acquisition costs, royalty fees, hardware and software expense associated with transaction
processing systems, telecommunication and computer network expense and occupancy costs associated with facilities where
these functions are performed by employees. Cost of services also includes client service costs, which include personnel costs
to collect, maintain and update our proprietary databases, to develop and maintain software application platforms and to provide
consumer and client call center support.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of personnel-related costs, selling costs, restructuring
costs, corporate costs, fees for professional and consulting services, advertising costs, uncollectible accounts and other costs of
administration such as marketing, human resources, finance, legal and administrative roles.
Income Taxes
We account for income taxes under the asset and liability method, whereby we recognize deferred tax assets and
liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases as well as expected benefits of utilizing net operating loss and credit
carryforwards. We measure deferred tax assets and liabilities using enacted tax rates we expect to apply in the years in which
we expect to recover or settle those temporary differences. We recognize in income the effect of a change in tax rates on
deferred tax assets and liabilities in the period that includes the enactment date.
53
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
We recognize the effect of income tax positions only if sustaining those positions is more likely than not. We reflect
changes in recognition or measurement of uncertain tax positions in the period in which a change in judgment occurs. We
recognize interest and penalties, if any, related to uncertain tax positions within income tax expense. Accrued interest and
penalties are included within the related tax liability line in the consolidated balance sheet.
We evaluate the need to establish a valuation allowance based upon expected levels of taxable income, future reversals
of existing temporary differences, tax planning strategies and recent financial operations. We establish a valuation allowance to
reduce deferred tax assets to the extent we believe it is more-likely-than-not that some or all of the deferred tax assets will not
be realized.
Comprehensive Income/(Loss)
Comprehensive income/(loss) includes all changes in equity except those resulting from investments by owners and
distributions to owners. Specifically, foreign currency translation adjustments, amounts related to supplemental benefit plans,
unrealized gains and losses on interest rate swap transactions and unrealized gains and losses on investment are recorded in
other comprehensive income/(loss).
The following table shows the components of accumulated other comprehensive loss, net of taxes as of December 31,
2014 and 2013:
Cumulative foreign currency translation
Cumulative supplemental benefit plans
Net unrecognized losses on interest rate swap
Net unrealized gains on marketable securities
Accumulative other comprehensive loss
Share-based Compensation
2014
(77,460) $
(4,266)
(2,335)
275
(83,786) $
2013
(50,787)
(568)
(2,482)
248
(53,589)
$
$
We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-
date fair value of the award. The cost is recognized over the period during which an employee is required to provide services in
exchange for the award. We used the binomial lattice option-pricing model to estimate the fair value for any options granted
after December 31, 2005 through December 31, 2009. For the options granted subsequent to December 31, 2009, we used the
Black-Scholes model to estimate the fair value. We utilize the Monte-Carlo simulation to estimate the fair value for any
performance-based restricted stock units (“PBRSUs”) granted. We utilize the straight-line single option method of attributing
the value of stock-based compensation expense unless another expense attribution model is required. As stock-based
compensation expense recognized in results of operations is based on awards ultimately expected to vest, stock-based
compensation expense has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. We apply the long-form method for
determining the pool of windfall tax benefits.
Currently, our primary means of providing stock-based compensation is granting restricted stock units (“RSUs”),
PBRSUs and stock options. The fair value of any grant is based on the market value of our shares on the date of grant and is
generally recognized as compensation expense over the vesting period. Shares granted to certain key employees have graded
vesting and have a service and performance requirement and are therefore expensed using the accelerated multiple-option
method to record stock-based compensation expense. All other awards have graded vesting and service is the only requirement
to vest in the award and are therefore generally expensed using the straight-line single option method to record stock-based
compensation expense.
In addition, we have an employee stock purchase plan that allows eligible employees to purchase common stock of the
Company at 85.0% of the closing price on the first or last day of each quarter, whichever is lower (which was updated for 2014
from the closing price on the last day of each quarter). We recognize an expense in the amount equal to the estimated fair value
of the discount. The 2001 employee stock purchase plan expired in September 2011. Our 2012 employee stock purchase plan
54
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
was approved by our stockholders at our 2012 annual meeting of stockholders and the first offering period commenced in
October 2012.
See Note 13 –Share-based Compensation Plans for additional information related to stock options and restricted stock
units.
Foreign Currency
The functional currencies of our foreign subsidiaries are their respective local currencies. The financial statements of
the foreign subsidiaries are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as
of the balance sheet date, stockholders’ equity at the historical rates of exchange and income and expense amounts at average
rates prevailing throughout the period. Translation adjustments resulting from the translation of the subsidiaries’ accounts are
included in “Accumulated other comprehensive income/(loss),” a separate component of stockholders’ equity. Gains and losses
resulting from foreign currency transactions are included within “Selling, general and administrative expenses” and are not
material to the results of operations.
Earnings/(loss) Per Share
Basic earnings/(loss) per share is computed by dividing net income/(loss) available to our stockholders by the
weighted-average number of common shares outstanding. The computation of diluted earnings per share is similar to the
computation of basic earnings per share, except that the weighted-average number of common shares outstanding is increased
to include the number of additional common shares that would have been outstanding if dilutive stock options had been
exercised and RSUs and PBRSUs were vested. The dilutive effect of stock options and unvested RSUs and PBRSUs is
computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock
options and vesting of RSUs and PBRSUs would be used to purchase shares of common stock at the average market price for
the period. The assumed proceeds include the purchase price the grantee pays, the hypothetical windfall tax benefit that we
receive upon assumed exercise or vesting and the hypothetical average unrecognized compensation expense for the period. We
calculate the assumed proceeds from excess tax benefits based on the “as-if” deferred tax assets calculated under stock-based
compensation standards.
Tax Escrow Disbursement Arrangements
We administer tax escrow disbursements as a service to our clients in connection with our tax services business. These
deposits are maintained in segregated accounts for the benefit of our clients. These deposits totaled $265.6 million and $317.2
million at December 31, 2014 and 2013, respectively. Because these deposits are held on behalf of our clients, they are not our
funds and, therefore, are not included in the accompanying consolidated balance sheets.
These deposits generally remain in the accounts for a period of two to five business days, and we invest the funds in
highly-rated, liquid investments, such as bank deposit products or AAA-rated money market funds. We earn interest income
from these investments and bear the risk of any losses. However, we have not historically incurred any investment losses and do
not anticipate incurring any future investment losses. As a result, we do not maintain any reserves for losses in value of these
investments.
Under our contracts with our clients, if we make a payment in error or fail to pay a taxing authority when a payment is
due, we could be held liable to our clients for all or part of the financial loss they suffer as a result of our act or omission. We
maintained claim reserves relating to incorrect disposition of assets of $20.2 million and $21.4 million as of December 31, 2014
and 2013, respectively.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance related to determining
whether substantial doubt exists about an entity's ability to continue as a going concern. The amendment provides guidance for
determining whether conditions or events give rise to substantial doubt that an entity has the ability to continue as a going
concern within one year following issuance of the financial statements, and requires specific disclosures regarding the
conditions or events leading to substantial doubt. The updated guidance is effective for annual reporting periods and interim
periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted but we do not anticipate
55
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
electing early adoption. We do not expect the adoption of this guidance to have a material impact on our consolidated financial
statements.
In June 2014, the FASB issued updated guidance related to stock compensation. The amendment requires that a
performance target that affects vesting and that could be achieved after the requisite period, be treated as a performance
condition. The updated guidance is effective for annual reporting periods and interim periods within those annual periods
beginning after December 15, 2015. Earlier adoption is permitted but we do not anticipate electing early adoption. We do not
expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In May 2014, the FASB issued updated guidance on revenue recognition in order to 1) remove inconsistencies in
revenue requirements, 2) provide a better framework for addressing revenue issues, 3) improve comparability across entities,
industries, etc., 4) provide more useful information through improved disclosures, and 5) simplify the preparation of financial
statements by reducing the number of requirements to which an entity must refer. Under the amendment, an entity should
recognize revenue to depict the transfer of promised goods or services to clients in the amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting
treatment for the incremental costs of obtaining a contract, which would not have been incurred had the contract not been
obtained. Further, an entity is required to disclose sufficient information to enable the user of the financial statements to
understand the nature, amount, timing, and uncertainty of revenue and cash flows from contracts with clients. The updated
guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that
reporting period. Early adoption is not permitted. We are currently evaluating the impact of the adoption of this guidance on our
consolidated financial statements.
In April 2014, the FASB issued updated guidance on reporting discontinued operations and disclosures of disposals of
components of an entity. Under the amendment only those disposals of components of an entity that represent a strategic shift
that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations
in the financial statements. Additionally, the elimination of the component's operations, cash flows and significant continuing
involvement conditions have been removed. Further, an equity method investment could be reported as discontinued operations.
The updated guidance is effective prospectively for all disposals or classifications as held for sale that occur within annual
periods beginning after December 15, 2014. We do not expect the adoption of this guidance to have a material impact on our
consolidated financial statements.
In July 2013, the FASB issued updated guidance on the financial statement presentation of an unrecognized tax benefit
when a net operating loss (“NOL”), a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit, or a
portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for
a NOL carryforward, a similar tax loss, or a tax credit carryforward. However, to the extent a NOL carryforward, similar tax
loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction and the
entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the
financial statements as a liability. The updated guidance is effective for fiscal years and interim periods within those years
beginning after December 15, 2013. Adoption of this guidance did not have a material impact on our consolidated financial
statements.
In March 2013, the FASB issued updated guidance related to the release of the cumulative translation adjustment into
net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial
interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or
conveyance of oil and gas mineral rights) within a foreign entity. This update clarifies that the release of cumulative translation
adjustments into net income is required for both an entity ceasing to have a controlling financial interest in a subsidiary or
group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and
gas mineral rights) within a foreign entity and when there is a loss of a controlling financial interest in a foreign entity or a step
acquisition involving an equity method investment that is a foreign entity. The updated guidance is effective for annual and
interim periods beginning after December 15, 2013. Adoption of this guidance did not have a material impact on our
consolidated financial statements.
56
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 3 - Property and Equipment, Net
Property and equipment, net as of December 31, 2014 and 2013 consists of the following:
(in thousands)
Land
Buildings
Furniture and equipment
Capitalized software
Leasehold improvements
Less: accumulated depreciation
Property and equipment, net
2014
2013
$
4,000
$
230
91,397
701,482
30,001
4,000
10,780
90,420
498,522
50,369
827,110
(458,496)
368,614
$
654,091
(456,549)
197,542
$
Depreciation expense for property and equipment was approximately $68.3 million, $60.8 million and $62.4 million
for the years ended December 31, 2014, 2013 and 2012, respectively. We have reclassified $1.7 million of property and
equipment, net, to assets of discontinued operations as of December 31, 2013. Further, we recognized a gain of $13.9 million
and a loss of $1.0 million on sale of property and equipment for the years ended December 31, 2014 and 2012, respectively. See
Note 12 - Fair Value of Financial Instruments for further discussion on property and equipment, net measured at fair value on a
nonrecurring basis.
Note 4 - Capitalized Data and Database Development Costs, Net
Capitalized data and database development costs, net as of December 31, 2014 and 2013 consists of the following:
(in thousands)
Property data
Flood data
Eviction data
Less accumulated amortization
Capitalized data and database costs, net
2014
477,221
55,416
18,068
550,705
(217,440)
333,265
$
$
2013
446,991
55,416
16,559
518,966
(188,778)
330,188
$
$
Amortization expense for capitalized data and database development costs was approximately $32.6 million, $30.1
million and $27.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Note 5 - Investment in Affiliates, Net
Investment in affiliates, net is accounted for under the equity method of accounting as we are deemed to have
significant influence over the affiliate but do not control or have a majority voting interest in the affiliate. The investment is
carried at the cost of acquisition, including subsequent capital contributions and loans from us, plus our equity in undistributed
earnings or losses since acquisition. Income tax expense of $8.9 million, $16.5 million and $22.1 million was recorded on those
earnings for the years ended December 31, 2014, 2013 and 2012, respectively. Dividends from equity method investments were
$38.7 million, $36.7 million and $70.7 million for the years ended December 31, 2014, 2013 and 2012, respectively.
57
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
One of our subsidiaries owns a 50.1% interest in RELS LLC, a joint venture that provides products and services used
in connection with loan originations. This investment in an affiliate contributed 80.0%, 70.7% and 73.8% of our total equity in
earnings of affiliates, net of tax, for the years ended December 31, 2014, 2013 and 2012, respectively. For the year ended
December 31, 2014, 2013 and 2012 we recorded $6.4 million, $8.7 million and $14.2 million, respectively, of operating
revenues related to RELS LLC. Based on the terms and conditions of the joint venture agreement, we have significant influence
but do not have control of, or a majority voting interest in, the joint venture. Accordingly, this investment is also accounted for
under the equity method. The following summarized financial information for this investment (assuming 100.0% ownership
interest) is as follows:
(in thousands)
Balance sheets
Total assets
Total liabilities
(in thousands)
Statements of operations
Total revenues
Expenses and other
Net income from continuing operations
Income from discontinued operations
Net income attributable to RELS LLC
CoreLogic equity in earnings of affiliate, pre-tax
2014
2013
$
$
44,536
15,977
$
$
56,925
28,562
2014
2013
2012
$ 221,328
$ 347,070
$ 451,876
183,761
$ 37,567
—
$ 37,567
$ 18,821
282,686
$ 64,384
—
$ 64,384
$ 32,256
370,533
$ 81,343
7,050
$ 88,393
44,285
In March 2014, we acquired certain equity interests, assets and intellectual property; which we collectively refer to as
"MSB/DataQuick." See Note 16 - Acquisitions for additional information. The acquisition included a 29.4% interest in
Symbility Solutions Inc. ("Symbility"). In connection with the purchase price allocation, we recorded $18.3 million to reflect
our basis in Symbility. The purchase allocation included $11.3 million of basis difference between the purchase price and our
interest in the net assets of Symbility, which is comprised of an indefinite-lived component of $2.0 million and a finite-lived
component of $9.4 million with an estimated weighted-average life of 15 years.
In September 2013, we acquired an additional 10% interest in PropertyIQ Ltd. ("PIQ") for NZD$3.3 million, or $2.6
million, a New Zealand joint venture, resulting in a 60% controlling interest. As we previously held a noncontrolling interest in
PIQ, we recorded a gain of approximately $6.6 million during the third quarter of 2013, which is included in gain on
investments and other, net in the accompanying consolidated statement of operations. Prior to our acquisition of the controlling
interest, we accounted for the investment in PIQ using the equity method. See Note 16 - Acquisitions for additional information.
In August 2012, we completed the disposition of our remaining 29.8% interest in Lone Wolf Real Estate Technologies,
Inc. for $8.0 million. The disposition resulted in a gain of $2.2 million, net for the year ended December 31, 2013. This gain is
included in gain on investments and other, net in the accompanying consolidated statements of operations.
See Note 12 - Fair Value of Financial Instruments for further discussion on investment in affiliates, net measured at
fair value on a nonrecurring basis.
58
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 6 - Goodwill, Net
A reconciliation of the changes in the carrying amount of goodwill, net, by reporting unit, for the years ended
December 31, 2014 and 2013 is as follows:
(in thousands)
Balance at January 1, 2013
Goodwill
Accumulated impairment losses
Goodwill, net
Acquisitions
Translation adjustments
Document solutions reclassification
Other
Balance at December 31, 2013
Goodwill, net
Acquisitions
Transfer from assets of discontinued operations
Impairment loss on transferred assets of discontinued operations
Translation adjustments
Under-banked credit services reclassification
Other
Balance at December 31, 2014
Goodwill, net
$
D&A
TPS
Consolidated
$
708,577
(600)
707,977
26,846
(20,262)
(26,044)
325
688,842
285,801
—
—
(12,527)
(9,044)
4,257
$
653,771
(6,925)
646,846
28,942
—
26,044
—
1,362,348
(7,525)
1,354,823
55,788
(20,262)
—
325
701,832
1,390,674
39,140
77,616
(3,900)
(303)
9,044
—
324,941
77,616
(3,900)
(12,830)
—
4,257
$
957,329
$
823,429
$
1,780,758
As of December 31, 2013, we concluded that we would actively pursue the sale of our Asset Management and
Processing Solutions ("AMPS") reporting segment, which was comprised of collateral solutions, field services, technology
solutions, solutions express and outsourcing services. As a result, these businesses were reflected in our consolidated financial
statement as discontinued operations. On September 30, 2014, we completed the sale of our collateral solutions and field
services businesses, which were previously included in our AMPS reporting segment, for consideration of $29.1 million,
subject to working capital adjustments, as well as contingent consideration of up to $20.0 million. Further, we concluded to
cease pursuing the sale of our remaining product lines, previously included in our AMPS reporting segment. These remaining
product lines included our technology solutions, solutions express and outsourcing services product lines. These product lines
were previously reflected as discontinued operations and are now reflected as part of continuing operations within our TPS
segment reporting disclosures for all periods presented. See Note 1 - Description of the Company and Note 18 - Discontinued
Operations for further discussion.
During 2013, as part of the process of marketing the sale of the AMPS businesses, we developed long-term projections
and obtained indicative fair market values from potential participants. The level of indicative values was below the net book
value of the businesses being marketed; therefore, we recorded a pre-tax non-cash impairment of $42.2 million related to our
retained product lines, which is currently within continuing operations, and a pre-tax non-cash impairment of $9.6 million
related to the businesses sold within discontinued operations. During the second quarter of 2014, we identified and corrected an
error which understated the 2013 goodwill impairment charge by $3.9 million related to the retained product lines within
continuing operations.
At September 30, 2014, we allocated the former AMPS reporting unit goodwill between the businesses sold and the
retained product lines based on their relative fair value and also evaluated the retained goodwill of $73.7 million at the TPS
reporting unit level noting no additional impairment indicators. Additionally, we reclassified $20.0 million of goodwill, net, to
assets of discontinued operations as of the year ended December 31, 2013, in connection with the sale of our collateral solutions
and field services businesses. Further, in September 2014, we transferred our under-banked credit services business from our
D&A segment to our TPS segment due to changes in our management structure and internal reporting, see Note 1 - Description
59
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
of the Company. As a result of the transfer, we revised our reporting for segment disclosure purposes, see Note 19 - Segment
Financial Information and reassessed our reporting units for purposes of evaluating the carrying value of our goodwill. This
assessment required us to perform a third quarter reassignment of our goodwill to each reporting unit impacted using the
relative fair value approach, based on the fair values of the reporting units as of August 31, 2014. As of December 31, 2014 and
December 31, 2013, the assessment resulted in $8.7 million and $9.0 million, respectively, of goodwill allocated to our TPS
reporting unit previously from D&A.
In connection with our acquisition of MSB/DataQuick, we recorded $277.8 million of goodwill within our D&A
reporting unit and $29.9 million of goodwill within our TPS reporting unit for the year ended December 31, 2014. Further, for
the year ended December 31, 2014, we recorded $2.3 million of goodwill in connection with our acquisition of Terralink
International Limited ("Terralink") within our D&A segment, $9.2 million of goodwill in connection with our acquisition of
Bank of America's mortgage-related credit reporting operations within our TPS segment and $5.7 million of goodwill in
connection with acquisitions that were not significant, all of which were within our D&A reporting unit. See Note 16 -
Acquisitions for additional information. For the year ended December 31, 2013, we recorded $12.7 million of goodwill in
connection with our acquisition of EQECAT, Inc. and EQECAT Sarl ("EQECAT") in December 2013, $14.9 million of
goodwill in connection with our acquisition of an additional 10% interest in PIQ in September 2013, $28.9 million of goodwill
in connection with our acquisition of Bank of America's flood zone determination and tax processing services operations in July
2013 and $0.5 million of goodwill in connection with an acquisition that was not significant.
Our policy is to perform an annual goodwill impairment test for each reporting unit in the fourth quarter. In addition to
our annual impairment test, we periodically assess whether events or circumstances occurred that potentially indicate that the
carrying amounts of these assets may not be recoverable. Determining the fair value of a reporting unit is judgmental in nature
and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates
and future market conditions, among others. Key assumptions used to determine the fair value of our reporting units in our
testing were: (a) expected cash flow for the period from 2015 to 2020; and (b) a discount rate ranging from 9.0% to 9.5%,
which was based on management's best estimate of the after-tax weighted average cost of capital. Based on the results of our
fourth quarter goodwill impairment test, the goodwill attributable to our reporting units is not impaired as of December 31,
2014. It is reasonably possible that changes in the facts, judgments, assumptions and estimates used in assessing the fair value
of the goodwill could cause a reporting unit to become impaired.
Note 7 - Other Identifiable Intangible Assets, Net
Other identifiable intangible assets, net as of December 31, 2014 and 2013 consist of the following:
(in thousands)
Gross
2014
Accumulated
Amortization
Client lists
Non-compete agreements
Trade names and licenses
$
394,070
9,332
93,497
$
(192,612) $
(7,351)
(18,666)
Net
201,458
1,981
74,831
$
Gross
318,939
9,150
31,108
$
496,899
$
(218,629) $
278,270
$
359,197
$
2013
Accumulated
Amortization
$
(165,578) $
(6,659)
(11,152)
(183,389) $
Net
153,361
2,491
19,956
175,808
Amortization expense for other identifiable intangible assets, net was $37.5 million, $35.1 million and $27.1 million
for the years ended December 31, 2014, 2013 and 2012, respectively. See Note 12 - Fair Value of Financial Instruments for
further discussion on other identifiable intangible assets measured at fair value on a nonrecurring basis.
60
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Estimated amortization expense for other identifiable intangible assets anticipated for the next five years is as follows:
(in thousands)
2015
2016
2017
2018
2019
Thereafter
$
39,795
33,650
31,702
30,898
28,139
114,086
$
278,270
61
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 8 - Long-Term Debt
Long-term debt as of December 31, 2014 and 2013 consist of the following:
(in thousands)
Acquisition-related notes:
Non-interest bearing acquisition note, $5.0 million installment due March
2016
Notes:
7.25% senior notes due June 2021
5.7% senior debentures due August 2014
7.55% senior debentures due April 2028
Bank debt:
Revolving line of credit borrowings due March 2019, weighted-average
interest rate of 3.92% at December 31, 2014
Term loan facility borrowings due March 2019, weighted-average interest rate
of 2.41% at December 31, 2014
Revolving line of credit borrowings due May 2016, weighted-average interest
rate of 1.9% at December 31, 2013, extinguished March 2014
Term loan facility borrowings due May 2016, weighted-average interest rate
of 2.9% at December 31, 2013, extinguished in March 2014
Other debt:
Various interest rates with maturities through 2017
Total long-term debt
Less current portion of long-term debt
Long-term debt, net of current portion
7.25% Senior Notes
2014
2013
$
4,623
$
9,276
393,000
—
59,645
85,000
786,250
—
—
2,045
1,330,563
11,352
1,319,211
$
$
393,000
825
59,645
—
—
100,000
275,625
1,559
839,930
28,154
811,776
On May 20, 2011, CoreLogic, Inc. issued $400.0 million aggregate principal amount of 7.25% senior notes due 2021
(the "Notes"). The Notes are guaranteed on a senior unsecured basis by each of our existing and future direct and indirect
subsidiaries that guarantee our Credit Agreement. Separate financial statements for each guarantor subsidiary are not included
in this filing because each guarantor subsidiary is 100% owned and the guarantees are full and unconditional, as well as joint
and several. There were no significant restrictions on the ability of the parent company or any guarantor subsidiary to obtain
funds from its subsidiaries by dividend or loan. The Notes bear interest at 7.25% per annum and mature on June 1, 2021.
Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2011. We
repurchased $7.0 million of the Notes during 2012.
The Notes are senior unsecured obligations and: (i) rank equally with any of our existing and future senior unsecured
indebtedness; (ii) rank senior to all our existing and future subordinated indebtedness; (iii) are subordinated to any of our
secured indebtedness (including indebtedness under our credit facility) to the extent of the value of the assets securing such
indebtedness; and (iv) are structurally subordinated to all of the existing and future liabilities (including trade payables) of each
of our subsidiaries that do not guarantee the Notes. The guarantees will: (i) rank equally with any existing and future senior
unsecured indebtedness of the guarantors; (ii) rank senior to all existing and future subordinated indebtedness of the guarantors;
and (iii) are subordinated in right of payment to any secured indebtedness of the guarantors (including the guarantee of our
credit facility) to the extent of the value of the assets securing such indebtedness.
The Notes are redeemable by us, in whole or in part on or after June 1, 2016 at a price up to 103.63% of the aggregate
principal amount of the Notes, plus accrued and unpaid interest, if any, to the applicable redemption date, subject to other
limitations. We may also redeem up to 35.0% of the original aggregate principal amount of the Notes at any time prior to June
1, 2014 with the proceeds from certain equity offerings at a price equal to 107.25% of the aggregate principal amount of the
Notes, together with accrued and unpaid interest, if any, to the applicable redemption date, subject to certain other limitations.
62
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
We may also redeem some or all of the Notes before June 1, 2016 at a redemption price equal to 100.0% of the aggregate
principal amount of the Notes, plus a "make-whole premium," plus accrued and unpaid interest, if any, to the redemption date.
Upon the occurrence of specific kinds of change of control events, holders of the Notes have the right to cause us to
purchase some or all of the Notes at 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the date of
purchase.
The indenture governing the Notes contains restrictive covenants that limit, among other things, our ability and that of
our restricted subsidiaries to incur additional indebtedness or issue certain preferred equity, pay dividends or make other
distributions or other restricted payments, make certain investments, create restrictions on distributions from restricted
subsidiaries, create liens on properties and certain assets to secure debt, sell certain assets, consolidate, merge, sell or otherwise
dispose of all or substantially all of its assets, enter into certain transactions with affiliates and designate our subsidiaries as
unrestricted subsidiaries. The indenture also contains customary events of default, including upon the failure to make timely
payments on the Notes or other material indebtedness, the failure to satisfy certain covenants and specified events of
bankruptcy and insolvency. If we have a significant increase in our outstanding debt or if our EBITDA decreases significantly,
we may be unable to incur additional amounts of indebtedness, and the holders of the notes may be unwilling to permit us to
amend the restrictive covenants to provide additional flexibility. In addition, the indenture contains a financial covenant for the
incurrence of additional indebtedness that requires that the interest coverage ratio be at least 2.00 to 1.00 on a pro forma basis
after giving effect to any new indebtedness. There are carve-outs that permit us to incur certain indebtedness notwithstanding
satisfaction of this ratio, but they are limited. Based on our EBITDA and interest charges as of December 31, 2014, we would
be able to incur additional indebtedness without breaching the limitation on indebtedness covenant contained in the indenture
and we are in compliance with all of our covenants under the indenture.
Credit Agreement
On March 25, 2014, the Company, CoreLogic Australia Pty Limited and the guarantors named therein entered into a
senior secured credit facility agreement (the "Credit Agreement") with Bank of America, N.A. as administrative agent and other
financial institutions, which replaced our previous senior secured credit facility that was entered into on May 23, 2011 (the
"Terminated Credit Agreement"). The Credit Agreement provides for an $850.0 million five-year term loan facility (the "Term
Facility") and a $550.0 million revolving credit facility (the "Revolving Facility"). The Revolving Facility includes a $100.0
million multicurrency revolving sub-facility and a $50.0 million letter of credit sub-facility. The Credit Agreement also provides
for the ability to increase the Term Facility and Revolving Facility by up to $500.0 million in the aggregate.
The loans under the Credit Agreement bear interest, at our election, at (i) the Alternate Base Rate (as defined in the
Credit Agreement) plus the Applicable Rate (as defined in the Credit Agreement) or (ii) the London interbank offering rate for
Eurocurrency borrowings, or the LIBO Rate, adjusted for statutory reserves, or the Adjusted LIBO Rate plus the Applicable
Rate. The initial Applicable Rate for Alternate Base Rate borrowings is 1.00% and for Adjusted LIBO Rate borrowings is
2.00%. Starting with the full fiscal quarter after the closing date, the Applicable Rate will vary depending on our leverage ratio.
The minimum Applicable Rate for Alternate Base Rate borrowings will be 0.25% and the maximum will be 1.50%. The
minimum Applicable Rate for Adjusted LIBO Rate borrowings will be 1.25% and the maximum will be 2.50%. The Credit
Agreement also requires us to pay commitment fees for the unused portion of the Revolving Facility, which will be a minimum
of 0.25% and a maximum of 0.50%, depending on our leverage ratio.
The obligations under the Credit Agreement are our and the guarantors' senior secured obligations, collateralized by a
lien on substantially all of our and the guarantors' personal property assets and mortgages or deeds of trust on our and the
guarantors' real property with a fair market value of $10.0 million or more (collectively, the "Collateral") and rank senior to any
of our and the guarantors' unsecured indebtedness (including the Notes) to the extent of the value of the Collateral.
The Credit Agreement provides that loans under the Term Facility shall be repaid in quarterly installments,
commencing on June 30, 2014 and continuing on each three-month anniversary thereafter until and including December 31,
2018 in an amount equal to $10.6 million on each repayment date from June 30, 2014 through March 31, 2016, $21.3 million
on each repayment date from June 30, 2016 through March 31, 2017 and $31.9 million on each repayment date from June 30,
2017 through December 31, 2018. The outstanding balance of the term loan will be due on the fifth anniversary of the closing
date of the Credit Agreement. The Term Facility is also subject to prepayment from (i) the net cash proceeds of certain debt
incurred or issued by us and the guarantors and (ii) the net cash proceeds received by us or the guarantors from certain assets
sales and recovery events, subject to certain reinvestment rights.
63
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
The Credit Agreement contains financial maintenance covenants, including a (i) maximum total leverage ratio not to
exceed 4.25 to 1.00 (stepped down to 4.00 to 1.00 starting with the fiscal quarter ending June 30, 2014, with a further step down
to 3.50 to 1.00 starting with the fiscal quarter ending June 30, 2015) and (ii) a minimum interest coverage ratio of not less than
3.00 to 1.00. The Credit Agreement also contains restrictive covenants that limit, among other things, our ability and that of our
subsidiaries, to incur additional indebtedness or issue certain preferred equity, pay dividends or make other distributions or
other restricted payments, make certain investments, create restrictions on distributions from subsidiaries, to enter into sale
leaseback transactions, amend the terms of certain other indebtedness, create liens on certain assets to secure debt, sell certain
assets, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and enter into certain transactions
with affiliates. The Credit Agreement also contains customary events of default, including upon the failure to make timely
payments under the Term Facility and the Revolving Facility or other material indebtedness, the failure to satisfy certain
covenants, the occurrence of a change of control and specified events of bankruptcy and insolvency. If we have a significant
increase in our outstanding debt or if our earnings decrease significantly, we may be unable to incur additional amounts of
indebtedness, and the lenders under the Credit Agreement may be unwilling to permit us to amend the financial or restrictive
covenants described above to provide additional flexibility.
For the year ended December 31, 2014, we prepaid $31.9 million of outstanding indebtedness under the Term Facility.
This prepayment was applied to the most current portion of the term loan amortization schedule. At December 31, 2014, we had
borrowing capacity under the revolving lines of credit of $465.0 million, and were in compliance with the financial and
restrictive covenants of our Credit Agreement. As of December 31, 2014 and 2013, we have recorded $9.2 million and $4.6
million, respectively, of accrued interest expense.
7.55% Senior Debentures
In April 1998, we issued $100.0 million in aggregate principal amount of 7.55% senior debentures due 2028. In April
2010, in anticipation of the Separation, we commenced a cash tender offer for these debentures and also solicited consent from
the holders thereof to expressly affirm that the Separation would not conflict with the terms of the debentures. In April 2010, we
announced that valid consents were tendered representing over 50.0% of the outstanding debentures. Accordingly, we received
the requisite approvals from debenture holders and amended the related indentures. The indentures governing these debentures,
as amended, contain limited restrictions on the Company.?
Acquisition-Related Notes
In March 2011, we acquired a joint venture interest in Speedy Title & Appraisal Review Services LLC ("STARS'). Our
initial investment in STARS was $20.0 million and we also issued a note payable for an additional $15.0 million of
consideration payable in three equal installments of $5.0 million. The remaining note payable is for $5.0 million and is non-
interest bearing and was discounted to $4.6 million as of December 31, 2014.
Debt Issuance Costs
In connection with entering into the Credit Agreement, we incurred approximately $14.0 million of debt issuance costs
of which $0.5 million was recorded as interest expense in the accompanying consolidated statements of operations for the year
ended December 31, 2014. We capitalized the remaining $13.5 million of debt issuance costs, within other assets in the
accompanying consolidated balance sheet as of December 31, 2014, and will amortize these costs over the term of the Credit
Agreement. When we entered into the Credit Agreement, we had unamortized costs of $5.4 million related to previously
recorded debt issuance costs, which we will amortize over the term of the Credit Agreement and we wrote-off $0.8 million of
unamortized debt issuance costs during the year ended December 31, 2014.
Interest Rate Swaps
In May 2014, we entered into amortizing interest rate swap transactions ("Swaps"). The Swaps became effective on
December 31, 2014 and terminate in March 2019. The Swaps are for an initial notional balance of $500.0 million, with a fixed
interest rate of 1.57%, and amortize quarterly by $12.5 million through December 31, 2017 and $25.0 million through
December 31, 2018, with a remaining notional amount of $250.0 million. Previous amortizing interest rate swap transactions,
entered into in June 2011, were terminated with a realized loss of $4.1 million for the year ended December 31, 2014 upon full
repayment of the underlying debt associated with the Terminated Credit Agreement.
64
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
We entered into the Swaps in order to convert a portion of our interest rate exposure on the Term Facility floating rate
borrowings from variable to fixed. We have designated the Swaps as cash flow hedges. The estimated fair value of these cash
flow hedges resulted in a liability of $3.8 million and $4.0 million at December 31, 2014 and 2013, respectively, which is
included in the accompanying consolidated balance sheets as a component of other liabilities.
For the years ended December 31, 2014, 2013 and 2012, an unrealized loss of $2.4 million (net of $1.5 million in
deferred taxes), an unrealized gain of $1.5 million (net of $0.9 million in deferred taxes) and an unrealized loss of $0.9 million
(net of $0.6 million in deferred taxes), respectively, were recognized in other comprehensive loss related to these Swaps.
The aggregate annual maturities for long-term debt are as follows:
(in thousands)
Year ending December 31,
2015
2016
2017
2018
2019
Thereafter
Total (1)
$
$
11,352
80,080
117,386
127,601
541,875
452,645
1,330,939
(1)
Includes the acquisition related remaining note payable of $5.0 million, which is non-interest bearing and discounted
to $4.6 million as of December 31, 2014.
Note 9 - Income Taxes
Income before income taxes from continuing operations is as follows for the years ended December 31, 2014, 2013
and 2012:
United States
Foreign
Total
2014
2013
2012
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
$
$
86,195 $
19,196
105,391 $
22,988
—
22,988
$
$
94,744 $
11,881
106,625 $
43,022
795
43,817
$
$
125,644 $
(2,074)
123,570 $
56,928
1,153
58,081
For the years ended December 31, 2014, 2013 and 2012, income on continuing operations attributable to Corelogic
includes income of certain incorporated noncontrolling interests.
65
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Provision for Income Taxes
The provision for taxes consists of the following for the years ended December 31, 2014, 2013 and 2012:
(in thousands)
2014
2013
2012
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
$
186 $
7,603
$
14,083
$
23,574 $
18,929
2,137
3,249
5,572
26,769
1,299
(3,870)
24,198
29,770 $
1,265
—
8,868
—
—
—
—
8,868
$
19,294 $
(1,596)
2,006
2,151
222
19,704
16,456
14,568
(273)
(326)
13,969
33,673 $
—
—
—
—
16,456
$
5,389
(3,358)
25,605
25,530
2,658
9,695
37,883
63,488 $
2,846
323
22,098
—
—
—
—
22,098
Total income tax provision
$
A reconciliation of the provision for taxes based on the federal statutory income tax rate on income from continuing
operations to our effective income tax rate is as follows for the years ended December 31, 2014, 2013 and 2012:
(in thousands)
2014
2013
2012
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
Continuing
Operations
Attributable
to CoreLogic
Equity In
Earnings
of
Affiliates
35.0%
3.6
35.0%
4.0
35.0%
3.2
35.0%
6.1
Federal statutory income tax rate
State taxes, net of federal benefit
Foreign taxes (less than) in excess of
federal rate
Non-deductible expenses, including
Separation-related
Gain on disposition of subsidiary
Change from investee to subsidiary
Change in uncertain tax positions
Research and development credits
Other items, net
Effective income tax rate
35.0%
6.2
(5.6)
1.7
—
—
1.3
(7.9)
(2.5)
28.2%
—
—
—
—
—
—
—
38.6%
1.0
(0.6)
—
—
—
—
—
4.9
—
(2.3)
2.7
(10.2)
(3.5)
31.6%
35.0%
3.2
(0.1)
—
—
—
—
—
5.0
0.3
—
—
0.1
—
—
37.6%
4.9
51.4%
—
38.1%
During the year ended December 31, 2014, we recorded income tax benefits of $8.4 million related to domestic
research and development credits related to tax years 2013 and 2014.
As of December 31, 2014, we had an estimated $13.2 million of undistributed earnings from foreign subsidiaries that
are intended to be indefinitely reinvested in foreign operations. No incremental U.S. tax has been provided for these earnings. If
in the future these earnings are repatriated to the U.S., or if we determine that the earnings will be remitted in the foreseeable
future, additional tax provisions may be required. It is not practicable to calculate the deferred taxes associated with those
66
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
earnings because of the variability of multiple factors that would need to be assessed at the time of assumed repatriation;
however, foreign tax credits may be available to reduce federal income taxes in the event of distribution.
Deferred Tax Assets and Liabilities
Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of assets
and liabilities, and operating loss and tax credit carryforwards for tax purposes. The components of the deferred income tax
assets and liabilities as of December 31, 2014 and 2013 are as follows:
(in thousands)
Deferred tax assets:
Net losses and credit carryforwards
Deferred revenue
Bad debt reserves
Employee benefits
Accrued expenses and loss reserves
Other
Less: valuation allowance
Deferred tax liabilities:
Depreciable and amortizable assets
Investment in affiliates
Net deferred tax asset
2014
2013
$
98,633
$
41,582
137,090
115,850
2,962
47,414
29,791
(989)
(21,912)
292,989
247,458
19,169
266,627
26,362
$
$
$
5,205
48,646
29,976
324
(24,173)
217,410
190,905
16,985
207,890
9,520
$
$
$
As of December 31, 2014 and 2013, we had federal net operating losses (“NOLS”) of $195.5 million and $55.0
million, respectively, which begin to expire in 2021. The state NOLS were $289.4 million and $94.8 million as December 31,
2014 and 2013, respectively, which begin to expire in 2015. The foreign NOLS were $15.3 million and $25.4 million as of
December 31, 2014 and 2013, respectively, of which approximately $2.2 million have an indefinite expiration and the
remainder begin to expire in 2015. The increase in the federal and state NOLS was primarily due to the acquisition of MSB/
DataQuick. As of December 31, 2014 we had available federal capital losses of $19.4 million expiring in 2017. As of
December 31, 2014 we had available state capital losses of $87.2 million expiring at various times beginning in 2015. The
change of ownership provisions of the Tax Reform Act of 1986 may limit utilization of a portion of our domestic NOL and tax
credit carryforwards to future periods. Further, a portion of the carryforwards may expire before being applied to reduce future
income tax liabilities.
As of December 31, 2014 and 2013, we had valuation allowances of approximately $21.9 million and $24.2 million,
respectively, against certain U.S. and foreign deferred tax assets to reflect the deferred tax asset at the net amount that is more
likely than not to be realized. The decrease in the valuation allowance recorded of approximately $2.3 million is primarily an
offset to foreign deferred tax assets, which we believe is more likely than not that future taxable income will be sufficient to
realize.
67
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Unrecognized Tax Benefits
A reconciliation of the unrecognized tax benefits for the years ended December 31, 2014, 2013 and 2012 are as
follows:
(in thousands)
Unrecognized tax benefits - opening balance
Gross increases - tax positions in prior period
Gross decreases - tax positions in prior period
Gross increases - current-period tax positions
Settlements with taxing authorities
Expiration of the statute of limitations for the assessment of taxes
2014
2013
2012
$
55,325
$
52,654
$
19,302
2,950
(22,698)
651
(565)
—
—
—
2,671
—
—
33,787
(21)
—
(163)
(251)
52,654
Unrecognized tax benefits - ending balance
$
35,663
$
55,325
$
Included in the December 31, 2014 and 2013 balances are $12.7 million and $11.2 million, respectively, of
unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The remaining $21.5 million and
$44.1 million for the years ended December 31, 2014 and 2013, respectively, would be offset against FAFC receivable pursuant
to the Tax Sharing Agreement entered in connection with the Separation. In addition, our reserves increased by $1.9 million due
to our acquisition of MSB/DataQuick, which were presented as a reduction to deferred tax assets for net operating loss carry
forwards.
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014
and 2013, we had $16.0 million and $9.1 million, respectively, accrued for the payment of interest and penalties. These
balances are gross amounts before any tax benefits and are included in other liabilities in the accompanying consolidated
balance sheets. For the years ended December 31, 2014, 2013 and 2012, we recognized approximately $0.6 million, $0.8
million and $0.6 million, respectively in interest and penalties, in the accompanying consolidated statements of income. Our
material tax jurisdiction is the U.S. With a few minor exceptions, we are no longer subject to U.S. federal, state, local, or
foreign income tax examinations by tax authorities for years prior to December 31, 2006. Our income tax returns, in several
jurisdictions, are being examined by various tax authorities. Management believes that adequate amounts of tax and related
interest and penalties, if any, have been provided for any adjustments that may result from these examinations.
During the year ended December 31, 2014, we effectively settled our 2007-2010 Internal Revenue Service ("IRS")
exam, which resulted in a reversal of approximately $0.3 million in unrecognized tax benefits. The decrease in our reserves for
uncertain tax positions relates primarily to the settlement of the claim, on our behalf by FAFC, for an uncertain tax position on a
prior year tax return. The claim is for FAFC losses reported and is subject to indemnification from FAFC under the Tax Sharing
Agreement. As of December 31, 2014, the liability was reduced by approximately $29.6 million of which the impact to net
income was zero.
We are currently under examination for the tax years 2005 through 2011 by the U.S. and various taxing authorities. It
is reasonably possible the amount of the unrecognized benefit with respect to certain unrecognized positions could significantly
increase or decrease within the next twelve months. We estimate that unrecognized tax benefits could decrease by up to $21.6
million within the next twelve months. The estimated change is primarily related to IRS audits, subject to the FAFC
indemnification, and will have no impact to net income.
68
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 10 - Earnings/(Loss) Per Share
The following is a reconciliation of net income per share attributable to CoreLogic for the years ended December 31,
2014, 2013 and 2012, using the treasury-stock method:
(in thousands, except per share amounts)
Numerator for basic and diluted net income/(loss) per share:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
Denominator:
Weighted-average shares for basic income/(loss) per share
Dilutive effect of stock options and restricted stock units
Weighted-average shares for diluted income/(loss) per share
Income/(loss) per share
Basic:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
Diluted:
Income from continuing operations, net of tax
(Loss)/income from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net income attributable to CoreLogic
2014
2013
2012
$
89,741
(16,653)
112
$
73,200
$ 100,313
$
96,065
14,423
(7,008)
$ 107,728
12,387
3,841
$ 112,293
90,825
1,604
92,429
95,088
2,021
97,109
102,913
1,137
104,050
$
$
$
$
0.99
(0.18)
—
0.81
0.97
(0.18)
—
0.79
$
$
$
$
1.05
0.15
(0.07)
1.13
1.03
0.15
(0.07)
1.11
$
$
$
$
0.93
0.12
0.04
1.09
0.92
0.12
0.04
1.08
For the year ended December 31, 2014, 2013 and 2012, RSUs, PBRSUs and stock options of 0.3 million, 0.4 million
and 2.6 million, respectively, were excluded from the weighted average diluted common shares outstanding due to their
antidilutive effect.
Note 11 - Employee Benefit Plans
We currently offer a variety of employee benefit plans, including a 401(k) savings plan and non-qualified plans,
including our frozen unfunded supplemental management and executive benefit plans (collectively, the “SERPs”), a frozen
pension restoration plan (“Restoration”) and a deferred compensation plan.
The non-qualified plans are exempt from most provisions of the Employee Retirement Income Security Act because
they are only available to a select group of management and highly compensated employees and are therefore not qualified
employee benefit plans. To preserve the tax-deferred savings advantages of a non-qualified plan, federal law requires that it be
an unfunded or informally funded future promise to pay.
As part of our acquisition of CDS Mapping in December 2012, we recorded a liability related to the pension obligation
and an asset related to the fair value of plan assets. The CDS Mapping plan was terminated, effective December 31, 2012. Refer
below for details of the amounts recorded. In addition refer to Note 16 - Acquisitions, for further details of the CDS Mapping
acquisition.
69
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
The following table summarizes the balance sheet impact, including benefit obligations, assets and funded status
associated with the SERPs and Restoration plan as of December 31, 2014 and 2013:
(in thousands)
Change in projected benefit obligation:
Benefit obligation at beginning of period
Service costs
Interest costs
Actuarial losses/(gains)
Benefits paid
Projected benefit obligation at end of period
Change in plan assets:
Plan assets at fair value at beginning of period
Actual return on plan assets
Company contributions
Benefits paid
Plan assets at fair value at end of the period
Reconciliation of funded status:
Unfunded status of the plans
Amounts recognized in the consolidated balance sheet consist of:
Accrued benefit liability
Pension plan asset
Amounts recognized in accumulated other comprehensive income/(loss):
Unrecognized net actuarial loss
Unrecognized prior service credit
2014
2013
$
27,059
$
34,102
$
$
282
1,233
5,564
(1,879)
32,259
$
637
1,293
(5,826)
(3,147)
27,059
— $
—
1,879
(1,879)
—
1,432
(53)
1,770
(3,149)
—
$
(32,259) $
(27,059)
$
$
$
$
$
(32,259) $
— $
(32,259) $
(27,059)
—
(27,059)
13,685
(6,775)
6,910
$
$
8,840
(7,920)
920
The net periodic pension cost for the years ended December 31, 2014, 2013 and 2012, for the FAC defined benefit
pension plan, SERPs, Restoration plan and CDS Mapping cash balance plan includes the following components:
(in thousands)
Expenses:
Service costs
Interest costs
Expected return on plan assets
Amortization of net (gain)/loss
Net periodic benefit cost
2014
2013
2012
$
282
$
637
$
932
1,231
—
(424)
1,089
$
1,293
(57)
179
2,052
$
1,386
(41)
80
2,357
$
70
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Weighted-average discount rate used to determine costs for the plans were as follows:
SERP Plans
Restoration Plan
CDS Mapping
2014
2013
2012
4.72%
4.82%
N/A
3.89%
4.02%
N/A
4.52%
4.57%
4.00%
Weighted-average actuarial assumptions used to determine benefit obligations for the plans were as follows:
SERP Plans
Discount rate
Salary increase rate
Restoration Plan
Discount rate
CDS Mapping
Discount rate
Salary increase rate
2014
2013
3.85%
N/A
4.72%
N/A
3.98%
4.82%
N/A
N/A
N/A
N/A
The discount-rate assumption used for pension plan accounting reflects the yield available on high-quality, fixed-
income debt securities that match the expected timing of the benefit obligation payments.
The following table provides the funded status in the defined SERPs as of December 31, 2014, 2013 and 2012:
(in thousands)
Projected benefit obligation
Accumulated benefit obligation
Plan assets at fair value at end of year
2014
2013
2012
$
$
$
32,259
32,259
$
$
— $
27,059
27,059
$
$
— $
34,102
34,102
—
The following benefit payments for all plans, which reflect expected future turnover, as appropriate, are expected to be
paid as follows:
(in thousands)
2015
2016
2017
2018
2019
2020-2024
$
$
1,955
1,414
1,397
1,379
1,361
8,358
15,864
The Corelogic, Inc. 401(k) Savings Plan (the "Savings Plan") allows for employee-elective contributions up to the
maximum deductible amount as determined by the Internal Revenue Code. We make discretionary matching contributions to
the Savings Plan based on participant contributions as well as discretionary contributions based on profitability. The expense
within continuing operations for the years ended December 31, 2014, 2013 and 2012 related to the Savings Plan were $5.7
million, $7.6 million and $6.0 million, respectively. The Savings Plan allows the participants to purchase shares of our common
71
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
stock as one of the investment options, subject to certain limitations. The Savings Plan held 866,559 and 951,704 shares of our
common stock, representing 1.0% of the total shares outstanding at December 31, 2014 and 2013.
We have a deferred compensation plan that allows participants to defer up to 80% of their salary, commissions and
bonus. Participants allocate their deferrals among a variety of investment crediting options (known as “deemed investments”).
Deemed investments mean that the participant has no ownership interest in the funds they select; the funds are only used to
measure the gains or losses that will be attributed to their deferral account over time. Participants can elect to have their deferral
balance paid out in a future year while they are still employed or after their employment ends. The participants’ deferrals and
any earnings on those deferrals are general unsecured obligations of the Company. The Company is informally funding the
deferred compensation plan through a tax-advantaged investment known as variable universal life insurance. Deferred
compensation plan assets are held as a Company asset within a special trust, called a “rabbi trust.”
The value of the assets underlying our deferred compensation plan was $30.3 million and $30.5 million as of
December 31, 2014 and 2013, respectively, and is included in other assets in the consolidated balance sheets. The unfunded
liability for our deferred compensation plan was $34.2 million and $34.3 million as of December 31, 2014 and 2013,
respectively, and is included in other liabilities in the accompanying consolidated balance sheets.
Note 12 - Fair Value of Financial Instruments
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market
participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to
the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.
The market approach is applied for recurring fair value measurements and endeavors to utilize the best available
information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. Fair value balances are classified based on the observability of those inputs.
A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to
unobservable inputs (Level 3 measurement). Level 2 measurements utilize observable inputs in markets other than active
markets.
In estimating the fair value of the financial instruments presented, we used the following methods and assumptions:
Cash and cash equivalents
For cash and cash equivalents, we believe that the carrying value is a reasonable estimate of fair value due to the short-
term nature of the instruments.
Restricted cash
Restricted cash is comprised of certificates of deposit that are pledged for various letters of credit secured by the
Company. We deem the carrying value to be a reasonable estimate of fair value due to the nature of these instruments.
Marketable securities
Equity and debt securities are classified as available-for-sale securities and are valued using quoted prices in active
markets.
Long-term debt
The fair value of long-term debt was estimated based on the current rates available to us for similar debt of the same
remaining maturities and consideration of our default and credit risk.
72
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Interest rate swap agreements and foreign currency purchase agreements
The fair value of the interest rate swap agreements and forward currency purchase agreements were estimated based
on market value quotes received from the counter parties to the agreements.
The fair values of our financial instruments as of December 31, 2014 are presented in the following table:
(in thousands)
Financial Assets:
Cash and cash equivalents
Restricted cash
Equity securities
Total Financial Assets
Financial Liabilities:
Total debt
Total Financial Liabilities
Derivatives:
Liability for interest rate swap agreements
Fair Value Measurements Using
Level 1
Level 2
Level 3
Fair Value
104,677
$
— $
— $
104,677
—
22,264
12,360
—
—
—
12,360
22,264
126,941
$
12,360
$
— $
139,301
— $
— $
1,323,201
1,323,201
$
$
— $
— $
1,323,201
1,323,201
— $
3,781
$
— $
3,781
$
$
$
$
$
The fair values of our financial instruments as of December 31, 2013 are presented in the following table:
(in thousands)
Financial Assets:
Cash and cash equivalents
Restricted cash
Equity securities
Total Financial Assets
Financial Liabilities:
Total debt
Total Financial Liabilities
Derivatives:
Liability for interest rate swap agreements
Fair Value Measurements Using
Level 2
Level 3
Level 1
134,419
—
22,220
156,639
$
$
— $
12,050
—
12,050
$
$
$
— $
— $
869,232
869,232
Fair Value
— $
—
—
— $
134,419
12,050
22,220
168,689
— $
— $
869,232
869,232
— $
4,020
$
— $
4,020
$
$
$
$
$
73
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the year
ended December 31, 2014:
Property and equipment, net
Goodwill, net
Investment in affiliates, net
$
$
Fair Value Measurements Using
Level 1
Level 2
Level 3
— $
— $
— $
— $
—
—
—
—
—
—
—
—
— $
— $
— $
— $
Impairment
Losses
1,070
3,900
360
5,330
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the year
ended December 31, 2013:
Fair Value Measurements Using
Level 1
Level 2
Level 3
Impairment
Losses
Assets of discontinued
operations
Property and equipment, net
Goodwill, net
Other intangible assets, net
$
$
19,961
—
77,616
—
97,577
$
$
— $
—
—
—
— $
— $
—
—
—
— $
19,961
—
77,616
—
97,577
$
$
9,614
1,969
42,216
248
54,047
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the year
ended December 31, 2012:
Fair Value Measurements Using
Level 1
Level 2
Level 3
Impairment
Losses
Assets of discontinued
operations
Property and equipment, net
Investment in affiliates, net
$
$
— $
—
—
— $
— $
—
—
— $
— $
—
—
— $
— $
—
—
— $
18,741
19,880
1,246
39,867
We recorded non-cash impairment charges of $9.6 million and $18.7 million for the years ended December 31, 2013
and 2012, respectively, in our assets of discontinued operations primarily due to the disposition or wind down of our
discontinued operations. See Note 18 - Discontinued Operations for further discussion. We recorded non-cash impairment
charges of $1.1 million, $2.0 million and $19.9 million for the years ended December 31, 2014, 2013 and 2012, respectively, in
our property and equipment, net primarily due to land and internally developed software. Further, we recorded non-cash
impairment charges of $3.9 million and $42.2 million for the years ended December 31, 2014 and 2013, respectively, in our
goodwill, net related to our technology solutions, solutions express and outsourcing services product lines. See Note 6 -
Goodwill, Net for further discussion. In addition, we recorded a non-cash impairment charge of $0.2 million for the year ended
December 31, 2013 in our other intangible assets, net related to client lists. Finally, we recorded non-cash impairment charges
of $0.4 million and $1.2 million for the years ended December 31, 2014 and 2012, respectively, in our investment in affiliates,
net due to other than temporary loss in value from the absence of an ability to recover the carrying amount of the investments.
These non-cash impairment charges relate to investments for which there is no material income/loss included in equity in
earnings of affiliates, net of tax. Therefore, they are included in gain on investments and other, net in the accompanying
consolidated statements of operations.
74
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 13 - Share-Based Compensation Plans
We issue equity awards under the CoreLogic, Inc. 2011 Performance Incentive Plan (the “Plan”) which was approved
by our stockholders at our Annual Meeting, held on May 19, 2011 and amended on July 29, 2014. The amended Plan permits
the grant of RSUs, PBRSUs and stock options. Prior to the approval of the Plan, we issued share-based awards under the
CoreLogic, Inc. 2006 Incentive Plan (the “2006 Plan”). The amended Plan was adopted, in part, to make an aggregate of
21,930,000 shares of the Company's common stock available for award grants, so that the Company will have sufficient
authority and flexibility to adequately provide for future incentives.
We primarily utilize RSUs, PBRSUs and stock options as our share-based compensation instruments for employees
and directors. The fair value of any share-based compensation instrument grant is based on the market value of our shares on
the date of grant and is recognized as compensation expense over the vesting period.
Restricted Stock Units
For the years ended December 31, 2014, 2013 and 2012, we awarded 807,890, 788,680 and 780,682 RSUs,
respectively, with an estimated value of $24.7 million, $20.8 million and $13.6 million, respectively. The RSU awards will vest
ratably over 3 years. RSU activity for the year ended December 31, 2014 is as follows:
(in thousands, except weighted average fair value prices)
Unvested RSUs outstanding at December 31, 2013
RSUs granted
RSUs vested
RSUs forfeited
Unvested RSUs outstanding at December 31, 2014
Weighted
Average
Grant-Date
Fair Value
Number of
Shares
$
1,466
$
808
(697) $
(197) $
$
1,380
22.13
30.62
20.89
26.02
27.17
As of December 31, 2014, there was $19.7 million of total unrecognized compensation cost related to unvested RSUs
that is expected to be recognized over a weighted-average period of 1.9 years. The fair value of RSUs is based on the market
value of the Company’s shares on the date of grant.
Performance-Based Restricted Stock Units
For the years ended December 31, 2014, 2013 and 2012, we awarded 367,558, 410,497 and 347,572 PBRSUs,
respectively, with an estimated value of $11.6 million, $10.7 million and $5.6 million, respectively. These awards could be
subject to service-based, performance-based and market-based vesting. The performance period for the PBRSUs awarded
during 2014 is from January 1, 2014 to December 31, 2016 and the performance metric is adjusted earnings per share and
market-based conditions. Subject to satisfaction of the performance criteria, the 2014 awards will vest on December 31, 2016.
The performance period for the PBRSUs awarded during 2013 is from January 1, 2013 to December 31, 2015 and the
performance metric is adjusted earnings per share and market-based conditions. Subject to satisfaction of the performance
criteria, the 2013 awards will vest on December 31, 2015. The fair values of the 2014 and 2013 awards were estimated using
Monte-Carlo simulation with the following weighted-average assumptions:
Expected dividend yield
Risk-free interest rate (1)
Expected volatility (2)
Average total shareholder return (2)
75
2014
2013
— %
0.74 %
27.88 %
(0.90)%
—%
0.41%
29.87%
17.87%
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
(1) The risk-free interest rate for the periods within the contractual term of the PBRSUs is based on the U.S. Treasury
yield curve in effect at the time of the grant.
(2) The expected volatility and average total shareholder return is a measure of the amount by which a stock price has
fluctuated or is expected to fluctuate based primarily on our and our peers' historical data.
The performance period for the PBRSUs awarded during 2012 was from January 1, 2012 to December 31, 2012 and
the performance metric was adjusted earnings per share. Based on achievement of the performance criteria, the 2012 awards
were earned at 150% of target and will vest subject to continuation of employment until December 31, 2014. The fair value of
the 2012 awards were based on the market value of the Company's common stock on the date of grant.
PBRSU activity for the year ended December 31, 2014 is as follows:
(in thousands, except weighted average fair value prices)
Unvested PBRSUs outstanding at December 31, 2013
PBRSUs granted
PBRSUs vested
PBRSUs forfeited
Unvested PBRSUs outstanding at December 31, 2014
Weighted
Average
Grant-Date
Fair Value
Number of
Shares
1,247
$
$
368
(612) $
(99) $
$
904
18.52
31.46
16.92
23.52
22.19
As of December 31, 2014, there was $1.1 million of total unrecognized compensation cost related to unvested
PBRSUs that is expected to be recognized over a weighted-average period of 1.3 years. The fair value of PBRSUs is based on
the market value of the Company’s shares on the date of grant.
Stock Options
In 2014 and 2013, we issued stock options as incentive compensation for certain key employees. The exercise price of
each stock option is the closing market price of our common stock on the date of grant. The 2014 and 2013 options will vest in
3 equal annual installments on the first, second and third anniversaries of grant and expire 10 years after the grant date. The fair
values of these stock options were estimated using a Black-Scholes model with the following weighted-average assumptions:
Expected dividend yield
Risk-free interest rate (1)
Expected volatility (2)
Expected life (3)
2014
2013
2012
—%
1.74%
37.92%
5.5
—%
0.90%
41.65%
5.5
—%
1.00%
42.81%
5.5
(1)
(2)
(3)
The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury
yield curve in effect at the time of the grant.
The expected volatility is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate
based primarily on our and our peers' historical data.
The expected life is the period of time, on average, that participants are expected to hold their options before
exercise based primarily on our historical data.
For the years ended December 31, 2014, 2013 and 2012 we awarded 290,737, 445,705 and 581,265 options,
respectively, with an estimated value of $9.1 million, $11.7 million and $9.3 million, respectively. Option activity for the year
ended December 31, 2014 is as follows:
76
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands, except weighted average prices)
Options outstanding at December 31, 2013
Options granted
Options exercised
Options canceled
Options outstanding at December 31, 2014
Options vested and expected to vest at December 31, 2014
Options exercisable at December 31, 2014
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Number of
Shares
2,663
$
$
291
(303) $
(88) $
$
2,563
2,539
1,953
$
$
21.12
31.46
19.77
25.02
22.32
22.26
21.18
4.9 $
4.9 $
3.9 $
23,903
23,834
20,344
As of December 31, 2014, there was $3.5 million of total unrecognized compensation cost related to unvested stock
options that is expected to be recognized over a weighted-average period of 1.8 years.
The intrinsic value of options exercised was $3.5 million, $13.8 million and $3.7 million for the years ended
December 31, 2014, 2013 and 2012, respectively. This intrinsic value represents the difference between the fair market value of
the Company’s common stock on the date of exercise and the exercise price of each option.
Employee Stock Purchase Plan
The employee stock purchase plan allows eligible employees to purchase our common stock at 85.0% of the lesser of
the closing price on the first day or the last day of each quarter. Our employee stock purchase plan was approved by our
stockholders at our 2012 annual meeting of stockholders and the first offering period commenced in October 2012. We
recognized an expense for the amount equal to the estimated fair value of the discount during the last offering period.
The following table sets forth the share-based compensation expense recognized for the years ended December 31,
2014, 2013 and 2012.
(in thousands)
Restricted stock units
Performance-based restricted stock units
Stock options
Employee stock purchase plan
2014
2013
2012
$
$
19,078
1,750
3,730
1,030
25,588
$
$
12,754
9,746
3,982
557
27,039
$
$
9,988
7,050
3,664
107
20,809
The above share-based compensation expense has $1.7 million, $1.0 million and $2.6 million included within cost of
services for the years ended December 31, 2014, 2013 and 2012, respectively. It also includes $0.2 million, $0.1 million and
$0.2 million of share-based compensation expense for the years ended December 31, 2014, 2013 and 2012, respectively,
reported within (loss)/income from discontinued operations, net of tax.
77
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Note 14 - Commitments and Contingencies
Lease Commitments
We lease certain office facilities, automobiles and equipment under operating leases, which, for the most part, are
renewable. The majority of these leases also provide that the Company will pay insurance and taxes.
Future minimum rental payments under operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 2014 are as follows:
(in thousands)
2015
2016
2017
2018
2019
Thereafter
$
32,280
27,795
16,654
12,814
10,910
13,483
$
113,936
Total rental expenses for all operating leases and month-to-month rentals were $35.6 million, $39.8 million, $42.4
million for the years ended December 31, 2014, 2013 and 2012, respectively.
Operational Commitments
In August 2011, an affiliate of Cognizant Technology Solutions Corporation ("Cognizant"), acquired CoreLogic India
Global Services Private Limited, our India-based captive operations ("CoreLogic India"). The purchase price for CoreLogic
India was $50.0 million in cash before working capital adjustments. As part of the transaction, we entered into a Master
Professional Services Agreement ("Services Agreement") and supplement ("Supplement") with Cognizant under which
Cognizant will provide a range of business process and information technology services to us. The Supplement has an initial
term of seven years and we have the unilateral right to extend the term for up to three one-year periods. During the first five
years of the agreement, we are subject to a net total minimum commitment of approximately $303.5 million, plus applicable
inflation adjustments. In connection with the sale, we recorded $27.1 million of deferred gain on sale which is being recognized
to income over the commitment period of five years. As of December 31, 2014, the remaining minimum commitment totaled
$93.5 million.
Note 15 - Litigation and Regulatory Contingencies
We have been named in various lawsuits. Also, we may from time to time be subject to audit or investigation by
governmental agencies. Currently, governmental agencies are auditing or investigating certain of our operations.
With respect to matters where we have determined that a loss is both probable and reasonably estimable, we have
recorded a liability representing our best estimate of the financial exposure based on known facts. While the ultimate
disposition of each such audit, investigation or lawsuit is not yet determinable, we do not believe that the ultimate resolution of
these matters, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of
operations or cash flows. In addition, we do not believe there is a reasonable possibility that a material loss exceeding amounts
already accrued may have been incurred. The ability to predict the ultimate outcome of such matters involves judgments,
estimates and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates.
We record expenses for legal fees as incurred.
Federal Deposit Insurance Corporation
On May 9, 2011, the Federal Deposit Insurance Corporation (the “FDIC”), as Receiver of Washington Mutual Bank
(“WaMu”), filed a complaint in the United States District Court for the Central District of California (the “Court”) against
78
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
CoreLogic Valuation Services, LLC (“CVS”), as successor to eAppraiseIT, LLC (“eAppraiseIT”) and several of its current and
former affiliates.
The FDIC complaint alleged that eAppraiseIT was grossly negligent and breached its contract with WaMu in the
provision of appraisal services in 2006 and 2007 relating to 194 residential mortgage loans. On November 14, 2011, the Court
granted the defendants' motion to dismiss the FDIC's gross negligence, alter ego, single business enterprise and joint venture
claims, and a portion of the breach of contract claim. On November 30, 2011, the FDIC filed its first amended complaint,
alleging only breach of contract claims and naming only CVS and its parent CoreLogic Real Estate Solutions, LLC f/k/a First
American Real Estate Solutions, LLC as defendants. The amended complaint sought to recover losses of at least $129.0 million
that the FDIC alleges WaMu suffered on loans allegedly related to these appraisal services. On February 6, 2012, the Court
granted the defendants' motion to dismiss the FDIC's $16.0 million breach of contract claim related to 26 appraisal services
allegedly provided before the effective date of the WaMu - eAppraiseIT Agreement. On February 16, 2012, the FDIC filed a
second amended complaint reasserting that claim. On April 25, 2012, the court granted the defendants' motion to dismiss that
$16.0 million claim with prejudice. On December 4, 2012, the FDIC filed its third amended complaint further reducing the total
number of transactions at issue to 160 and reducing the amount of its purported losses to at least $108.0 million. On June 20,
2013, the court dismissed 14 additional transactions with prejudice pursuant to a stipulation between the parties. As a result, the
number of transactions at issue was reduced to 146 and the amount of the FDIC's purported losses was reduced to at least $98.9
million. On May 28, 2014 the parties settled the case with the defendants agreeing to pay a total of $12.0 million; which was
recorded within loss from discontinued operations, net of tax for the three months ended June 30, 2014. Following payment of
the settlement amount on July 2, 2014, the case was dismissed with prejudice on July 7, 2014.
Real Estate Settlement Procedures Act Class Action
On February 8, 2008, a purported class action was filed in the United States District Court for the Northern District of
California, San Jose Division, against WaMu and eAppraiseIT alleging breach of contract, unjust enrichment, and violations of
the Real Estate Settlement Procedures Act (“RESPA”), the California Unfair Competition Law and the California Consumers
Legal Remedies Act. The complaint alleged a conspiracy between WaMu and eAppraiseIT to allow WaMu to direct appraisers
to artificially inflate appraisals in order to qualify higher value loans that WaMu could then sell in the secondary market.
Plaintiffs subsequently voluntarily dismissed WaMu on March 9, 2009. On August 30, 2009, the court dismissed all claims
against eAppraiseIT except the RESPA claim.
On July 2, 2010, the court denied plaintiff's first motion for class certification. On November 19, 2010, the plaintiffs
filed a renewed motion for class certification. On April 25, 2012, the court granted plaintiffs' renewed motion and certified a
nationwide class of all persons who, on or after June 1, 2006, received home loans from WaMu in connection with appraisals
that were obtained through eAppraiseIT. On July 12, 2012, the Ninth Circuit Court of Appeals declined to review the class
certification order. Following discovery, on July 1, 2014 the defendant filed motions for summary judgment and to decertify the
class. On September 16, 2014 the trial court granted summary judgment against one named plaintiff but denied it as to the
other, denied the motion to decertify the class, and bifurcated trial into two phases with the first phase to begin November 24,
2014. The parties thereafter conducted a court-ordered mediation and subsequently reached agreement, subject to court
approval, to settle the case for a total of $9.9 million inclusive of attorney fees. This amount has been reserved and recorded
within loss from discontinued operations, net of tax for the year ended December 31, 2014.
On December 12, 2014 the court preliminarily approved the settlement. Notice to the class is underway and the final
fairness hearing is set for April 24, 2015.
Separation
Following the spin off of our financial services businesses into a new, publicly-traded, New York Stock Exchange-
listed company called FAFC in June 2010, we became responsible for a portion of FAFC's contingent and other corporate
liabilities. In the Separation and Distribution Agreement we entered into in connection with the Separation, we agreed with
FAFC to share equally in the cost of resolution of a small number of corporate-level lawsuits, including certain consolidated
securities litigation matters from which we have since been dropped. There were no liabilities incurred in connection with the
consolidated securities matters. Responsibility to manage each case has been assigned to either FAFC or us, with the managing
party required to update the other party regularly and consult with the other party prior to certain important decisions, such as
settlement. The managing party will also have primary responsibility for determining the ultimate total liability, if any, related
to the applicable case. We will record our share of any such liability when the responsible party determines a reserve is
necessary. At December 31, 2014, no reserves were considered necessary.
79
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
In addition, the Separation and Distribution Agreement provides for cross-indemnities principally designed to place
financial responsibility for the obligations and liabilities of FAC's financial services business with FAFC and financial
responsibility for the obligations and liabilities of FAC's information solutions business with us. Specifically, each party will,
and will cause its subsidiaries and affiliates to, indemnify, defend and hold harmless the other party, its respective affiliates and
subsidiaries and each of its respective officers, directors, employees and agents for any losses arising out of or otherwise in
connection with the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement; and
any breach by such party of the Separation and Distribution Agreement.
Note 16 - Acquisitions
In November 2014, we completed our acquisition of Bank of America's mortgage-related credit reporting operation for
approximately $19.6 million, which is included as a component of our TPS reporting segment. The purchase price was
allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow
analysis, which included significant unobservables. The purchase price allocation is subject to change based on our final
determination of fair value in connection with certain tax and working capital matters. We preliminarily recorded property and
equipment of $4.3 million with an estimated average life of 3 years, client lists of $6.1 million with an estimated average life of
10 years and goodwill of $9.2 million, which is fully deductible for tax purposes. The business combination did not have a
material impact on our consolidated financial statements.
In March 2014, we completed the acquisition of Marshall & Swift/Boeckh ("MSB") and DataQuick Information
Systems ("DataQuick"). In addition, we acquired the assets of the credit, flood services and automated valuation model
operations of DataQuick Lending Solutions and certain intellectual property assets of Decision Insight Information Group S.à
r.l. The total consideration paid in connection with the MSB/DataQuick acquisition was approximately $652.5 million in cash,
which was funded through borrowings. The acquisition of MSB/DataQuick significantly expands our footprint in property and
casualty insurance and adds scale to our existing property data and analytics business, which is a contributing factor to the
recording of goodwill. The operations of MSB's and DataQuick's data licensing and analytics units are reported within our
D&A segment and DataQuick's flood zone determination and credit servicing operations are reported within our TPS segment.
The purchase price was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including
discounted cash flow analysis, which included significant unobservable inputs. Any excess of the purchase price over the fair
value of identified assets acquired and liabilities assumed is recognized as goodwill. The purchase price allocation is subject to
change based on our final determination of fair value in connection with certain tax and working capital matters. The
preliminary allocation of the purchase price is as follows:
(in thousands)
Cash and cash equivalents
Accounts receivable
Prepaid expenses and other current assets
Deferred income tax assets, current
Property and equipment
Goodwill (1)
Other intangible assets
Deferred income tax, net of current
Investment in affiliates
Total assets acquired
Accounts payable and accrued expenses
Income taxes payable
Deferred revenue, current
Deferred revenue, net of current
Net assets acquired
80
$
$
$
36
9,227
2,190
6,658
177,311
307,773
129,400
29,760
18,300
680,655
3,911
31
22,371
1,823
652,519
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
(1)
Goodwill of $307.8 million includes $167.8 million of deductible basis for tax purposes. Goodwill was reduced by
approximately $55.5 million from the initial amount recorded in the first quarter of 2014, as a result of a change in
the purchase price allocation for certain working capital and tax adjustments.
We reported revenues and net loss of approximately $67.5 million and $5.8 million, respectively, from the MSB/
DataQuick acquisition from the acquisition date of March 25, 2014 through December 31, 2014. The net loss includes $18.6
million of depreciation and amortization from acquired property and equipment and other intangible assets. The financial
information in the table below summarizes the combined results of operations of MSB/DataQuick and us on a pro forma basis
as though the companies had been combined as of January 1, 2013. The pro forma financial information is presented for
informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition
had taken place at the beginning of each of the periods presented. The pro forma financial information for all periods presented
also includes elimination of intercompany revenue, the impact of fair value adjustments to deferred revenue, amortization
expense from acquired intangible assets, adjustments to interest expense and related tax effects.
The unaudited pro forma financial information for the years ended December 31, 2014 and 2013 combines our results
of operations for the periods presented.
(in thousands)
Net revenues
Net income
2014
2013
$ 1,427,424
82,724
$
$ 1,506,660
103,997
$
In January 2014, we completed our acquisition of Terralink for NZD$14.5 million, or $11.9 million, which is included
as a component of our D&A reporting segment. The purchase price was allocated to the assets acquired and liabilities assumed
using a variety of valuation techniques including discounted cash flow analysis, which included significant unobservables. We
recorded property and equipment of $2.1 million with an estimated average life of 5 years, client lists of $1.4 million with an
estimated average life of 15 years, trade names of $0.2 million with an estimated average life of 12 years, capitalized data and
database costs of $6.0 million with an estimated average life of 15 years and goodwill of $2.3 million, which is fully deductible
for tax purposes. The business combination did not have a material impact on our consolidated financial statements.
In December 2013, we completed our acquisition of EQECAT for $22.2 million, which is included as a component of
our D&A reporting segment. The purchase price was allocated to the assets acquired and liabilities assumed using a variety of
valuation techniques including discounted cash flow analysis which included significant unobservables. We recorded $3.9
million of client lists with an estimated average life of 10 years, $0.6 million of tradenames with an estimated average life of 10
years and goodwill of $16.9 million. The business combination did not have a material impact on our consolidated financial
statements.
In September 2013, we acquired an additional 10% interest in PIQ for NZD$3.3 million or $2.6 million, resulting in a
60% controlling interest. We previously held a noncontrolling interest in the entity and as a result of the purchase of the
controlling interest, we recognized a gain of approximately $6.6 million, to reflect our existing ownership interest at fair value,
which is included in gain on investments and other, net in the accompanying consolidated statements of operations. PIQ is
included as a component of the D&A segment. The purchase price was allocated to the assets acquired and liabilities assumed
using a variety of valuation techniques including discounted cash flow analysis which included significant unobservables. We
recorded $1.1 million of property and equipment with an estimated average life of 5 years, $9.0 million of capitalized data and
database costs with an average estimated life of 15 years, $3.5 million of client lists with an estimated average life of 15 years,
$0.7 million of tradenames with an estimated average life of 10 years and goodwill of $14.9 million. The business combination
did not have a material impact on our consolidated financial statements.
In July 2013, we completed our acquisition of Bank of America's flood zone determination and tax processing services
operations for $62.5 million, which is included as a component of the TPS segment. The purchase price was allocated to the
assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis which
included significant unobservables. We recorded $31.1 million of client lists with an estimated average life of 10 years,
indefinite life capitalized data and database costs of $2.5 million and goodwill of $28.9 million, which is fully deductible for tax
purposes. The business combination did not have a material impact on our consolidated financial statements.
81
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
In December 2012, we completed our acquisition of CDS Mapping, a digital mapping sales and consulting company,
for a cash price of $78.8 million, which is included as a component of the D&A segment. The purchase price was allocated to
the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis
which included significant unobservable inputs. We recorded $33.9 million of goodwill, which is fully deductible for tax
purposes, $24.5 million of client lists with an estimated average life of 13 years, $4.2 million of tradenames with an estimated
average life of 14 years and $2.9 million of noncompete agreements with an estimated average life of 5 years. The business
combination did not have a material impact on our consolidated financial statements.
For the year ended December 31, 2014, we incurred $9.0 million of acquisition-related costs within selling, general
and administrative expenses on our consolidated statements of operations. Acquisition related costs were not significant for the
years ended December 31, 2013 and 2012.
Note 17 – Redeemable Noncontrolling Interest
Noncontrolling interests that are redeemable at the option of the holder are classified as redeemable noncontrolling
interests in the mezzanine section of our consolidated balance sheet between liabilities and stockholders’ equity. Redeemable
noncontrolling interests are reported at their estimated redemption value in each reporting period, but contractually not less
than their initial fair value. Any adjustments to the redemption value impacts retained earnings. As of December 31, 2014, we
recorded a $6.6 million adjustment to redeemable noncontrolling interests and retained earnings to account for changes in its
estimated redemption value.
In September 2013, we acquired an additional 10% interest in PIQ for NZD$3.3 million, or $2.6 million, resulting in a
60% controlling interest. In connection with the acquisition, effective August 2015, the seller has the right to sell their
remaining noncontrolling shares in PIQ to us (the "put") and we have the right to purchase the remaining noncontrolling
interest in PIQ at fair value (the "call"). As the call and put do not represent separate assets or liabilities and the exercise of the
put is outside of our control, the noncontrolling interest of NZD$13.2 million, or $10.2 million, was recorded on the date of
acquisition as a redeemable noncontrolling interest in the accompanying consolidated balance sheet. For the year ended
December 31, 2014, we recorded $1.3 million of net income attributable to redeemable noncontrolling interest.
Note 18 - Discontinued Operations
On September 30, 2014, we completed the sale of our collateral solutions and field services businesses, which were
previously included in our AMPS reporting segment, for total consideration of $29.1 million, subject to working capital
adjustments, as well as potential earn-outs of up to $20.0 million, which will be recognized when realized. Further, we
determined to cease pursuing the sale of our remaining product lines, previously included in our AMPS reporting segment.
These remaining product lines included our technology solutions, solutions express and outsourcing services product lines.
These product lines were previously reflected as discontinued operations and are now reflected as part of continuing operations
within our TPS segment. See Note 1 - Description of the Company for further discussion.
For the year ended December 31, 2014, we recorded a $0.1 million gain on the sale of discontinued operations, net of
tax, primarily related to $1.5 million of earn-out payments, net of tax, from previously disposed discontinued operations,
partially offset by an after-tax loss of $1.4 million related to the sale of our collateral solutions and field services businesses.
For the year ended December 31, 2013, we recorded a $7.0 million loss on the sale of discontinued operations, net of tax
primarily related to estimated liabilities associated with audits of previously disposed subsidiaries. As of August 31, 2012, we
completed the disposition of our transportation services business (American Driving Records) for $11.0 million, which resulted
in a pre-tax gain of $3.9 million for the year ended December 31, 2012. This gain is included in gain/(loss) from sale of
discontinued operations, net of tax in the accompanying consolidated statements of operations. We completed the wind down of
our consumer services business and our appraisal management company business in lieu of a sale as of September 2012. In
connection with the wind down of our 100% owned appraisal management company business, we incurred a pre-tax write-
down of the remaining goodwill of $13.9 million in the first quarter of 2012.
Each of these businesses is reflected in our accompanying consolidated financial statements as discontinued operations
and the results of these businesses in the prior years have been recast to conform to the 2014 presentation.
82
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Summarized below are certain assets and liabilities classified as discontinued operations as of December 31, 2014,
2013 and 2012:
(in thousands)
As of December 31, 2014
D&A
Marketing Consumer
TPS
Appraisal
AMPS
Total
Deferred income tax asset and other current
assets
Total assets
Total liabilities
As of December 31, 2013
Accounts receivable
Other current assets
Property and equipment, net
Goodwill and other identifiable intangible
assets, net
Total assets
Accounts payable
Other liabilities
Total liabilities
$
$
$
$
$
$
$
177
177
194
$
$
$
149
149
88
$
$
$
3,808
3,808
10,941
$
$
$
133
133
2,481
$
$
$
4,267
4,267
13,704
— $
— $
— $
14,073
$
14,073
177
—
—
177
676
259
935
$
$
$
149
—
—
149
$
— $
88
88
$
200
—
—
200
3,127
568
3,695
$
$
$
2,668
1,698
19,961
38,400
7,282
8,616
15,898
$
$
$
3,194
1,698
19,961
38,926
11,085
9,531
20,616
83
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Summarized below are the components of our (loss)/income from discontinued operations, net of tax for the years
ended December 31, 2014, 2013 and 2012:
(in thousands)
For the Year Ended December 31, 2014
D&A
Marketing Consumer
TPS
Appraisal
AMPS
Total
Operating revenue
(Loss)/income from discontinued operations
before income taxes
(Benefit)/provision for income taxes
(Loss)/income from discontinued operations, net
of tax
For the Year Ended December 31, 2013
Operating revenue
(Loss)/income from discontinued operations
before income taxes
(Benefit)/provision for income taxes
(Loss)/income from discontinued operations, net
of tax
For the Year Ended December 31, 2012
Operating revenue
(Loss)/income from discontinued operations
before income taxes
Provision/(benefit) for income taxes
(Loss)/income from discontinued operations, net
of tax
Note 19 - Segment Financial Information
$
$
$
— $
— $
— $
94,039
$
94,039
(717)
(350)
—
—
(30,739)
(11,785)
7,188
4,520
(24,268)
(7,615)
(367) $
— $
(18,954) $
2,668
$ (16,653)
— $
— $
— $
193,117
$ 193,117
(2,129)
(814)
196
75
(6,194)
(2,369)
32,928
13,486
24,801
10,378
$
(1,315) $
121
$
(3,825) $
19,442
$
14,423
$
— $
55,773
$
25,138
$
280,589
$ 361,500
(122)
4,891
5,026
15
(21,375)
(5,186)
42,566
13,988
26,095
13,708
$
(5,013) $
5,011
$
(16,189) $
28,578
$
12,387
We have organized our reportable segments into the following two segments: D&A and TPS. In September 2014, we
concluded that we would cease pursuing the sale of the remaining AMPS related product lines. As a result, our technology
solutions, solutions express and outsourcing services product lines are now reported within our TPS segment. Also, in
September 2014, we transferred our under-banked credit services business from our D&A segment to our TPS segment. All
segment reporting disclosures presented herein reflect these transfers. See Note 1 - Description of the Company for further
discussion.
Data & Analytics. Our D&A segment owns or licenses data assets including loan information, criminal and eviction
records, employment verification, property sales and characteristic information, property risk and replacement cost, and
information on mortgage-backed securities. We both license our data directly to our clients and provide our clients with
analytical products and workflow solutions for risk management, multiple listing services ("MLS"), insurance underwriting,
collateral assessment, loan quality reviews and fraud assessment. We are also a provider of geospatial proprietary software and
databases combining geographic mapping and our data assets. Our primary clients are commercial banks, mortgage lenders and
brokers, investment banks, fixed-income investors, real estate agents, MLS companies property and casualty insurance
companies, title insurance companies and government agencies and sponsored enterprises.
Our D&A segment includes intercompany revenues of $4.3 million, $8.5 million, and $10.1 million for the years
ended December 31, 2014, 2013 and 2012, respectively; and intercompany expenses of $5.6 million, $0.9 million and $1.8
million for the years ended December 31, 2014, 2013 and 2012, respectively.
Technology and Processing Solutions. Our TPS segment provides property tax monitoring, flood zone certification and
monitoring, credit services, mortgage loan administration and production services, lending solutions, mortgage-related business
84
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
process outsourcing, technology solutions and compliance-related services. The segment’s primary clients are large, national
mortgage lenders and servicers, but we also serve regional mortgage lenders and brokers, credit unions, commercial banks,
government agencies and casualty insurance companies.
Our TPS segment includes intercompany revenues of $5.5 million, $3.3 million, and $1.2 million for the years ended
December 31, 2014, 2013 and 2012, respectively; and intercompany expenses of $4.3 million, $7.8 million and $9.4 million for
the years ended December 31, 2014, 2013 and 2012, respectively.
Corporate consists primarily of investment gains and losses, corporate personnel and other expenses associated with
our corporate functions and facilities, equity in earnings of affiliates, net of tax, and interest expense.
Due to the number of clients we service and the number of products and services we offer, it is impracticable to
disclose revenues from external clients for each product and service offered.
Selected segment financial information is as follows:
(in thousands)
For the Year Ended December 31, 2014
Operating revenue
Depreciation and amortization
Operating income/(loss)
Equity in earnings/(loss) of affiliates, net of tax
Net income/(loss) from continuing operations
Capital expenditures
For the Year Ended December 31, 2013
Operating revenue
Depreciation and amortization
Operating income/(loss)
Equity in earnings/(loss) of affiliates, net of tax
Net income/(loss) from continuing operations
Capital expenditures
For the Year Ended December 31, 2012
Operating revenue
Depreciation and amortization
Operating income/(loss)
Equity in earnings/(loss) of affiliates, net of tax
Net income/(loss) from continuing operations
Capital expenditures
D&A
TPS
Corporate Eliminations
Consolidated
(Excluding
Discontinued
Operations)
$ 647,264
98,313
$
97,654
$
49
$
98,975
$
56,383
$
$ 572,169
$
74,186
$ 100,963
$
1,631
$ 110,143
54,085
$
$ 544,753
69,567
$
$
$
$
$
96,519
2,197
99,188
54,147
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
767,567
26,019
139,168
22,900
167,726
8,336
$
30
$
$
14,062
$
$ (67,064) $
(8,829) $
$
$ (163,728) $
$
22,435
$
843,887
30,780
137,225
41,638
179,622
20,048
$
631
$
$
$
21,366
$ (96,046) $
$ (15,908) $
$ (189,505) $
$
32,453
$
800,890
24,161
189,700
55,570
245,686
18,738
$
640
$
$
$
23,515
$ (115,952) $
$ (21,784) $
$ (249,589) $
$
10,849
$
(9,821) $
— $
— $
— $
(11,965) $
— $
(12,286) $
— $
— $
— $
— $
— $
(12,804) $
(135) $
$
135
— $
135
$
— $
1,405,040
138,394
169,758
14,120
91,008
87,154
1,404,401
126,332
142,142
27,361
100,260
106,586
1,333,479
117,108
170,402
35,983
95,420
83,734
85
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands)
As of December 31, 2014
Investment in affiliates, net
Long-lived assets
Total assets
As of December 31, 2013
Investment in affiliates, net
Long-lived assets
Total assets
D&A
TPS
Corporate Eliminations
Consolidated
(Excluding
Discontinued
Operations)
$
27,809
$
68,547
$
7,242
$ 1,739,715
$ 1,161,873
$ 4,888,730
$ 1,886,478
$ 1,297,903
$ 5,102,328
$
— $
$ (4,774,581) $
$ (4,774,614) $
103,598
3,015,737
3,512,095
$
9,460
$
78,290
$
7,593
$ 1,176,994
$ 1,130,237
$ 4,232,718
$ 1,306,023
$ 1,257,195
$ 4,499,268
$
— $
$ (4,098,235) $
$ (4,098,281) $
95,343
2,441,714
2,964,205
Operating revenue is attributed to countries based on location of the revenue-generating business. Operating revenue
separated between domestic and foreign operations and by segment is as follows:
(in thousands)
D&A
TPS
Corporate
Eliminations
Consolidated
2014
$
Domestic
509,521
764,251
—
(9,821)
$ 1,263,951
$
$
Foreign
137,743
3,316
30
—
141,089
Year Ended December 31,
2013
$
Domestic
476,048
838,721
—
(12,286)
$ 1,302,483
$
$
Foreign
96,121
5,166
631
—
101,918
2012
$
Domestic
460,401
794,584
—
(12,804)
$ 1,242,181
$
$
Foreign
84,352
6,306
640
—
91,298
Long-lived assets separated between domestic and foreign operations and by segment is as follows:
(in thousands)
D&A
TPS
Corporate
Eliminations
Consolidated (excluding assets for discontinued operations)
Note 20 - Guarantor Subsidiaries
As of December 31,
2014
2013
Domestic
Foreign
Domestic
Foreign
$ 1,429,305
1,161,853
4,142,791
(4,028,642)
$ 2,705,307
$
$
310,410
20
745,939
(745,939)
310,430
$
856,111
1,130,234
3,486,778
(3,352,295)
$ 2,120,828
$
$
320,883
3
745,940
(745,940)
320,886
As discussed in Note 8 - Long-Term Debt, the Notes are guaranteed on a senior unsecured basis by each of our existing
and future direct and indirect subsidiaries that guarantee our Credit Agreement. These guarantees are required in support of the
Notes, are full and unconditional, as well as joint and several, and are coterminous with the terms of the Notes and would
require performance upon certain events of default referred to in the respective guarantees. The guarantees are subject to release
under certain customary circumstances. The indenture governing the notes provides that the guarantees may be automatically
and unconditionally released only upon the following circumstances: 1) the guarantor is sold or sells all of its assets in
compliance with the terms of the indenture; 2) the guarantor is released from its guarantee obligations under the credit
agreement; 3) the guarantor is properly designated as an “unrestricted subsidiary”, and 4) the requirements for legal or covenant
defeasance or satisfaction and discharge have been satisfied. The maximum potential amounts that could be required to be paid
under the domestic guarantees are essentially equal to the outstanding principal and interest under the Notes. The following
86
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
condensed consolidating financial information reflects CoreLogic, Inc.'s (the "Parent's") separate accounts, the combined
accounts of the guarantor subsidiaries, the combined accounts of the non-guarantor subsidiaries, the combined consolidating
adjustments and eliminations and the Parent's consolidated accounts for the dates and periods indicated.
Condensed Balance Sheet
As of December 31, 2014
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
Assets:
Cash and cash equivalents
$
61,602
$
8,733
$
34,342
$
— $
104,677
Accounts receivable
Other current assets
Property and equipment, net
Goodwill, net
Other intangible assets, net
Capitalized data and database cost, net
Investment in affiliates, net
Deferred income tax assets, long-term
Restricted cash
Investment in subsidiaries
Intercompany receivable
Other assets
Total assets
Liabilities and equity:
Current liabilities
Long-term debt, net of current
Deferred revenue, net of current
Deferred income tax liabilities, long
term
Intercompany payable
Other liabilities
Redeemable noncontrolling interest
Total CoreLogic stockholders' equity
—
55,867
17,261
—
290
—
—
49,365
11,035
2,350,467
89,780
105,262
2,740,929
123,196
1,313,270
—
—
158,939
131,357
—
1,014,167
$
$
189,138
120,531
325,638
1,612,388
242,170
254,236
103,598
—
—
—
158,939
31,925
3,047,296
389,170
5,941
389,302
91,197
22,325
27,930
—
2,121,431
$
$
$
$
25,206
5,206
25,715
168,370
35,810
79,029
—
—
1,325
—
—
1,685
376,688
—
—
—
—
—
—
—
(49,365)
—
(2,350,467)
(248,719)
—
$
(2,648,551) $
214,344
181,604
368,614
1,780,758
278,270
333,265
103,598
—
12,360
—
—
138,872
3,516,362
$
38,224
—
6
— $
—
—
550,590
1,319,211
389,308
22,147
67,455
1,797
18,023
229,036
(49,365)
(248,719)
—
—
(2,350,467)
(2,648,551) $
63,979
—
161,084
18,023
1,014,167
3,516,362
Total liabilities and equity
$
2,740,929
$
3,047,296
$
376,688
$
87
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Condensed Balance Sheet
As of December 31, 2013
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Assets:
Cash and cash equivalents
$
104,310
$
— $
30,109
$
— $
Total
134,419
215,020
211,978
197,542
1,468,290
175,808
330,188
95,343
—
12,050
—
—
162,493
3,003,131
21,764
4,228
27,618
161,819
40,134
80,716
—
—
1,409
—
9,170
2,104
379,071
—
(193)
—
—
—
—
—
(58,998)
—
(2,210,416)
(627,711)
—
$
(2,897,318) $
$
33,206
—
9
24,303
63,647
3,271
10,202
244,433
379,071
$
(193) $
—
—
534,091
811,776
377,855
(58,998)
(627,711)
—
—
(2,210,416)
(2,897,318) $
76,969
—
147,865
10,202
1,044,373
3,003,131
Accounts receivable
Other current assets
Property and equipment, net
Goodwill, net
Other intangible assets, net
Capitalized data and database cost, net
Investment in affiliates, net
Deferred income tax assets, long-term
Restricted cash
Investment in subsidiaries
Intercompany receivable
Other assets
Total assets
Liabilities and equity:
Current liabilities
Long-term debt, net of current
Deferred revenue, net of current
Deferred income taxes liabilities, long
term
Intercompany payable
Other liabilities
Redeemable noncontrolling interest
Total CoreLogic stockholders' equity
Total liabilities and equity
—
56,877
20,076
—
348
—
—
58,998
10,335
2,210,416
63,647
118,709
2,643,716
107,340
806,395
—
—
564,064
121,544
—
1,044,373
2,643,716
$
$
$
193,256
151,066
149,848
1,306,471
135,326
249,472
95,343
—
306
—
554,894
41,680
2,877,662
393,738
5,381
377,846
111,664
—
23,050
—
1,965,983
2,877,662
$
$
$
$
$
$
88
Operating revenue
Intercompany revenue
Cost of services (exclusive of
depreciation and amortization below)
Selling, general and administrative
expenses
Depreciation and amortization
Impairment loss
Operating (loss)/income
Total interest expense, net
Gain on investments and other, net
(Benefit)/Provision for income taxes
Equity in earnings of affiliates, net of
tax
Equity in earnings of subsidiary, net of
tax
Net income/(loss) from continuing
operations
Loss from discontinued operations, net
of tax
(Loss)/gain from sale of discontinued
operations, net of tax
Net income/(loss)
Less: Net loss attributable to
noncontrolling interests
Net income/(loss) attributable to
CoreLogic
Net income
Total other comprehensive (loss)/income
Less: Comprehensive loss attributable to
noncontrolling interests
Comprehensive income/(loss)
attributable to CoreLogic
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Condensed Statement of Operations
For the Year Ended December 31, 2014
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
— $
1,263,980
$
141,060
$
— $
1,405,040
—
637
(637)
—
686,630
53,696
(25)
740,301
—
—
58,176
4,836
—
(63,012)
(65,299)
5,070
(43,448)
252,879
107,002
4,970
212,499
(627)
(6,278)
73,179
—
14,120
152,993
—
41,174
26,556
—
20,271
(1,056)
5,090
39
—
—
(612)
—
—
—
—
—
—
—
351,617
138,394
4,970
169,758
(66,982)
3,882
29,770
14,120
(152,993)
—
73,200
146,535
24,266
(152,993)
91,008
—
(16,653)
—
—
(16,653)
—
73,200
(1,424)
128,458
1,536
25,802
—
(152,993)
112
74,467
—
—
1,267
—
1,267
$
$
$
$
73,200
73,200
(30,197)
$
$
128,458
128,458
—
$
$
24,535
25,802
(26,673)
(152,993) $
73,200
(152,993) $
26,673
74,467
(30,197)
—
—
1,267
—
1,267
$
43,003
$
128,458
$
(2,138) $
(126,320) $
43,003
89
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Condensed Statement of Operations
For the Year Ended December 31, 2013
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
— $
1,303,115
$
101,286
$
— $
1,404,401
—
631
(631)
—
679,032
38,804
(631)
717,205
Operating revenue
Intercompany revenue
Cost of services (exclusive of
depreciation and amortization below)
Selling, general and administrative
expenses
Depreciation and amortization
Impairment loss
Operating (loss)/income
Total interest expense, net
Gain on investments and other, net
(Benefit)/provision for income taxes
Equity in earnings of affiliates, net of
tax
Equity in earnings of subsidiary, net of
tax
Net income from continuing operations
Income/(loss) from discontinued
operations, net of tax
(Loss)/gain on sale of discontinued
operations, net of tax
Net income
Less: Net loss attributable to
noncontrolling interests
Net income attributable to CoreLogic
Net income
Total other comprehensive loss
Less: Comprehensive loss attributable to
noncontrolling interests
Comprehensive income/(loss)
attributable to CoreLogic
—
—
63,205
3,767
—
(66,972)
(45,270)
3,785
(40,392)
276,236
98,670
44,433
204,744
(2)
1,250
72,385
—
26,566
175,793
107,728
—
160,173
—
14,595
—
107,728
—
107,728
107,728
(38,075)
$
$
(8,514)
166,254
—
166,254
166,254
—
$
$
$
$
34,848
23,895
—
4,370
(2,330)
6,997
1,680
795
—
8,152
(172)
1,506
9,486
(53)
9,539
9,486
(43,337)
—
—
—
—
—
—
—
—
(175,793)
(175,793)
374,289
126,332
44,433
142,142
(47,602)
12,032
33,673
27,361
—
100,260
—
14,423
—
(175,793)
—
(175,793) $
(7,008)
107,675
(53)
107,728
(175,793) $
43,337
107,675
(38,075)
$
$
—
—
(53)
—
(53)
$
69,653
$
166,254
$
(33,798) $
(132,456) $
69,653
90
Operating revenue
Intercompany revenue
Cost of services (exclusive of
depreciation and amortization below)
Selling, general and administrative
expenses
Depreciation and amortization
Impairment loss
Operating (loss)/income
Total interest (expense)/income, net
Gain on investments and other, net
(Benefit)/provision for income taxes
Equity in earnings of affiliates, net of
tax
Equity in earnings of subsidiary, net of
tax
Net income/(loss) from continuing
operations
Income/(loss) from discontinued
operations, net of tax
Loss from sale of discontinued
operations, net of tax
Net income/(loss)
Less: Net loss attributable to
noncontrolling interests
Net income/(loss) attributable to
CoreLogic
Net income/(loss)
Total other comprehensive income
Less: Comprehensive loss attributable to
noncontrolling interests
Comprehensive income/(loss)
attributable to CoreLogic
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Condensed Statement of Operations
For the Year Ended December 31, 2012
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
— $
1,244,136
$
89,343
$
— $
1,333,479
—
1,955
(1,955)
—
636,707
34,732
(1,955)
669,484
—
—
65,637
2,937
—
(68,574)
(50,222)
3,492
(44,908)
257,650
91,173
19,880
238,726
88
1,504
102,058
—
35,153
182,689
—
33,318
22,998
—
250
(2,339)
—
6,338
830
—
—
—
—
—
—
—
—
—
356,605
117,108
19,880
170,402
(52,473)
4,996
63,488
35,983
(182,689)
—
112,293
173,413
(7,597)
(182,689)
95,420
—
15,298
(2,911)
—
12,387
—
112,293
3,841
192,552
—
(10,508)
—
(182,689)
3,841
111,648
—
—
(645)
—
(645)
$
$
$
$
112,293
112,293
4,802
$
$
192,552
192,552
—
(9,863) $
(182,689) $
112,293
(10,508) $
5,921
(182,689) $
(5,921)
111,648
4,802
—
—
(645)
—
(645)
$
117,095
$
192,552
$
(3,942) $
(188,610) $
117,095
91
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Cash flows from operating activities:
Net cash provided by operating activities
- continuing operations
Net cash used in operating activities -
discontinued operations
Total cash provided by operating
activities
Cash flow from investing activities:
Purchases of property and equipment
Purchases of capitalized data and other
intangible assets
Cash paid for acquisitions, net of cash
acquired
Cash received from sale of subsidiary,
net
Proceeds from sale of property and
equipment
Change in restricted cash
Net cash used in investing activities -
continuing operations
Net cash provided by investing activities
- continuing operations
Total cash used in by investing
activities
Cash flow from financing activities:
Proceeds from long-term debt
Debt issuance costs
Repayments of long-term debt
Shares repurchased and retired
Proceeds from issuance of stock related
to stock options and employee benefit
plans
Minimum tax withholding paid on
behalf of employees for restricted stock
units
Tax benefit related to stock options
Intercompany loan payments
Intercompany loan proceeds
Net cash (used in)/provided by financing
activities - continuing operations
Net cash provided by financing activities
- discontinued operations
Total cash (used in)/provided by
financing activities
Effect of Exchange Rate on cash
Condensed Statement of Cash Flows
For the Year Ended December 31, 2014
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
$
$
$
$
9,433
$
283,316
$
42,844
$
— $
335,593
—
(13,717)
—
—
(13,717)
9,433
$
269,599
$
42,844
$
— $
321,876
(1,964) $
(40,598) $
(9,463) $
— $
(52,025)
—
—
—
—
(700)
(30,077)
(5,052)
(665,753)
(29,118)
25,366
13,937
306
—
—
84
(2,664)
(696,819)
(43,549)
—
—
1,536
—
—
—
—
—
—
—
(35,129)
(694,871)
25,366
13,937
(310)
(743,032)
1,536
(2,664) $
(696,819) $
(42,013) $
— $
(741,496)
$
690,017
(14,042)
(195,217)
(91,475)
— $
—
(4,789)
—
— $
—
—
—
— $
—
—
—
690,017
(14,042)
(200,006)
(91,475)
15,213
—
(15,980)
6,791
(610,239)
179,187
—
—
(179,187)
606,212
(35,745)
422,236
—
—
—
—
—
—
4,027
4,027
—
—
—
—
789,426
(789,426)
—
—
15,213
(15,980)
6,791
—
—
390,518
—
$
(35,745) $
422,236
$
—
—
$
4,027
(625)
— $
—
390,518
(625)
92
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Net decrease in cash and cash
equivalents
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept (to)/from discontinued
operations
$
(28,976) $
(4,984) $
4,233
$
— $
(29,727)
104,310
—
30,109
—
(13,717)
(13,732)
—
1,536
1,536
—
—
—
134,419
(12,181)
(12,196)
Cash and cash equivalents at end of year
$
61,602
$
8,733
$
34,342
$
— $
104,677
93
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Cash flows from operating activities:
Net cash (used in)/provided by operating
activities - continuing operations
Net cash provided by operating activities
- discontinued operations
Total cash (used in)/provided by
operating activities
Cash flow from investing activities:
Purchases of property and equipment
Purchases of capitalized data and other
intangible assets
Cash paid for acquisitions, net of cash
acquired
Cash received from sale of
discontinued operations
Purchases of investments
Change in restricted cash
Net cash used in investing activities -
continuing operations
Net cash provided by investing activities
- discontinued operations
Total cash used in investing activities
Cash flow from financing activities:
Proceeds from long-term debt
Debt issuance costs
Repayments of long-term debt
Shares repurchased and retired
Proceeds from issuance of stock related
to stock options and employee benefit
plans
Minimum tax withholding paid on
behalf of employees for restricted stock
units
Tax benefit related to stock options
Intercompany loan payments
Intercompany loan proceeds
Net cash provided by/(used in) financing
activities - continuing operations
Net cash provided by financing activities
- discontinued operations
Total cash provided by/(used in)
financing activities
Effect of Exchange Rate on cash
Condensed Statement of Cash Flows
For the Year Ended December 31, 2013
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
$
$
$
$
(51,864) $
354,004
$
26,080
$
— $
328,220
—
24,094
1,506
—
25,600
(51,864) $
378,098
$
27,586
$
— $
353,820
(8,870) $
(51,660) $
(8,215) $
— $
(68,745)
(348)
(23,171)
(14,322)
—
(92,591)
—
—
7,964
2,263
(2,351)
—
542
—
—
2,104
(1,254)
(167,510)
(19,891)
—
—
—
—
—
—
(37,841)
(92,049)
2,263
(2,351)
10,068
(188,655)
—
(1,254) $
1,862
(165,648) $
—
(19,891) $
—
— $
1,862
(186,793)
$
50,000
—
(4,375)
(241,161)
$
1,647
(10,436)
(291)
—
— $
—
—
—
— $
—
—
—
51,647
(10,436)
(4,666)
(241,161)
28,232
(8,665)
5,146
—
191,147
—
—
—
(180,885)
—
—
—
—
(10,262)
—
20,324
(189,965)
(10,262)
—
—
—
$
20,324
$
(189,965) $
—
—
(10,262) $
(2,116)
—
—
—
191,147
(191,147)
28,232
(8,665)
5,146
—
—
—
—
(179,903)
—
— $
—
(179,903)
(2,116)
94
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept from discontinued
operations
$
(32,794) $
22,485
$
(4,683) $
— $
(14,992)
111,305
3,471
34,792
—
25,956
25,799
—
1,506
1,506
—
—
—
149,568
27,462
27,305
Cash and cash equivalents at end of year
$
104,310
$
— $
30,109
$
— $
134,419
95
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Cash flows from operating activities:
Net cash (used in)/provided by operating
activities - continuing operations
Net cash provided by operating activities
- discontinued operations
Total cash (used in)/provided by
operating activities
Cash flow from investing activities:
Purchases of property and equipment
Purchases of capitalized data and other
intangible assets
Cash paid for acquisitions, net of cash
acquired
Cash received from sale of subsidiary,
net
Proceeds from sale of property and
equipment
Proceeds from sale of investments
Change in restricted cash
Net cash used in investing activities -
continuing operations
Net cash used in investing activities -
discontinued operations
Total cash used in investing activities
Cash flow from financing activities:
Proceeds from long-term debt
Repayments of long-term debt
Shares repurchased and retired
Proceeds from issuance of stock related
to stock options and employee benefit
plans
Minimum tax withholding paid on
behalf of employees for restricted stock
units
Distribution to noncontrolling interests
Tax benefit related to stock options
Intercompany loan payments
Intercompany loan proceeds
Net cash (used in)/provided by financing
activities - continuing operations
Net cash used in financing activities -
discontinued operations
Total cash (used in)/provided by
financing activities
Condensed Statement of Cash Flows
For the Year Ended December 31, 2012
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
$
$
$
$
(60,340) $
380,064
$
16,927
$
— $
336,651
—
26,494
—
—
26,494
(60,340) $
406,558
$
16,927
$
— $
363,145
(3,195) $
(36,897) $
(11,453) $
— $
(51,545)
—
—
—
—
—
(1)
(28,792)
(3,397)
(78,354)
10,000
1,863
8,000
(184)
—
—
—
—
271
(3,196)
(124,364)
(14,579)
—
(5,203)
—
—
—
—
—
—
—
—
—
(32,189)
(78,354)
10,000
1,863
8,000
86
(142,139)
(5,203)
(3,196) $
(129,567) $
(14,579) $
— $
(147,342)
50,000
(103,368)
(226,629)
13,497
(3,466)
—
935
(66,765)
278,231
$
— $
— $
(11,020)
—
(52,327)
—
— $
—
—
50,000
(166,715)
(226,629)
—
—
—
—
(278,231)
—
—
—
(10)
—
—
66,765
—
—
—
—
344,996
(344,996)
13,497
(3,466)
(10)
935
—
—
(57,565)
(289,251)
14,428
—
(79)
—
—
—
(332,388)
(79)
$
(57,565) $
(289,330) $
14,428
$
— $
(332,467)
96
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
Effect of Exchange Rate on cash
—
—
(153)
—
(153)
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept from discontinued
operations
$
(121,101) $
(12,339) $
16,623
$
— $
(116,817)
229,871
10,076
18,169
—
21,212
2,535
26,946
—
—
—
—
—
258,116
21,212
29,481
Cash and cash equivalents at end of year
$
111,305
$
3,471
$
34,792
$
— $
149,568
Note 21 - Unaudited Quarterly Financial Data
The following table sets forth certain unaudited consolidated quarterly financial data for years ended 2014 and 2013:
(in thousands, except per share amounts)
Operating revenue
Operating income
Equity in earnings of affiliates, net of tax
Amounts attributable to CoreLogic:
(Loss)/income from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net of tax
Net (loss)/income attributable to CoreLogic stockholders
Basic income/(loss) per share:
(Loss)/income from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net of tax
Net income
Diluted income/(loss) per share:
(Loss)/income from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Income/(loss) from sale of discontinued operations, net of tax
Net income
Weighted-average common shares outstanding:
Basic
Diluted
For the Quarters Ended
3/31/2014
6/30/2014
9/30/2014
12/31/2014
$ 326,104
14,825
$
2,382
$
$ 365,970
41,020
$
3,875
$
$ 367,454
77,755
$
4,032
$
$
$
$
$
$
$
(3,179) $
387
—
(2,792) $
26,740
(10,752)
—
15,988
(0.03) $
—
—
(0.03) $
(0.03) $
—
—
(0.03) $
0.29
(0.12)
—
0.17
0.29
(0.12)
—
0.17
$
$
$
$
$
$
49,719
(4,856)
476
45,339
0.55
(0.05)
0.01
0.51
0.54
(0.05)
0.01
0.50
$
$
$
$
$
$
$
$
$
345,512
36,158
3,831
16,461
(1,432)
(364)
14,665
0.18
(0.02)
—
0.16
0.18
(0.02)
—
0.16
91,433
91,433
91,750
93,062
90,518
91,987
89,597
91,245
97
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2014, 2013 and 2012
(in thousands, except per share amounts)
3/31/2013
6/30/2013
9/30/2013
12/31/2013
For the Quarters Ended
Operating revenue
Operating income/(loss)
Equity in earnings of affiliates, net of tax
Amounts attributable to CoreLogic:
Income/(loss) from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Loss on sale of discontinued operations, net of tax
Net income
Basic income/(loss) per share:
Income/(loss) from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Loss on sale of discontinued operations, net of tax
Net income
Diluted income/(loss) per share:
Income/(loss) from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Loss on sale of discontinued operations, net of tax
Net income
Weighted-average common shares outstanding:
Basic
Diluted
$ 350,861
$ 368,437
$ 356,581
$
$
$
$
$
$
$
$
47,065
8,788
30,907
4,405
(1,744)
33,568
0.32
0.05
(0.02)
0.35
0.31
0.04
(0.02)
0.33
$
$
$
$
$
$
$
$
52,980
9,347
35,352
8,198
—
43,550
0.37
0.09
—
0.46
0.36
0.08
—
0.44
$
$
$
$
$
$
$
$
$ 328,522
(19,264)
3,510
$
$
61,361
5,716
43,382
$
5,332
(5,052)
43,662
0.46
0.06
(0.05)
0.47
0.45
0.06
(0.05)
0.46
$
$
$
$
$
(9,328)
(3,512)
(212)
(13,052)
(0.10)
(0.04)
—
(0.14)
(0.10)
(0.04)
—
(0.14)
97,113
99,056
95,516
97,180
94,773
96,793
92,946
92,946
98
CORELOGIC AND SUBSIDIARY COMPANIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
December 31, 2014, 2013 and 2012
(in thousands)
For the Year Ended December 31,
2014
Allowance for doubtful accounts
Claim losses
Tax valuation allowance
For the Year Ended December 31,
2013
Allowance for doubtful accounts
Claim losses
Tax valuation allowance
For the Year Ended December 31,
2012
Allowance for doubtful accounts
Claim losses
Tax valuation allowance
Balance at
Beginning of
Period
Charged to
Costs &
Expenses
Charged to
Other
Accounts
Deductions
Balance at
End of
Period
$
$
$
$
$
$
$
$
$
13,045
26,128
24,173
19,511
26,106
30,955
15,634
22,819
29,389
$
$
$
$
$
$
$
$
$
3,228
$
11,138
$
(5,506) $
—
$
—
$
3,244 (3) $
(5,447) (1) $
(12,395) (2) $
$
—
10,826
24,871
21,911
5,782
$
$
13,998
(5,295) $
—
$
—
$
(1,487) (3) $
(12,248) (1) $
(13,976) (2) $
$
—
13,045
26,128
24,173
11,109
19,216
13,134
$
$
$
$
—
—
$
(11,568) (3) $
(7,232) (1) $
(15,929) (2) $
$
—
19,511
26,106
30,955
(1) Amount represents accounts written off, net of recoveries.
(2) Amount represents claim payments, net of recoveries.
(3) Amount represents adjustments for acquired net operating loss and credit carryforwards.
99
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company’s principal executive officer and principal financial officer have concluded that, as of the end of the
fiscal year covered by this Annual Report on Form 10-K, the Company’s disclosure controls and procedures, as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934, as amended, were effective, based on the evaluation of these controls and
procedures required by Rule 13a-15(b) thereunder.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting. The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP
and includes those policies and procedures that:
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). Based on that assessment, management
determined that the Company’s internal control over financial reporting was effective as of December 31, 2014.
We excluded MSB/DataQuick from our assessment of internal control over financial reporting as of December 31, 2014
as it was acquired during 2014. The total assets and total revenues of MSB/DataQuick, a wholly-owned subsidiary, represent
16.0% and 4.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended
December 31, 2014.
PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the Company’s financial
statements provided in Item 8, above, has issued a report on the effectiveness of the Company’s internal controls over financial
reporting as of December 31, 2014.
(c) Changes in Internal Controls
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2014
that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
On February 24, 2015, the Compensation Committee approved an increase in the annual base salary for Barry M.
Sando, the Company’s Senior Executive Vice President and Group Executive, Technology and Processing Solutions, from
$500,000 to $550,000, and an increase in the annual base salary for Stergios Theologides, the Company’s Senior Vice
President, General Counsel and Secretary, from $350,000 to $425,000.
100
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Except as provided below, the information required by this item will be included in an amendment to this Annual
Report on Form 10-K or incorporated by reference from our Proxy Statement for our 2015 Annual Meeting of Stockholders to
be filed with the SEC within 120 days after the end of the year ended December 31, 2014.
Code of Ethics
Our Board of Directors has adopted a code of ethics that applies to the Company's principal executive officer,
principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of this
code of ethics is posted on the Investors section of the Company's Web site under Corporate Governance at
www.corelogic.com. The Board also has adopted a broader code of ethics and conduct, applying to all employees, officers and
directors, which also has been posted under "Investors-Corporate Governance" on the Web site at the address stated above. If
the Company waives or amends any provisions of these codes of ethics that apply to the Company's directors and executive
officers, including our principal executive officer, principal financial officer, principal accounting officer or controller and
persons performing similar functions, it will disclose such waivers or amendments on the Company's Web site, at the address
and location specified above, to the extent required by applicable rules of the Securities and Exchange Commission or the New
York Stock Exchange.
Item 11. Executive Compensation
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or
incorporated by reference from our Proxy Statement for our 2015 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2014.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or
incorporated by reference from our Proxy Statement for our 2015 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2014.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or
incorporated by reference from our Proxy Statement for our 2015 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2014.
Item 14. Principal Accountant Fees and Services
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or
incorporated by reference from our Proxy Statement for our 2015 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2014.
101
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a) 1. The following consolidated financial statements of CoreLogic, Inc. are included in Item 8.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statement of Comprehensive/(Loss) Income for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012
Notes to the Consolidated Financial Statements for the Years Ended December 31, 2014, 2013 and 2012
2. Financial Statement Schedule.
The financial statements of RELS LLC required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.1 to this
Annual Report on Form 10-K.
3. Exhibits – See Exhibit Index.
102
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
CoreLogic, Inc.
(Registrant)
By: /s/ Anand Nallathambi
Anand Nallathambi
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 26, 2015
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and
appoints Anand Nallathambi, Frank D. Martell and Stergios Theologides, and each of them, his or her true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
103
Signature
Title
Date
/s/ Anand Nallathambi
Anand Nallathambi
President and Chief Executive Officer
February 26, 2015
(Principal Executive Officer)
/s/ Frank D. Martell
Frank D. Martell
Chief Operating and Financial Officer
(Principal Financial Officer)
Senior Vice President and Corporate
Controller
(Principal Accounting Officer)
Chairman of the Board, Director
February 26, 2015
/s/ James L. Balas
James L. Balas
/s/ Paul F. Folino
Paul F. Folino
/s/ J. David Chatham
J. David Chatham
/s/ Douglas C. Curling
Douglas C. Curling
/s/ John C. Dorman
John C. Dorman
/s/ Thomas C. O’Brien
Thomas C. O’Brien
Director
Director
Director
Director
/s/ Jaynie Miller Studenmund
Jaynie Miller Studenmund
Director
/s/ David F. Walker
David F. Walker
/s/ Mary Lee Widener
Mary Lee Widener
Director
Director
104
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
Exhibit No.
Description
EXHIBIT INDEX
2.1
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Agreement and Plan of Merger, dated May 28, 2010, by and between The First American Corporation and
CoreLogic, Inc. (Incorporated by reference herein from Exhibit 2.1 to the Company's Form 8-K as filed with
the SEC on June 1, 2010).
Purchase and Sale Agreement by and among CoreLogic Acquisition Co. I, LLC, CoreLogic Acquisition Co. II,
LLC, CoreLogic Acquisition Co. III, LLC, Property Data Holdings, Ltd., DataQuick Lending Solutions, Inc.,
Decision Insight Information Group S.à r.l., and solely with respect to, and as specified in, Sections 2.5, 2.7,
2.10(f), 5.7, 5.18, 5.21, 8.2(b), 8.7(b), and 9.15 of the Purchase and Sale Agreement, CoreLogic Solutions,
LLC, and solely with respect to, and as specified in, Sections 5.4 and 5.7 of the Purchase and Sale Agreement,
Property Data Holdings, L.P. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on
July 5, 2013). † ^
Amended and Restated Certificate of Incorporation of CoreLogic, Inc., dated May 28, 2010 (Incorporated by
reference herein from Exhibit 3.1 to the Company's Current Report on Form 8-K as filed with the SEC on June
1, 2010).
Amended and Restated Bylaws of CoreLogic, Inc. (incorporated by reference to the Company's Current Report
on Form 8-K as filed with the SEC on March 5, 2014).
Specimen Certificate for shares of Common Stock of CoreLogic, Inc. (Incorporated by reference herein from
Exhibit 3.3 to the Company's Current Report on Form 8-K as filed with the SEC on June 1, 2010).
Senior Indenture, dated as of April 7, 1998, between The First American Financial Corporation and Wilmington
Trust Company as Trustee (Incorporated by reference herein from Exhibit (4) to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1998 as filed with the SEC on August 14, 1998).
Form of First Supplemental Indenture (Incorporated by reference herein from Exhibit 4.2 of Registration
Statement 333-116855 on Form S-3, dated June 25, 2004).
Third Supplemental Indenture to Senior Indenture, dated as of May 10, 2010 (Incorporated by reference herein
from Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed
with the SEC on August 9, 2010).
Fourth Supplemental Indenture to Senior Indenture, dated as of June 1, 2010 (Incorporated by reference herein
from Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed
with the SEC on August 9, 2010).
Senior Notes Indenture, dated May 20, 2011, among CoreLogic, Inc., the guarantors named therein and
Wilmington Trust FSB, as trustee (Incorporated by reference herein to Exhibit 4.1 to the Company's Current
Report on Form 8-K as filed with the SEC on May 25, 2011).
Supplemental Indenture, dated November 13, 2013, among CoreLogic, Inc., the guarantors party thereto and
Wilmington Trust, National Association, as trustee (Incorporated by reference herein from Exhibit 4.1 to the
Company's Current Report on Form 8-K as filed with the SEC on November 15, 2013).
Registration Rights Agreement, dated May 20, 2011, by and among CoreLogic, Inc., the guarantors identified
therein, and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo
Securities, LLC, Barclays Capital, Inc., SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc.,
Comerica Securities, Inc. and HSBC Securities (USA) Inc. (Incorporated by reference herein to Exhibit 4.2 to
the Company's Current Report on Form 8-K as filed with the SEC on May 25, 2011).
105
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
Separation and Distribution Agreement by and between The First American Corporation and First American
Financial Corporation, dated as of June 1, 2010 (Incorporated by reference herein to Exhibit 10.1 to the
Company's Current Report on Form 8-K as filed with the SEC on June 1, 2010).
Tax Sharing Agreement by and between The First American Corporation and First American Financial
Corporation, dated as of June 1, 2010 (Incorporated by reference herein to Exhibit 10.2 to the Company's
Current Report on Form 8-K as filed with the SEC on June 1, 2010).
Restrictive Covenants Agreement among First American Financial Corporation and The First American
Corporation, dated June 1, 2010 (Incorporated by reference herein to Exhibit 10.4 to the Company's Current
Report on Form 8-K as filed with the SEC on June 1, 2010).
Employment Agreement, dated May 3, 2011, between CoreLogic, Inc. and Anand K. Nallathambi
(Incorporated by reference herein from Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 2011 as filed with the SEC on May 6, 2011).*
Employment Agreement, dated May 3, 2011, between CoreLogic, Inc. and Barry M. Sando (Incorporated by
reference herein to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the period ended June
30, 2011 as filed with the SEC on August 8, 2011).*
Amendment to Employment Agreement between the Company and Barry Sando effective as of June 16, 2014
(Incorporated by reference herein to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2014 as filed with the SEC on July 25, 2014).*
Amendment to Employment Agreement between the Company and Barry Sando effective as of October 6,
2014.*
Form of Employment Agreement (Incorporated by reference herein from Exhibit 10.7 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 2011 as filed with the SEC on May 6, 2011).*
Employment Agreement, dated August 29, 2011, between CoreLogic, Inc. and Frank Martell (Incorporated by
reference herein to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2011 as filed with the SEC on November 4, 2011).*
Amendment to Employment Agreement between the Company and Frank Martell effective as of June 16, 2014
(Incorporated by reference herein to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2014 as filed with the SEC on July 25, 2014).*
Employment Agreement, dated May 4, 2011, between CoreLogic, Inc. and Stergios Theologides (Incorporated
by reference herein from Exhibit 10.86 to the Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2011 as filed with the SEC on April 30, 2012).*
Form of Change in Control Agreement (Incorporated by reference herein to Exhibit 10.2 to the Company's
Current Report on Form 8-K as filed with the SEC on June 14, 2010).*
Pension Restoration Plan, effective as of June 1, 2010 (Incorporated by reference herein from Exhibit 10.18 to
the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed with the SEC on
August 9, 2010).*
Executive Supplemental Benefit Plan, effective as of June 1, 2010 (Incorporated by reference herein from
Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed
with the SEC on August 9, 2010).*
Amendment No. 1 to the Company's Executive Supplemental Benefit Plan, effective as of December 31, 2010
(Incorporated by reference herein from Exhibit 10.1 to the Company's Current Report on Form 8-K as filed
with the SEC on November 24, 2010).*
106
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
Amendment No. 2 to the Company's Executive Supplemental Benefit Plan, dated as of January 27, 2011
(Incorporated by reference herein from Exhibit 10.23 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2010 as filed with the SEC on March 14, 2011).*
Management Supplemental Benefit Plan, effective as of June 1, 2010 (Incorporated by reference herein from
Exhibit 10.20 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed
with the SEC on August 9, 2010).*
Amendment No. 1 to the Company's Management Supplemental Benefits Plan, effective as of December 31,
2010 (Incorporated by reference herein from Exhibit 10.2 to the Company's Current Report on Form 8-K as
filed with the SEC on November 24, 2010). *
Amendment No. 2 to the Company's Management Supplemental Benefit Plan, dated as of January 27, 2011
(Incorporated by reference herein from Exhibit 10.25 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2010 as filed with the SEC on March 14, 2011).*
Deferred Compensation Plan, effective as of June 1, 2010 (Incorporated by reference herein from Exhibit 10.21
to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2010 as filed with the SEC on
August 9, 2010).*
Amendment No. 1 to the Company's Deferred Compensation Plan, effective as of December 31, 2010
(Incorporated by reference herein from Exhibit 10.3 to the Company's Current Report on Form 8-K as filed
with the SEC on November 24, 2010).*
Amendment No. 2 to the Company's Deferred Compensation Plan, effective as of January 1, 2011
(Incorporated by reference herein from Exhibit 10.27 to the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 2010 as filed with the SEC on March 31, 2011).*
Amendment No. 3 to the Company's Deferred Compensation Plan, effective as of September 29, 2011
(Incorporated by reference herein to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2011 as filed with the SEC on February 29, 2012).*
Amendment No. 4 to the Company's Deferred Compensation Plan, effective as of September 29, 2011
(Incorporated by reference herein to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2011 as filed with the SEC on February 29, 2012).*
10.25
Amendment No. 5 to the Company's Deferred Compensation Plan, effective as of January 1, 2012.*
10.26
Amendment No. 6 to the Company's Deferred Compensation Plan, effective as of January 1, 2013.*
10.27
10.28
10.29
10.30
1997 Directors’ Stock Plan (Incorporated by reference herein from Exhibit 4.1 of Registration Statement No.
333-41993 on Form S-8, dated December 11, 1997).*
Amendment No. 1 to 1997 Directors’ Stock Plan, dated February 26, 1998 (Incorporated by reference herein
from Exhibit (10)(m) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 as filed with the SEC on March 22, 1999).*
Amendment No. 2 to 1997 Directors’ Stock Plan, dated July 7, 1998 (Incorporated by reference herein from
Exhibit (10)(n) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
filed with the SEC on March 22, 1999).*
Amendment No. 3 to 1997 Directors’ Stock Plan, dated July 19, 2000 (Incorporated by reference herein from
Exhibit (10)(c) to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2000 as filed
with the SEC on August 11, 2000).*
107
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
1996 Stock Option Plan (Incorporated by reference herein from Exhibit 4 of Registration Statement No.
333-19065 on Form S-8, dated December 30, 1996).*
Amendment No. 1 to 1996 Stock Option Plan , dated February 26, 1998 (Incorporated by reference herein from
Exhibit (10)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
filed with the SEC on March 22, 1999).*
Amendment No. 2 to 1996 Stock Option Plan, dated June 22, 1998 (Incorporated by reference herein from
Exhibit (10)(j) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
filed with the SEC on March 22, 1999).*
Amendment No. 3 to 1996 Stock Option Plan, dated July 7, 1998 (Incorporated by reference herein from
Exhibit (10)(k) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
filed with the SEC on March 22, 1999).*
Amendment No. 4 to 1996 Stock Option Plan, dated April 22, 1999 (Incorporated by reference herein from
Exhibit (10)(a) to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1999 as filed
with the SEC on August 16, 1999).*
Amendment No. 5 to 1996 Stock Option Plan, dated February 29, 2000 (Incorporated by reference herein from
Exhibit (10)(o) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 as
filed with the SEC on March 22, 1999).*
Amendment No. 6 to 1996 Stock Option Plan, dated July 19, 2000 (Incorporated by reference herein from
Exhibit (10)(b) of Quarterly Report on Form 10-Q for the period ended June 30, 2000 as filed with the SEC on
August 11, 2000).*
Amendment No. 7 to 1996 Stock Option Plan, dated June 4, 2002 (Incorporated by reference herein from
Exhibit (10)(a) to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002 as filed
with the SEC on August14, 2002).*
The CoreLogic, Inc. 2006 Incentive Compensation Plan (formerly The First American Corporation 2006
Incentive Compensation Plan) (Incorporated by reference herein from Exhibit 10.42 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2010 as filed with the SEC on March 14, 2011).*
CoreLogic, Inc.'s Amended and Restated 2011 Performance Incentive Plan (Incorporated by reference herein to
Exhibit 10.1 to the Company's Form 8-K as filed with the SEC on August 4, 2014).*
Form of Notice of Restricted Stock Unit Grant and Form of Restricted Stock Unit Award Agreement
(Employee), approved January 28, 2015.*
Form of Notice of Restricted Stock Unit Grant and Form of Restricted Stock Unit Award Agreement (NEO),
approved January 28, 2015.*
Form of Notice of Performance-Based Restricted Stock Unit Grant and Form of Performance-Based Restricted
Stock Unit Award Agreement, approved January 28, 2015.*
Form of Notice of Nonqualified Stock Option Grant and Nonqualified Stock Option Grant Agreement
(Employee) (Incorporated by reference herein from Exhibit 10.59 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2010, as filed with the SEC on March 14, 2011).*
Form of Notice of Option Grant and Option Award Agreement (Employee) (Incorporated by reference herein to
Exhibit 10.5 to the Company's Current Report on Form 8-K as filed with the SEC on May 25, 2011).*
108
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
Form of Performance Unit Grant and Form of Performance Unit Award Agreement, approved January 28,
2015.*
Form of Indemnification Agreement (Directors and Officers) (Incorporated by reference herein to Exhibit 10.1
to the Company's Current Report on Form 8-K as filed with the SEC on May 25, 2011).*
Credit Agreement, dated as of September 18, 2013, among CoreLogic, Inc., CoreLogic Australia Pty Limited,
the guarantors named therein, the lenders party from time to time thereto and Bank of America, N.A., as
administrative agent (Incorporated by reference herein to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 2013 as filed with the SEC on October 25, 2013).
Reseller Services Agreement, dated as of November 30, 1997 (Incorporated by reference herein from Exhibit
(10)(g) to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998 as filed with the
SEC on May 15, 1998).
Amendment to Reseller Services Agreement for Resales to Consumers, dated as of November 30, 1997
(Incorporated by reference herein from Exhibit (10)(h) to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1998 as filed with the SEC on May 15, 1998).
Agreement for Service, dated October 7, 1998, between CoreLogic CREDCO (formerly First American
CREDCO) and Equifax Credit Information Services, Inc. (Incorporated by reference herein from Exhibit 10.3
to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2011 as filed with the SEC
on May 6, 2011).
Addendum to Agreement for Service, dated May 31, 2000, between CoreLogic CREDCO (formerly First
American CREDCO) and Equifax Credit Information Services, Inc. (Incorporated by reference herein from
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2011 as filed
with the SEC on May 6, 2011).
Reseller Service Agreement, dated April 26, 2011, between CoreLogic, Inc. and Trans Union LLC
(Incorporated by reference herein from Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 2011 as filed with the SEC on May 6, 2011).
Master Professional Services Agreement, dated August 17, 2011, between CoreLogic Real Estate Solutions,
LLC and Cognizant Technology Solutions U.S. Corporation (Incorporated by reference herein to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q/A for the period ended September 30, 2011 as filed with the
SEC on March 23, 2012).±
Amendment No. 2 to Supplement A, effective as of March 1, 2012, by and between CoreLogic Solutions, LLC
and Cognizant Technology Solutions U.S. Corporation, to the Master Professional Services Agreement between
CoreLogic Real Estate Solutions, LLC and Cognizant Technology Solutions U.S. Corporation (Incorporated by
reference herein to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2013 as filed with the SEC on October 25, 2013). ±
Amendment No. 3 to Supplement A, effective as of September 1, 2013, by and between CoreLogic Solutions,
LLC and Cognizant Technology Solutions U.S. Corporation, to the Master Professional Services Agreement
between CoreLogic Real Estate Solutions, LLC and Cognizant Technology Solutions U.S. Corporation
(Incorporated by reference herein to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2014 as filed with the SEC on July 25, 2014).±
Master Services Agreement by and between the Company and Dell Marketing, L.P., dated as of July 19, 2012
(Incorporated by reference herein from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2012 as filed with the SEC on October 26, 2012).±
Amendment No. 1 dated October 23, 2012 to the Master Services Agreement by and between CoreLogic
Solutions, LLC and Dell Marketing, L.P. (Incorporated by reference herein from Exhibit 10.85 to the
Company's Annual Report on Form 10-K for the period ended December 31, 2013 as filed with the SEC on
February 25, 2013).
109
10.59
Amendment No. 2 dated October 26, 2012 to the Master Services Agreement and Supplement A between
CoreLogic Solutions, LLC and Dell Marketing L.P. (Incorporated by reference herein from Exhibit 10.85 to the
Company's Annual Report on Form 10-K for the period ended December 31, 2013 as filed with the SEC on
February 25, 2013). ±
21.1
23.1
23.2
31.1
31.2
32.1
32.2
99.1
101
*
±
^
†
Subsidiaries of the registrant.
Consent of Independent Registered Public Accounting Firm.
Consent of Independent Registered Public Accounting Firm.
Certification by Principal Executive Officer Pursuant to Rule 13a-14(a) under the Securities Act of 1934, as
amended.
Certification by Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of
1934, as amended.
Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.
Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
Audited Financial Statements of RELS LLC.
The following financial information from CoreLogic, Inc.'s Annual Report on From 10-K for the year ended
December 31, 2014, formatted in Extensible Business Reporting Language (XBRL) and furnished
electronically herewith: (I) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive (Loss)/Income, (iv) Consolidated Statements of Changes in
Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial
Statements.
Included in this filing
Indicates a management contract or compensatory plan or arrangement in which any director or named executive
officer participates.
Confidential treatment has been requested with respect to portions of this exhibit pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934 and these confidential portions have been redacted from this exhibit. A complete
copy of this exhibit, including the redacted terms, has been separately filed with the Securities and Exchange
Commission.
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby
agrees to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the
Securities and Exchange Commission.
This agreement contains representations and warranties by us or our subsidiaries. These representations and
warranties have been made solely for the benefit of the other parties to the agreement and (i) has been qualified by
disclosures made to such other parties, (ii) were made only as of the date of such agreement or such other date(s)
as may be specified in such agreement and are subject to more recent developments, which may not be fully
reflected in our public disclosures, (iii) may reflect the allocation of risk among the parties to such agreement and
(iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly,
these representations and warranties may not describe the actual state of affairs at the date hereof and should not
be relied upon.
110
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Stock Exchange Listing
Trading Symbol “CLGX”
New York Stock Exchange
Board of Directors
Executive Officers
J. David Chatham
Anand Nallathambi
2015 Annual Meeting of Stockholders
April 28, 2015, 2:00 p.m.
CoreLogic, Inc.
40 Pacifica
Irvine, CA 92618 USA
Independent Registered Public
Accounting Firm
PricewaterhouseCoopers LLP
2020 Main Street
Suite 400
Irvine, California 92614
Transfer Agent and Registrar
for registered stockholders
Wells Fargo Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120
866-877-6206
651-450-4064
www.shareowneronline.com
Financial Information
Investor Relations
CoreLogic, Inc.
40 Pacifica
Irvine, CA 92618 USA
Toll-Free: (877) 849-1023
Douglas C. Curling
Frank D. Martell
Barry M. Sando
Stergios Theologides
John C. Dorman
Paul F. Folino
Anand K. Nallathambi
Thomas C. O'Brien
Jaynie Miller Studenmund
David F. Walker
Mary Lee Widener