2015 ANNUAL REPORT
TO OUR STOCKHOLDERS:
CoreLogic celebrated its 5th anniversary as a public Company in June 2015. Over the past five years, we have transformed our
company into a leading global property information, analytics and data-enabled services provider. Our transformation has
been guided by a boundless passion to achieve our vision - deliver unique property-level insights that power the global real
estate economy.
We owe much of our success to a relentless focus on empowering our clients to make smarter decisions through data-driven
insights. Along these lines, we successfully executed against a multi-year 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:
• Achieve differentiated market leadership in our core property intelligence, underwriting and risk management solutions
businesses,
• Build-out unique, industry currency data-driven solution sets in our core mortgage-related strategic business units and
build meaningful scale in insurance, geo-spatial solutions and international operations,
• Drive operating leverage and expand margins through process reengineering, workflow optimization and cost efficiency,
•
Invest aggressively in technology infrastructure and the CoreLogic Innovation Center to enable and support future growth
and efficiency, and
• Build financial flexibility and consistently return capital to our stockholders.
Over the past five years we have delivered consistent growth in revenues, profits and cash flow. Our ability to grow revenues
in areas where we can secure market leadership and scale has been the foundation of our success. Our focus on data,
analytics and data-enabled solutions has fostered a higher level of long-term subscription-based revenues with favorable
profitability and cash flow characteristics. Since 2011, we have increased revenues at a compounded rate of 9%; adjusted
EBITDA by 15%; and adjusted EPS by 30%. At the same time, we invested in our business to secure our long-term growth and
returned more than $830 million in capital to our stockholders.
By almost every measure, CoreLogic has become a higher-growth, higher-margin enterprise. Today, our core solutions sit at
the heart of the global housing ecosystem. Our Property Intelligence (PI) segment is a global leader in residential property
data, analytics, valuation solutions and related workflow services. Our Risk Management and Workflow (RMW) 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 insights and solutions are unique and deeply
embedded in our clients’ most critical workflows. This positions CoreLogic to help our clients build their businesses and
assess and manage risk twenty-four hours a day, seven days a week.
Remarkably, our transformation into a global leader providing “must-have” data-driven property insights was achieved during
a period of significant macro-economic pressures, regulatory uncertainty and market-specific headwinds in the U.S. housing
and mortgage industries. Despite these external pressures, we invested to build high operating leverage in our core business
units and foster technology leadership and innovation. We also improved our quality and service and achieved significant
operating efficiencies. We largely self-funded these investments by developing a culture of continuous improvement and
embedding a passion for driving operating emphasis on cost effectiveness and operating efficiency, and attention to cash flow
management.
Our record operating and financial performance in 2015 reflects the strength of our business model and validates that our
strategic transformation plan is driving sustained and long-term value creation for all of our stakeholders. Our more
significant 2015 full-year financial results are highlighted below:
• Revenues up 9% to $1,528 million, driven by double-digit growth in the PI segment and RMW market outperformance,
• Operating income from continuing operations up 20% to $203 million, reflecting the benefits of revenue growth and cost
management programs partially offset by foreign currency translation,
• Net income from continuing operations up 43% to $128 million, fueled by growth in operating results, a gain on
investments related to the RELS, LLC acquisition and lower interest costs,
• Diluted earnings per share (EPS) from continuing operations up 46% to $1.42 and adjusted EPS grew 43% to $1.90,
• Adjusted EBITDA increased 17% to $423 million, and
• Repurchase of 2.5 million shares of our common stock.
Our record financial results in 2015 reflect the strength of our business model. Our unique products and solutions help our
clients to more precisely underwrite and manage their risks and capitalize on growth opportunities as they arise.
2016 presents a clear pathway to sustained growth. Realizing the CoreLogic vision requires that we constantly innovate and
achieve market leadership and relevancy through scaled and data-enabled solutions. It is in this spirit that we launched the
Valuation Solutions Group (VSG) in the fourth quarter of 2015. Over $4 billion is spent annually on residential property
valuation in the U.S. alone. This area remains one of several underwriting and risk management activities in the property
ecosystem that we believe would benefit from enhanced technology and the application of data and analytics.
The VSG will provide a comprehensive array of property valuation, compliance and collateral assessment solutions and tools
that improve accuracy, reduce cycle time and connect market participants. The opportunity to transform the way assets in a
real estate transaction are valued — and to bring greater transparency to the process — makes this a significant medium- and
long-term growth opportunity for CoreLogic. We believe that the VSG, along with our existing PI assets, provides the
foundational elements of a scaled, integrated solutions provider powered by a broad suite of fulfillment, technology, data and
analytics capabilities.
Completing the integration of our capabilities and realizing the full potential of the VSG will be a significant multi-year
endeavor, but we believe the opportunities for CoreLogic and the industry could be transformative. In many ways, the
creation of the VSG demonstrates the power and opportunities inherent in the increasing integration of our data, analytical
tools, domain expertise and technological capabilities.
The U.S. mortgage market is continuing to heal and transition to a purchase-driven cycle. With market fundamentals
improving, purchase volumes are gathering steam and should help to, at least partially, offset the expected drop in refinancing
activity in 2016. With sustainable job creation and overall economic recovery, we expect to see healthier housing starts and
inventory levels over time. Overall, we believe this transition has set the stage for a more sustainable real estate market for
this year and beyond.
CoreLogic is entering 2016 with accelerating momentum. I believe we are well-positioned to deliver against an aggressive
business plan which positions CoreLogic to capitalize on the opportunities presented by a gradually-improving U.S. housing
market and also opens up new opportunities to leverage our capabilities and insights in insurance, financial services and the
public sector.
I believe our consistently strong performance, in 2015 and over the past five years, demonstrates the benefits and value
creation opportunities inherent in the CoreLogic strategic plan. CoreLogic is deeply embedded in our clients’ critical
workflows. Our scale and ability to invest in the VSG and other unique solutions sets, compliance, automation and data-
enabled services, as well as our reputation for delivering a high level of quality and service, have made us a preferred partner
for businesses and government agencies with a need for property intelligence and risk management solutions. Our talented
team members, who are now more than 6,000 strong, are dedicated to putting our clients first. By keeping clients top of mind
in each action we take, we ensure their and our own success.
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. CoreLogic's focus on
fundamental value drivers positions us to execute on our strategic vision.
In closing, I want to thank our employees, clients and stockholders for their continued support. As always, our focus remains
squarely on strong operational execution and positioning CoreLogic for superior long-term growth and stakeholder value
creation.
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, 2015
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,
2015, the last business day of the registrant's most recently-completed second fiscal quarter was $3,501,483,234.
On February 22, 2016, there were 88,248,915 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement with respect to the 2016 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
12
19
19
19
19
20
20
22
23
36
37
96
96
96
97
97
97
97
97
97
98
98
99
101
(This page has been left blank intentionally.)
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, property risk and replacement cost, 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 a comprehensive national database 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 900 million historical property transactions, over 96 million mortgage applications and
property-specific data covering approximately 99% of U.S. residential and commercial properties exceeding 149 million
records. We are also the industry's first parcel-based geocoder and have developed a proprietary parcel database covering more
than 130 million parcels across the U.S. 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 property tax processing, property valuation, mortgage and automotive credit reporting,
tenancy screening, hazard risk, property risk and replacement cost, flood plain location determination and other geospatial data,
analytics 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
Pending Acquisition
In December 2015, we entered into an agreement to acquire FNC, Inc. ("FNC"), a leading provider of real estate
collateral information technology and solutions that automates property appraisal ordering, tracking, documentation and review
for lender compliance with government regulations, for total consideration of $475.0 million, subject to certain closing
adjustments. We expect the acquisition of FNC will expand our real estate asset valuation and appraisal solutions in connection
with loan originations. The transaction's closing is conditioned upon customary closing conditions, including the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR"), and there can be
no assurance of completion. Following completion of the acquisition, FNC's operations will be reported within our Property
Intelligence ("PI") reporting segment. The agreement may be terminated in certain circumstances, including by either party on
or after September 1, 2016 in the event the transaction has not closed by such date.
Acquisitions
We completed the acquisitions of LandSafe Appraisal Services, Inc. ("LandSafe") in September 2015 for $122.0
million in cash, Cordell Information Pty Ltd ("Cordell") in October 2015 for AUD$70.0 million in cash, or $49.1 million, and
the remaining 49.9% interest in RELS LLC ("RELS") in December 2015 for $65.0 million in cash. Certain of these acquisitions
are subject to working capital adjustments and they are included as components of our PI reporting segment. We acquired
LandSafe and RELS to expand our real estate asset valuation and appraisal solutions in connection with loan originations, and
3
to provide the market with differentiated valuation solutions. The acquisition of Cordell expands our project activity and
building information footprint in Australia.
Credit Agreement Amendment
In April 2015, the Company, CoreLogic Australia Pty Limited and the guarantors named therein amended and restated
our senior secured credit facility (the "Credit Agreement") with Bank of America, N.A., as administrative agent, and other
financial institutions. The Credit Agreement amended and restated our previous senior secured credit facility that was entered
into in March 2014, increasing our borrowing capacity and lowering our future borrowing costs. In addition, the amendment
provided for increased flexibility for acquisitions and certain types of investments as well as an extension of the term to April
2020. The Credit Agreement provides for an $850.0 million five-year term loan facility (the "Term Facility") and a $550.0
million five-year revolving credit facility (the "Revolving Facility") and expires on April 21, 2020. 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 $750.0 million in the
aggregate.
Productivity & Cost Management
In line with our commitment to operational excellence and margin expansion, in April of 2015 we announced an
expanded three-year productivity and cost management program, which is expected to reduce expense, on an annual run-rate
basis, by approximately $60.0 million by 2017. Savings are expected to be realized through the reduction of operating costs,
selling, general and administrative costs, outsourcing certain business process functions, consolidation of facilities and other
operational improvements. Cash and non-cash charges associated with this program are expected to aggregate approximately
$20.0 million and will be incurred over the course of the three-year program.
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.
Our client agreements typically govern the use of our client-contributed data. These contractual arrangements often
permit our clients to use our solutions which incorporate their data. We structure our client agreements to specify the particular
uses of the data they contribute and to provide the required levels of data privacy and protection. Our contributed data includes
loan performance information (from loan servicers, trustees, securitizers, issuers and others), appraisal information, mortgage,
automotive, 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 Solution Groups
In line with our continuing strategic transformation and expansion, we updated our business and reporting segments
effective as of December 2015. We revised the name of our Data & Analytics segment to PI to reflect the broad and unique
nature of the property-level insights provided by these businesses. This segment includes our property information and
analytics solutions businesses including international operations, and our valuation solutions group. In addition, we combined
our solutions express business and advisory services businesses under our PI segment.
Also, we renamed our Technology and Processing Solutions segment to Risk Management and Work Flow ("RMW")
in order to reflect the current mix of risk management and underwriting-focused solutions provided by these businesses. This
segment comprises our credit and screening solutions units as well as our technology and post-closing focused units including
4
property tax processing and flood data services. Our existing technology solutions businesses also report within RMW. In
addition, we transferred our multifamily services business from our PI segment to our RMW segment.. The segment reporting
presented herein reflect these transfers. The following table sets forth the key solutions we offer in each of these two segments:
Business Segments
Property Intelligence
Solution Groups
Property Information & Analytics
Valuation Solutions
Risk Management and Work Flow
Credit & Screening Solutions
Technology and Post-Closing Solutions
We believe that we hold the leading market position for many of our solutions, including:
•
•
•
property tax processing, 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; and
•
• multiple listing services ("MLS"), based on the number of active desktops using our technology.
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:
(in thousands)
PI
RMW
Corporate
Eliminations
Operating revenue
$ 1,528,110
% of
Total
Operating
Revenue
% of
Total
Operating
Revenue
2014
2015
2013
$
663,344
43.4% $
598,113
42.6% $
518,622
875,057
57.3
816,717
58.1
895,953
39
(10,330)
—
(0.7)
31
(9,821)
100.0% $ 1,405,040
—
(0.7)
631
(10,805)
100.0% $ 1,404,401
% of
Total
Operating
Revenue
36.9%
63.8
—
(0.8)
100.0%
More detailed financial information regarding each of the Company’s business segments as well as information about
our operating revenue attributed to domestic and foreign operations is included in Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations and Note 19 - Segment Financial Information of the Notes to
Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of Part II of this report.
Products and Services
Property Intelligence
Our PI segment owns or licenses real property, mortgage and consumer information, which includes loan information,
property sales and characteristic information, property risk and replacement cost, natural hazard data, geospatial data, parcel
maps and mortgage-backed securities information. We have also developed proprietary technology and software platforms to
access, automate or track our data and assist our clients with compliance regulations. We deliver this information directly to our
clients in a standard format over the web, through customizable software platforms or in bulk data form. Our products and
services include data licensing and analytics, data-enabled advisory services, platform solutions and valuation solutions in
North America, Western Europe and Asia Pacific.
Our data licensing and analytics solutions combine our real estate information with flood, demographics, crime, site
inspection, neighborhood, document images and other information from proprietary sources to enable our clients to improve
5
customer acquisition and retention, detect and prevent fraud, improve mortgage transaction cycle time and cost efficiency,
identify real estate trends and neighborhood characteristics, track market performance and increase market share.
Our data-enabled advisory services 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, identity and certain employment verification services using Internal Revenue Service and Social Security
Administration databases as well as third-party employment data providers.
Our platform solutions maintain the leading market share 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 also provide a full range of professional
services to listing organizations and assist our clients in identifying revenues opportunities and improving member services.
Our valuation solutions provide a variety of real estate valuation services in an effort to assist them in assessing their
risk of loss with alternative forms of property valuations. We have been building property valuation and collateral risk
management tools for more than 20 years and provide collateral information technology and solutions that automate property
appraisal ordering, tracking, documentation and review for lender compliance with government regulations.
Risk Management & Work Flow
Our RMW segment owns or licenses real property information, mortgage information and consumer information,
which includes loan information, property sales and characteristic information, natural hazard data, parcel maps, employment
verification, criminal records and eviction records. We have also developed proprietary technology and software platforms to
access, automate or track our data and assist our clients with compliance regulations. Our products and services include credit
and screening solutions, property tax processing, flood data services and technology solutions in North America.
Our credit and screening solutions have access to one of the largest consumer and business databases, which enables
us to provide credit and income verification services to the mortgage, automotive and multifamily housing industries. We
provide comprehensive data about credit history, income verification, home address history, evictions, criminal records and
additional proprietary sources. We normalize our data to provide a broad range of advanced business information solutions
designed to reduce risk and improve business performance. We also provide wholesale background data to the background
screening industry.
Our property tax processing solution aggregates 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 over 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.
Our flood data services provides flood zone determinations within the U.S. Federal legislation passed in 1994, which
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 provide flood zone determinations primarily to mortgage lenders.
Our technology solutions provide software and workflow platforms 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. We also provide a suite of compliance solutions that allow our clients to benefit
from our specialists and their knowledge of our data to provide project-based or client-customized reports.
Clients
We focus our marketing efforts predominantly on financial service institutions in the mortgage and insurance space.
We provide our services to national and regional mortgage lenders, brokers, credit unions, commercial banks, investment
banks, fixed-income investors, real estate agents, MLS companies, property and casualty insurance companies, government
agencies and government-sponsored enterprises.
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
6
from our largest clients, with 33.5% of our 2015 operating revenues being generated by our ten largest clients, However, for
2015, no single client accounted for 10% or more of our revenues.
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 PI 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, which provides real estate information, analytics,
valuation related services and other solutions, RealtyTrac, which provides public records data, Clear Capital, which provides
valuation-related services, and Verisk Analytics, Inc., which provides data and risk assessment in the insurance and financial
services space. We also compete with departments within financial institutions that utilize internal resources to provide similar
analytics and services on a captive basis. 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 exceeds comparable
data sets of most of our competitors.
Our RMW segment competes with third-party providers such as Black Knight Financial Services and Lereta LLC,
which provide tax and flood services, as well as credit and screening solutions providers such as Equifax, Inc., Kroll Factual
Data, RealPage, Inc. and Yardi Systems, Inc. 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 client-focused and resources are primarily assigned based on client size and complexity. 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 are responsible for working with mortgage and real estate brokers, property and casualty insurance companies, fixed-
income investors, appraisers, real estate agents, correspondents and other lenders.
Several of our product and service lines have sales teams and subject matter experts who 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 accelerate growth by building trusted relationships with our clients and delivering
superior value through unique property-related 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 increase volume, quality and velocity of sales
opportunities. Our marketing activities include direct marketing, advertising, public relations, event marketing, social media
and other targeted activities.
Acquisitions and Divestitures
7
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.
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.
We have 49 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 90 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 300 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 1,000 registered copyrights in the U.S. and foreign countries, 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. 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. In July 2012, as part of our on-going cost efficiency initiatives, we announced
the launch of our Technology Transformation Initiative ("TTI"), which is designed to provide us with new functionality,
increased performance and reduced application management and development costs. The TTI encompasses two phases. The
first phase was 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 and was completed in the second quarter of 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 operates in our new private, dedicated cloud
computing environment hosted by Dell. We successfully completed the development of two pilot products, which are already
being on-boarded by clients, using PaaS. In 2015, we formed CoreLogic Innovation Labs in collaboration with Pivotal to
develop next generation technology platforms and associated applications, analytical models and solutions. CoreLogic
Innovation Labs is 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, leveraging social media, mobility, voice and other capabilities via a
compelling new delivery portal driven by a common order management system and a state-of-art integrated data and analytics
platform.
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Technology. Our new private, dedicated cloud computing environment hosted by Dell is designed to 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 a 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 as well as the development of our solutions. In conjunction with Dell, we operate a computing
technology environment intended to allow us to provide flexible systems at all times, enabling 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 combined solution
to our clients.
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 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.
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 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
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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 such as 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 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 continue to 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
valuation products 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 Automated Valuation Models ("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:
• Appraisals, AVMs and other forms of home value estimates are now subject to more explicit and detailed quality
control requirements, and creditors are 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
• 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 October 2015. We have evaluated the impact of these
regulations on the services we provide and, where necessary, adjusted our products and services to conform to the new
requirements.
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The Bank 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.
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. Moreover, the OCC and other federal regulators have issued guidance encouraging
greater supervision of third party relationships by regulated entities. 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, if adopted.
In addition to the foregoing areas of regulation, several of our other businesses are subject to regulation, including the
following:
• Our tenant screening business is subject to certain landlord-tenant laws;
• 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
• 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, 2015, we had approximately 6,500 employees, of which approximately 5,800 were employed in
the U.S. and 700 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://
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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.
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 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
12
on our clients, we may experience client losses or increased operating costs, and our business and results of operations could be
negatively affected.
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, lawsuits and other regulatory imposed restrictions and 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 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. Our technology infrastructure runs primarily in a private dedicated cloud-based environment
hosted in Dell's technology center in Quincy, WA. We cannot be sure that certain systems interruptions or events beyond our
control, including issues with Dell's technology center or our third-party network and infrastructure providers, will not 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 or adverse changes in the interest rate environment
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
and/or increasing interest rate environments 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 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 33.5% of our operating revenues for the year ended December 31, 2015. We expect
that a limited number of our clients will continue to represent a significant portion of our revenues for the foreseeable future,
and that our concentration of revenue with one or more clients may increase. 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. In addition, in response to increased regulatory oversight, clients in the mortgage
lending industry may have internal policies that require them to use multiple vendors or service providers, thereby causing a
diversification of revenue among many vendors. Deterioration in or termination of any of these relationships, including through
vendor diversification policies or merger or consolidation 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.
8. Our 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.
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. 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.
9. 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
14
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.
10. Our international service providers and our own international operations subject us to additional risks, which
could have an adverse effect on our results of operations and 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. Fluctuations 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
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 service provider 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. Furthermore, 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.
11. 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.
12. 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
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:
•
•
•
•
•
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.
13. 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. Further, the instruments governing our
indebtedness subject us to various restrictions that could limit our operating flexibility.
15
As of December 31, 2015, our total debt was approximately $1.4 billion, and we have unused commitments of
approximately $475.0 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 ("notes") and our other debt instruments, we may incur 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 increase. Specifically, our level of debt could have important consequences to us, including increasing
our vulnerability to adverse economic and industry conditions and compromising our flexibility to capitalize our business
opportunities and to plan for, or react to, competitive pressures and changes in our business or market conditions.
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;
•
•
•
•
• make certain investments and acquisitions, including joint ventures;
•
•
•
•
•
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.
14. 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.
15. 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.
16
16. 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.
17. 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 underperformance 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.
18. We may not be able to effectively achieve our cost-containment or growth strategies, which could adversely affect
our financial condition or results of operations.
Our ability to execute on our cost-containment and growth strategies depends 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 realize all of the projected benefits of our cost-
containment plans or 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 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.
19. 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, by and between FAC and FAFC, dated as of June 1, 2010 (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 the date of the 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 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.
20. 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 U.S. Internal Revenue Code of 1986, as amended (the ‘‘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
17
income tax purposes under Sections 355 and 368(a)(1)(D) of the 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.
21. 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
and the Restrictive Covenants Agreement. 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. 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.
18
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2015, our real estate portfolio of 1.6 million square feet is comprised of leased property
throughout 25 states in the U.S. at approximately 1.5 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 approximately 600,000 square feet.
The Westlake property lease expires in March 2017 and in January 2017 we will begin relocating to a new 325,000 square feet
facility nearby in Dallas, TX as part of our cost efficiency and productivity initiatives. The lease governing our new Dallas, TX
property expires in March 2032. 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.
19
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 22, 2016 was 2,679. 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,
2015
2014
High
Low
High
Low
$
$
$
$
36.44 $
40.86 $
42.31 $
41.39 $
30.39
34.45
34.83
33.27
$
$
$
$
35.96 $
31.03 $
31.04 $
33.71 $
29.12
26.58
26.47
25.54
We did not declare dividends for the years ended December 31, 2015 and 2014 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, 2015, we did not issue any unregistered shares of our common stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On July 31, 2015, the Board of Directors canceled all prior repurchase authorizations and established a new share
repurchase authorization of up to $350.0 million. The new share repurchase authorization replaces the unused portion of our
previous share repurchase authorization, which was announced in December 2013. As of December 31, 2015, we have $311.3
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.
Stock Performance Graph
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 Russell 2000 Index and two peer group indices. The
comparison assumes an investment of $100 at the close of business on December 31, 2010 and reinvestment of dividends. This
historical performance is not indicative of future performance.
20
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among CoreLogic, Inc., the S&P Midcap 400 Index, the Russell 2000 Index,
Old Peer Group and New Peer Group
$300
$250
$200
$150
$100
$50
$0
12/10
12/11
12/12
12/13
12/14
12/15
CoreLogic, Inc.
S&P Midcap 400
Russell 2000
Old Peer Group
New Peer Group
We have presented the Russell 2000 Index in the stock performance graph because we believe that the Russell 2000
Index is a more relevant and useful comparison for the Company based on the size of companies included. We have included
the S&P 400 Midcap Index for transition purposes only.
The Old Peer Group, which was 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. In early 2015, the Compensation Committee adopted the New Peer Group for use in
2015 compensation decisions, modifying the Old Peer Group to add Fidelity National Financial, Inc., First American Financial
and Neustar, Inc., and to remove Alliance Data Systems Corporation, Fidelity National Information Services, Inc., Fiserv, Inc.,
Sapient Corp. and Syntel, Inc. The Compensation Committee believes that the New Peer Group more accurately and
appropriately reflects our business and the industries in which we compete and also reflects the recent merger and acquisition
activity and corporate reorganizations impacting companies in the Old Peer Group.
21
Item 6. Selected Financial Data
The selected consolidated financial data for the Company for the five-year period ended December 31, 2015 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, 2012 and 2011 and the consolidated balance sheet data as of
December 31, 2013, 2012, and 2011 have been derived from financial statements not included herein.
In September 2011, we closed our marketing services business. In August 2012, we completed the disposition of
American Driving Records within our transportation services business. In September 2012, we completed the wind down of our
consumer services business and our then-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.
(in thousands, except per share amounts)
Income Statement Data:
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
Gain/(loss) from sale of discontinued operations, net of
tax
Net income/(loss)
Balance Sheet Data:
Assets of discontinued operations
Total assets
2015
$1,528,110
$ 202,924
$
13,720
$ 128,400
(556)
—
$ 127,844
$
681
For the Year Ended December 31,
2013
2012
2014
2011
$1,405,040
$ 169,758
$1,404,401
$ 142,142
$ 1,333,479
$ 170,402
$1,100,086
46,576
$
$
$
$
$
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
$ 112,293
$
$
30,270
26,637
(101,246)
—
$ (74,609)
4,267
$
38,926
$
50,187
$ 106,575
$3,701,050
$3,516,362
$3,003,131
$ 3,027,497
$3,115,822
Long-term debt, excluding discontinued operations
$1,364,008
$1,330,563
$ 839,930
$ 792,426
$ 908,287
Total equity
Amounts 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/(loss)
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/(loss)
Weighted average shares outstanding
$1,049,490
$1,014,167
$1,044,373
$ 1,170,945
$1,244,820
$
$
$
$
$
$
$
1.44
(0.01)
—
1.43
1.42
(0.01)
$
$
$
0.99
(0.18)
—
0.81
0.97
(0.18)
—
—
1.41
$
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)
Basic
Diluted
89,070
90,564
90,825
92,429
95,088
97,109
102,913
104,050
109,122
109,712
22
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 cost management program, our acquisition strategy and our growth plans, expectations
regarding our recent acquisitions, share repurchases, the level of aggregate U.S. mortgage originations 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:
•
•
•
•
•
•
•
•
•
•
•
•
•
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;
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 the timing thereof;
risks related to the outsourcing of services and international operations;
our cost-containment and 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 clients;
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, except as required by applicable law. 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, property risk and replacement cost, 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 a comprehensive national database 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 900 million historical property transactions, over 96 million mortgage applications and
property-specific data covering approximately 99% of U.S. residential and commercial properties exceeding 149 million
23
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 volume of U.S. mortgage loan originations serves 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 increased during the year in 2015 relative to the same period in 2014, primarily due to low interest rates and
improvement in home purchase-related and mortgage loan refinancing-related origination volumes. We expect 2016 mortgage
unit volumes to be 15% lower relative to 2015 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 33.5% of our operating revenues for the year ended December 31,
2015 were generated from our ten largest clients who consist of the largest U.S. mortgage originators and servicers.
While the majority of our revenues are generated in the U.S., continued strengthening of the U.S. dollar versus other
currencies in 2015 unfavorably impacted the financial results translation of our international operating revenues by $23.4
million.
Recent Company Developments
Pending Acquisition
In December 2015, we entered into an agreement to acquire FNC, a leading provider of real estate collateral
information technology and solutions that automates property appraisal ordering, tracking, documentation and review for
lender compliance with government regulations, for total consideration of $475.0 million, subject to certain closing
adjustments. We expect the acquisition of FNC will expand our real estate asset valuation and appraisal solutions in connection
with loan originations. The transaction's closing is conditioned upon customary closing conditions, including the expiration or
termination of the HSR waiting period, and there can be no assurance of completion. Following completion of the acquisition,
FNC's operations will be reported within our PI reporting segment. The agreement may be terminated in certain circumstances,
including by either party on or after September 1, 2016 in the event the transaction has not closed by such date.
Acquisitions
We completed the acquisitions of LandSafe in September 2015 for $122.0 million in cash, Cordell in October 2015 for
AUD$70.0 million in cash, or $49.1 million, and RELS in December 2015 for $65.0 million in cash. Certain of these
acquisitions are subject to working capital adjustments and they are included as components of our PI reporting segment. We
acquired LandSafe and the remaining 49.9% interest in RELS to expand our real estate asset valuation and appraisal solutions
in connection with loan originations, and to provide the market with differentiated valuation solutions. The acquisition of
Cordell expands our solutions sets, with project activity and building cost information, and our footprint in Australia.
Credit Agreement Amendment
In April 2015, we completed an amendment and restatement of our senior secured credit facility agreement, increasing
our borrowing capacity and lowering our future borrowing costs. In addition, the amendment provided for increased flexibility
for acquisitions and certain types of investments as well as an extension of the term to April 2020. See “Corporate Events”
under Item 1. Business of Part I of this report for additional information.
24
Productivity & Cost Management
In line with our commitment to operational excellence and margin expansion, in April 2015, we announced an
expanded three-year productivity and cost management program, which is expected to reduce expense, on an annual run-rate
basis, by approximately $60.0 million by 2018. Savings are expected to be realized through the reduction of selling, general
and administrative costs, outsourcing certain business process functions, consolidation of facilities and other operational
improvements. Cash and non-cash charges associated with this program are expected to aggregate approximately $20.0 million
and will be incurred over the course of the three-year program.
Business Segments and Solutions
In line with our continuing strategic transformation and expansion, we updated our business and reporting segments
effective as of December 2015. We revised the name of our Data & Analytics segment to PI to reflect the broad and unique
nature of the property-level insights provided by these businesses. This segment includes our property information and
analytics solutions businesses, including international operations, and our valuation solutions group. In addition, we combined
our solutions express business and advisory services businesses under our PI segment.
Also, we renamed our Technology and Processing Solutions segment to RMW in order to reflect the current mix of
risk management and underwriting-focused solutions provided by these businesses. This segment comprises our credit and
screening solutions units as well as our technology and post-closing focused units including property tax processing and flood
data services. Our existing technology solutions businesses also report within RMW. In addition, we transferred our
multifamily services business from our PI segment to our RMW segment. The segment reporting presented herein reflect these
transfers.
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.
25
Consolidated Results of Operations
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Operating Revenues
Our consolidated operating revenues were $1.5 billion for the year ended December 31, 2015, an increase of $123.1
million when compared to 2014, and consisted of the following:
(in thousands, except percentages)
2015
2014
$ Change % Change
PI
RMW
Corporate and eliminations
Operating revenues
$
663,344
$
598,113
$
65,231
875,057
(10,291)
$ 1,528,110
816,717
(9,790)
$ 1,405,040
$
58,340
(501)
123,070
10.9%
7.1
5.1
8.8%
Our PI segment revenues increased by $65.2 million, or 10.9%, when compared to 2014. Acquisition activity
contributed an increase of $68.3 million in 2015. Excluding acquisition activity, the decrease of $3.1 million was primarily due
to lower property information and analytics revenues of $2.9 million, which included the impact of unfavorable foreign
currency exchange fluctuations of $23.4 million, partially offset by higher mortgage origination volumes and improved pricing.
Our RMW segment revenues increased by $58.3 million, or 7.1%, when compared to 2014. Acquisition activity
contributed an increase of $13.5 million in 2015. Excluding acquisition activity, the increase of $45.0 million was primarily due
to higher mortgage origination volumes and market-share gains, which increased our revenues from property tax processing by
$26.9 million, credit and screening solutions by $13.5 million and flood data services by $16.9 million, partially offset by lower
technology solutions revenues of $12.3 million.
Our corporate and eliminations revenues were comprised of intercompany revenue eliminations between our operating
segments.
Cost of Services (exclusive of depreciation and amortization)
Our consolidated cost of services was $776.5 million for the year ended December 31, 2015, an increase of $36.2
million, or 4.9%, when compared to 2014. Acquisition activity contributed an increase of $36.0 million in 2015. Excluding
acquisition activity, the increase of $0.2 million was primarily due to higher mortgage origination volumes which impacted cost
of services by $21.8 million, partially offset by favorable product mix of $21.6 million resulting from our ongoing operational
efficiency programs including synergies from acquisition integration activities and off-shore efficiencies.
Selling, General and Administrative Expense
Our consolidated selling, general and administrative expenses were $398.3 million for the year ended December 31,
2015, an increase of $46.7 million, or 13.3%, when compared to 2014. Acquisition activity contributed an increase of $32.8
million in 2015. Excluding acquisition activity, the increase of $14.0 million was primarily due to a $13.9 million gain from
disposition of property and equipment in 2014, which offset selling, general and administrative expenses in the prior year.
Depreciation and Amortization
Our consolidated depreciation and amortization expense was $146.6 million for the year ended December 31, 2015, an
increase of $8.2 million, or 5.9%, when compared to 2014. Acquisition activity contributed an increase of $11.4 million in
2015. Excluding acquisition activity, the decrease of $3.3 million was primarily due to assets that were fully depreciated in the
prior year primarily in the RMW segment.
26
Impairment Loss
Our impairment loss was $3.8 million for the year ended December 31, 2015, a decrease of $1.2 million, or 24.1%,
when compared to 2014. The variance was primarily due to goodwill impairment charges related to our technology solutions,
solutions express and outsourcing services businesses of $3.9 million in the second quarter of the prior year, partially offset by
higher impairment charges for our internally-developed software in 2015.
Operating Income
Our consolidated operating income was $202.9 million for the year ended December 31, 2015, an increase of $33.2
million, or 19.5%, when compared to 2014, and consisted of the following:
(in thousands, except percentages)
2015
2014
$ Change % Change
PI
RMW
Corporate and eliminations
Operating income
$
72,761
$
70,181
$
2,580
216,178
(86,015)
202,924
$
166,640
(67,063)
169,758
$
49,538
(18,952)
33,166
$
3.7%
29.7
28.3
19.5%
Our PI segment operating income increased by $2.6 million, or 3.7%, when compared to 2014. Acquisition-related
activity contributed to operating income by $3.6 million in 2015. Excluding acquisition activity, operating income decreased
$1.0 million and operating margins decreased 10 basis points primarily due to lower volume, partially offset by lower costs
from the impact of ongoing cost efficiency programs.
Our RMW segment operating income increased by $49.5 million, or 29.7%, when compared to 2014. Acquisition
activity contributed to higher losses of $2.1 million in 2015 due to higher depreciation and amortization expense and higher
integration costs. Excluding acquisition activity, operating income increased $51.8 million and operating margins increased 497
basis points primarily due to the increase in mortgage origination volumes, market-share gains and the impact of ongoing
operational efficiency programs.
Corporate and eliminations operating loss increased $19.0 million, or 28.3%, due to higher non-recurring selling,
general and administrative expenses primarily related to investments related to our operational efficiency programs announced
in April of 2015 and due to the impact of a $13.9 million gain from disposition of property and equipment in 2014, which offset
selling, general and administrative expenses in the prior year.
Total Interest Expense, Net
Our consolidated total interest expense, net was $61.3 million for the year ended December 31, 2015, a decrease of
$5.7 million, or 8.5%, when compared to 2014. The decrease was primarily due to an out-of-period adjustment recorded during
the first quarter of 2015, which reduced interest expense by $5.2 million.
Gain on Investments and Other, Net
Our consolidated gain on investments and other income, net was $31.6 million for the year ended December 31, 2015,
an increase of $27.7 million when compared to 2014. The increase is primarily due to the acquisition of the remaining 49.9%
interest in RELS which resulted in a $34.3 million gain due to the step-up in fair value on the previously held interest, partially
offset by a $6.0 million distribution gain from a previously impaired investment in affiliate recorded in the prior year.
Provision for Income Taxes
Our consolidated provision for income taxes from continuing operations was $57.4 million and $29.8 million for the
years ended December 31, 2015 and 2014, respectively. Our effective income tax rate was 33.4% and 28.2% for the years
ended December 31, 2015 and 2014, respectively. The change in income tax was primarily attributable to unfavorable foreign
rate differentials, due to foreign exchange gains and losses in jurisdictions with tax rates lower than the U.S., offset by a
favorable valuation allowance released in the United Kingdom and the impact of the RELS acquisition.
27
Equity in Earnings of Affiliates, Net of Tax
Our consolidated equity in earnings of affiliates, net of tax was $13.7 million for the year ended December 31, 2015, a
decrease of $0.4 million, or 2.8%, when compared to 2014. We have equity interests in various affiliates which primarily
provide settlement services in connection with residential mortgage loans. The decrease is primarily due to higher losses of
$1.3 million from our property and casualty insurance investment in affiliate. The decrease was partially offset by higher
mortgage loan origination volumes in RELS. For the years ended December 31, 2015 and 2014, RELS contributed 84.9% and
80.0%, respectively, of our total equity in earnings of affiliates, net of tax. Due to the acquisition of RELS, we do not expect
equity in earnings of affiliates to be significant in future reporting periods.
(Loss)/Income from Discontinued Operations, Net of Tax
Our consolidated loss from discontinued operations, net of tax was $0.6 million for the year ended December 31,
2015, a favorable variance of $16.1 million when compared to 2014. The variance is primarily due to pre-tax legal settlements
of $21.9 million incurred in the prior year.
Net Income/(Loss) Attributable to Noncontrolling Interests
Our consolidated net income attributable to noncontrolling interests was $1.2 million for the year ended December 31,
2015, a decrease of $0.1 million, or 9.1%, when compared to 2014.
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
PI
RMW
Corporate and eliminations
Operating revenues
$
598,113
$
518,622
$
816,717
(9,790)
$ 1,405,040
895,953
(10,174)
$ 1,404,401
79,491
(79,236)
384
$
639
15.3%
(8.8)
(3.8)
—%
Our PI segment revenues increased by $79.5 million, or 15.3%, when compared to 2013. Acquisition activity
contributed an increase of $107.0 million in 2014. Excluding acquisition activity, the decrease of $27.5 million was primarily
due to lower property information and analytics revenues of $32.1 million, which included the exit of a non-core product line
and the impact of unfavorable foreign currency exchange fluctuations of $6.3 million.
Our RMW segment revenues decreased by $79.2 million, or 8.8%, when compared to 2013. Acquisition activity
contributed an increase of $20.7 million in 2014. Excluding acquisition activity, the decrease of $99.9 million was primarily
due to the significant decline in mortgage origination volumes which decreased credit and screening solutions by $34.6 million,
technology solutions by $29.4 million, property tax processing by $28.6 million and flood data services by $8.9 million;
partially offset by an increase in other of $1.6 million.
Our corporate and eliminations revenues were comprised of intercompany revenue eliminations between our operating
segments.
Cost of Services (exclusive of depreciation and amortization)
Our consolidated cost of services was $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 contributed an increase of $66.8 million in 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 RMW segment.
28
Selling, General and Administrative Expense
Our consolidated selling, general and administrative expenses was $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 an increase of $25.8
million 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 on-going 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 contributed an increase of $22.7 million 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 RMW segment.
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)
2014
2013
$ Change % Change
PI
RMW
Corporate and eliminations
Operating income
$
70,181
$
56,515
$
166,640
(67,063)
169,758
$
181,673
(96,046)
142,142
$
13,666
(15,033)
28,983
$
27,616
24.2%
(8.3)
(30.2)
19.4%
Our PI segment operating income increased by $13.7 million, or 24.2%, 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 increased $15.2 million and operating margins increased 379 basis
points primarily due to lower goodwill impairment charges of $13.4 million related to our solutions express businesses
recorded in the prior year.
Our RMW segment operating income decreased by $15.0 million, or 8.3%, when compared to 2013. Acquisition
activity contributed $13.9 million of operating income in 2014. Excluding acquisition activity, operating income decreased
$28.9 million and operating margins decreased 93 basis points primarily due to a significant decline in mortgage origination
volumes, partially offset by lower goodwill impairment charges of $25.7 million related to our technology solutions and
outsourcing services businesses.
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 and the impact of a $13.9 million gain from disposition of
property and equipment in 2014, which offset selling, general and administrative expenses.
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 2014.
29
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 allowances released in certain foreign
jurisdictions.
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 was primarily due to legal settlements of
$21.9 million, on a pre-tax basis, as well as declining default market volumes which adversely 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 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 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.
Liquidity and Capital Resources
Cash and cash equivalents totaled $99.1 million and $104.7 million as of December 31, 2015 and 2014, respectively,
representing a decrease of $5.6 million compared to 2014. Furthermore, cash and cash equivalents decreased $29.7 million in
2014 compared to 2013.
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. As of December 31, 2015, we held $38.3 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
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 $10.9 million and $12.4 million at December 31, 2015 and 2014, 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.
30
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 $328.5 million, $321.9 million and
$353.8 million for the years ended December 31, 2015, 2014 and 2013, respectively. The increase in cash provided by
operating activities in 2015 relative to 2014 was primarily due to lower cash used by operating activities from our discontinued
operations of $6.1 million due to the sale of our collateral solutions and field services businesses in September 2014.
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 in 2014 due to higher dividends received from investments in affiliates and the timing of payments for accounts payable
and accrued expenses.
Investing Activities. Total cash used in investing activities consists primarily of capital expenditures, acquisitions and
dispositions. Cash used in investing activities was approximately $277.2 million, $741.5 million, and $186.8 million for the
years ended December 31, 2015, 2014 and 2013, respectively.
Cash used in investing activities from continuing operations during 2015 was primarily related to net cash paid for
acquisitions, including $27.1 million for RELS in December 2015, $48.1 million for Cordell in October 2015 and $119.3
million for LandSafe in September 2015. Further, we had investments in property and equipment and capitalized data of $44.1
million and $36.4 million, respectively, in 2015.
Cash used in investing activities from continuing operations during 2014 was primarily related to cash paid for
acquisitions, including $19.6 million for Bank of America's credit services operations in November 2014, $652.5 million for
MSB/DataQuick in March 2014, $11.9 million for Terralink in January 2014 and $11.0 million, net of cash acquired, for other
acquisitions 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 were 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 cash paid for
acquisitions, including $62.5 million for Bank of America's flood zone determination and tax processing services operations in
July 2013, $2.6 million for an additional 10% interest in PIQ in September 2013 and $22.2 million for EQECAT 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; which were partially offset by
favorable changes in restricted cash of $10.1 million.
For the year ending December 31, 2016, the Company anticipates investing in the aggregate between $95 million and
$105 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 $58.5 million, $390.5 million and
$179.9 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Net cash used in financing activities during 2015 was primarily comprised of share repurchases of $97.4 million,
repayment of long-term debt of $82.9 million and debt issuance costs of $6.5 million, partially offset by proceeds from debt
issuance of $114.4 million and net settlement from stock-based compensation related transactions of $13.9 million.
Net cash used in financing activities during 2014 was primarily comprised of proceeds from debt issuance of $690.0
million and net settlement from stock-based compensation related transactions of $6.0 million, partially offset by repayment of
long-term debt of $200.0 million, share repurchases of $91.5 million and debt issuance costs of $14.0 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
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.
31
Financing and Financing Capacity
We had total debt outstanding of $1.4 billion and $1.3 billion as of December 31, 2015 and 2014, 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, 2015, 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") that expires in April 2020. 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 $750.0 million in
the aggregate.
The Credit Agreement contains customary financial maintenance covenants, including a (i) maximum total leverage
ratio not to exceed 4.50 to 1.00; provided that such total leverage ratio shall step down to (a) 4.25 to 1.00 starting with the fiscal
quarter ending June 30, 2016, (b) 4.00 to 1.00 starting with the fiscal quarter ending June 30, 2017, and (c) 3.50 to 1.00 starting
with the fiscal quarter ending June 30, 2018, and is subject to additional adjustments if the Company completes a Qualified
Acquisition (as defined in the Credit Agreement); and (ii) a minimum interest coverage ratio of not less than 3.00 to 1.00.
At December 31, 2015, we had additional borrowing capacity under the Revolving Facility of $475.0 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, 2015 and December 31, 2014, we have recorded $3.6 million and $9.2 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.
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.
32
In December 2015, we entered into a definitive agreement to acquire FNC in connection with our valuation solutions
strategy. The transaction's closing is subject to customary closing conditions including regulatory clearance. While we maintain
adequate cash balances and borrowing capacity to complete the transaction, we will continue to evaluate additional financing
alternatives as we determine appropriate.
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 years ended December 31, 2015 and 2014, we repurchased approximately 2.5 million and 3.1 million
shares of our common stock for $97.4 million and $91.5 million, respectively, 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, 2015, 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
Total
$
32,789
$
34,192
$
22,947
$
7,710
$
97,638
48,497
53,201
51,238
171,390
109,926
—
691,476
91,297
—
452,645
1,364,008
48,020
—
302,444
51,238
$
185,725
$
315,508
$
805,720
$
508,375
$ 1,815,328
(1) Includes the remaining acquisition-related note payable of $5.0 million, which is non-interest bearing and discounted
to $4.9 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 liability of $13.3 million related to uncertain tax positions including associated interest and penalties,
and deferred compensation of $32.2 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.
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
33
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: (i) persuasive evidence of an
arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) our price to the buyer is fixed or
determinable; and (iv) 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 and claims management.
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, property risk and
replacement cost, flood database licenses, realtor 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.
Property tax processing 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 property tax processing 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 property tax
processing 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
34
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 2015, we transferred our multifamily services business from our PI segment to our RMW segment,
relocated our solutions express business and consolidated our advisory services under our PI segment to leverage the core
business capabilities of each segment and represent changes in our management structure and internal reporting. As a result of
these actions, 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 fourth 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 December 31, 2015. As of December 31, 2015, the assessment resulted in $101.8 million of goodwill allocated to our RMW
reporting unit from our PI reporting unit and $6.6 million of goodwill allocated to our PI reporting unit from our RMW
reporting unit.
As of December 31, 2015 our reporting units related to continuing operations are PI and RMW. During the fourth
quarter of 2015, 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 2016 to 2021; and (b) a discount rate of 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
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 utilize the Monte-Carlo simulation to estimate the fair value for any
performance-based restricted stock units (“PBRSUs”) granted. We used the Black-Scholes model to estimate the fair value of
stock options. 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.
35
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”) and
PBRSUs. 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.
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.
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. The interest rate swap agreement was
terminated in connection with the full repayment of the associated underlying debt in March 2014.
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 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, 2015, we had approximately $1.4 billion in long-term debt outstanding, of which approximately
$903.8 million was variable-interest-rate debt. As of December 31, 2015, the remaining notional balance of the Swaps was
$450.0 million. A hypothetical 1% increase or decrease in interest rates could result in an approximately $1.1 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, 2015, we had equity
securities with a cost and fair value of $22.7 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.
36
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 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.
38
39
40
41
42
43
45
95
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.
37
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of CoreLogic, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operation,
comprehensive income, stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of
CoreLogic, Inc. and its subsidiaries at December 31, 2015 and December 31, 2014, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2015 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, 2015, 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 the financial statement schedule, 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.
/s/ PricewaterhouseCoopers LLP
Orange County, California
February 26, 2016
38
CoreLogic, Inc.
Consolidated Balance Sheets
As of December 31, 2015 and 2014
(in thousands, except par value)
Assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable (less allowances of $6,212 and $10,826 in 2015 and 2014, 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
Deferred income tax assets, long-term
Restricted cash
Other assets
Total assets
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses
Accrued salaries and benefits
Deferred revenue, current
Mandatorily redeemable noncontrolling interests
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
Equity:
CoreLogic, Inc.'s ("CoreLogic") stockholders' equity:
2015
2014
$
99,090
22,709
240,988
45,882
37,029
95,887
681
542,266
375,654
1,881,547
352,148
327,841
69,205
2,219
10,926
139,244
$ 3,701,050
$
158,213
117,187
269,071
18,981
48,497
2,527
614,476
1,315,511
448,819
107,249
165,505
2,651,560
$
104,677
22,264
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
—
18,023
Preferred stock, $0.00001 par value; 500 shares authorized, no shares issued or outstanding
—
—
Common stock, $0.00001 par value; 180,000 shares authorized; 88,228 and 89,343 shares
issued and outstanding as of December 31, 2015 and 2014, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total CoreLogic stockholders' equity
Total liabilities and equity
1
551,206
618,399
(120,116)
1,049,490
$ 3,701,050
1
605,511
492,441
(83,786)
1,014,167
$ 3,516,362
The accompanying notes are an integral part of these consolidated financial statements.
39
CoreLogic, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2015, 2014 and 2013
(in thousands, except per share amounts)
Operating revenue
Cost of services (exclusive of depreciation and amortization)
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
2015
$ 1,528,110
776,509
398,300
146,607
3,770
1,325,186
202,924
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
4,021
65,311
(61,290)
31,592
173,226
57,394
115,832
13,720
129,552
(556)
—
128,996
1,152
127,844
128,400
(556)
—
127,844
1.44
(0.01)
—
1.43
1.42
(0.01)
—
1.41
$
$
$
$
$
$
$
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
89,070
90,564
90,825
92,429
95,088
97,109
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
40
CoreLogic, Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2015, 2014 and 2013
(in thousands)
Net income
Other comprehensive loss:
2015
2014
2013
$ 128,996
$
74,467
$ 107,675
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
Comprehensive income
Less: Comprehensive income/(loss) attributable to the noncontrolling interests
275
(364)
—
(36,968)
727
(36,330)
92,666
1,152
27
(2,408)
2,555
(26,673)
(3,698)
(30,197)
44,270
1,267
Comprehensive income attributable to CoreLogic
$
91,514
$
43,003
$
32
1,526
—
(43,337)
3,704
(38,075)
69,600
(53)
69,653
The accompanying notes are an integral part of these consolidated financial statements.
41
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T
CoreLogic, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2015, 2014 and 2013
(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
Loss/(gain) 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
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 flows from financing activities:
Proceeds from long-term debt
Debt issuance costs
Repayments of long-term debt
43
2015
2014
2013
$
$ 128,996
(556)
—
129,552
74,467
(16,653)
112
91,008
$ 107,675
14,423
(7,008)
100,260
146,607
138,394
126,332
3,770
8,260
35,786
(6,513)
(13,720)
24
1,589
35,110
(33,181)
(15,400)
7,104
(45,289)
68,410
(32,771)
30,084
16,727
4,970
11,825
25,379
(6,791)
(14,120)
(13,866)
763
20,986
(3,882)
13,151
1,231
(5,000)
16,010
(11,380)
38,655
28,260
336,149
(7,612)
$ 328,537
335,593
(13,717)
$ 321,876
44,433
13,345
26,901
(5,146)
(27,361)
—
—
8,120
(12,032)
24,553
113
(9,330)
48,125
(27,543)
36,680
(19,230)
328,220
25,600
$ 353,820
$ (44,149) $ (52,025) $ (68,745)
(37,841)
(92,049)
2,263
(2,351)
—
(36,409)
(194,491)
—
(3,748)
137
(35,129)
(694,871)
25,366
—
13,937
(310)
(743,032)
1,536
1,434
(277,226)
—
10,068
(188,655)
1,862
$ (277,226) $ (741,496) $ (186,793)
$ 114,375
(6,452)
(82,891)
$ 690,017
(14,042)
(200,006)
$
51,647
(10,436)
(4,666)
Shares repurchased and retired
Proceeds from issuance of shares in connection with share-based compensation
Minimum tax withholdings related to net share settlements
Tax benefit related to stock options
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
Effect of exchange rate on cash
Net change 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
(91,475)
15,213
(15,980)
6,791
(97,430)
22,569
(15,230)
6,513
(58,546)
—
(241,161)
28,232
(8,665)
5,146
(179,903)
—
—
$ (179,903)
$ (58,546) $ 390,518
(2,116)
(625)
2,182
(5,053) $ (29,727) $ (14,992)
149,568
390,518
$
104,677
(7,612)
(8,146)
99,090
134,419
(12,181)
(12,196)
$ 104,677
27,462
27,305
$ 134,419
64,679
47,783
3,737
5,909
$
$
$
$
59,376
5,436
27,545
4,492
$
$
$
$
46,432
71,055
14,096
2,339
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
44
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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, property risk and replacement cost, 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. 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, analytics and related services. Clients rely
on us to help identify and manage growth opportunities, improve performance and mitigate risk. We are also a party to various
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.
Reporting Segments
In December 2015, we renamed our Data & Analytics segment to Property Intelligence ("PI") to reflect the broad and
unique nature of the property-level insights provided by these businesses. Also, we renamed our Technology and Processing
Solutions segment to Risk Management and Work Flow ("RMW") in order to reflect the current mix of risk management and
underwriting-focused solutions provided by these businesses. In addition, we transferred our multifamily services business from
our PI segment to RMW segment and relocated our solutions express business and consolidated our advisory services
businesses under our PI segment. The changes above represent changes in our management structure and internal reporting. All
segment reporting disclosures presented herein reflect these changes.
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
45
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 first quarter of 2015, we identified an error which overstated our interest expense by $5.2 million ($3.1
million, net of tax), reflected within continuing operations, for the year ended December 31, 2014. We recorded an out-of-
period adjustment to correct the error in the quarter ended March 31, 2015, which increased basic and diluted net income per
share by $0.03. We assessed the materiality of this error and concluded the error was not material to the results of operations or
financial condition for the years ended December 31, 2015 and 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,
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 a specific client’s is unable 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 we
reasonably believe will be collected.
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 loss. As of
December 31, 2015 and 2014, our marketable securities consist primarily of investments in preferred stock of $22.7 million and
$22.3 million, respectively.
Property and Equipment
Property and equipment is recorded at cost and 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.
46
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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, 2015 and 2014. 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.
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 any recorded 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
47
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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.
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: (i) persuasive evidence of an arrangement exists; (ii) delivery has
occurred or services have been rendered; (iii) our price to the buyer is fixed or determinable; and (iv) 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 and claims management.
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, property risk and replacement cost, 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.
Property tax processing 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
48
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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.
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
Comprehensive income 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 loss.
The following table shows the components of accumulated other comprehensive loss, net of taxes as of December 31,
2015 and 2014:
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
49
2015
$ (114,427) $
(3,540)
(2,699)
550
$ (120,116) $
2014
(77,460)
(4,266)
(2,335)
275
(83,786)
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Share-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 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”) and
PBRSUs. 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.
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.
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: (i) assets and liabilities at the exchange rate
as of the balance sheet date, (ii) stockholders’ equity at the historical rates of exchange and (iii) 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 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 to 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 $340.3 million and $265.6
million at December 31, 2015 and 2014, 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.
50
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 $21.2 million and $20.2 million as of December 31,
2015 and 2014, respectively.
Recent Accounting Pronouncements
In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which requires all deferred
tax assets and liabilities, as well as any related valuation allowance, to be classified as non-current on the balance sheet. The
guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. 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 September 2015, the FASB issued updated guidance, which eliminates the requirement for an acquirer in a business
combination to account for measurement-period adjustments retrospectively. Acquirers must recognize measurement-period
adjustments during the period of resolution, including the effect on earnings of any amounts they would have recorded in
previous periods if the accounting had been completed at the acquisition date. The updated guidance is effective for fiscal years
beginning after December 15, 2015. Earlier adoption is permitted for any interim and annual financial statements that have not
yet been issued. We do not expect the adoption of this guidance to have a material impact on our consolidated financial
statements.
In August 2015, the FASB issued updated guidance concerning presentation and subsequent measurement of debt
issuance costs relating to line of credit arrangements, which can be presented on the balance sheet as an asset to be
subsequently amortized ratably over the term of the line of credit arrangement. The updated guidance is effective immediately.
This updated guidance did not have a material impact on our financial statements.
In April 2015, FASB issued guidance, which requires that debt issuance costs be presented in the balance sheet as a
deduction from the carrying amount of the related liability, rather than as a deferred charge. The updated guidance is effective
retrospectively for financial statements covering fiscal years beginning after December 15, 2015, and interim periods within
those fiscal years. Earlier adoption is permitted but we did elect early adoption. We do not expect the adoption of this guidance
to have a material impact on our consolidated financial statements.
In February 2015, the FASB issued guidance, which modifies the analysis regarding the evaluation of certain types of
entities to be consolidated. Specifically, it (i) modifies the assessment of whether limited partnerships are variable interest
entities (VIEs), (ii) eliminates the presumption that a limited partnership should be consolidated by its general partner, (iii)
removes certain conditions for the evaluation of whether a fee paid to a decision-maker constitutes a variable interest, and (iv)
modifies the evaluation concerning the impact of related parties in the determination of the primary beneficiary of a VIE. 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 did not elect early adoption. We do not expect the adoption of this
guidance to have a material impact on our consolidated financial statements.
In January 2015, the FASB issued guidance, which completely eliminates all references to and guidance concerning
the concept of an extraordinary item. 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 did not elect early adoption. We
do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2014, the 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
51
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
December 15, 2016. 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 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 did not elect 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 i) remove inconsistencies in
revenue requirements, ii) provide a better framework for addressing revenue issues, iii) improve comparability across entities,
industries, etc., iv) provide more useful information through improved disclosures, and v) 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. As updated by
FASB in August 2015, the guidance is effective for annual reporting periods beginning after December 15, 2017, including
interim periods within that reporting period. Earlier adoption is permitted for annual reporting periods beginning after
December 15, 2016 but we do not anticipate early adoption. 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. Adoption of this guidance did not have a material impact on our
consolidated financial statements.
Note 3 - Property and Equipment, Net
Property and equipment, net as of December 31, 2015 and 2014 consists of the following:
(in thousands)
Land
Buildings
Furniture and equipment
Capitalized software
Leasehold improvements
Less: accumulated depreciation
Property and equipment, net
2015
2014
$
4,000
111
62,140
759,925
29,038
4,000
230
91,397
701,482
30,001
855,214
(479,560)
375,654
$
827,110
(458,496)
368,614
$
$
Depreciation expense for property and equipment was approximately $73.7 million, $68.3 million and $60.8 million
for the years ended December 31, 2015, 2014 and 2013, 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 on
sale of property and equipment for the year ended December 31, 2014. See Note 12 - Fair Value of Financial Instruments for
further discussion on property and equipment, net measured at fair value on a nonrecurring basis.
52
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Note 4 - Capitalized Data and Database Development Costs, Net
Capitalized data and database development costs, net as of December 31, 2015 and 2014 consists of the following:
(in thousands)
Property data
Flood data
Eviction data
Less accumulated amortization
Capitalized data and database costs, net
2015
2014
$
498,697
$
477,221
55,416
17,336
55,416
18,068
571,449
(243,608)
327,841
$
550,705
(217,440)
333,265
$
Amortization expense for capitalized data and database development costs was approximately $33.2 million, $32.6
million and $30.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Note 5 - Investment in Affiliates, Net
Investments in affiliates, net is accounted for under the equity method of accounting when we are deemed to have
significant influence over the affiliate but do not control or have a majority voting interest in the affiliate. Investments are
carried at the cost of acquisition, including subsequent capital contributions and loans from us, plus our equity in undistributed
earnings or losses since inception of the investment. Income tax expense of $9.1 million, $8.9 million and $16.5 million was
recorded on those earnings for the years ended December 31, 2015, 2014 and 2013, respectively. Dividends from equity
method investments were $30.1 million, $38.7 million and $36.7 million for the years ended December 31, 2015, 2014 and
2013, respectively. We recorded $18.2 million, $19.0 million and $15.4 million, respectively, of operating revenues and $13.0
million, $12.9 million and $13.5 million, respectively, of operating expenses related to our investment in affiliates for the years
ended December 31, 2015, 2014 and 2013.
In December 2015, we completed the acquisition of the remaining 49.9% interest in RELS LLC ("RELS"), a leading
nation-wide provider of real estate asset valuation and appraisal solutions, and recorded an investment gain of approximately
$34.3 million due to the step-up in fair value on the previously held 50.1% interest, which is included in gain on investment and
other, net in the accompanying consolidated statements of operations. See Note 16 - Acquisitions for additional information.
Prior to the acquisition, RELS contributed 84.9%, 80.0% and 70.7% of our total equity in earnings of affiliates, net of tax, for
the years ended December 31, 2015, 2014 and 2013, respectively. Due to the acquisition of RELS, we do not expect equity in
earnings of affiliates to be significant in future reporting periods. Based on the terms and conditions of the joint venture
agreement, we had significant influence but did not have control of, or a majority voting interest in, the joint venture.
Accordingly, prior to the acquisition of the remaining 49.9% interest in RELS in December 2015, this investment was
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 attributable to RELS LLC
CoreLogic equity in earnings of affiliate, pre-tax
53
2015
2014
$
$
42,164
13,391
$
$
44,536
15,977
2015
2014
2013
$ 244,647
$ 221,328
$ 347,070
205,891
183,761
282,686
$ 38,756
$ 37,567
$ 64,384
$ 19,417
$ 18,821
$ 32,256
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 10.0% interest in PropertyIQ Ltd. ("PIQ") for NZD$3.3 million, or $2.6
million, a New Zealand joint venture, resulting in a 60.0% 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 to reflect our then existing ownership
interest at fair value, 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.
In January 2016, we completed the acquisition of the remaining 40.0% interest in PIQ for NZD$27.8 million, or $19.0 million.
See Note 17 - Redeemable Noncontrolling Interest for additional information.
See Note 12 - Fair Value of Financial Instruments for further discussion on investment in affiliates, net measured at
fair value on a nonrecurring basis.
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, 2015 and 2014 is as follows:
(in thousands)
Balance at January 1, 2014
Goodwill
Accumulated impairment losses
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
Acquisitions
Translation adjustments
Multifamily reclassification
Solution Express reclassification
Other
Balance at December 31, 2015
Goodwill, net
$
PI
RMW
Consolidated
689,442
(600)
688,842
285,801
—
—
(12,527)
(9,044)
4,257
957,329
119,589
(18,800)
(101,786)
6,586
162
$
$
708,757
(6,925)
701,832
39,140
77,616
(3,900)
(303)
9,044
—
1,398,199
(7,525)
1,390,674
324,941
77,616
(3,900)
(12,830)
—
4,257
823,429
1,780,758
—
—
101,786
(6,586)
(162)
119,589
(18,800)
—
—
—
$
963,080
$
918,467
$
1,881,547
In December 2015, we transferred our multifamily services business from our PI segment to our RMW segment,
relocated our solutions express business and consolidated our advisory services under our PI segment to leverage the core
business capabilities of each segment and represent changes in our management structure and internal reporting, see Note 1 -
Description of the Company. As a result of these actions, 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 fourth quarter reassignment of our goodwill to each reporting unit impacted
54
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
using the relative fair value approach, based on the fair values of the reporting units as of December 31, 2015. As of
December 31, 2015, the assessment resulted in $101.8 million of goodwill allocated to our RMW reporting unit from our PI
reporting unit and $6.6 million of goodwill allocated to our PI reporting unit from our RMW reporting unit.
For the year ended December 31, 2015, we recorded $23.1 million of goodwill in connection with our acquisition of
RELS in December 2015, $31.9 million of goodwill in connection with our acquisition of Cordell Information Pty Ltd
("Cordell") in October 2015 and $64.6 million of goodwill in connection with our acquisition of LandSafe Appraisal Services,
Inc. ("LandSafe") in September 2015. The goodwill for these acquisitions was recorded within our PI reporting unit. See Note
16 - Acquisitions for additional information.
In connection with our acquisition of MSB/DataQuick in March 2014, we recorded $277.8 million of goodwill within
our PI reporting unit and $29.9 million of goodwill within our RMW 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 PI reporting unit in January 2014, $9.2 million of goodwill in
connection with our acquisition of Bank of America's mortgage-related credit reporting operations within our RMW reporting
unit in November 2014 and $5.7 million of goodwill in connection with acquisitions that were not significant, all of which were
within our PI reporting unit. See Note 16 - Acquisitions for additional information.
We 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 2016 to 2021; and (b) a discount rate of 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, 2015. 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, 2015 and 2014 consist of the following:
(in thousands)
Client lists
2015
Accumulated
Amortization
Gross
Net
Gross
2014
Accumulated
Amortization
$
496,192
$
(219,887) $
276,305
$
394,070
$
Non-compete agreements
Trade names and licenses
9,302
102,297
(7,983)
(27,773)
1,319
74,524
9,332
93,497
$
607,791
$
(255,643) $
352,148
$
496,899
$
(192,612) $
(7,351)
(18,666)
(218,629) $
Net
201,458
1,981
74,831
278,270
Amortization expense for other identifiable intangible assets, net was $39.7 million, $37.5 million and $35.1 million
for the years ended December 31, 2015, 2014 and 2013, 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.
55
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Estimated amortization expense for other identifiable intangible assets anticipated for the next five years is as follows:
(in thousands)
2016
2017
2018
2019
2020
Thereafter
$
44,224
42,131
41,327
37,037
37,932
149,497
$
352,148
Note 8 - Long-Term Debt
Long-term debt as of December 31, 2015 and 2014 consists 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
7.55% senior debentures due April 2028
Bank debt:
Revolving line of credit borrowings due April 2020, weighted-average interest
rate of 1.96% at December 31, 2015
Term loan facility borrowings due April 2020, weighted-average interest rate
of 1.96% at December 31, 2015
Revolving line of credit borrowings due March 2019, weighted-average
interest rate of 3.92% at December 31, 2014, extinguished April 2015
Term loan facility borrowings due March 2019, weighted-average interest rate
of 2.41% at December 31, 2014, extinguished April 2015
Other debt:
Various interest rates with maturities through 2019
Total long-term debt
Less current portion of long-term debt
Long-term debt, net of current portion
7.25% Senior Notes
2015
2014
$
4,924
$
4,623
393,000
59,645
393,000
59,645
75,000
828,750
—
—
2,689
1,364,008
48,497
—
—
85,000
786,250
2,045
1,330,563
11,352
$
1,315,511
$
1,319,211
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.
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
56
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 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. 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, 2015, 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
In April 2015, the Company, CoreLogic Australia Pty Limited and the guarantors named therein amended and restated
our senior secured credit facility (the "Credit Agreement") with Bank of America, N.A. as administrative agent and other
financial institutions. The Credit Agreement amended and restated our previous senior secured credit facility that was entered
into on March 25, 2014. The Credit Agreement provides for an $850.0 million five-year term loan facility (the "Term Facility")
and a $550.0 million five-year revolving credit facility (the "Revolving Facility") and expires on April 21, 2020. 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 $750.0 million in
the aggregate. As of December 31, 2015, we were in compliance with all of our covenants under the Credit Agreement.
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, adjusted for statutory reserves, plus the Applicable Rate. The initial Applicable Rate for Alternate
Base Rate borrowings is 0.75% and for Adjusted Eurocurrency Rate borrowings is 1.75%. 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 1.00%. The minimum Applicable Rate for Adjusted
Eurocurrency Rate borrowings will be 1.25% and the maximum will be 2.00%. 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
0.40%, depending on our leverage ratio.
57
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 September 30, 2015 and continuing on each three-month anniversary thereafter until and including March 31,
2020 in an amount equal to $10.6 million on each repayment date from September 30, 2015 through June 30, 2017, $21.3
million on each repayment date from September 30, 2017 through June 30, 2018 and $31.9 million on each repayment date
from September 30, 2018 through March 31, 2020. 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.
The Credit Agreement contains financial maintenance covenants, including a (i) maximum total leverage ratio not to
exceed 4.50 to 1.00 (stepped down to 4.25 to 1.00 starting with the fiscal quarter ending June 30, 2016, with a further step
down to 4.00 to 1.00 starting with the fiscal quarter ending June 30, 2017, stepped down to 3.50 to 1.00 starting with the fiscal
quarter ending June 30, 2018 and provided further that if the Company completes a Qualified Transaction (as defined in the
Credit Agreement), the total leverage ratio will step up by 0.25 basis points commencing in the fiscal quarter in which such
Qualified Acquisition occurs and thereafter the total leverage ratio will step down by 0.25 basis points starting with the fiscal
quarter ending June 30, 2019; 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.
At December 31, 2015, we had borrowing capacity under the revolving lines of credit of $475.0 million, and were in
compliance with the financial and restrictive covenants of our Credit Agreement. As of December 31, 2015 and 2014, we have
recorded $3.6 million and $9.2 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 $4.9 million as of December 31, 2015.
Debt Issuance Costs
In connection with the amendment and restatement of the Credit Agreement, we incurred approximately $6.5 million
of debt issuance costs of which $0.4 million was recorded as interest expense in the accompanying consolidated statements of
58
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
operations for the year ended December 31, 2015. We capitalized the remaining $6.1 million of debt issuance costs, within
other assets in the accompanying consolidated balance sheet as of December 31, 2015, and will amortize these costs over the
term of the Credit Agreement.
When we amended and restated the Credit Agreement, we had unamortized costs of $14.8 million related to
previously recorded debt issuance costs, which we will amortize over the term of the Credit Agreement and we wrote-off $1.6
million of unamortized debt issuance costs during the year ended December 31, 2015.
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 associated underlying debt.
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 $4.4 million and $3.8 million at December 31, 2015 and 2014, respectively, which is
included in the accompanying consolidated balance sheets as a component of other liabilities.
For the years ended December 31, 2015, 2014 and 2013, an unrealized loss of $0.4 million (net of $0.2 million in
deferred taxes), an unrealized loss of $2.4 million (net of $1.5 million in deferred taxes) and an unrealized gain of $1.5 million
(net of $0.9 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,
2016 (1)
2017
2018
2019
2020
Thereafter
Total (1)
$
48,497
64,634
106,756
127,725
563,751
452,645
$
1,364,008
(1)
Includes the acquisition related remaining note payable of $5.0 million, which is non-interest bearing and discounted
to $4.9 million as of December 31, 2015.
59
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Note 9 - Income Taxes
Income before income taxes from continuing operations attributable to CoreLogic is as follows for the years ended
December 31, 2015, 2014 and 2013:
(in thousands)
2015
2014
2013
United States
Foreign
Total
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
$
$
155,345 $
16,729
172,074 $
23,790
(970)
22,820
$
$
86,195 $
22,988
19,196
—
105,391 $
22,988
$
$
94,744 $
43,022
11,881
795
106,625 $
43,817
For the years ended December 31, 2015, 2014 and 2013, income before income taxes from continuing operations
attributable to CoreLogic includes income of certain incorporated noncontrolling interests.
Provision for Income Taxes
The provision for taxes consists of the following for the years ended December 31, 2015, 2014 and 2013:
(in thousands)
2015
2014
2013
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
Total income tax provision
$
17,108 $
2,166
3,394
22,668
29,561
3,562
1,603
34,726
57,394 $
7,910
1,190
—
9,100
—
—
—
—
9,100
$
186 $
2,137
3,249
5,572
26,769
1,299
(3,870)
24,198
29,770 $
$
7,603
1,265
—
8,868
—
—
—
—
8,868
$
$
19,294 $
(1,596)
2,006
19,704
14,568
(273)
(326)
13,969
33,673 $
14,083
2,151
222
16,456
—
—
—
—
16,456
60
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
A reconciliation of the provision for taxes based on the federal statutory income tax rate on income from continuing
operations attributable to CoreLogic to our effective income tax rate is as follows for the years ended December 31, 2015, 2014
and 2013:
2015
2014
2013
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
Federal statutory income tax rate
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
State taxes, net of federal benefit
Foreign taxes (less than) in excess of
federal rate
Non-deductible expenses, including
Separation-related
Change from investee to subsidiary
Change in uncertain tax positions
Research and development credits
Other items, net
Effective income tax rate
3.4
0.4
0.5
(2.5)
(0.7)
(2.6)
(0.1)
3.4
1.5
—
—
—
—
—
33.4%
39.9%
6.2
(5.6)
1.7
—
1.3
(7.9)
(2.5)
28.2%
3.6
—
—
—
—
—
—
38.6%
4.0
1.0
4.9
(2.3)
2.7
(10.2)
(3.5)
31.6%
3.2
(0.6)
—
—
—
—
—
37.6%
We recorded income tax benefits of $4.5 million and $8.4 million during the years ended December 31, 2015 and
2014, respectively, related to domestic research and development credits.
As of December 31, 2015, we had an estimated $23.7 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
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.
61
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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, 2015 and 2014 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
Other
Net deferred tax (liability)/asset
2015
2014
$
92,537
$
98,633
132,359
137,090
1,042
46,586
32,796
—
(19,171)
286,149
$
$
279,435
11,199
4,658
2,962
47,414
29,791
(989)
(21,912)
292,989
247,458
19,169
—
$
$
295,292
$
(9,143) $
266,627
26,362
As of December 31, 2015 and 2014, we had federal net operating losses (“NOLS”) of $181.4 million and $195.5
million, respectively, which begin to expire in 2021. The state NOLS were $251.1 million and $289.4 million as December 31,
2015 and 2014, respectively, which begin to expire in 2016. The foreign NOLS were $12.8 million and $15.3 million as of
December 31, 2015 and 2014, respectively. As of December 31, 2015 we had available federal capital losses of $20.0 million
beginning to expire in 2017. As of December 31, 2015 we had available state capital losses of $87.9 million expiring at various
times beginning in 2016. 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, 2015 and 2014, we had valuation allowances of approximately $19.2 million and $21.9 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 $2.7 million is primarily due
to the release of a foreign valuation allowance from the emergence of cumulative losses in recent years and a return to
sustainable operating profits, as well as projections of future taxable income.
62
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Unrecognized Tax Benefits
A reconciliation of the unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 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
Unrecognized tax benefits - ending balance
2015
2014
2013
$
35,663
$
55,325
$
52,654
13
(2,152)
896
(119)
34,301
$
2,950
(22,698)
651
(565)
35,663
$
—
—
2,671
—
$
55,325
Included in the December 31, 2015 and 2014 balances are $13.3 million and $12.7 million, respectively, of
unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The remaining $21.5 million for
the years ended December 31, 2015 and 2014 would be offset against FAFC receivable pursuant to the Tax Sharing Agreement
entered in connection with the Separation and may have an impact to the effective tax rate depending upon the settlement of
ongoing examination as discussed below.
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015
and 2014, we had $17.3 million and $16.0 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, 2015, 2014 and 2013, we recognized approximately $0.2 million, $0.6
million and $0.8 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. Adequate amounts of tax and related interest and penalties, if any,
have been provided for any adjustments that may result from these examinations.
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 $23.7
million within the next twelve months. The estimated change is primarily related to Internal Revenue Service audits, subject to
the FAFC indemnification, of which approximately $21.5 million will have no impact to net income.
63
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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,
2015, 2014 and 2013, 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
2015
2014
2013
$ 128,400
(556)
—
$
89,741
(16,653)
112
$ 127,844
$
73,200
$ 100,313
14,423
(7,008)
$ 107,728
89,070
1,494
90,564
90,825
1,604
92,429
95,088
2,021
97,109
$
$
$
$
$
$
$
1.44
(0.01)
—
1.43
1.42
(0.01)
—
$
$
$
0.99
(0.18)
—
0.81
0.97
(0.18)
—
1.41
$
0.79
$
1.05
0.15
(0.07)
1.13
1.03
0.15
(0.07)
1.11
For the December 31, 2014 and 2013, RSUs, PBRSUs and stock options of 0.3 million and 0.4 million, respectively,
were excluded from the weighted average diluted common shares outstanding due to their antidilutive effect. For the year ended
December 31, 2015 less than 0.1 million stock option were considered antidilutive.
Note 11 - Employee Benefit Plans
We currently offer a variety of employee benefit plans, including a 401(k) savings plan, a defined benefit pension plan
incorporated with the acquisition of RELS ("RELS Pension"), non-qualified plans and a deferred compensation plan. The non-
qualified plans are comprised of our frozen unfunded supplemental management and executive benefit plans (collectively, the
“SERPs”) and a frozen pension restoration plan (“Restoration”).
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.
64
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
The following table summarizes the balance sheet impact, including benefit obligations, assets and funded status
associated with the RELS Pension, SERPs and Restoration plans as of December 31, 2015 and 2014:
(in thousands)
Change in projected benefit obligation:
Benefit obligation at beginning of period
Addition of RELS
Service costs
Interest costs
Actuarial (gains)/losses
Benefits paid
Projected benefit obligation at end of period
Change in plan assets:
Plan assets at fair value at beginning of period
Addition of RELS
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
2015
2014
$
32,259
$
27,059
31,308
161
1,205
(1,797)
(1,880)
61,256
$
— $
21,175
1,880
(1,880)
21,175
—
282
1,233
5,564
(1,879)
32,259
—
—
1,879
(1,879)
—
$
$
$
(40,081) $
(32,259)
$
$
$
$
$
(61,256) $
21,175
$
(40,081) $
(32,259)
—
(32,259)
11,363
(5,631)
5,732
$
$
13,685
(6,775)
6,910
The net periodic pension cost for the years ended December 31, 2015, 2014 and 2013, for the RELS Pension plan,
SERPs, and Restoration 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
2015
2014
2013
$
161
$
282
$
637
1,205
—
(620)
746
$
1,231
—
(424)
1,089
$
1,293
(57)
179
$
2,052
65
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Weighted-average discount rate used to determine costs for the plans were as follows:
RELS Pension Plan
SERP Plans
Restoration Plan
2015
2014
2013
4.09%
3.85%
3.98%
N/A
4.72%
4.82%
N/A
3.89%
4.02%
Weighted-average actuarial assumptions used to determine benefit obligations for the plans were as follows:
RELS Pension Plan
Discount rate
Salary increase rate
SERP Plans
Discount rate
Salary increase rate
Restoration Plan
Discount rate
2015
2014
4.44%
N/A
4.20%
N/A
N/A
N/A
3.85%
N/A
4.32%
3.98%
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 RELS Pension, Restoration and SERPs as of
December 31, 2015, 2014 and 2013:
(in thousands)
Projected benefit obligation
Accumulated benefit obligation
Plan assets at fair value at end of year
2015
2014
2013
$
$
$
61,256
61,256
21,175
$
$
$
32,259
32,259
$
$
27,059
27,059
— $
—
The following benefit payments for all plans, which reflect expected future turnover, as appropriate, are expected to be
paid as follows:
(in thousands)
2016
2017
2018
2019
2020
2021-2025
$
$
2,051
2,089
2,120
2,135
2,162
13,816
24,373
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, 2015, 2014 and 2013 related to the Savings Plan were $10.0
66
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
million, $5.7 million and $7.6 million, respectively. The Savings Plan allows the participants to purchase shares of our common
stock as one of the investment options, subject to certain limitations. The Savings Plan held 820,101 and 866,559 shares of our
common stock, representing 0.9% and 1.0% of the total shares outstanding at December 31, 2015 and 2014, respectively.
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 $27.4 million and $30.3 million as of
December 31, 2015 and 2014, respectively, and is included in other assets in the consolidated balance sheets. The unfunded
liability for our deferred compensation plan was $32.2 million and $34.2 million as of December 31, 2015 and 2014,
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.
67
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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, 2015 are presented in the following table:
(in thousands)
Financial Assets:
Cash and cash equivalents
Restricted cash
Equity securities
Financial Liabilities:
Total debt
Derivatives:
Liability for interest rate swap agreements
Fair Value Measurements Using
Level 1
Level 2
Level 3
Fair Value
99,090
$
— $
— $
—
22,709
10,926
—
—
—
99,090
10,926
22,709
121,799
$
10,926
$
— $
132,725
— $
1,315,473
$
— $
1,315,473
— $
4,370
$
— $
4,370
$
$
$
$
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
Financial Liabilities:
Total debt
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
— $
3,781
$
— $
3,781
$
$
$
$
68
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the year
ended December 31, 2015:
(in thousands)
Level 1
Level 2
Level 3
Impairment
Losses
Property and equipment, net
$
— $
— $
— $
— $
3,770
Fair Value Measurements Using
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the year
ended December 31, 2014:
(in thousands)
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:
(in thousands)
Assets of discontinued
operations
Property and equipment, net
Goodwill, net
Other intangible assets, net
Fair Value Measurements Using
Level 1
Level 2
Level 3
Impairment
Losses
$
$
19,961
$
— $
— $
19,961
$
—
77,616
—
—
—
—
—
—
—
—
77,616
—
97,577
$
— $
— $
97,577
$
9,614
1,969
42,216
248
54,047
We recorded non-cash impairment charges of $9.6 million for the year ended December 31, 2013 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 $3.8 million, $1.1 million and
$2.0 million for the years ended December 31, 2015, 2014 and 2013, respectively, in our property and equipment, net primarily
related to 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 businesses. 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 a non-cash impairment charge of $0.4 million for the year ended December 31, 2014
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 investment. 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.
69
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Note 13 - Share-Based Compensation
We currently issue equity awards under the Amended and Restated CoreLogic, Inc. 2011 Performance Incentive Plan,
which was initially approved by our stockholders at our Annual Meeting, held on May 19, 2011 with an amendment and
restatement approved by our stockholders at our Annual Meeting held on July 29, 2014 (the "Plan"). The Plan includes the
ability to grant RSUs, PBRSU 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 Plan provides for up to 21,909,000 shares of the Company's
common stock to be available for award grants.
We have primarily utilized 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 its vesting period.
Restricted Stock Units
For the years ended December 31, 2015, 2014 and 2013, we awarded 965,978, 807,890 and 788,680 RSUs,
respectively, with an estimated fair value of $34.1 million, $24.7 million and $20.8 million, respectively. The RSU awards will
vest ratably over 3 years. RSU activity for the year ended December 31, 2015 is as follows:
(in thousands, except weighted average fair value prices)
Unvested RSUs outstanding at December 31, 2014
RSUs granted
RSUs vested
RSUs forfeited
Unvested RSUs outstanding at December 31, 2015
Weighted
Average
Grant-Date
Fair Value
Number of
Shares
1,380
$
$
966
(715) $
(94) $
$
1,537
27.17
35.31
25.19
31.81
32.92
As of December 31, 2015, there was $26.1 million of total unrecognized compensation cost related to unvested RSUs
that is expected to be recognized over a weighted-average period of 1.7 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, 2015, 2014 and 2013, we awarded 231,624, 367,558 and 410,497 PBRSUs,
respectively, with an estimated fair value of $7.9 million, $11.6 million and $10.7 million, respectively. These awards could be
subject to service-based, performance-based and market-based vesting. The performance period for the PBRSUs awarded
during 2015 is from January 1, 2015 to December 31, 2017 and the performance metric is adjusted earnings per share and
market-based conditions. Subject to satisfaction of the performance criteria, the 2015 awards will vest on December 31, 2017.
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 was
from January 1, 2013 to December 31, 2015 and the performance metric was adjusted earnings per share. Based on
achievement of the performance criteria, the 2013 awards were earned at 45%.
70
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
The fair values of the 2015 and 2014 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)
2015
2014
2013
— %
—%
0.93%
0.74 %
24.01% 27.88 %
8.37% (0.90)%
—%
0.41%
29.87%
17.87%
(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.
PBRSU activity for the year ended December 31, 2015 is as follows:
(in thousands, except weighted average fair value prices)
Unvested PBRSUs outstanding at December 31, 2014
PBRSUs granted
PBRSUs vested
PBRSUs forfeited
Unvested PBRSUs outstanding at December 31, 2015
Weighted
Average
Grant-Date
Fair Value
Number of
Shares
904
$
$
232
(415) $
(62) $
$
659
22.19
34.01
16.51
30.63
29.15
As of December 31, 2015, there was $10.3 million of total unrecognized compensation cost related to unvested
PBRSUs that is expected to be recognized over a weighted-average period of 1.8 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 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
—%
1.74%
—%
0.9%
37.92%
41.65%
5.5
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.
71
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
For the years ended December 31, 2014 and 2013 we awarded 290,737 and 445,705 options, respectively, with an
estimated fair value of $9.1 million and $11.7 million, respectively. Option activity for the year ended December 31, 2015 is as
follows:
(in thousands, except weighted average prices)
Options outstanding at December 31, 2014
Options granted
Options exercised
Options canceled
Options outstanding at December 31, 2015
Options vested and expected to vest at December 31, 2015
Options exercisable at December 31, 2015
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Number of
Shares
2,563
$
— $
(695) $
(42) $
$
1,826
1,818
1,579
$
$
22.32
—
24.53
28.62
21.33
21.30
20.09
5.1
5.1
4.7
$
$
$
22,867
22,849
21,756
As of December 31, 2015, there was $1.2 million of total unrecognized compensation cost related to unvested stock
options that is expected to be recognized over a weighted-average period of 1.1 years.
The intrinsic value of options exercised was $9.0 million, $3.5 million and $13.8 million for the years ended
December 31, 2015, 2014 and 2013, 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,
2015, 2014 and 2013:
(in thousands)
Restricted stock units
Performance-based restricted stock units
Stock options
Employee stock purchase plan
2015
2014
2013
$
$
24,591
8,080
1,923
1,192
$
19,078
1,750
3,730
1,030
12,754
9,746
3,982
557
$
35,786
$
25,588
$
27,039
The above share-based compensation expense has $4.0 million, $1.7 million and $1.0 million included within cost of
services for the years ended December 31, 2015, 2014 and 2013, respectively. It also includes $0.2 million and $0.1 million of
share-based compensation expense for the years ended December 31, 2014 and 2013, respectively, reported within (loss)/
income from discontinued operations, net of tax.
72
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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, 2015 are as follows:
(in thousands)
2016
2017
2018
2019
2020
Thereafter
$
$
32,789
19,450
14,742
12,686
10,261
7,710
97,638
Total rental expenses for all operating leases and month-to-month rentals were $28.6 million, $35.6 million and $39.8
million for the years ended December 31, 2015, 2014 and 2013, 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 five years. As of December 31, 2015, the remaining minimum commitment totaled $51.2 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.
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 Washington Mutual Bank ("WaMu") and eAppraiseIT, LLC ("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
73
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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. The parties thereafter conducted a court-
ordered mediation and subsequently reached an agreement in principle to settle the case for a total of $9.9 million, inclusive of
attorney fees and subject to court approval. We previously recorded an accrual for this amount within loss from discontinued
operations, net of tax.
On December 12, 2014, the court preliminarily approved the settlement. Notice to the class was subsequently made
and, after a final fairness hearing on April 24, 2015, the court entered final judgment on April 27, 2015 approving the
settlement and dismissing the case with prejudice.
Separation
Following the Separation, we are 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, 2015, no reserves were considered necessary.
In addition, the Separation and Distribution Agreement provides for cross-indemnities principally designed to place
financial responsibility for the obligations and liabilities of our predecessor, FAC 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 December 2015, we completed the acquisition of the remaining 49.9% interest in RELS for approximately $65.0
million and recorded an investment gain of approximately $34.3 million due to the step-up in fair value on the previously held
50.1% interest, which is included in gain on investment and other, net in the accompanying consolidated statements of
operations. RELS is included as a component of our PI reporting segment. The acquisition of RELS expands our real estate
asset valuation and appraisal solutions in connection with loan originations. 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. The purchase price allocation is subject to change based on our final determination of
fair value in connection with intangible assets and working capital matters. We preliminarily recorded property and equipment
of $27.0 million with an estimated average life of 10 years, customer lists of $48.4 million with an estimated average life of 10
years, other intangibles of $5.0 million with an estimated useful life of 10 years and goodwill of $23.1 million, of which $11.5
million is deductible for tax purposes. The business combination did not have a material impact on our consolidated financial
statements.
In October 2015, we completed the acquisition of Cordell for AUD$70.0 million, or $49.1 million, subject to working
capital adjustments, which is included as a component of our PI reporting segment. The acquisition of Cordell further expands
our property information capabilities in Australia. The purchase price was allocated to the assets acquired and liabilities
74
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
assumed using a variety of valuation techniques including discounted cash flow analysis, which included significant
unobservable inputs. The purchase price allocation is subject to change based on our final determination of fair value in
connection with intangible assets and working capital matters. We preliminarily recorded property and equipment of $14.3
million with an estimated average life of 10 years, customer lists of $5.5 million with an estimated average life of 8 years, trade
names of $0.6 million with an estimated useful life of 4 years and goodwill of $31.9 million, which is fully deductible for tax
purposes. The business combination did not have a material impact on our consolidated financial statements.
In September 2015, we completed the acquisition of LandSafe for $122.0 million, subject to working capital
adjustments, which is included as a component of our PI reporting segment. The acquisition builds on our longstanding
strategic relationship with a key client and continues to expand our property valuation capabilities. 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. The purchase price allocation is subject to change based on our final
determination of fair value in connection with intangible assets and working capital matters. We preliminarily recorded
customer lists of $53.4 million with an estimated average life of 10 years, other intangibles of $4.3 million with an estimated
useful life of 10 years and goodwill of $64.6 million, which is fully deductible for tax purposes. The business combination did
not have a material impact on our consolidated financial statements.
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 RMW 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 unobservable inputs. We 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 PI
segment and DataQuick's flood zone determination and credit servicing operations are reported within our RMW 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 allocation of the purchase price is as
follows:
75
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
(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
$
$
$
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
(1)
Goodwill of $307.8 million includes $167.8 million of deductible basis for tax purposes.
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
$ 1,506,660
$
82,724
$
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 PI 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 unobservable
inputs. 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 PI 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 unobservable inputs. 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
76
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 10.0% interest in PIQ for NZD$3.3 million, or $2.6 million, resulting in
a 60.0% 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 PI 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 $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 RMW 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 $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.
For the years ended December 31, 2015 and 2014, we incurred $3.9 million and $9.0 million, respectively, of
acquisition-related costs within selling, general and administrative expenses on our consolidated statements of operations.
Acquisition related costs were not significant for the year ended December 31, 2013. For the years ended December 31, 2015,
2014 and 2013, the aggregation of the business combinations in each respective period did not have a material impact on our
consolidated financial statements.
Note 17 – Redeemable Noncontrolling Interest and Mandatorily 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.
In September 2013, we acquired an additional 10.0% interest in PIQ for NZD$3.3 million, or $2.6 million, resulting in
a 60.0% controlling interest. In connection with the acquisition, effective August 2015, the seller had the right to sell their
remaining noncontrolling shares in PIQ to us (the "put") and we had the right to purchase the remaining noncontrolling interest
in PIQ at fair value (the "call"). As the call and put did not represent separate assets or liabilities and the exercise of the put
was 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 years ended
December 31, 2015 and 2014, we recorded $1.2 million and $1.3 million, respectively, of net income in connection with the
redeemable noncontrolling interest.
In December 2015, we entered into an agreement to acquire the remaining 40.0% interest in PIQ for NZD$27.8
million, or $19.0 million, in January 2016 resulting in accumulated adjustments of $8.5 million to redeemable noncontrolling
interest and retained earnings to account for changes in its redemption value. Further, we reclassified the redeemable
noncontrolling interests of NZD$27.8 million, or $19.0 million, in the mezzanine section of our consolidated balance sheet to
mandatorily redeemable noncontrolling interest in the liabilities section of our consolidated balance sheet as of December 31,
2015.
77
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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 the former reporting segment Asset Management and Processing Solutions ("AMPS"), for total
consideration of $29.1 million, subject to working capital adjustments. In September 2012, we completed the wind down of our
consumer services business and our then-owned appraisal management company business which were included in our PI and
RMW segments, respectively. In September 2011, we closed our marketing services business which was included in our PI
segment.
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.
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 2015 presentation.
Summarized below are certain assets and liabilities classified as discontinued operations as of December 31, 2015 and
2014:
(in thousands)
As of December 31, 2015
PI
RMW
AMPS
Total
Deferred income tax asset and other current assets
$
326
$
(217) $
572
$
681
Accounts payable, accrued expenses and other
liabilities
As of December 31, 2014
Deferred income tax and other current assets
Accounts payable, accrued expenses and other
liabilities
$
$
$
250
$
319
$
1,958
$
2,527
326
$
3,808
$
133
$
4,118
282
$
10,941
$
2,481
$
13,704
78
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Summarized below are the components of our (loss)/income from discontinued operations, net of tax for the years
ended December 31, 2015, 2014 and 2013:
(in thousands)
For the Year Ended December 31, 2015
Operating revenue
Loss from discontinued operations before income
taxes
Benefit for income taxes
Loss from discontinued operations, net of tax
For the Year Ended December 31, 2014
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
$
$
$
$
$
$
PI
RMW
AMPS
Total
— $
— $
— $
(650)
(204)
(20)
(52)
(230)
(88)
(446) $
32
$
(142) $
—
(900)
(344)
(556)
— $
— $
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
(1,933)
(739)
(6,194)
(2,369)
32,928
13,486
24,801
10,378
(1,194) $
(3,825) $
19,442
$
14,423
79
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Note 19 - Segment Financial Information
In December 2015, we renamed our Data & Analytics segment to PI to reflect the broad and unique nature of the
property-level insights provided by these businesses. Also, we renamed our Technology and Processing Solutions segment to
RMW in order to reflect the current mix of risk management and underwriting-focused solutions provided by these businesses.
In addition, in December 2015, we transferred our multifamily services business from our PI segment to our RMW segment and
relocated our solutions express business and consolidated our advisory services businesses under our PI segment. As a result of
these actions, as well as changes in management structure and internal reporting, we have organized our reportable segments
into the following two segments: PI and RMW. All segment reporting disclosures presented herein reflect these changes. See
Note 1 - Description of the Company for further discussion.
Property Intelligence. Our PI segment owns or licenses real property information, mortgage information and consumer
information, which includes loan information, property sales and characteristic information, property risk and replacement cost,
natural hazard data, geospatial data, parcel maps, and mortgage-backed securities information. We have also developed
proprietary technology and software platforms to access, automate or track our data and assist our clients with compliance
regulations. We deliver this information directly to our clients in a standard format over the web, through customizable software
platforms or in bulk data form. Our products and services include data licensing and analytics, data-enabled advisory services,
platform solutions and valuation solutions in North America, Western Europe and Asia Pacific. The segment's 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, government agencies and government-
sponsored enterprises.
Our PI segment includes intercompany revenues of $5.5 million, $4.3 million, and $7.1 million for the years ended
December 31, 2015, 2014 and 2013, respectively; and intercompany expenses of $4.8 million, $5.6 million and $2.4 million for
the years ended December 31, 2015, 2014 and 2013, respectively.
Risk Management and Work Flow. Our RMW segment owns or licenses real property information, mortgage
information and consumer information, which includes loan information, property sales and characteristic information, natural
hazard data, parcel maps, employment verification, criminal records and eviction records. We have also developed proprietary
technology and software platforms to access, automate or track our data and assist our clients with compliance regulations. Our
products and services include credit and screening solutions, property tax processing, flood data services and technology
solutions in North America. 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, fixed-income investors, government agencies and
casualty insurance companies.
Our RMW segment includes intercompany revenues of $4.8 million, $5.5 million, and $3.2 million for the years ended
December 31, 2015, 2014 and 2013, respectively; and intercompany expenses of $5.5 million, $4.3 million and $7.9 million for
the years ended December 31, 2015, 2014 and 2013, 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.
80
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Selected segment financial information is as follows:
(in thousands)
For the Year Ended December 31, 2015
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, 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
(in thousands)
As of December 31, 2015
Investment in affiliates, net
Long-lived assets
Total assets
As of December 31, 2014
Investment in affiliates, net
Long-lived assets
Total assets
PI
RMW
Corporate Eliminations
Consolidated
(Excluding
Discontinued
Operations)
$ 663,344
$
$
$
$
$
96,766
72,761
22,622
94,522
48,902
$ 598,113
$
$
$
92,615
70,181
22,949
$ 100,070
$
48,535
$ 518,622
$
$
$
68,375
56,515
43,269
$ 106,842
$
46,726
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
875,057
$
39
$
33,723
216,178
216,147
12,714
$
$
16,118
$ (86,015) $
(8,902) $
$ (181,117) $
$
18,942
$
— $
816,717
$
31
$
31,717
166,640
166,631
16,184
$
$
14,062
$ (67,063) $
(8,829) $
$ (163,728) $
$
22,435
$
— $
895,953
$
631
$
36,591
181,673
182,923
27,407
$
21,366
$
$ (96,046) $
— $ (15,908) $
$ (189,505) $
$
32,453
$
(10,330) $
— $
— $
— $
— $
— $
(9,821) $
— $
— $
— $
(11,965) $
— $
(10,805) $
— $
— $
— $
— $
— $
1,528,110
146,607
202,924
13,720
129,552
80,558
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
PI
RMW
Corporate Eliminations
Consolidated
(Excluding
Discontinued
Operations)
$
61,765
$
— $
7,440
$ 1,856,410
$ 1,183,318
$ 5,139,576
$ 2,058,412
$ 1,316,785
$ 5,346,324
— $
$
$ (5,020,520) $
$ (5,021,152) $
69,205
3,158,784
3,700,369
$
96,356
$
— $
7,242
$ 1,693,332
$ 1,208,256
$ 4,888,730
$ 1,838,423
$ 1,345,958
$ 5,102,328
$
— $
$ (4,774,581) $
$ (4,774,614) $
103,598
3,015,737
3,512,095
81
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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)
PI
RMW
Corporate
Eliminations
Consolidated
2015
$
Domestic
535,405
872,319
—
(10,330)
$ 1,397,394
$
$
Foreign
127,939
2,738
39
—
130,716
Year Ended December 31,
2014
$
Domestic
460,370
813,401
—
(9,821)
$ 1,263,950
$
$
Foreign
137,743
3,316
31
—
141,090
2013
$
Domestic
422,501
890,787
—
(10,805)
$ 1,302,483
$
$
Foreign
96,121
5,166
631
—
101,918
Long-lived assets separated between domestic and foreign operations and by segment are as follows:
(in thousands)
PI
RMW
Corporate
Eliminations
Consolidated (excluding assets for discontinued operations)
Note 20 - Guarantor Subsidiaries
As of December 31,
2015
2014
Domestic
Foreign
Domestic
Foreign
$ 1,536,133
$
320,277
$ 1,382,922
$
310,410
1,183,305
4,393,637
(4,274,581)
$ 2,838,494
13
1,208,236
20
745,939
(745,939)
320,290
4,142,791
(4,028,642)
$ 2,705,307
$
745,939
(745,939)
310,430
$
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: i) the guarantor is sold or sells all of its assets in
compliance with the terms of the indenture; ii) the guarantor is released from its guarantee obligations under the credit
agreement; iii) the guarantor is properly designated as an “unrestricted subsidiary”, and iv) 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 condensed consolidating financial information reflects CoreLogic'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.
82
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Condensed Balance Sheet
As of December 31, 2015
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
(in thousands)
Assets:
Cash and cash equivalents
$
28,259
$
33,186
$
37,645
$
— $
99,090
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
—
80,110
17,806
—
233
—
—
51,763
9,777
2,539,614
128,222
102,148
211,943
117,008
322,109
1,700,102
319,756
258,425
68,112
—
—
—
329,847
35,754
29,045
5,070
35,739
181,445
32,159
69,416
1,093
2,219
1,149
—
—
1,342
—
—
—
—
—
—
—
(51,763)
—
(2,539,614)
(458,069)
—
240,988
202,188
375,654
1,881,547
352,148
327,841
69,205
2,219
10,926
—
—
139,244
$
2,957,932
$
3,396,242
$
396,322
$
(3,049,446) $
3,701,050
$
136,863
$
410,538
$
67,075
$
— $
614,476
Long-term debt, net of current
1,313,895
Deferred revenue, net of current
Deferred income tax liabilities, long
term
Intercompany payable
Other liabilities
—
—
329,847
127,837
1,616
448,654
132,228
22,325
35,982
Total CoreLogic stockholders' equity
1,049,490
2,344,899
—
165
26,784
105,897
1,686
194,715
Total liabilities and equity
$
2,957,932
$
3,396,242
$
396,322
$
—
—
(51,763)
(458,069)
—
(2,539,614)
(3,049,446) $
1,315,511
448,819
107,249
—
165,505
1,049,490
3,701,050
83
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Condensed Balance Sheet
As of December 31, 2014
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
(in thousands)
Assets:
Cash and cash equivalents
$
61,602
$
8,733
$
34,342
$
— $
—
55,867
17,261
—
290
—
—
49,365
11,035
2,350,467
89,780
105,262
189,138
120,531
325,638
1,612,388
242,170
254,236
103,598
—
—
—
158,939
31,925
25,206
5,206
25,715
168,370
35,810
79,029
—
—
1,325
—
—
1,685
—
—
—
—
—
—
—
(49,365)
—
(2,350,467)
(248,719)
—
Total
104,677
214,344
181,604
368,614
1,780,758
278,270
333,265
103,598
—
12,360
—
—
138,872
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
$
2,740,929
$
3,047,296
$
376,688
$
(2,648,551) $
3,516,362
$
123,196
$
389,170
$
38,224
$
— $
550,590
Long-term debt, net of current
1,313,270
Deferred revenue, net of current
Deferred income taxes liabilities, long
term
Intercompany payable
Other liabilities
Redeemable noncontrolling interest
—
—
158,939
131,357
—
5,941
389,302
91,197
22,325
27,930
—
—
6
22,147
67,455
1,797
18,023
Total CoreLogic stockholders' equity
1,014,167
2,121,431
229,036
Total liabilities and equity
$
2,740,929
$
3,047,296
$
376,688
$
—
—
(49,365)
(248,719)
—
—
(2,350,467)
(2,648,551) $
1,319,211
389,308
63,979
—
161,084
18,023
1,014,167
3,516,362
84
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Condensed Statement of Operations
For the Year Ended December 31, 2015
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
$
— $
1,397,431
$
130,679
$
— $
1,528,110
—
717
(717)
—
729,029
47,518
(38)
776,509
—
—
68,814
4,981
—
(73,795)
(57,457)
(2,654)
(46,928)
290,239
117,870
3,770
256,523
(1,405)
34,323
99,664
—
14,690
214,822
127,844
—
127,844
—
127,844
127,844
(36,330)
—
—
204,467
(556)
203,911
—
203,911
203,911
$
$
$
$
—
—
$
$
39,926
23,756
—
20,196
(2,428)
(77)
4,658
(970)
—
12,063
—
12,063
1,152
10,911
12,063
(36,968)
1,152
(679)
—
—
—
—
—
—
—
(214,822)
(214,822)
—
(214,822)
398,300
146,607
3,770
202,924
(61,290)
31,592
57,394
13,720
—
129,552
(556)
128,996
$
$
—
1,152
(214,822) $
127,844
(214,822) $
36,968
128,996
(36,330)
—
1,152
(in thousands)
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
(Loss)/gain on investments and other,
net
(Benefit)/Provision for income taxes
Equity in earnings/(loss) of affiliates,
net of tax
Equity in earnings of subsidiary, net of
tax
Net income from continuing operations
Loss from discontinued operations, net
of tax
Net income
Less: Net income attributable to
noncontrolling interests
Net income attributable to CoreLogic
Net income
Total other comprehensive loss
Less: Comprehensive income
attributable to noncontrolling interests
Comprehensive income/(loss)
attributable to CoreLogic
$
91,514
$
203,911
$
(26,057) $
(177,854) $
91,514
85
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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)
—
(in thousands)
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/(loss) 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
73,200
146,535
24,266
(152,993)
91,008
Loss from discontinued operations, net
of tax
(Loss)/gain on sale of discontinued
operations, net of tax
Net income
Less: Net income attributable to
noncontrolling interests
Net income attributable to CoreLogic
Net income
Total other comprehensive loss
Less: Comprehensive income
attributable to noncontrolling interests
Comprehensive income/(loss)
attributable to CoreLogic
—
—
73,200
—
73,200
73,200
(30,197)
—
$
$
(16,653)
—
—
(16,653)
(1,424)
128,458
—
128,458
128,458
$
$
$
$
—
—
1,536
25,802
1,267
24,535
25,802
(26,673)
1,267
$
$
—
(152,993)
—
(152,993) $
112
74,467
1,267
73,200
(152,993) $
26,673
74,467
(30,197)
—
1,267
$
43,003
$
128,458
$
(2,138) $
(126,320) $
43,003
86
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
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
—
—
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
—
—
107,728
—
107,728
107,728
(38,075)
—
—
160,173
14,595
(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) $
(175,793) $
43,337
(7,008)
107,675
(53)
107,728
107,675
(38,075)
$
$
(53)
—
(53)
(in thousands)
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 from 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
$
69,653
$
166,254
$
(33,798) $
(132,456) $
69,653
87
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
$
$
$
$
$
(in thousands)
Cash flows from operating activities:
Net cash (used in)/provided by operating
activities - continuing operations
Net cash used in 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
Purchases of investments
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
- discontinued 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 shares in
connection with share-based
compensation
Minimum tax withholding related to
net share settlements
Tax benefit related to stock options
Intercompany payments
Intercompany 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
Net change in cash and cash equivalents
Condensed Statement of Cash Flows
For the Year Ended December 31, 2015
Parent
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Consolidating/
Eliminating
Adjustments
Total
(94,034) $
400,950
$
29,233
$
— $
336,149
—
(7,612)
—
—
(7,612)
(94,034) $
393,338
$
29,233
$
— $
328,537
(3,911) $
(30,810) $
(9,428) $
— $
(44,149)
—
—
—
—
1,259
(31,063)
(5,346)
(146,414)
(1,684)
(48,077)
(2,064)
137
—
—
175
(2,652)
(209,834)
(64,740)
—
—
—
—
—
—
—
—
—
—
(36,409)
(194,491)
(3,748)
137
1,434
(277,226)
—
(2,652) $
(209,834) $
(64,740) $
— $
(277,226)
114,375
$
— $
— $
— $
(6,452)
(82,176)
(97,430)
22,569
(15,230)
6,513
(36,628)
165,948
—
(715)
—
—
—
—
(165,948)
—
—
—
—
—
—
—
—
36,628
71,489
(166,663)
36,628
—
—
—
$
$
71,489
$
(166,663) $
36,628
—
—
(25,197) $
16,841
$
2,182
3,303
$
$
88
—
—
—
—
—
—
202,576
(202,576)
—
—
— $
—
— $
114,375
(6,452)
(82,891)
(97,430)
22,569
(15,230)
6,513
—
—
(58,546)
—
(58,546)
2,182
(5,053)
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept to discontinued
operations
61,602
8,733
34,342
—
(7,612)
(8,146)
—
—
—
—
—
—
Cash and cash equivalents at end of year
$
28,259
$
33,186
$
37,645
$
— $
104,677
(7,612)
(8,146)
99,090
89
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
(in thousands)
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
discontinued operations
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
- 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 shares in
connection with share-based
compensation
Minimum tax withholding related to
net share settlements
Tax benefit related to stock options
Intercompany payments
Intercompany 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
Net change in cash and cash equivalents
$
$
$
$
$
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)
—
—
(2,664) $
(696,819) $
1,536
(42,013) $
—
—
—
—
—
—
—
— $
690,017
$
— $
— $
— $
(14,042)
(195,217)
(91,475)
15,213
(15,980)
6,791
(610,239)
179,187
—
(4,789)
—
—
—
—
(179,187)
606,212
(35,745)
422,236
—
—
—
—
—
—
—
—
—
4,027
4,027
—
$
$
(35,745) $
422,236
$
—
(28,976) $
—
(4,984) $
4,027
(625)
4,233
$
$
90
—
—
—
—
—
—
789,426
(789,426)
—
—
— $
—
— $
(35,129)
(694,871)
25,366
13,937
(310)
(743,032)
1,536
(741,496)
690,017
(14,042)
(200,006)
(91,475)
15,213
(15,980)
6,791
—
—
390,518
—
390,518
(625)
(29,727)
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept (to)/from discontinued
operations
104,310
—
30,109
—
(13,717)
(13,732)
—
1,536
1,536
—
—
—
Cash and cash equivalents at end of year
$
61,602
$
8,733
$
34,342
$
— $
134,419
(12,181)
(12,196)
104,677
91
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
(in thousands)
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)/received 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 cost
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 related to
net share settlements
Tax benefit related to stock options
Intercompany payments
Intercompany 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
Net change in cash and cash equivalents
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)
—
—
—
7,964
(92,591)
2,263
(2,351)
—
542
—
—
2,104
(1,254)
(167,510)
(19,891)
—
(1,254) $
1,862
(165,648) $
—
(19,891) $
—
—
—
—
—
—
—
— $
50,000
$
—
(4,375)
(241,161)
1,647
(10,436)
(291)
—
28,232
(8,665)
5,146
—
191,147
—
—
—
(180,885)
—
$
— $
— $
—
—
—
—
—
—
(10,262)
—
—
—
—
—
—
—
191,147
(191,147)
(37,841)
(92,049)
2,263
(2,351)
10,068
(188,655)
1,862
(186,793)
51,647
(10,436)
(4,666)
(241,161)
28,232
(8,665)
5,146
—
—
20,324
(189,965)
(10,262)
—
—
—
$
$
20,324
$
(189,965) $
—
—
(32,794) $
22,485
$
(10,262) $
(2,116)
(4,683) $
—
—
(179,903)
—
— $
—
— $
(179,903)
(2,116)
(14,992)
92
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 2014 and 2013
Cash and cash equivalents at beginning
of period
Less: Change in cash and cash
equivalents - discontinued operations
Plus: Cash swept from discontinued
operations
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
Note 21 - Unaudited Quarterly Financial Data
The following table sets forth certain unaudited consolidated quarterly financial data for the years ended 2015 and
2014:
(in thousands, except per share amounts)
3/31/2015
6/30/2015
9/30/2015
12/31/2015
For the Quarters Ended
Operating revenue
Operating income
Equity in earnings of affiliates, net of tax
Amounts attributable to CoreLogic:
Income from continuing operations, net of tax
Loss from discontinued operations, net of tax
Net income attributable to CoreLogic stockholders
Basic income/(loss) per share:
Income from continuing operations, net of tax
Loss from discontinued operations, net of tax
Net income
Diluted income/(loss) per share:
Income from continuing operations, net of tax
Loss from discontinued operations, net of tax
Net income
Weighted-average common shares outstanding:
Basic
Diluted
$ 364,772
$ 386,013
$ 386,439
$
$
$
$
$
$
$
$
49,265
3,766
29,290
(111)
29,179
0.33
—
0.33
0.32
—
0.32
$
$
$
$
$
$
$
$
60,707
4,667
33,006
(217)
32,789
0.37
—
0.37
0.36
—
0.36
$
$
$
$
$
$
$
$
65,920
3,498
28,288
(117)
28,171
0.32
—
0.32
0.31
—
0.31
$
$
$
$
$
$
$
$
$
390,886
27,032
1,789
37,816
(111)
37,705
0.43
—
0.43
0.42
—
0.42
89,751
91,117
89,564
90,963
88,719
90,154
88,157
89,789
93
CoreLogic, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2015, 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
Gain/(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
Gain/(loss) from sale of discontinued operations, net of tax
Net (loss)/income attributable to CoreLogic stockholders
Diluted income/(loss) per share:
(Loss)/income from continuing operations, net of tax
Income/(loss) from discontinued operations, net of tax
Gain/(loss) from sale of discontinued operations, net of tax
Net (loss)/income attributable to CoreLogic stockholders
Weighted-average common shares outstanding:
For the Quarters Ended
3/31/2014
6/30/2014
9/30/2014
12/31/2014
$ 326,104
$ 365,970
$ 367,454
$ 345,512
$
$
$
$
$
$
$
$
14,825
2,382
$
$
41,020
3,875
(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)
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
77,752
4,031
49,718
(4,856)
476
45,338
0.55
(0.05)
0.01
0.51
0.54
(0.05)
0.01
0.17
$
0.50
$
36,161
3,832
16,462
(1,432)
(364)
14,666
0.18
(0.02)
—
0.16
0.18
(0.02)
—
0.16
Basic
Diluted
91,433
91,433
91,750
93,062
90,518
91,987
89,597
91,245
94
CORELOGIC AND SUBSIDIARY COMPANIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
December 31, 2015, 2014 and 2013
(in thousands)
For the Year Ended December 31,
2015
Allowance for accounts receivable
Claim losses
Tax valuation allowance
For the Year Ended December 31,
2014
Allowance for accounts receivable
Claim losses
Tax valuation allowance
For the Year Ended December 31,
2013
Allowance for accounts receivable
Claim losses
Tax valuation allowance
Balance at
Beginning of
Period
Charged to
Costs &
Expenses
Charged to
Other
Accounts
Deductions
Balance at
End of
Period
$
$
$
$
$
$
$
$
$
10,826
24,871
21,911
13,045
26,128
24,173
19,511
26,106
30,955
$
$
$
$
$
$
$
$
$
1,736
$
10,448
$
(2,645) $
3,228
$
11,138
$
(5,506) $
—
—
(95)
—
$
$
$
$
—
$
3,244 (3) $
(6,350) (1) $
(9,975) (2) $
$
—
6,212
25,344
19,171
(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
(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.
95
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:
(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 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
(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.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2015. 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, 2015.
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, 2015.
(c) Changes in Internal Controls
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2015
that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
96
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 2016 Annual Meeting of Stockholders to
be filed with the SEC within 120 days after the end of the year ended December 31, 2015.
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 2016 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2015.
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 2016 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2015.
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 2016 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2015.
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 2016 Annual Meeting of Stockholders to be filed with the SEC
within 120 days after the end of the year ended December 31, 2015.
97
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, 2015 and 2014
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statement of Comprehensive/(Loss) Income for the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013
Notes to the Consolidated Financial Statements for the Years Ended December 31, 2015, 2014 and 2013
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.
98
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, 2016
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.
99
Signature
Title
Date
/s/ Anand Nallathambi
Anand Nallathambi
President and Chief Executive Officer
February 26, 2016
(Principal Executive Officer)
/s/ Frank D. Martell
Frank D. Martell
Chief Operating and Financial Officer
(Principal Financial Officer)
February 26, 2016
February 26, 2016
Senior Vice President Finance and
Controller
(Principal Accounting Officer)
Chairman of the Board, Director
February 26, 2016
Director
Director
Director
Director
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
/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
/s/ Jaynie Miller Studenmund
Director
February 26, 2016
Jaynie Miller Studenmund
/s/ David F. Walker
David F. Walker
/s/ Mary Lee Widener
Mary Lee Widener
Director
Director
February 26, 2016
February 26, 2016
100
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
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). † ^
Agreement and Plan of Merger, dated December 17, 2015, by and among CoreLogic Solutions, LLC,
CoreLogic Acquisition Co., Inc., FNC Holding Company, Inc. and, solely in his capacity as Shareholder
Representative, Dennis S. Tosh, Jr. †^
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).
10.1
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).
101
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
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 (Incorporated by reference herein from Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2014 as filed with the SEC on February 26, 2015).*
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).*
102
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
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).*
Amendment No. 5 to the Company's Deferred Compensation Plan, effective as of January 1, 2012
(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, 2014 as filed with the SEC on February 26, 2015).*
Amendment No. 6 to the Company's Deferred Compensation Plan, effective as of January 1, 2013
(Incorporated by reference herein from Exhibit 10.26 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 as filed with the SEC on February 26, 2015).*
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).*
103
10.30
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
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).*
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 (Incorporated by reference herein from Exhibit 10.41 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 as filed with the SEC on
February 26, 2015).*
Form of Notice of Restricted Stock Unit Grant and Form of Restricted Stock Unit Award Agreement (NEO),
approved January 28, 2015 (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, 2014 as filed with the SEC on February 26,
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 (Incorporated by reference herein from Exhibit 10.43
to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 as filed with the
SEC on February 26, 2015).*
104
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
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).*
Form of Performance Unit Grant and Form of Performance Unit Award Agreement, approved January 28, 2015
(Incorporated by reference herein from Exhibit 10.46 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 as filed with the SEC on February 26, 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 April 21, 2015, 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 10.1 to the Company's Current Report on
Form 8-K as filed with the SEC on April 22, 2015).
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). ±
105
10.56
10.57
10.58
10.59
10.60
21.1
23.1
23.2
31.1
31.2
32.1
32.2
99.1
101
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).
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). ±
Amendment No. 1 to the Master Professional Services Agreement entered into effective as of September 4,
2014 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 June 30, 2015 as filed with the SEC on July 24, 2015).±
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.
106
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.
107
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Stock Exchange Listing
Trading Symbol “CLGX”
New York Stock Exchange
Board of Directors
Executive Officers
J. David Chatham(1), (2), (3)
President and Chief Executive Officer,
Chatham Holdings Corporation
Anand Nallathambi
President and Chief Executive Officer
2016 Annual Meeting of Stockholders
April 27, 2016, 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
A copy of the Company's Annual
Report on Form 10-K, as filed with the
U.S. Securities and Exchange
Commission, as well as other financial
information, can be found on
CoreLogic's investor website (http://
investor.corelogic.com) or may be
obtained without charge by writing or
calling:
Investor Relations
CoreLogic, Inc.
40 Pacifica
Irvine, CA 92618 USA
Toll-Free: (877) 849-1023
Douglas C. Curling(3), (4)
Principal and Managing Director,
New Kent Capital
Frank D. Martell
Chief Operating and Financial Officer
Barry M. Sando
Senior Executive Vice President, Group Executive,
Risk Management and Workflow
Stergios Theologides
Senior Vice President, General Counsel
and Secretary
John C. Dorman(1), (4)
Corporate Director and Private Investor
Paul F. Folino(1), (2), (3), (4)
Former Executive Chairman,
Emulex Corporation
Anand Nallathambi(4)
President and Chief Executive Officer,
CoreLogic, Inc.
Thomas C. O'Brien(2), (3)
Former Chief Executive Officer and President,
Insurance Auto Auctions Inc.
Jaynie Miller Studenmund(2)
Corporate Director and Advisor
David F. Walker(1), (4)
Chairman of the Board, Chico's FAS, Inc.
Mary Lee Widener(1)
Community Investment Consultant
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating and Corporate
Governance Committee
(4) Member of the Acquisition and Strategic
Planning Committee
40 Pacifi ca, Ste. 900
Irvine, CA 92618
corelogic.com
29-AR15-0316-00
© 2016 CoreLogic, Inc. All rights reserved.
NYSE: CLGX