Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 09, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NOVATION COMPANIES, INC. | ||
Entity Central Index Key | 1,025,953 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 96,007,321 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 8,117 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 2,740 | $ 4,805 |
Accounts and unbilled receivables | 7,922 | 0 |
Marketable securities | 11,795 | 9,943 |
Other current assets | 578 | 1,091 |
Total current assets | 23,035 | 15,839 |
Non-Current Assets | ||
Goodwill | 8,205 | 0 |
Intangible assets, net | 8,172 | 0 |
Marketable securities | 0 | 26,545 |
Other | 425 | 246 |
Total non-current assets | 16,802 | 26,791 |
Total assets | 39,837 | 42,630 |
Current Liabilities | ||
Borrowings under revolving line of credit | 3,333 | 0 |
Accrued compensation and benefits payable | 4,213 | 75 |
Accrued professional fees payable | 1,037 | 691 |
Accrued interest payable | 1,050 | 3,689 |
Other | 1,650 | 1,063 |
Total current liabilities | 11,283 | 5,518 |
Non-Current Liabilities | ||
Long-term debt | 86,050 | 85,938 |
Other | 386 | 373 |
Total non-current liabilities | 86,436 | 86,311 |
Total liabilities | 97,719 | 91,829 |
Commitments and contingencies | ||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized: | ||
Common stock, 97,138,750 and 92,844,907shares issued and outstanding as of December 31, 2017 and 2016, respectively | 971 | 928 |
Additional paid-in capital | 744,937 | 744,873 |
Accumulated deficit | (815,184) | (804,319) |
Accumulated other comprehensive income | 11,394 | 9,319 |
Total shareholders' deficit | (57,882) | (49,199) |
Total liabilities and shareholders' deficit | $ 39,837 | $ 42,630 |
Consolidated Balance Sheets - P
Consolidated Balance Sheets - Parentheticals - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Capital stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Capital stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 97,138,750 | 92,844,907 |
Common stock, shares outstanding | 97,138,750 | 92,844,907 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Service fee income | $ 27,965 | $ 0 |
Cost and expenses: | ||
Cost of services | 24,473 | 0 |
General and administrative | 6,713 | 4,367 |
Goodwill impairment charge | 4,500 | 0 |
Operating loss | (7,721) | (4,367) |
Interest income – mortgage securities | 3,143 | 5,060 |
Other income (expense) | 348 | 5,472 |
Reorganization items, net | (3,581) | 667 |
Interest expense | (3,935) | (3,606) |
Income (loss) from continuing operations before income taxes | (11,746) | 3,226 |
Income tax expense (benefit) | 14 | (21) |
Net income (loss) from continuing operations | (11,760) | 3,247 |
Income from discontinued operations, net of income taxes | 895 | 1,966 |
Net income (loss) | (10,865) | 5,213 |
Other comprehensive income (loss): | ||
Less reclassification gain included in net income | (137) | (3,672) |
Change in unrealized gain (loss) on marketable securities | 2,212 | 11,555 |
Other comprehensive income (loss) | 2,075 | 7,883 |
Net comprehensive income (loss) | $ (8,790) | $ 13,096 |
Earnings (loss) per common share: | ||
Basic (in USD per share) | $ (0.12) | $ 0.06 |
Diluted (in USD per share) | $ (0.12) | $ 0.06 |
Weighted average basic common shares outstanding | 92,800,392 | 91,905,941 |
Weighted average diluted common shares outstanding | 92,800,392 | 91,905,941 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Balance at Dec. 31, 2015 | $ (62,593) | $ 928 | $ 744,575 | $ (809,532) | $ 1,436 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Compensation recognized under stock compensation plans | 298 | 298 | |||
Net income (loss) | 5,213 | 5,213 | |||
Other comprehensive income (loss) | 7,883 | 7,883 | |||
Balance at Dec. 31, 2016 | (49,199) | 928 | 744,873 | (804,319) | 9,319 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of nonvested shares | 0 | 43 | (43) | ||
Compensation recognized under stock compensation plans | 107 | 107 | |||
Net income (loss) | (10,865) | (10,865) | |||
Other comprehensive income (loss) | 2,075 | 2,075 | |||
Balance at Dec. 31, 2017 | $ (57,882) | $ 971 | $ 744,937 | $ (815,184) | $ 11,394 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (10,865) | $ 5,213 |
Income from discontinued operations, net of income taxes | 895 | 1,966 |
Net income (loss) from continuing operations | (11,760) | 3,247 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Goodwill impairment charge | 4,500 | 0 |
Gains on sales of marketable securities, net | (137) | (3,672) |
Accretion of marketable securities, net | 58 | 16 |
Adjustments to and amortization of deferred debt issuance costs and senior debt discount | 0 | (2,447) |
Compensation recognized under stock compensation plans | 107 | 274 |
Adjustments to and amortization of deferred debt issuance costs and senior debt discount | 496 | 0 |
Changes in operating assets and liabilities, net of acquisition: | ||
Accounts receivable | (457) | 0 |
Accrued professional fees payable | 346 | 315 |
Accrued compensation and benefits payable | (613) | (200) |
Accrued interest payable | (2,639) | 3,687 |
Due from discontinued operations | 0 | (26) |
Other current assets and liabilities, net | 63 | 329 |
Other noncurrent assets and liabilities, net | 415 | 593 |
Net cash provided by (used in) operating activities of continuing operations | (9,621) | 2,116 |
Net cash provided by (used in) operating activities of discontinued operations | 895 | (1,921) |
Net cash provided by (used in) operating activities | (8,726) | 195 |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of marketable securities | 26,847 | 33,468 |
Purchase of business, net of cash received | (23,337) | 0 |
Proceeds from sale of subsidiary | 0 | 7,643 |
Purchases of available for sale securities | 0 | (39,520) |
Net cash provided by investing activities of continuing operations | 3,510 | 1,591 |
Net cash used in investing activities of discontinued operations | 0 | (159) |
Net cash provided by investing activities | 3,510 | 1,432 |
Cash flows from financing activities: | ||
Borrowings under revolving line of credit | 10,043 | 0 |
Repayments of borrowings under revolving line of credit | (6,710) | 0 |
Paydowns of long-term debt | (182) | 0 |
Cash receipts from distributions of earnings from discontinued operations | 0 | (205) |
Net cash used in financing activities of continuing operations | 3,151 | (205) |
Net cash provided by financing activities of discontinued operations | 0 | 205 |
Net cash provided by financing activities | 3,151 | 0 |
Net increase (decrease) in cash and cash equivalents | (2,065) | 1,627 |
Cash and cash equivalents, beginning of period | 4,805 | 3,178 |
Cash and cash equivalents, end of period | 2,740 | 4,805 |
Supplemental disclosure of cash flow information: | ||
Cash paid for reorganization items | 4,501 | 902 |
Cash paid for interest | 6,557 | 0 |
Cash income taxes paid, net | 0 | (17) |
Assets acquired and liabilities assumed in connection with purchase of business: | ||
Cash and cash equivalents | 246 | 0 |
Accounts receivable | 7,465 | 0 |
Other current assets | 59 | 0 |
Other assets | 581 | 0 |
Intangible assets | 8,669 | 0 |
Goodwill recorded in connection with the HCS Acquisition | 12,705 | 0 |
Accrued compensation and benefits | (4,751) | 0 |
Long-term debt, including current portion of $426 | (683) | 0 |
Other current liabilities | (708) | 0 |
Purchase price | $ 23,583 | $ 0 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands | Dec. 31, 2017USD ($) |
Statement of Cash Flows [Abstract] | |
Current portion of long term debt | $ 426 |
Basis of Presentation, Business
Basis of Presentation, Business Plan and Liquidity | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Business Plan and Liquidity | Basis of Presentation, Business Plan and Liquidity Description of Operations – Novation Companies, Inc. and its subsidiaries (the “Company,” “Novation,” “we,” or “us”), through Healthcare Staffing, Inc. ("HCS"), our wholly-owned subsidiary acquired on July 27, 2017, provides outsourced health care staffing and related services in the State of Georgia. We also own a portfolio of mortgage securities which generate earnings to support on-going financial obligations. Our common stock, par value $0.01 per share, is traded on the OTC Pink marketplace of the OTC Markets Group, Inc. under the symbol “NOVC”. Liquidity and Going Concern – During 2017, the Company incurred a net loss of $10.9 million and generated negative operating cashflow of $ 8.7 million . As of December 31, 2017 the Company has an overall shareholders deficit of $ 57.9 million . As of December 31, 2017 the Company had an aggregate of $2.7 million in cash and cash equivalents and total liabilities of $97.7 million . Of the $2.7 million in cash, $1.1 million is held by the Company's subsidiary NovaStar Mortgage LLC ("NMLLC"), which has filed a Chapter 11 plan of reorganization that remains subject to court approval. This cash is available to pay general creditors and expenses of NMLLC. The Company also has a significant on-going obligation to pay interest under its senior note agreement. In addition, beginning in 2018 a significant customer significantly reduced the level of staff outsourced to HCS. At the time of the Company's filing of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, management concluded that substantial doubt existed about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements were issued. Management’s assessment was based on the expected negative impact on cash flow related to the loss of a significant customer of HCS. In addition, management was unsure of its ability to generate cash flow through other means, such as selling the Company's marketable securities at acceptable prices and uncertainty as to whether the Company could efficiently transfer the securities and receive cash proceeds in order to meet obligations as they come due. Subsequent to that filing and subsequent to year end, the Company engaged a major investment firm to evaluate the marketplace for its mortgage securities. Management learned during that process that a market exists for the Company’s mortgage securities and that those securities may be sold at prices acceptable to the Company. The Company executed trades to sell a portion of its overcollateralization mortgage securities. These sales are expected to generate $2.9 million in cash proceeds for the Company. Management believes that other mortgage securities may be sold on similar terms in the event additional cash proceeds are needed. In addition, through the date of this filing, HCS has demonstrated that it can provide positive cash flow sufficient to support HCS operations. Management continues to work toward expanding HCS’s customer base by increasing revenue from existing customers and targeting new customers that have not previously been served by HCS. In addition, management is exploring cost cutting initiatives that will reduce overall corporate overhead and operating costs. While our historical operating results and poor cashflow suggest substantial doubt exists related to the Company’s ability to continue as a going concern, management has concluded that the factors discussed above have alleviated the substantial doubt about the Company's ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We cannot provide assurance that revenue generated from our businesses will be sufficient to sustain our operations in the long term. Additionally, we cannot be certain that we will be successful at raising capital, whether from divesting of mortgage securities or other assets, or from equity or debt financing, on commercially reasonable terms, if at all. Such failures would have a material adverse effect on our business, including the possible cessation of operations. Financial Statement Presentation. The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the period. The Company uses estimates and judgments in establishing the fair value of its mortgage securities, assessing the recoverability of goodwill intangible assets and accounting for income taxes, including the determination of the timing of the establishment or release of the valuation allowance related to the deferred tax asset balances and reserves for uncertain tax positions. While the consolidated financial statements and footnotes reflect the best estimates and judgments of management at the time, actual results could differ significantly from those estimates. |
Reorganization
Reorganization | 12 Months Ended |
Dec. 31, 2017 | |
Reorganizations [Abstract] | |
Reorganization | Reorganization On July 20, 2016, (the "Bankruptcy Petition Date"), Novation and three of its subsidiaries, NMLLC, NovaStar Mortgage Funding Corporation and 2114 Central LLC (collectively, the “Debtors”), filed voluntary petitions (the "Bankruptcy Petitions") for reorganization under Chapter 11 Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Maryland (the "Bankruptcy Court"). The Company and one of its subsidiaries subsequently filed with the Bankruptcy Court, and amended, a plan of reorganization for the resolution of the outstanding claims against and interests pursuant to Section 1121(a) of the Bankruptcy Code (as amended and supplemented, the “Plan”) and a related disclosure statement. The Bankruptcy Court entered an order on June 12, 2017 confirming the Plan (the “Confirmation Order”) solely with respect to the Company, which provided that the effective date of the Plan would occur when all conditions precedent to effectiveness, as set forth in the Plan, had been satisfied or waived. Two of the conditions to the effectiveness of the Plan were (i) the closing of the Company’s acquisition (the “HCS Acquisition”) of all of the capital stock of HCS as discussed in Note 4 and (ii) the restructuring (the “Note Refinancing”) of the Company’s outstanding Series 1 Notes, Series 2 Notes and Series 3 Notes (collectively, the “2011 Notes”), held by Taberna Preferred Funding I, Ltd. (“Taberna I”), Taberna Preferred Funding II, Ltd. (“Taberna II”) and Kodiak CDO I, Ltd. (“Kodiak” and, together with Taberna I and Taberna II, the “Noteholders”), issued pursuant to three Indentures, each dated as of March 22, 2011 (the “Indentures”), between the Company and The Bank of New York Mellon Trust Company, National Association. The HCS Acquisition and the Note Refinancing were completed on July 27, 2017, and are discussed in Note 4 and Note 8 , respectively. On July 27, 2017, upon the completion of the HCS Acquisition and the Note Refinancing, and the satisfaction or waiver of all other conditions precedent to effectiveness, the effective date of the Plan occurred and the Company filed a Notice of Occurrence of Effective Date of the Plan with the Bankruptcy Court. Under the Plan, holders of existing equity interests in the Company (i.e., the common stock) retained their interests. On September 25, 2017, the bankruptcy case of 2114 Central, LLC was dismissed by order of the Bankruptcy Court. Thereafter, on December 22, 2017, NMLLC filed with the Bankruptcy Court a Chapter 11 plan of reorganization, and on December 26, 2017 filed a related disclosure statement. The Bankruptcy Court entered an order on February 16, 2018 approving the disclosure statement, as revised. The Bankruptcy Court will conduct a hearing on April 11, 2018 to consider confirmation of NMLLC’s plan of reorganization. We incurred significant costs associated with our reorganization and the Chapter 11 proceedings. These costs, which are being expensed as incurred, include (in thousands): Year Ended December 31, 2017 2016 Adjustments to deferred debt issuance costs and senior debt premium $ — $ 2,399 Professional fees (3,460 ) (1,252 ) Adjustments to other liabilities for claims made or rejected contracts (87 ) (449 ) Other (34 ) (31 ) Reorganization items, net $ (3,581 ) $ 667 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Reporting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting and Reporting Policies Recently Adopted Accounting Principles. In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment to eliminate a step in the quantitative goodwill impairment test. The new single quantitative step test requires companies to compare the fair value of a reporting unit with its carrying amount and record an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit. The Company will continue to have the option of first performing a qualitative assessment to determine whether it is necessary to complete the quantitative goodwill impairment test. The Company early adopted this guidance in the fourth quarter of 2017 by applying the single quantitative step test to our interim goodwill impairment analysis. See Note 7. Cash and Cash Equivalents. Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. The Company maintains cash balances at four major financial institutions in the United States. Accounts are secured by the Federal Deposit Insurance Corporation up to $250,000. The uninsured balances of the Company’s unrestricted cash and cash equivalents accounts aggregated $2.0 million as of December 31, 2017 . Accounts and Unbilled Receivables. Accounts receivable are uncollateralized customer obligations due under normal trade terms. Customer account balances that are not paid within contract terms are considered delinquent. Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company maintains an allowance for potential losses primarily based upon management's analysis of delinquent accounts, routine assessment of its customers' financial condition, and any other known factors impacting collectability, including disputed amounts. When management has exhausted all collection efforts, amounts deemed uncollectible are written off. Recoveries of previously written off accounts receivable are recognized in the period in which they are received. The ultimate amount of accounts receivable that becomes uncollectible could differ from management's estimate. Marketable Securities – Available-for-Sale. Marketable securities are stated at fair value in accordance with the relevant accounting guidance. The Company determines the fair value of its marketable securities based on pricing from our third party service provider and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's mortgage securities – available-for-sale, the Company estimates fair value using significant unobservable inputs (Level 3 inputs). The methods and processes used to estimate the fair value of the Company's mortgage securities are discussed further below. Mortgage securities – available-for-sale represent beneficial interests the Company retains in securitization transactions which consist of residual interests (the “residual securities”) in certain components of the cash flows of the underlying mortgage loans to the securitization trusts. As payments are received on the residual securities, the payments are applied to the cost basis of the related mortgage securities. Each period, the accretable yield for each mortgage security is evaluated and, to the extent there has been a change in the estimated cash flows, it is adjusted and applied prospectively. The accretable yield is recorded as interest income with a corresponding increase to the carrying basis of the mortgage security. The Company estimates the fair value of its residual securities retained based on the present value of future expected cash flows to be received, except for those securities for which a portion was sold subsequent to year end as discussed in Note 10. Management’s best estimate of key assumptions, including credit losses, prepayment speeds, market discount rates and forward yield curves commensurate with the risks involved, are used in estimating future cash flows. All of the Company's available-for-sale securities are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent the cost basis of these securities exceeds the estimated fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The Company uses the specific identification method in computing realized gains or losses. Goodwill and Indefinite-Lived Intangible Assets. Goodwill and trademarks are assessed annually to determine whether their carrying value exceeds their fair value. In addition, they are tested on an interim basis if an event occurs or circumstances change between annual tests that would more likely than not reduce their fair value below carrying value. If we determine the fair value of goodwill or trademarks is less than their carrying value, an impairment loss is recognized. Impairment losses, if any, are reflected in operating income or loss in the period incurred. The Company performs its annual tests of goodwill and trademarks during the second quarter of each fiscal year. Impairment of Long-Lived Intangible Assets with Finite Lives. Long-lived intangible assets held and used by us which have finite lives are assessed for impairment whenever an event or change in circumstances indicates that the carrying value of the asset may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. An impairment loss is measured by comparing the fair value of the asset to its carrying value. If we determine the fair value of an asset is less than the carrying value, an impairment loss is incurred. Impairment losses, if any, are reflected in operating income or loss in the period incurred. Revenue and Cost Recognition - The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, fees for services are fixed or determinable and collectability is reasonably assured. HCS's revenue is generated from time and material contracts where there is a signed agreement in place that specifies the fixed hourly rate and other reimbursable costs to be billed based on direct labor hours incurred. Revenue is recognized on these contracts based on direct labor hours and reimbursable costs incurred. During 2017, 43% of Service Fee Income was generated from two customers and 98% was generated from 16 Community Service Board ("CSB") customers. As of December 31, 2017, 48% of accounts and unbilled receivables were due from three customers and 97% was due from the 16 CSB customers. Income Taxes. The Company had a gross deferred tax asset of $164.7 million and $295.9 million as of December 31, 2017 and 2016 , respectively. In determining the amount of deferred tax assets to recognize in the consolidated financial statements, the Company evaluates the likelihood of realizing such benefits in future periods. The income tax guidance requires the recognition of a valuation allowance if it is more likely than not that all or some portion of the deferred tax asset will not be realized. Income tax guidance indicates the more likely than not threshold is a level of likelihood that is more than 50%. Under the income tax guidance, companies are required to identify and consider all available evidence, both positive and negative, in determining whether it is more likely than not that all or some portion of its deferred tax assets will not be realized. Positive evidence includes, but is not limited to the following: cumulative earnings in recent years, earnings expected in future years, excess appreciated asset value over the tax basis and positive industry trends. Negative evidence includes, but is not limited to the following: cumulative losses in recent years, losses expected in future years, a history of operating losses or tax credit carryforwards expiring, and adverse industry trends. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is required to counter to support a conclusion that a valuation allowance is not needed for all or some of the deferred tax assets. Cumulative losses in recent years are significant negative evidence that is difficult to overcome when determining the need for a valuation allowance. Similarly, cumulative earnings in recent years represent significant positive objective evidence. If the weight of the positive evidence is sufficient to support a conclusion that it is more likely than not that a deferred tax asset will be realized, a valuation allowance should not be recorded. The Company examines and weighs all available evidence (both positive and negative and both historical and forecasted) in the process of determining whether it is more likely than not that a deferred tax asset will be realized. The Company considers the relevance of historical and forecasted evidence when there has been a significant change in circumstances. Additionally, the Company evaluates the realization of its recorded deferred tax assets on an interim and annual basis. The Company does not record a full valuation allowance if the weight of the positive evidence exceeds the negative evidence and is sufficient to support a conclusion that it is more likely than not that its deferred tax asset will be realized. If a valuation allowance is necessary, the Company considers all sources of taxable income in determining the amount of valuation allowance to be recorded. Sources of taxable income identified in the income tax guidance include the following: 1) taxable income in prior carryback year, 2) future reversals of existing taxable temporary differences, 3) future taxable income exclusive of reversing temporary differences and carryforwards, and 4) tax planning strategies. The Company currently evaluates estimates of uncertainty in income taxes based upon a framework established in the income tax accounting guidance. The guidance prescribes a recognition threshold and measurement standard for the recognition and measurement of tax positions taken or expected to be taken in a tax return. In accordance with the guidance, the Company evaluates whether a tax position will more likely than not be sustained upon examination by the appropriate taxing authority. The Company measures the amount to recognize in its consolidated financial statements as the largest amount that is greater than 50% likely of being realized upon ultimate settlement. The recognition and measurement of tax benefits is often judgmental, and determinations regarding the tax benefit can change as additional developments occur relative to the issue. Earnings (Loss) Per Share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is calculated assuming all options, nonvested shares and performance-based awards of the Company's common stock have been exercised, unless the exercise would be antidilutive. See Note 11 to the consolidated financial statements for additional details on earnings per share calculation. New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, which amended Revenue from Contracts with Customers (Topic 606). The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. With respect to public entities, this guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early application is not permitted. The Company has determined the adoption of this guidance will have no material impact on the way revenue is recognized. Additional disclosure will be required in the footnotes to the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in its balance sheet a liability to make lease payments and an asset representing its right to use the underlying asset for the lease term. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact this guidance will have on its consolidated financial statements. |
Acquisition and Divestiture
Acquisition and Divestiture | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Acquisition and Divestiture | Acquisition and Divestiture Acquisition of Healthcare Staffing, Inc. On February 1, 2017, the Company entered into a Stock Purchase Agreement (the “HCS Purchase Agreement”) with Novation Holding, Inc., a wholly-owned subsidiary of the Company (“NHI”), HCS and Butler America, LLC, the owner of HCS (“Butler” and, together with HCS, the “Seller Parties”). Pursuant to the HCS Purchase Agreement, NHI agreed to purchase from Butler all of the outstanding capital stock of HCS for $24.0 million in cash, subject to terms and conditions as provided therein, including but not limited to the Company’s receipt of bankruptcy court approval for the HCS Acquisition in its Chapter 11 case. The purchase price was subject to a potential working capital adjustment, based on HCS having $5.0 million of working capital at closing. On July 27, 2017, in connection with the anticipated closing of the HCS Acquisition, the Company, NHI, HCS and Butler entered into a Closing Agreement, dated as of the same date (the “Closing Agreement”), relating to certain closing matters and the terms of the HCS Purchase Agreement. The Closing Agreement provided for the following: (i) eliminate the $240,000 indemnification escrow under the HCS Purchase Agreement; (ii) provide for NHI’s reimbursement to Butler of $100,000 in costs and expenses incurred by Butler in consideration for the delay in closing the HCS Acquisition; (iii) clarify the treatment of certain of HCS’s outstanding tax obligations; (iv) provide that an adjustment to the purchase price under the HCS Purchase Agreement will be made in connection with the calculation of final closing date net working capital of HCS only if there is a difference between such amount and the pre-closing estimate of greater than three percent; and (v) make certain other changes to the HCS Purchase Agreement. We have made claims against Butler for a working capital adjustment, indemnification and other reimbursements and payments under the terms of the HCS Purchase Agreement and are in discussions with Butler regarding these claims. As of the date of this filing, the claims are unresolved and the Company has not recorded any amounts for these claims in the consolidated financial statements. On July 27, 2017, the Company and NHI completed the HCS Acquisition pursuant to the terms of the HCS Purchase Agreement and the Closing Agreement, as a result of which HCS became a wholly-owned subsidiary of NHI. The net purchase price was allocated as follows (in thousands): Cash $ 246 Accounts receivable 7,465 Other assets 59 Property and equipment 581 Intangible assets: Customer relationships 6,895 Trademark 1,147 Non-compete 627 Goodwill 12,705 Accrued compensation and benefits (4,751 ) Long-term debt, including current portion of $426 (683 ) Other current liabilities (708 ) Net assets acquired $ 23,583 The purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed at their estimated fair values as of the acquisition date. The fair value measurements of the assets acquired and liabilities assumed were based on valuations involving significant unobservable inputs, or Level 3 in the valuation hierarchy. The allocation of the purchase price above to the assets and liabilities are based on our preliminary assessment and is subject to further review pending the completion of an appraisal of certain assets and liabilities acquired. The gross contractual amount of accounts receivable is $7.5 million , which approximates fair value. Goodwill and trademarks are considered indefinite-lived assets and are not subject to future amortization, but will be tested for impairment at least annually. Goodwill is comprised primarily of processes for services and knowhow, assembled workforces and other intangible assets that do not qualify for separate recognition. The amortization period for the intangibles for customer relationships and the non-compete agreement are seven and three years, respectively. The goodwill will be deductible for tax purposes. HCS’s results are included in our consolidated statement of operations beginning July 27, 2017. The following unaudited pro forma financial information presents the combined results of HCS and Novation as if the HCS Acquisition had occurred on January 1, 2016 (in thousands). The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been or what results may be expected in the future. For the Year Ended December 31, 2017 2016 Service fee income $ 63,246 $ 55,161 Income (loss) from continuing operations $ (9,331 ) $ 3,903 Net income (loss) $ (8,450 ) $ 5,869 Basic and diluted earnings per share: Net income (loss) from continuing operations $ (0.10 ) $ 0.04 Net income (loss) $ (0.09 ) $ 0.06 Included in general and administrative expenses, primarily during 2017, are approximately $1.3 million in fees associated with the HCS Acquisition, including $0.9 million in investment advisor fees. Sale of Corvisa LLC . Subject to the terms and conditions of the Membership Interest Purchase Agreement, dated as of December 21, 2015, by and among the Company, Corvisa Services, LLC ("Corvisa") and ShoreTel, Inc. ("Shoretel"), Shoretel agreed to purchase 100% of the membership interests of Corvisa, at the time a wholly-owned subsidiary of the Company. The sale closed on January 6, 2016. During the first quarter of 2017, the Company received $1.0 million from the release of the indemnification escrow which was recorded as a gain and included in discontinued operations during 2017. Results of Discontinued Operations - The results of the Company's discontinued operations are summarized below (in thousands): For the Year Ended December 31, 2017 2016 Recognition of gain upon release of indemnification escrow - Corvisa sale $ 1,020 $ — Gain on sale of Corvisa — 1,966 Expenses related to discontinued operations (125 ) — Income from discontinued operations, net of income taxes $ 895 $ 1,966 The assets and liabilities of discontinued operations are not material. |
Accounts and Unbilled Receivabl
Accounts and Unbilled Receivables | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Accounts and Unbilled Receivables | Accounts and Unbilled Receivables December 31, 2017 (in thousands) Accounts receivable $ 5,418 Unbilled receivables 2,504 $ 7,922 As of December 31, 2017, management has determined no allowance for doubtful accounts is necessary. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Mortgage Securities | Marketable Securities The Company's portfolio of available-for-sale securities includes (dollars in thousands): Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses As of December 31, 2017 Marketable securities, current Mortgage securities $ 400 $ 11,394 $ — $ 11,794 Equity securities 1 — — 1 Total $ 401 $ 11,394 $ — $ 11,795 As of December 31, 2016 Marketable securities, current Mortgage securities $ 450 $ 9,341 $ — $ 9,791 Equity securities 112 47 (7 ) 152 Total $ 562 $ 9,388 $ (7 ) $ 9,943 Marketable securities, non-current Agency mortgage-backed securities $ 26,607 $ — $ (62 ) $ 26,545 See Note 10 for a discussion of the Company's fair value methods and measurements. During 2017, the Company's entire portfolio of agency mortgage-backed securities was sold. Proceeds from the sale were $25.2 million and a gain of $79 thousand recognized, included in other income in the Company's consolidated statements of operations and comprehensive income (loss). Prior to 2016, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. As a result of those activities, the Company holds mortgage securities that continue to be a source of its earnings and cash flow. As of December 31, 2017 and 2016 , these mortgage securities consisted entirely of the Company's investment in the residual securities issued by securitization trusts sponsored by the Company. Residual securities consist of interest-only and overcollateralization bonds. There were no other-than-temporary impairments relating to available-for-sale securities for 2017 and 2016. Maturities of retained mortgage securities owned by the Company depend on repayment characteristics and experience of the underlying financial instruments. See Note 10 to the consolidated financial statements for details on the Company's fair value methodology. The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (in thousands): Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(B) Year to Date Loss on Sale Year to Date Cash Flows December 31, 2017 $ 2,714,823 $ 11,794 $ — $ 11,794 $ — $ 3,193 December 31, 2016 $ 3,185,270 $ 9,791 $ — $ 9,791 $ — $ 5,153 (A) Principal Outstanding is the aggregate principal of the underlying loans held by the securitization trusts. (B) Assets on Balance Sheet and Maximum Exposure to Loss is the estimated fair value of securities issued by the entity and recorded as marketable securities, current in the consolidated balance sheets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived assets Goodwill $ 8,205 $ — $ 8,205 Tradenames 1,147 — 1,147 $ 9,352 $ — $ 9,352 Finite-lived assets Customer relationships 6,895 410 6,485 Non-compete agreement 627 87 540 $ 7,522 $ 497 $ 7,025 Year Ended December 31, 2017 Goodwill activity (in thousands): Balance, December 31, 2016 $ — Goodwill recorded in connection with the HCS Acquisition 12,705 Impairment charge (4,500 ) Balance, December 31, 2017 $ 8,205 During the fourth quarter of 2017, HCS was notified that a customer was significantly reducing the level of staff outsourced to HCS. The last pay period in 2017 was the final service period for these employees. This customer represented more than 20% of the Company's service fee income during 2017. Accordingly, management completed a goodwill impairment assessment as of December 31, 2017, determined that the carrying value of the HCS goodwill exceeded the fair value by $4.5 million and recorded a goodwill impairment charge for the year ended December 31, 2017. Management assessed the other indefinite and definite lived intangible assets and determined no impairment existed as of December 31, 2017. Amortization expense (in thousands) 2017 $ 496 Estimated amortization expense (in thousands) 2018 1,194 2019 1,194 2020 1,107 2021 985 2022 985 Thereafter 1,560 Total estimated amortization expense $ 7,025 |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Revolving Credit Agreement. As of December 31, 2017, HCS had $3.3 million outstanding under a Revolving Credit and Security Agreement (the “FNCC Credit Agreement”) between HCS and Federal National Payables, Inc. (d/b/a Federal National Commercial Credit) (“FNCC”) providing HCS with a line of credit of up to $5,000,000 . Availability under the FNCC Credit Agreement is based on a formula tied to HCS’s eligible accounts receivable. Borrowings, and borrowings under the FNCC Credit Agreement bear interest at the prime rate plus 1.25% . The FNCC Credit Agreement also provides for customary origination and collateral monitoring fees payable to FNCC during its term. The initial term of the FNCC Credit Agreement expires on November 17, 2018, but it will be renewed automatically for consecutive one-year terms thereafter unless the FNCC Credit Agreement is terminated pursuant to its terms. The obligations of HCS under the FNCC Credit Agreement are secured by HCS’s inventory and accounts receivable. The FNCC Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including but not limited to financial covenants. The FNCC Credit Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, FNCC may, among other remedies, accelerate payment of all obligations under the FNCC Credit Agreement. In connection with the FNCC Credit Agreement, the Company executed a guaranty in favor of FNCC guaranteeing all of HCS’s obligations under the FNCC Credit Agreement. Note Refinancing and 2017 Notes. Prior to the third quarter of 2017, the Company had outstanding three series of unsecured 2011 Notes pursuant to three separate “Indentures” with an aggregate principal balance of $85.9 million . On July 27, 2017, the Company entered into a Senior Secured Note Purchase Agreement, dated as of the same date (the “Note Purchase Agreement”), with NHI and HCS as guarantors (together with the Company, collectively, the “Credit Parties”), the Noteholders and Wilmington Savings Fund Society, FSB, as collateral agent for the benefit of the Noteholders, to refinance $85.9 million of principal indebtedness of the Company under the 2011 Notes. Pursuant to the Note Purchase Agreement, the Noteholders exchanged their 2011 Notes for new notes from the Company in the same aggregate principal amount (collectively, the “2017 Notes”) on the terms and conditions set forth therein. Pursuant to the Note Purchase Agreement, in connection with the Note Refinancing, the Company paid all overdue and unpaid accrued interest on the 2011 Notes in the agreed, reduced aggregate amount of $5.8 million , and paid $0.5 million in fees and expenses incurred by the Noteholders. The unpaid principal amounts of the 2017 Notes bear interest at a variable rate equal to LIBOR plus 3.5% per annum, payable quarterly in arrears until maturity on March 30, 2033. The 2017 Notes generally rank senior in right of payment to any existing or future subordinated indebtedness of the Credit Parties. The Company may at any time upon 30 days’ notice to the Noteholders redeem all or part of the 2017 Notes at a redemption price equal to 101% of the principal amount redeemed plus any accrued and unpaid interest thereon. The Note Purchase Agreement contains customary affirmative and negative covenants, including but not limited to certain financial covenants. The Note Purchase Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, the Noteholders may, among other remedies, accelerate the payment of all obligations under the Note Purchase Agreement and the 2017 Notes. The Credit Parties entered into a Pledge and Security Agreement, dated as of the same date, pursuant to which each of the Credit Parties granted a first priority lien generally covering all of its assets, other than accounts receivable and inventory, for the benefit of the Noteholders, to secure the obligations under the Note Purchase Agreement and the 2017 Notes. Property Financing. HCS financed the acquisition of property used in its operations under two separate financing agreements. The total amount financed under the agreements was $1.3 million at an aggregate nominal interest rate of 4.1% . The total amount outstanding under these loans was $0.6 million as of December 31, 2017 of which $0.4 million was current and is included in other current liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies . Prior to 2016, the Company originated, purchased, securitized, sold, invested in and serviced residential nonconforming mortgage loans and mortgage securities. The Company has received indemnification and loan repurchase demands with respect to alleged violations of representations and warranties (“defects”) and with respect to other alleged misrepresentations and contractual commitments made in loan sale and securitization agreements. These demands have been received substantially beginning in 2006 and have continued into recent years. Prior to the Company ceasing the origination of loans in its mortgage lending business, it sold loans to securitization trusts and other third parties and agreed to repurchase loans with material defects and to otherwise indemnify parties to these transactions. Beginning in 1997 and ending in 2007, affiliates of the Company sold loans to securitization trusts and third parties with the potential of such obligations. The aggregate original principal balance of these loans was $43.1 billion at the time of sale or securitization. The remaining principal balance of these loans is not available as these loans are serviced by third parties and may have been refinanced, sold or liquidated. Claims to repurchase loans or to indemnify under securitization documents have not been acknowledged as valid by the Company. In some cases, claims were made against affiliates of the Company that have ceased operations and have no or limited assets. The Company has not repurchased any loans or made any such indemnification payments since 2010. Historically, repurchases of loans or indemnification of losses where a loan defect has been alleged have been insignificant and any future losses for alleged loan defects have not been deemed to be probable or reasonably estimable; therefore, the Company has recorded no reserves related to these claims. The Company does not use internal groupings for purposes of determining the status of these loans. The Company is unable to develop an estimate of the maximum potential amount of future payments related to repurchase demands because the Company does not have access to information relating to loans sold and securitized and the number or amount of claims deemed probable of assertion is not known nor is it reasonably estimated. Further, the validity of claims received remains questionable. Also, considering that the Company completed its last sale or securitization of loans during 2007, the Company believes that it will be difficult for a claimant to successfully validate any additional repurchase demands. Management does not expect that the potential impact of claims will be material to the Company's consolidated financial statements. Pending Litigation . The Company is a party to various legal proceedings. Except as set forth below, these proceedings are of an ordinary and routine nature. Any legal fees associated with these proceedings are expensed as incurred. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than the active proceedings described in detail below, proceedings and actions against the Company should not, individually, or in the aggregate, have a material effect on the Company's financial condition, operations and liquidity. Furthermore, due to the uncertainty of any potential loss as a result of pending litigation and due to the Company's belief that an adverse ruling is not probable, the Company has not accrued a loss contingency related to the following matters in its consolidated financial statements. However, a material outcome in one or more of the active proceedings described below could have a material impact on the results of operations in a particular quarter or fiscal year. See Note 2 to the consolidated financial statements for a description of the impact of the Company's Chapter 11 case on these proceedings. On May 21, 2008, a purported class action case was filed in the Supreme Court of the State of New York, New York County, by the New Jersey Carpenters' Health Fund, on behalf of itself and all others similarly situated. Defendants in the case included NovaStar Mortgage Funding Corporation (“NMFC”) and NovaStar Mortgage, Inc. ("NMI"), wholly-owned subsidiaries of the Company, and NMFC's individual directors, several securitization trusts sponsored by the Company (“affiliated defendants”) and several unaffiliated investment banks and credit rating agencies. The case was removed to the United States District Court for the Southern District of New York. On June 16, 2009, the plaintiff filed an amended complaint. The plaintiff seeks monetary damages, alleging that the defendants violated sections 11, 12 and 15 of the Securities Act of 1933, as amended, by making allegedly false statements regarding mortgage loans that served as collateral for securities purchased by the plaintiff and the purported class members. On August 31, 2009, the Company filed a motion to dismiss the plaintiff's claims, which the court granted on March 31, 2011, with leave to amend. The plaintiff filed a second amended complaint on May 16, 2011, and the Company again filed a motion to dismiss. On March 29, 2012, the court dismissed the plaintiff's second amended complaint with prejudice and without leave to replead. The plaintiff filed an appeal. On March 1, 2013, the appellate court reversed the judgment of the lower court, which had dismissed the case. Also, the appellate court vacated the judgment of the lower court which had held that the plaintiff lacked standing, even as a class representative, to sue on behalf of investors in securities in which plaintiff had not invested, and the appellate court remanded the case back to the lower court for further proceedings. On April 23, 2013 the plaintiff filed its memorandum with the lower court seeking a reconsideration of the earlier dismissal of plaintiff's claims as to five offerings in which plaintiff was not invested, and on February 5, 2015 the lower court granted plaintiff's motion for reconsideration and vacated its earlier dismissal. On March 8, 2017, the affiliated defendants and all other parties executed an agreement to settle the action, with the contribution of the affiliated defendants to the settlement fund being paid by their insurance carriers. The court certified a settlement class and granted preliminary approval to the settlement on May 10, 2017. One member of the settlement class objected to the settlement and sought a stay of the final settlement approval hearing on the ground that it did not receive notice of the settlement and had no opportunity to timely opt out of the class. After the court rejected the motion for a stay, the objector filed an appeal and requested a stay of the district court proceedings pending disposition of the appeal. The court of appeals denied the temporary stay of the district court proceedings pending a decision on the objector’s request for a stay. Assuming the settlement is approved and completed, which is expected, the Company will incur no loss. The Company believes that the affiliated defendants have meritorious defenses to the case and, if the settlement is not approved, expects them to defend the case vigorously. On June 20, 2011, the National Credit Union Administration Board, as liquidating agent of U.S. Central Federal Credit Union, filed an action against NMFC and numerous other defendants in the United States District Court for the District of Kansas, claiming that the defendants issued or underwrote residential mortgage-backed securities pursuant to allegedly false or misleading registration statements, prospectuses, and/or prospectus supplements. On August 24, 2012, the plaintiff filed an amended complaint making essentially the same claims against NMFC. NMFC filed a motion to dismiss the amended complaint which was denied on September 12, 2013. The defendants had claimed that the case should be dismissed based upon a statute of limitations and sought an appeal of the court's denial of this defense. An interlocutory appeal of this issue was allowed, and on August 27, 2013, the Tenth Circuit affirmed the lower court’s denial of defendants’ motion to dismiss the plaintiff’s claims as being time barred; the appellate court held that the Extender Statute, 12 U.S.C. §1787(b)(14) applied to plaintiff’s claims. On June 16, 2014, the United States Supreme Court granted a petition of NMFC and its co-defendants for certiorari, vacated the ruling of the Tenth Circuit, and remanded the case back to that court for further consideration in light of the Supreme Court’s decision in CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014). On August 19, 2014, the Tenth Circuit reaffirmed its prior decision, and on October 2, 2014 the defendants filed a petition for writ of certiorari with the Supreme Court, which was denied. On March 22, 2016, NMFC filed motions for summary judgment, and plaintiff filed a motion for partial summary judgment. Those motions remain pending. Given that plaintiff did not file a timely proof of claim in NMFC’s bankruptcy case, the Company believes it is likely that the case will be dismissed. The Company and NMFC have meritorious defenses to the case and expects it to defend the case vigorously in the event it proceeds. On February 28, 2013 the Federal Housing Finance Agency, as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac) and purportedly on behalf of the Trustee of the NovaStar Mortgage Funding Trust, Series 2007-1 (the “Trust”), a securitization trust in which the Company retains a residual interest, filed a summons with notice in the Supreme Court of the State of New York, County of New York against the Company and NMI. The notice provides that this is a breach of contract action with respect to certain, unspecified mortgage loans and defendants' failure to repurchase such loans under the applicable agreements. Plaintiff alleges that defendants, from the closing date of the transaction that created the Trust, were aware of the breach of the representations and warranties made and failed to give notice of and cure such breaches, and due to the failure of defendants to cure any breach, notice to defendants would have been futile. The summons with notice was not served until June 28, 2013. By letter dated June 24, 2013, the Trustee of the Trust forwarded a notice from Freddie Mac alleging breaches of representations and warranties with respect to 43 loans, as more fully set forth in included documentation. The 43 loans had an aggregate, original principal balance of about $6.5 million . On August 19, 2013, Deutsche Bank National Trust Company, as Trustee, filed a complaint identifying alleged breaches of representations and warranties with respect to seven loans that were included in the earlier list of 43 loans. Plaintiff also generally alleged a trust-wide breach of representations and warranties by defendants with respect to loans sold and transferred to the trust. Plaintiff seeks specific performance of repurchase obligations; compensatory, consequential, recessionary and equitable damages for breach of contract; specific performance and damages for anticipatory breach of contract; indemnification (indemnification against NMI only) and damages for breach of the implied covenant of good faith and fair dealing. On October 9, 2013, the Company and NMI filed a motion to dismiss plaintiff’s complaint. This motion to dismiss was withdrawn after plaintiff filed an amended complaint on January 28, 2014, and on March 4, 2014 the Company and NMI filed a motion to dismiss the amended complaint. By a Decision/Order dated November 30, 2017, the court granted in part and denied in part the motion to dismiss the amended complaint. The court dismissed all claims except for plaintiff’s claim for damages for breach of contract, to the extent that claim is based on the Company’s and NMI’s alleged failure to notify plaintiff of allegedly defective loans, and plaintiff’s claim for indemnification. The court denied the motion to dismiss these claims without prejudice to the Company’s and NMI’s right to file a new motion to dismiss in conformity with procedures to be established in coordinated proceedings before the court addressing similar claims against numerous defendants. Briefing of the indemnification issues is now underway. Given the stage of the litigation, the Company cannot provide an estimate of the range of any loss. The Company believes it has meritorious defenses to the case and expects to defend the case vigorously. |
Fair Value Accounting
Fair Value Accounting | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Accounting | Fair Value Accounting Fair Value Measurements The Company's valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy: • Level 1 – Valuations based on quoted prices in active markets for identical assets and liabilities. • Level 2 – Valuations based on observable inputs in active markets for similar assets and liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates for substantially the full term of the asset or liability. • Level 3 – Valuations based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies based on internal cash flow forecasts. The following tables present for each of the fair value hierarchy levels, the Company's assets and liabilities which are measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017 Marketable securities, current $ 11,795 $ 1 $ — — $ 11,794 December 31, 2016 Marketable securities, current $ 9,943 $ 152 $ — $ 9,791 Marketable securities, non-current 26,545 26,545 — — $ 36,488 $ 26,697 $ — $ 9,791 Valuation Methods and Processes When available, the Company determines the fair value of its marketable securities using market prices from industry-standard independent data providers. Market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's retained mortgage securities, the Company estimates fair value using present value techniques and generally does not have the option to choose other valuation methods for these securities. The methods and processes used to estimate the fair value of the Company's retained mortgage securities are discussed further below. There have been no significant changes to the Company's valuation techniques. Accordingly, there have been no material changes to the consolidated financial statements resulting from changes to our valuation techniques. The Company's marketable securities are classified as available-for-sale and are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent that the cost basis of the Company's marketable securities exceeds the fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The specific identification method is used in computing realized gains or losses. Mortgage securities - available-for-sale . The Company's mortgage securities include traditional agency mortgage-backed securities, with valuations based on quoted prices in active markets for identical assets (Level 1). Additionally, mortgage securities include investments that were retained during the Company's lending and securitization process, conducted prior to 2016. For the retained mortgage securities, the Company maintains the right to receive excess interest and other cash flow generated through the mortgage loan securitization vehicle. The Company receives the difference between the interest on the mortgage loans and the interest paid to the securitization bondholders. The Company also owns overcollateralization ("OC") classes of various securitization trusts. These OC bonds represent the difference in the principal of the underlying mortgage loans compared to the bonds sold to third parties. This extra collateral serves as a cushion for losses that have and may occur in the underlying mortgage pool. The OC bonds may receive cash if and when it is determined that actual losses are less than expectations. As of December 31, 2017 , the aggregate overcollateralization was $27.0 million . The timing and amount of cash to be generated by the OC bonds is contingent upon the performance of the underlying mortgage loan collateral. The independent loan servicer controls and manages the individual mortgage loans and therefore the Company has no control over the loan performance. Collectively, these mortgage securities are identified by the Company as "retained mortgage securities," in order to distinguish them from the Company's traditional agency mortgage-backed securities. Retained mortgage-backed securities are valued at each reporting date using significant unobservable inputs (Level 3) by discounting the expected cash flows. An independent valuation specialist has been engaged to assist management in estimating cash flows and values for the Company's mortgage securities. It is the Company's responsibility for the overall resulting valuation. As discussed in Note 1 , the Company sold a portion of its retained mortgage securities subsequent to December 31, 2017. The Company evaluated the market conditions and other factors existing at the time of the sale as compared to December 31, 2017 and determined that conditions were substantially the same as of the sale date and December 31, 2017. Therefore, as of December 31, 2017 the Company valued these securities at the price at which it was sold. However, the Company determined that it could not extrapolate that price to the other retained mortgage securities because the underlying assets and their performance are not substantially similar to that of the security that was sold. Therefore, the other mortgage securities have been valued as discussed below. The critical assumptions used in estimating the value of the mortgage securities include market interest rates, rate and severity of default, prepayment speeds and how long the security will continue to provide cash flow. To determine the assumptions, the Company and its independent valuation specialist rely primarily on historical mortgage loan performance and appropriate general economic indicators. The Company continuously reviews the assumptions used and monitors the efforts of the independent valuation specialist. The significant unobservable inputs used in preparing the fair value estimates are: As of December 31, 2017 2016 Weighted average: Loss severity 62.1 % 49.6 % Default rate 2 % 2.1 % Prepayment speed 13.5 % 9.8 % Servicer's optional redemption date None None The following table provides a reconciliation of the beginning and ending balances for the Company's retained mortgage securities – available-for-sale which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): For the Year Ended 2017 2016 Balance, beginning of period $ 9,791 $ 2,011 Increases (decreases) to mortgage securities – available-for-sale: Proceeds from paydowns of securities, net (A) (51 ) (75 ) Mark-to-market value adjustment 2,054 7,855 Net increases (decreases) to mortgage securities – available-for-sale 2,003 7,780 Balance, end of period $ 11,794 $ 9,791 (A) Cash received on mortgage securities with no cost basis was $2.8 million and $4.7 million during 2017 and 2016 , respectively. The following disclosure of the estimated fair value of financial instruments presents amounts that have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimation methodologies could have a material impact on the estimated fair value amounts. The fair value of short-term financial assets and liabilities, such as service fees receivable, accounts payable and accrued expenses are not included in the following table as their fair value approximates their carrying value. The estimated fair values of the Company's financial instruments are as follows as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Marketable securities $ 11,795 $ 11,795 $ 36,488 $ 36,488 Financial liabilities: Senior notes $ 85,938 $ 23,018 $ 85,938 $ 23,349 For the items in the table above not measured at fair value in the consolidated balance sheets but for which the fair value is disclosed, the fair value has been estimated using Level 3 methodologies, based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow calculations based on internal cash flow forecasts. No assets or liabilities have been transferred between levels during any period presented. Senior Notes. The fair value is estimated by discounting future projected cash flows using a discount rate commensurate with the risks involved. The interest rate on the senior notes is three-month LIBOR plus 3.5% per annum until maturity in March 2033. The three-month LIBOR used in the analysis was projected using a forward interest rate curve. Financial assets reported at fair value on a nonrecurring basis include the following (in thousands): December 31, 2017 Fair Value (Level 3) Gains and (Losses) Goodwill $ 8,205 $ (4,500 ) Activity during 2017 for Goodwill, the Company's only Level 3 asset, measured on a nonrecurring basis is included in the following table (in thousands): Goodwill Balance, December 31, 2016 $ — Goodwill recorded in connection with the HCS Acquisition 12,705 Impairment charge (4,500 ) Balance, December 31, 2017 $ 8,205 See note 7 for additional information regarding the Company's Goodwill and Intangible Assets. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and nonvested shares. The computations of basic and diluted earnings per share for 2017 and 2016 (dollars in thousands, except share and per share amounts) are as follows: For the Year Ended 2017 2016 Numerator: Net income (loss) from continuing operations $ (11,760 ) $ 3,247 Income (loss) from discontinued operations 895 1,966 Net income (loss) $ (10,865 ) $ 5,213 Denominator: Weighted average common shares outstanding – basic 92,800,392 91,905,941 Weighted average common shares outstanding – diluted: Weighted average common shares outstanding – basic 92,800,392 91,905,941 Stock options — — Nonvested shares — — Weighted average common shares outstanding – diluted 92,800,392 91,905,941 Basic earnings per share: Net income (loss) from continuing operations $ (0.13 ) $ 0.04 Income (loss) from discontinued operations 0.01 0.02 Net income (loss) $ (0.12 ) $ 0.06 Diluted earnings per share: Net income (loss) from continuing operations $ (0.13 ) $ 0.04 Income (loss) from discontinued operations 0.01 0.02 Net income (loss) $ (0.12 ) $ 0.06 The following weighted-average stock options to purchase shares of common stock were outstanding, but were not included in the computation of diluted earnings (loss) per share because the number of shares assumed to be repurchased, as calculated was greater than the number of shares to be obtained upon exercise, therefore, the effect would be antidilutive. There were no options granted during 2016 and 2017. For the Year Ended 2017 2016 Number of stock options 1,411 4,719 Weighted average exercise price of stock options $ 0.89 $ 0.68 During 2016, the Company granted 0.1 million nonvested shares to a director and these shares vested in 2016. During 2017, the Company granted 4.3 million shares to directors, officers and other members of management. Substantially all of these shares will vest in 2018, assuming the grantees are employed at the vest date. As of December 31, 2017 and 2016, respectively, the Company had approximately 4.3 million and 0.1 million nonvested shares outstanding. The weighted average impact of 1.1 million and 0.9 million nonvested shares were not included in the calculation of earnings per share for 2017 and 2016, respectively, because they were anti-dilutive. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income tax expense (benefit) from continuing operations are (in thousands): For the Year Ended December 31, 2017 2016 Current: Federal $ (1 ) $ (14 ) State and local 15 (7 ) Total current $ 14 $ (21 ) Below is a reconciliation of the expected federal income tax expense (benefit) using the federal statutory tax rate of 35% to the Company’s actual income tax benefit and resulting effective tax rate (in thousands). For the Year Ended December 31, 2017 2016 Income tax (benefit) at statutory rate $ (3,802 ) $ 1,129 State income taxes, net of federal tax benefit (54 ) 211 Valuation allowance (131,234 ) 14,595 Change in federal tax rate 33,640 — Change in state tax rate 100,899 (16,475 ) Bankruptcy reorganization 746 437 Uncertain tax positions (4 ) (35 ) Other (177 ) 117 Total income tax expense (benefit) $ 14 $ (21 ) In 2017, the federal statutory rate for periods beginning after December 31, 2017 was changed to 21%. This change in rate caused a significant change to the Company's deferred tax assets as they pertain to its net operating losses ("NOLs"). The 2017 change in deferred tax assets related to the federal NOLs was $100.9 million in the current year. This was offset by a decrease in the valuation allowance by $100.9 million . Prior to 2016, the Company concluded that it was no longer more likely than not that it would realize a portion of its deferred tax assets. Therefore, the Company maintained a full valuation allowance against its net deferred tax assets as of both December 31, 2017 and 2016. The Company's determination of the realizable deferred tax assets requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of December 31, 2017 and 2016, the Company maintained a valuation allowance of $162.7 million and $292.2 million , respectively, for its deferred tax assets. In 2017, due to the purchase of HCS, the Company reassessed their state apportionment rates. Based on available information, the Company changed the apportionment factors, specifically the apportionment factor used for allocation of income to the State of Missouri. In this reassessment, the Company determined that as of December 31, 2017 it was no longer appropriate to apportion 100% of the Federal NOL to the state of Missouri, but rather the company would apportion approximately 13% . As a result of this reassessment, the Company recalculated the deferred tax assets which resulted in the reduction of the deferred tax asset related to state NOLs totaling approximately $33.6 million in the current year. This was offset by a decrease in the valuation allowance of approximately $33.6 million . Significant components of the Company’s deferred tax assets and liabilities are (in thousands): December 31, 2017 2016 Deferred tax assets: Basis difference – investments $ 8,015 $ 17,261 Federal NOL carryforwards 145,608 239,942 State NOL carryforwards 8,301 35,896 Other 2,756 2,816 Gross deferred tax asset 164,680 295,915 Valuation allowance (162,708 ) (292,214 ) Deferred tax asset 1,972 3,701 Deferred tax liabilities: Other 1,972 3,701 Deferred tax liability 1,972 3,701 Net deferred tax asset $ — $ — As of December 31, 2017 , the Company had a federal NOL of approximately $692.0 million , including $307.3 million in losses on mortgage securities that have not been recognized for income tax purposes. The federal NOL may be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code (the "Code"). If not used, these NOLs will expire in years 2025 through 2037 . The Company has state NOL carryforwards arising from both combined and separate filings from as early as 2004. The state NOL carryforwards may expire as early as 2017 and as late as 2037 . The activity in the accrued liability for unrecognized tax benefits, included in other current liabilities, was (in thousands): For the Year Ended December 31, 2017 2016 Beginning balance $ 331 $ 368 Gross increases – tax positions in current period 22 2 Lapse of statute of limitations (25 ) (39 ) Ending balance $ 328 $ 331 As of December 31, 2017 and 2016 , the total gross amount of unrecognized tax benefits was $0.3 million , which also represents the total amount of unrecognized tax benefits that would impact the effective tax rate. The Company anticipates a reduction of unrecognized tax benefits of less than $0.1 million due the lapse of statute of limitations in the next twelve months. The Company does not expect any other significant change in the liability for unrecognized tax benefits in the next twelve months. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The benefit for interest and penalties recorded in income tax expense was not significant for 2017 and 2016 . There were accrued interest and penalties of less than $0.1 million as of both December 31, 2017 and 2016 . The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and local jurisdictions. Tax years 2013 to 2017 remain open to examination for both U.S. federal income tax and major state tax jurisdictions. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the period. |
Cash and Cash Equivalents | Cash and Cash Equivalents. Cash equivalents consist of liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. |
Marketable Securities | Marketable Securities – Available-for-Sale. Marketable securities are stated at fair value in accordance with the relevant accounting guidance. The Company determines the fair value of its marketable securities based on pricing from our third party service provider and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. To the extent observable inputs are not available, as is the case with the Company's mortgage securities – available-for-sale, the Company estimates fair value using significant unobservable inputs (Level 3 inputs). The methods and processes used to estimate the fair value of the Company's mortgage securities are discussed further below. Mortgage securities – available-for-sale represent beneficial interests the Company retains in securitization transactions which consist of residual interests (the “residual securities”) in certain components of the cash flows of the underlying mortgage loans to the securitization trusts. As payments are received on the residual securities, the payments are applied to the cost basis of the related mortgage securities. Each period, the accretable yield for each mortgage security is evaluated and, to the extent there has been a change in the estimated cash flows, it is adjusted and applied prospectively. The accretable yield is recorded as interest income with a corresponding increase to the carrying basis of the mortgage security. The Company estimates the fair value of its residual securities retained based on the present value of future expected cash flows to be received, except for those securities for which a portion was sold subsequent to year end as discussed in Note 10. Management’s best estimate of key assumptions, including credit losses, prepayment speeds, market discount rates and forward yield curves commensurate with the risks involved, are used in estimating future cash flows. All of the Company's available-for-sale securities are reported at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive income. To the extent the cost basis of these securities exceeds the estimated fair value and the unrealized loss is considered to be other than temporary, an impairment charge is recognized and the amount recorded in accumulated other comprehensive income or loss is reclassified to earnings as a realized loss. The Company uses the specific identification method in computing realized gains or losses. |
Goodwill and Indefinite-Lived Intangible Assets | Goodwill and Indefinite-Lived Intangible Assets. Goodwill and trademarks are assessed annually to determine whether their carrying value exceeds their fair value. In addition, they are tested on an interim basis if an event occurs or circumstances change between annual tests that would more likely than not reduce their fair value below carrying value. If we determine the fair value of goodwill or trademarks is less than their carrying value, an impairment loss is recognized. Impairment losses, if any, are reflected in operating income or loss in the period incurred. The Company performs its annual tests of goodwill and trademarks during the second quarter of each fiscal year. |
Impairment of Long-Lived Intangible Assets with Finite Lives | Impairment of Long-Lived Intangible Assets with Finite Lives. Long-lived intangible assets held and used by us which have finite lives are assessed for impairment whenever an event or change in circumstances indicates that the carrying value of the asset may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. An impairment loss is measured by comparing the fair value of the asset to its carrying value. If we determine the fair value of an asset is less than the carrying value, an impairment loss is incurred. Impairment losses, if any, are reflected in operating income or loss in the period incurred. |
Revenue and Cost Recognition | Revenue and Cost Recognition - The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, fees for services are fixed or determinable and collectability is reasonably assured. HCS's revenue is generated from time and material contracts where there is a signed agreement in place that specifies the fixed hourly rate and other reimbursable costs to be billed based on direct labor hours incurred. Revenue is recognized on these contracts based on direct labor hours and reimbursable costs incurred. |
Income Taxes | Income Taxes. The Company had a gross deferred tax asset of $164.7 million and $295.9 million as of December 31, 2017 and 2016 , respectively. In determining the amount of deferred tax assets to recognize in the consolidated financial statements, the Company evaluates the likelihood of realizing such benefits in future periods. The income tax guidance requires the recognition of a valuation allowance if it is more likely than not that all or some portion of the deferred tax asset will not be realized. Income tax guidance indicates the more likely than not threshold is a level of likelihood that is more than 50%. Under the income tax guidance, companies are required to identify and consider all available evidence, both positive and negative, in determining whether it is more likely than not that all or some portion of its deferred tax assets will not be realized. Positive evidence includes, but is not limited to the following: cumulative earnings in recent years, earnings expected in future years, excess appreciated asset value over the tax basis and positive industry trends. Negative evidence includes, but is not limited to the following: cumulative losses in recent years, losses expected in future years, a history of operating losses or tax credit carryforwards expiring, and adverse industry trends. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is required to counter to support a conclusion that a valuation allowance is not needed for all or some of the deferred tax assets. Cumulative losses in recent years are significant negative evidence that is difficult to overcome when determining the need for a valuation allowance. Similarly, cumulative earnings in recent years represent significant positive objective evidence. If the weight of the positive evidence is sufficient to support a conclusion that it is more likely than not that a deferred tax asset will be realized, a valuation allowance should not be recorded. The Company examines and weighs all available evidence (both positive and negative and both historical and forecasted) in the process of determining whether it is more likely than not that a deferred tax asset will be realized. The Company considers the relevance of historical and forecasted evidence when there has been a significant change in circumstances. Additionally, the Company evaluates the realization of its recorded deferred tax assets on an interim and annual basis. The Company does not record a full valuation allowance if the weight of the positive evidence exceeds the negative evidence and is sufficient to support a conclusion that it is more likely than not that its deferred tax asset will be realized. If a valuation allowance is necessary, the Company considers all sources of taxable income in determining the amount of valuation allowance to be recorded. Sources of taxable income identified in the income tax guidance include the following: 1) taxable income in prior carryback year, 2) future reversals of existing taxable temporary differences, 3) future taxable income exclusive of reversing temporary differences and carryforwards, and 4) tax planning strategies. The Company currently evaluates estimates of uncertainty in income taxes based upon a framework established in the income tax accounting guidance. The guidance prescribes a recognition threshold and measurement standard for the recognition and measurement of tax positions taken or expected to be taken in a tax return. In accordance with the guidance, the Company evaluates whether a tax position will more likely than not be sustained upon examination by the appropriate taxing authority. The Company measures the amount to recognize in its consolidated financial statements as the largest amount that is greater than 50% likely of being realized upon ultimate settlement. The recognition and measurement of tax benefits is often judgmental, and determinations regarding the tax benefit can change as additional developments occur relative to the issue. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is calculated assuming all options, nonvested shares and performance-based awards of the Company's common stock have been exercised, unless the exercise would be antidilutive. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, which amended Revenue from Contracts with Customers (Topic 606). The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. With respect to public entities, this guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early application is not permitted. The Company has determined the adoption of this guidance will have no material impact on the way revenue is recognized. Additional disclosure will be required in the footnotes to the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in its balance sheet a liability to make lease payments and an asset representing its right to use the underlying asset for the lease term. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact this guidance will have on its consolidated financial statements. |
Reorganization (Tables)
Reorganization (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reorganizations [Abstract] | |
Reorganization Items | We incurred significant costs associated with our reorganization and the Chapter 11 proceedings. These costs, which are being expensed as incurred, include (in thousands): Year Ended December 31, 2017 2016 Adjustments to deferred debt issuance costs and senior debt premium $ — $ 2,399 Professional fees (3,460 ) (1,252 ) Adjustments to other liabilities for claims made or rejected contracts (87 ) (449 ) Other (34 ) (31 ) Reorganization items, net $ (3,581 ) $ 667 |
Acquisition and Divestiture (Ta
Acquisition and Divestiture (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The net purchase price was allocated as follows (in thousands): Cash $ 246 Accounts receivable 7,465 Other assets 59 Property and equipment 581 Intangible assets: Customer relationships 6,895 Trademark 1,147 Non-compete 627 Goodwill 12,705 Accrued compensation and benefits (4,751 ) Long-term debt, including current portion of $426 (683 ) Other current liabilities (708 ) Net assets acquired $ 23,583 |
Pro Forma Information | The following unaudited pro forma financial information presents the combined results of HCS and Novation as if the HCS Acquisition had occurred on January 1, 2016 (in thousands). The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been or what results may be expected in the future. For the Year Ended December 31, 2017 2016 Service fee income $ 63,246 $ 55,161 Income (loss) from continuing operations $ (9,331 ) $ 3,903 Net income (loss) $ (8,450 ) $ 5,869 Basic and diluted earnings per share: Net income (loss) from continuing operations $ (0.10 ) $ 0.04 Net income (loss) $ (0.09 ) $ 0.06 |
Schedule of Results of Discontinued Operations | The results of the Company's discontinued operations are summarized below (in thousands): For the Year Ended December 31, 2017 2016 Recognition of gain upon release of indemnification escrow - Corvisa sale $ 1,020 $ — Gain on sale of Corvisa — 1,966 Expenses related to discontinued operations (125 ) — Income from discontinued operations, net of income taxes $ 895 $ 1,966 |
Accounts and Unbilled Receiva23
Accounts and Unbilled Receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | December 31, 2017 (in thousands) Accounts receivable $ 5,418 Unbilled receivables 2,504 $ 7,922 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale Securities | The Company's portfolio of available-for-sale securities includes (dollars in thousands): Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses As of December 31, 2017 Marketable securities, current Mortgage securities $ 400 $ 11,394 $ — $ 11,794 Equity securities 1 — — 1 Total $ 401 $ 11,394 $ — $ 11,795 As of December 31, 2016 Marketable securities, current Mortgage securities $ 450 $ 9,341 $ — $ 9,791 Equity securities 112 47 (7 ) 152 Total $ 562 $ 9,388 $ (7 ) $ 9,943 Marketable securities, non-current Agency mortgage-backed securities $ 26,607 $ — $ (62 ) $ 26,545 |
Schedule of Variable Interest Entities | The following table relates to the securitizations where the Company retained an interest in the assets issued by the securitization trust (in thousands): Principal Outstanding (A) Assets on Balance Sheet (B) Liabilities on Balance Sheet Maximum Exposure to Loss(B) Year to Date Loss on Sale Year to Date Cash Flows December 31, 2017 $ 2,714,823 $ 11,794 $ — $ 11,794 $ — $ 3,193 December 31, 2016 $ 3,185,270 $ 9,791 $ — $ 9,791 $ — $ 5,153 (A) Principal Outstanding is the aggregate principal of the underlying loans held by the securitization trusts. (B) Assets on Balance Sheet and Maximum Exposure to Loss is the estimated fair value of securities issued by the entity and recorded as marketable securities, current in the consolidated balance sheets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived assets Goodwill $ 8,205 $ — $ 8,205 Tradenames 1,147 — 1,147 $ 9,352 $ — $ 9,352 Finite-lived assets Customer relationships 6,895 410 6,485 Non-compete agreement 627 87 540 $ 7,522 $ 497 $ 7,025 |
Schedule of Goodwill | Year Ended December 31, 2017 Goodwill activity (in thousands): Balance, December 31, 2016 $ — Goodwill recorded in connection with the HCS Acquisition 12,705 Impairment charge (4,500 ) Balance, December 31, 2017 $ 8,205 |
Finite-lived Intangible Assets Amortization Expense | Amortization expense (in thousands) 2017 $ 496 Estimated amortization expense (in thousands) 2018 1,194 2019 1,194 2020 1,107 2021 985 2022 985 Thereafter 1,560 Total estimated amortization expense $ 7,025 |
Fair Value Accounting (Tables)
Fair Value Accounting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following tables present for each of the fair value hierarchy levels, the Company's assets and liabilities which are measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2017 Marketable securities, current $ 11,795 $ 1 $ — — $ 11,794 December 31, 2016 Marketable securities, current $ 9,943 $ 152 $ — $ 9,791 Marketable securities, non-current 26,545 26,545 — — $ 36,488 $ 26,697 $ — $ 9,791 |
Fair Value Inputs, Assets and Liabilities, Quantitative Information | The significant unobservable inputs used in preparing the fair value estimates are: As of December 31, 2017 2016 Weighted average: Loss severity 62.1 % 49.6 % Default rate 2 % 2.1 % Prepayment speed 13.5 % 9.8 % Servicer's optional redemption date None None |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the Company's retained mortgage securities – available-for-sale which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): For the Year Ended 2017 2016 Balance, beginning of period $ 9,791 $ 2,011 Increases (decreases) to mortgage securities – available-for-sale: Proceeds from paydowns of securities, net (A) (51 ) (75 ) Mark-to-market value adjustment 2,054 7,855 Net increases (decreases) to mortgage securities – available-for-sale 2,003 7,780 Balance, end of period $ 11,794 $ 9,791 (A) Cash received on mortgage securities with no cost basis was $2.8 million and $4.7 million during 2017 and 2016 , respectively. |
Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company's financial instruments are as follows as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 Carrying Value Fair Value Carrying Value Fair Value Financial assets: Marketable securities $ 11,795 $ 11,795 $ 36,488 $ 36,488 Financial liabilities: Senior notes $ 85,938 $ 23,018 $ 85,938 $ 23,349 |
Fair Value Measurements, Nonrecurring | Activity during 2017 for Goodwill, the Company's only Level 3 asset, measured on a nonrecurring basis is included in the following table (in thousands): Goodwill Balance, December 31, 2016 $ — Goodwill recorded in connection with the HCS Acquisition 12,705 Impairment charge (4,500 ) Balance, December 31, 2017 $ 8,205 Financial assets reported at fair value on a nonrecurring basis include the following (in thousands): December 31, 2017 Fair Value (Level 3) Gains and (Losses) Goodwill $ 8,205 $ (4,500 ) |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per share for 2017 and 2016 (dollars in thousands, except share and per share amounts) are as follows: For the Year Ended 2017 2016 Numerator: Net income (loss) from continuing operations $ (11,760 ) $ 3,247 Income (loss) from discontinued operations 895 1,966 Net income (loss) $ (10,865 ) $ 5,213 Denominator: Weighted average common shares outstanding – basic 92,800,392 91,905,941 Weighted average common shares outstanding – diluted: Weighted average common shares outstanding – basic 92,800,392 91,905,941 Stock options — — Nonvested shares — — Weighted average common shares outstanding – diluted 92,800,392 91,905,941 Basic earnings per share: Net income (loss) from continuing operations $ (0.13 ) $ 0.04 Income (loss) from discontinued operations 0.01 0.02 Net income (loss) $ (0.12 ) $ 0.06 Diluted earnings per share: Net income (loss) from continuing operations $ (0.13 ) $ 0.04 Income (loss) from discontinued operations 0.01 0.02 Net income (loss) $ (0.12 ) $ 0.06 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average stock options to purchase shares of common stock were outstanding, but were not included in the computation of diluted earnings (loss) per share because the number of shares assumed to be repurchased, as calculated was greater than the number of shares to be obtained upon exercise, therefore, the effect would be antidilutive. There were no options granted during 2016 and 2017. For the Year Ended 2017 2016 Number of stock options 1,411 4,719 Weighted average exercise price of stock options $ 0.89 $ 0.68 |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) from continuing operations are (in thousands): For the Year Ended December 31, 2017 2016 Current: Federal $ (1 ) $ (14 ) State and local 15 (7 ) Total current $ 14 $ (21 ) |
Schedule of Effective Income Tax Rate Reconciliation | Below is a reconciliation of the expected federal income tax expense (benefit) using the federal statutory tax rate of 35% to the Company’s actual income tax benefit and resulting effective tax rate (in thousands). For the Year Ended December 31, 2017 2016 Income tax (benefit) at statutory rate $ (3,802 ) $ 1,129 State income taxes, net of federal tax benefit (54 ) 211 Valuation allowance (131,234 ) 14,595 Change in federal tax rate 33,640 — Change in state tax rate 100,899 (16,475 ) Bankruptcy reorganization 746 437 Uncertain tax positions (4 ) (35 ) Other (177 ) 117 Total income tax expense (benefit) $ 14 $ (21 ) |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are (in thousands): December 31, 2017 2016 Deferred tax assets: Basis difference – investments $ 8,015 $ 17,261 Federal NOL carryforwards 145,608 239,942 State NOL carryforwards 8,301 35,896 Other 2,756 2,816 Gross deferred tax asset 164,680 295,915 Valuation allowance (162,708 ) (292,214 ) Deferred tax asset 1,972 3,701 Deferred tax liabilities: Other 1,972 3,701 Deferred tax liability 1,972 3,701 Net deferred tax asset $ — $ — |
Schedule of Unrecognized Tax Benefits Roll Forward | The activity in the accrued liability for unrecognized tax benefits, included in other current liabilities, was (in thousands): For the Year Ended December 31, 2017 2016 Beginning balance $ 331 $ 368 Gross increases – tax positions in current period 22 2 Lapse of statute of limitations (25 ) (39 ) Ending balance $ 328 $ 331 |
Basis of Presentation, Busine29
Basis of Presentation, Business Plan and Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 06, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operations [Line Items] | |||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | |
Net loss | $ 10,865 | $ (5,213) | |
Operating cash flow | 8,726 | (195) | |
Stockholders' deficit | 57,900 | ||
Cash | 2,740 | 4,805 | |
Liabilities | 97,719 | $ 91,829 | |
NMLLC | |||
Operations [Line Items] | |||
Cash | $ 1,100 | ||
Subsequent Event | |||
Operations [Line Items] | |||
Proceeds from sale of mortgage securities | $ 2,900 |
Reorganization Schedule of Reor
Reorganization Schedule of Reorganization Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reorganization Items [Line Items] | ||
Reorganization items, net | $ (3,581) | $ 667 |
Adjustments to deferred debt issuance costs and senior debt premium | ||
Reorganization Items [Line Items] | ||
Reorganization items, net | 0 | 2,399 |
Professional fees | ||
Reorganization Items [Line Items] | ||
Reorganization items, net | (3,460) | (1,252) |
Adjustments to other liabilities for claims made or rejected contracts | ||
Reorganization Items [Line Items] | ||
Reorganization items, net | (87) | (449) |
Other | ||
Reorganization Items [Line Items] | ||
Reorganization items, net | $ (34) | $ (31) |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Product Information [Line Items] | ||
Uninsured balances of unrestricted cash and cash equivalents | $ 2,000 | |
Deferred tax assets | $ 164,680 | $ 295,915 |
Major customer | Sales Revenue, Net | Customer Concentration Risk | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 43.00% | |
Major customer | Accounts Receivable | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 48.00% | |
Consumer Service Board Customers | Sales Revenue, Net | Customer Concentration Risk | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 98.00% | |
Consumer Service Board Customers | Accounts Receivable | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 97.00% |
Acquisition and Divestiture - A
Acquisition and Divestiture - Acquisition of Healthcare Staffing, Inc. (Details) - USD ($) $ in Thousands | Jul. 27, 2017 | Feb. 01, 2017 | Dec. 31, 2017 |
Healthcare Staffing, Inc. | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 24,000 | ||
Working capital adjustment | $ 5,000 | ||
Indemnification escrow | $ 240 | ||
Reimbursement of costs and expenses incurred | $ 100 | ||
Pre-closing estimate change percent threshold | 3.00% | ||
Gross receivables | $ 7,500 | ||
Fees associated with acquisition | 1,300 | ||
Investment advisor fees | $ 900 | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Amortization period for intangibles | 7 years | ||
Non-compete | |||
Business Acquisition [Line Items] | |||
Amortization period for intangibles | 3 years |
Acquisition and Divestiture - S
Acquisition and Divestiture - Schedule of HCS Acquisition Purchase Price Allocation (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jul. 27, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Cash | $ 246 | $ 0 | |
Accounts receivable | 7,465 | 0 | |
Other assets | 59 | 0 | |
Intangible assets | 8,669 | 0 | |
Goodwill | 8,205 | 0 | |
Accrued compensation and benefits | (4,751) | 0 | |
Long-term debt, including current portion of $426 | (683) | 0 | |
Other current liabilities | (708) | 0 | |
Purchase price | 23,583 | $ 0 | |
Current portion of long term debt | $ 426 | ||
Healthcare Staffing, Inc. | |||
Business Acquisition [Line Items] | |||
Cash | $ 246 | ||
Accounts receivable | 7,465 | ||
Other assets | 59 | ||
Property and equipment | 581 | ||
Goodwill | 12,705 | ||
Accrued compensation and benefits | (4,751) | ||
Long-term debt, including current portion of $426 | (683) | ||
Other current liabilities | (708) | ||
Purchase price | 23,583 | ||
Current portion of long term debt | 426 | ||
Customer relationships | Healthcare Staffing, Inc. | |||
Business Acquisition [Line Items] | |||
Intangible assets | 6,895 | ||
Trademark | Healthcare Staffing, Inc. | |||
Business Acquisition [Line Items] | |||
Intangible assets | 1,147 | ||
Non-compete | Healthcare Staffing, Inc. | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 627 |
Acquisition and Divestiture - P
Acquisition and Divestiture - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Service fee income | $ 63,246 | $ 55,161 |
Income (loss) from continuing operations | (9,331) | 3,903 |
Net income (loss) | $ (8,450) | $ 5,869 |
Basic and diluted earnings per share: | ||
Net income (loss) from continuing operations | $ (0.10) | $ 0.04 |
Net income (loss) | $ (0.09) | $ 0.06 |
Acquisition and Divestiture -35
Acquisition and Divestiture - Sale of Corvisa LLC (Details) - Discontinued Operations, Disposed of by Sale - Corvisa LLC - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 06, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Membership interests, percentage | 100.00% | |||
Gain from release of escrow | $ 1,000 | $ 0 | $ 1,966 |
Acquisition and Divestiture -36
Acquisition and Divestiture - Schedule of Results from Discontinued Operations (Details) - Discontinued Operations, Disposed of by Sale - Corvisa LLC - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Recognition of gain upon release of indemnification escrow - Corvisa sale | $ 1,020 | $ 0 | |
Income from discontinued operations before income taxes | $ 1,000 | 0 | 1,966 |
Expenses related to discontinued operations | (125) | 0 | |
Income from discontinued operations, net of income taxes | $ 895 | $ 1,966 |
Accounts and Unbilled Receiva37
Accounts and Unbilled Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Accounts receivable | $ 5,418 | |
Unbilled receivables | 2,504 | |
Total | $ 7,922 | $ 0 |
Marketable Securities - Availab
Marketable Securities - Available-for-Sale (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, current | $ 401 | $ 562 |
Accumulated gross unrealized gains, current | 11,394 | 9,388 |
Accumulated gross unrealized losses, current | 0 | (7) |
Estimated fair value, current | 11,795 | 9,943 |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, current | 1 | 112 |
Accumulated gross unrealized gains, current | 0 | 47 |
Accumulated gross unrealized losses, current | 0 | (7) |
Estimated fair value, current | 1 | 152 |
Mortgage securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, current | 400 | 450 |
Accumulated gross unrealized gains, current | 11,394 | 9,341 |
Accumulated gross unrealized losses, current | 0 | 0 |
Estimated fair value, current | $ 11,794 | 9,791 |
Agency mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, noncurrent | 26,607 | |
Accumulated gross unrealized gains, noncurrent | 0 | |
Accumulated gross unrealized losses, noncurrent | (62) | |
Estimated fair value, noncurrent | $ 26,545 |
Marketable Securities - Narrati
Marketable Securities - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Other than temporary impairment | $ 0 | $ 0 |
Agency mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Proceeds from securities sale | 25,200,000 | |
Gain recognized from sale of securities | $ 79,000 |
Mortgage Securities - VIE's and
Mortgage Securities - VIE's and CDO's (Details) - Variable Interest Entity, Primary Beneficiary - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Variable Interest Entity [Line Items] | ||
Size/Principal outstanding | $ 2,714,823 | $ 3,185,270 |
Assets on balance sheet | 11,794 | 9,791 |
Liabilities on balance sheet | 0 | 0 |
Maximum exposure to loss | 11,794 | 9,791 |
Year to date loss on sale | 0 | 0 |
Year to date cash flows | $ 3,193 | $ 5,153 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 8,205 | $ 0 |
Tradenames | 1,147 | |
Indefinite-lived assets | 9,352 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 7,522 | |
Finite-lived intangible assets, accumulated amortization | 497 | |
Finite-lived intangible assets, net | 7,025 | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 6,895 | |
Finite-lived intangible assets, accumulated amortization | 410 | |
Finite-lived intangible assets, net | 6,485 | |
Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 627 | |
Finite-lived intangible assets, accumulated amortization | 87 | |
Finite-lived intangible assets, net | $ 540 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 0 | |
Goodwill recorded in connection with the HCS Acquisition | 12,705 | $ 0 |
Impairment charge | (4,500) | 0 |
Goodwill, ending balance | $ 8,205 | $ 0 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment loss | $ 4,500 | $ 0 |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets - Schedule of Estimated Amortization Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 496 |
Estimated amortization expense (in thousands) | |
2,018 | 1,194 |
2,019 | 1,194 |
2,020 | 1,107 |
2,021 | 985 |
2,022 | 985 |
Thereafter | 1,560 |
Total estimated amortization expense | $ 7,025 |
Borrowings - Revolving Credit A
Borrowings - Revolving Credit Agreement (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||
Outstanding line of credit | $ 3,333,000 | $ 0 |
Revolving Credit Facility | FNCC Credit Agreement | ||
Line of Credit Facility [Line Items] | ||
Outstanding line of credit | 3,300,000 | |
Line of credit, maximum borrowing capacity | $ 5,000,000 | |
Revolving Credit Facility | FNCC Credit Agreement | Prime Rate | ||
Line of Credit Facility [Line Items] | ||
Interest rate | 1.25% |
Borrowings - Note Refinancing a
Borrowings - Note Refinancing and 2017 Notes (Details) - Senior Notes - USD ($) | Jul. 27, 2017 | Dec. 31, 2017 | Aug. 31, 2017 |
Post-Modification Notes | |||
Debt Instrument [Line Items] | |||
Debt face amount | $ 85,900,000 | ||
Basis spread on variable rate | 3.50% | ||
Notes 2,017 | |||
Debt Instrument [Line Items] | |||
Debt face amount | $ 85,900,000 | ||
Interest | 5,800,000 | ||
Fees and expenses | $ 500,000 | ||
Redemption notice, number of days | 30 days | ||
Redemption price, percentage | 101.00% | ||
Notes 2017 | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 3.50% |
Borrowings - Property Financing
Borrowings - Property Financing (Details) - Property Financing | 12 Months Ended |
Dec. 31, 2017USD ($)agreementRate | |
Debt Instrument [Line Items] | |
Number of loans | agreement | 2 |
Debt face amount | $ 1,300,000 |
Interest rate | Rate | 4.10% |
Amount of outstanding loans | $ 600,000 |
Current portion of loan | $ 400,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended | |
Jun. 24, 2014USD ($)loan | Dec. 31, 2007USD ($) | |
Claims to repurchase securitized loans | ||
Loss Contingencies [Line Items] | ||
Aggregate original principal balance of loans sold to securitization trusts and third parties | $ 43,100 | |
February 2013 Lawsuit | ||
Loss Contingencies [Line Items] | ||
Number of loans | loan | 43 | |
Principal balance of loans summoned in litigation case | $ 6.5 |
Fair Value Accounting - Recurri
Fair Value Accounting - Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value, current | $ 11,795 | $ 9,943 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value, current | 11,795 | 9,943 |
Estimated fair value, noncurrent | 26,545 | |
Assets, fair value | 36,488 | |
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value, current | 152 | |
Estimated fair value, noncurrent | 26,545 | |
Assets, fair value | 26,697 | |
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value, current | 0 | 0 |
Estimated fair value, noncurrent | 0 | |
Assets, fair value | 0 | |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value, current | $ 11,794 | 9,791 |
Estimated fair value, noncurrent | 0 | |
Assets, fair value | $ 9,791 |
Fair Value Accounting - Signifi
Fair Value Accounting - Significant Unobservable Inputs (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted average: | ||
Loss severity | 62.10% | 49.60% |
Default rate | 2.00% | 2.10% |
Prepayment speed | 13.50% | 9.80% |
Mortgage-backed Securities, Issued by Private Enterprises | ||
Fair Value Inputs Quantitative Information [Line Items] | ||
Aggregate overcollateralization | $ 27 |
Fair Value Accounting - Reconci
Fair Value Accounting - Reconciliation of Changes in Level 3 Balances (Details) - Available-for-sale Securities - Mortgage securities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | $ 9,791 | $ 2,011 |
Proceeds from paydowns of securities | (51) | (75) |
Mark-to-market value adjustment | 2,054 | 7,855 |
Net decreases to mortgage securities - available-for-sale | 2,003 | 7,780 |
Balance, end of period | 11,794 | 9,791 |
Cash received on mortgage securities with no cost basis | $ 2,800 | $ 4,700 |
Fair Value Accounting - Carryin
Fair Value Accounting - Carrying Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable securities | $ 11,795 | $ 36,488 |
Senior notes | 85,938 | 85,938 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable securities | 11,795 | 36,488 |
Senior notes | $ 23,018 | $ 23,349 |
Post-Modification Notes | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Basis spread on variable rate | 3.50% |
Fair Value Accounting - Financi
Fair Value Accounting - Financial Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Goodwill, gains and (losses) | $ (4,500,000) | $ 0 |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring | ||
Debt Instrument [Line Items] | ||
Goodwill, fair value (level 3) | 8,205,000 | $ 0 |
Goodwill, gains and (losses) | $ (4,500,000) |
Fair Value Accounting - Schedul
Fair Value Accounting - Schedule of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | ||
Goodwill recorded in connection with the HCS Acquisition | $ 12,705,000 | $ 0 |
Goodwill, Impairment Loss | (4,500,000) | 0 |
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3 | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 0 | |
Goodwill recorded in connection with the HCS Acquisition | 12,705,000 | |
Goodwill, Impairment Loss | (4,500,000) | |
Goodwill, ending balance | $ 8,205,000 | $ 0 |
Earnings (Loss) per Share - Com
Earnings (Loss) per Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | ||
Net income (loss) from continuing operations | $ (11,760) | $ 3,247 |
Income from discontinued operations, net of income taxes | 895 | 1,966 |
Net income (loss) | $ (10,865) | $ 5,213 |
Denominator: | ||
Weighted average common shares outstanding - basic | 92,800,392 | 91,905,941 |
Weighted average common shares outstanding - diluted | 92,800,392 | 91,905,941 |
Basic earnings per share: | ||
Net income (loss) from continuing operations | $ (0.13) | $ 0.04 |
Income (loss) from discontinued operations | 0.01 | 0.02 |
Net income (loss) | (0.12) | 0.06 |
Diluted earnings per share: | ||
Net income (loss) from continuing operations | (0.13) | 0.04 |
Income (loss) from discontinued operations | 0.01 | 0.02 |
Net income (loss) | $ (0.12) | $ 0.06 |
Stock Options | ||
Denominator: | ||
Incremental shares related to share-based compensation | 0 | 0 |
Nonvested Shares | ||
Denominator: | ||
Incremental shares related to share-based compensation | 0 | 0 |
Earnings (Loss) per Share - Ant
Earnings (Loss) per Share - Antidilutive Securities (Details) - Stock Options - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of stock options | 1,411 | 4,719 |
Weighted average exercise price of stock options (in USD per share) | $ 0.89 | $ 0.68 |
Earnings (Loss) per Share - Nar
Earnings (Loss) per Share - Narrative (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Nonvested Shares | ||
Class of Stock [Line Items] | ||
Shares vested | 100,000 | |
Number of stock options | 1,100,000 | 900,000 |
Nonvested Shares | ||
Class of Stock [Line Items] | ||
Nonvested shares granted | 4,300,000 | 100,000 |
Nonvested shares oustanding | 4,300,000 | 100,000 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | ||
Federal | $ (1) | $ (14) |
State and local | 15 | (7) |
Total current | $ 14 | $ (21) |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Reconciliation, Other Reconciling Items [Abstract] | ||
Income tax (benefit) at statutory rate | $ (3,802) | $ 1,129 |
State income taxes, net of federal tax benefit | (54) | 211 |
Valuation allowance | (131,234) | 14,595 |
Change in federal tax rate | 33,640 | 0 |
Change in state tax rate | 100,899 | (16,475) |
Bankruptcy reorganization | 746 | 437 |
Uncertain tax positions | (4) | (35) |
Other | (177) | 117 |
Total income tax expense (benefit) | $ 14 | $ (21) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets: | ||
Basis difference – investments | $ 8,015 | $ 17,261 |
Federal NOL carryforwards | 145,608 | 239,942 |
State NOL carryforwards | 8,301 | 35,896 |
Other | 2,756 | 2,816 |
Gross deferred tax asset | 164,680 | 295,915 |
Valuation allowance | (162,708) | (292,214) |
Deferred tax asset | 1,972 | 3,701 |
Deferred tax liabilities: | ||
Other | 1,972 | 3,701 |
Deferred tax liability | 1,972 | 3,701 |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 331 | $ 368 |
Gross increases – tax positions in current period | 22 | 2 |
Lapse of statute of limitations | (25) | (39) |
Ending balance | $ 328 | $ 331 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Examination [Line Items] | |||
Federal statutory income tax rate | 35.00% | 35.00% | |
Change in deferred tax assets | $ 100,900 | ||
Decrease in deferred tax asset valuation allowance | 100,900 | ||
Valuation allowance | 162,708 | $ 292,214 | |
Deferred tax assets, related to state operating losses | 33,600 | ||
Increase in valuation allowance | $ 33,600 | ||
Missouri percentage of total federal operating loss | 13.00% | ||
Unrecognized tax benefits | $ 328 | 331 | $ 368 |
Unrecognized tax benefits reductions resulting from lapse of applicable statute of limitations due In next twelve months | 100 | ||
Accrued interest and penalties | 100 | $ 100 | |
Internal Revenue Service (IRS) | |||
Income Tax Examination [Line Items] | |||
Federal net operating loss carryforwards | $ 692,000 | ||
Minimum | |||
Income Tax Examination [Line Items] | |||
Open tax year | 2,013 | ||
Minimum | Internal Revenue Service (IRS) | |||
Income Tax Examination [Line Items] | |||
Year of operating loss carryforwards expiration | Dec. 31, 2025 | ||
Minimum | State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Year of operating loss carryforwards expiration | Dec. 31, 2017 | ||
Maximum | |||
Income Tax Examination [Line Items] | |||
Open tax year | 2,017 | ||
Maximum | Internal Revenue Service (IRS) | |||
Income Tax Examination [Line Items] | |||
Year of operating loss carryforwards expiration | Dec. 31, 2037 | ||
Maximum | State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Year of operating loss carryforwards expiration | Dec. 31, 2037 | ||
Mortgage Security | Internal Revenue Service (IRS) | |||
Income Tax Examination [Line Items] | |||
Federal net operating loss carryforwards | $ 307,300 |