##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM          TO
 Commission File Number: 001-34354
 
 Altisource Portfolio Solutions S.A.
 (Exact name of Registrant as specified in its charter)
 Luxembourg
(State or other jurisdiction of 
incorporation or organization)
    
    Not Applicable
(I.R.S. Employer
Identification No.)
 2, rue Jean Bertholet
L-1233 Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive offices)(Zip Code)
 (352) 24 69 79 00
(Registrants telephone number, including area code)
 
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $1.00 par value
    
    The NASDAQ Stock Market
   o þ
  o þ
  þ o
  o o
 o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(do not check if a smaller reporting company)Smaller reporting company o
  o þ




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##### 



TABLE OF CONTENTS
  
 PagePART IITEM 1.
    
    BUSINESS
    
    
    3ITEM 1A.
    
    RISK FACTORS
    
    
    9ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    12ITEM 2.
    
    PROPERTIES
    
    
    12ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    12ITEM 4.
    
    RESERVED
    
    
    12PART IIITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    13ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    14ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    16ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
    
    
    39ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    40ITEM 9.
    
    CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
    
    
    71ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
    
    71ITEM 9B.
    
    OTHER INFORMATION
    
    
    71PART IIIITEM 10.
    
    DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
    
    
    72ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    72ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    72ITEM 13.
    
    CERTAIN  RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    72ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    72PART IVITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    73SIGNATURES
    
    
    
    
    75EX-10.12EX-10.13EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2
  1




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Forward-Looking Statements
   2




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PART I
 
 ITEM 1.
    
    BUSINESS
 Overview
   Reportable Segments
 Mortgage Services Financial Services Technology
Products
  Mortgage Services
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Revenue:Residential Property Valuation
    
    $
    26,800
    
    
    $
    28,882
    
    
    $
    38,998Closing and Title Services
    
    
    17,444
    
    
    
    13,173
    
    
    
    14,042Default Management Services
    
    
    9,194
    
    
    
    51
    
    
    
    Asset Management Services
    
    
    30,464
    
    
    
    1,167
    
    
    
    Component Services
    
    
    19,196
    
    
    
    11,683
    
    
    
    11,220Total Revenue
    
    $
    103,098
    
    
    $
    54,956
    
    
    $
    64,260Transactions with Related Parties:Residential Property Valuation
    
    $
    25,762
    
    
    $
    27,301
    
    
    $
    26,604Closing and Title Services
    
    
    13,496
    
    
    
    13,173
    
    
    
    14,042Default Management Services
    
    
    4,367
    
    
    
    
    
    
    
    Asset Management Services
    
    
    30,464
    
    
    
    1,161
    
    
    
    Total
    
    $
    74,089
    
    
    $
    41,635
    
    
    $
    40,646
 3




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For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Expense Reimbursements (included in Revenue):Default Management Services
    
    $
    1,770
    
    
    $
    
    
    
    $
    Asset Management Services
    
    
    14,308
    
    
    
    
    
    
    
    Total
    
    $
    16,078
    
    
    $
    
    
    
    $
    
 Residential Property Valuation.
 Closing and Title Services
 Default Management Services
 Asset Management
 Component Services
  Financial Services
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Revenue:Asset Recovery Management
    
    $
    51,019
    
    
    $
    62,771
    
    
    $
    36,802Customer Relationship Management
    
    
    13,415
    
    
    
    11,064
    
    
    
    4,491Total Revenue
    
    $
    64,434
    
    
    $
    73,835
    
    
    $
    41,293Transactions with Related Parties:Asset Recovery Management
    
    $
    98
    
    
    $
    1,181
    
    
    $
    1,044
 Asset Recovery Management
 Customer Relationship Management
 4




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Technology Products
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Revenue:REALSuite
    
    $
    25,784
    
    
    $
    20,463
    
    
    $
    18,328IT Infrastructure Services
    
    
    21,669
    
    
    
    24,820
    
    
    
    17,907Total Revenue
    
    $
    47,453
    
    
    $
    45,283
    
    
    $
    36,235Transactions with Related
Parties(1):REALSuite
    
    $
    9,899
    
    
    $
    9,134
    
    
    $
    7,800IT Infrastructure Services
    
    
    10,811
    
    
    
    26,012
    
    
    
    16,742Total
    
    $
    20,710
    
    
    $
    35,146
    
    
    $
    24,542
 
 (1)
    
    Includes revenue earned from other segments related to RealSuite and IT infrastruture services of $1.8 million and $13.7 million,
respectively in 2008 and $1.5 million and $6.9 million, respectively in 2007.  REALServicing ® ®
 REALTrans ®
 REALRemit ®
 IT Infrastructure Services
 Corporate Items and Eliminations
  Customers
  5




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RealServicing
 Sales and Marketing
   Intellectual Property
   Competition
   6




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Employees
  ConsolidatedUnited States
    
    India
    
    Other
    
    AltisourceMortgage Services
    
    
    70
    
    
    
    1,089
    
    
    
    
    
    
    
    1,159Financial Services(1)
    
    
    757
    
    
    
    350
    
    
    
    2
    
    
    
    1,109Technology Products
    
    
    11
    
    
    
    411
    
    
    
    
    
    
    
    422Corporate
    
    
    28
    
    
    
    104
    
    
    
    25
    
    
    
    157Total Employees
    
    
    866
    
    
    
    1,954
    
    
    
    27
    
    
    
    2,847
 
 (1)
    
    We also have approximately 700 employees in India utilized via an outsource agreement
with an unrelated third-party.  Seasonality
  Government Regulation
   7




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Available Information
   8




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ITEM 1A.
    
    RISK FACTORS
  RISKS RELATED TO OUR BUSINESS IN GENERAL:
 Our business is dependent on our ability to grow, and an inability to attract new customers could
adversely affect us.
  
    
    maintain or improve the quality of services that we provide to our customers;
    
    maintain or improve the level of attention expected by our customers; and
    
    successfully leverage our existing client relationships to sell additional services.
  Our continuing relationship with Ocwen may inhibit our ability to obtain and retain other customers
that compete with Ocwen.
  We are dependent on certain key customer relationships, the loss of or their inability to pay could
reduce our revenues.
    9




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If we do not adapt our services to changes in technology or in the marketplace, or if our ongoing
efforts to upgrade our technology are not successful, we could lose customers and have difficulty
attracting new customers for our services.
  Technology failures could damage our business operations and increase our costs.
   We may be subject to claims of legal violations or wrongful conduct which may cause us to pay
unexpected litigation costs or damages or modify our products or processes.
  If we fail to comply with privacy regulations imposed on providers of services to financial
institutions, our business could be harmed.
  10




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Our business is subject to extensive regulation, and failure to comply with existing or new
regulations may adversely impact us.
    Altisource is a Luxembourg company and it may be difficult to enforce judgments against it or its
directors and executive officers.
  If the Distribution does not qualify as a tax-free transaction, taxes could be imposed on Ocwen,
Altisource and our shareholders. We have agreed to indemnify Ocwen for payment of taxes and
tax-related losses and agreed to certain restrictions.
    11




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ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    (Removed and Reserved)
 12




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  2009Quarter Ended
    
    Low
    
    HighSeptember 30
    
    $
    10.10
    
    
    $
    14.51December 31
    
    $
    14.41
    
    
    $
    21.21
  Dividends
  Securities Authorized for Issuance under Equity Compensation Plans
  Stock Performance Graph
 The information contained in Altisource Common Stock Comparative Performance Graph section shall
not be deemed to be soliciting material or filed or incorporated by reference in future filings
with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934,
as amended, except to the extent that we specifically request that it be treated as soliciting
material or incorporate it by reference into a document filed under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended.
  
 8/10/09
    
    
    8/31/09
    
    
    9/30/09
    
    
    10/31/09
    
    
    11/30/09
    
    
    12/31/09Altisource
    
    
    $
    100.00
    
    
    
    $
    117.62
    
    
    
    $
    118.36
    
    
    
    $
    125.00
    
    
    
    $
    132.30
    
    
    
    $
    172.05S&P 500
    
    
    
    100.00
    
    
    
    
    101.34
    
    
    
    
    104.96
    
    
    
    
    102.89
    
    
    
    
    108.79
    
    
    
    
    110.72
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ITEM 6.
    
    SELECTED FINANCIAL DATA
    Years Ended December 31,(in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Revenue (1)
    
    $
    202,812
    
    
    $
    160,363
    
    
    $
    134,906
    
    
    $
    96,603
    
    
    $
    89,915Cost of Revenue (1)
    
    
    126,797
    
    
    
    115,048
    
    
    
    96,954
    
    
    
    72,163
    
    
    
    75,675Gross Profit
    
    
    76,015
    
    
    
    45,315
    
    
    
    37,952
    
    
    
    24,440
    
    
    
    14,240Selling, General and Administrative
Expenses(1)
    
    
    39,473
    
    
    
    28,088
    
    
    
    27,930
    
    
    
    17,622
    
    
    
    17,953Income (Loss) from Operations
    
    
    36,542
    
    
    
    17,227
    
    
    
    10,022
    
    
    
    6,818
    
    
    
    (3,713
    )Other (Expense) Income, net
    
    
    1,034
    
    
    
    (2,626
    )
    
    
    (1,743
    )
    
    
    205
    
    
    
    (192
    )Income (Loss) before Income Taxes
    
    
    37,576
    
    
    
    14,601
    
    
    
    8,279
    
    
    
    7,023
    
    
    
    (3,905
    )Income Tax Provision
    
    
    (11,605
    )
    
    
    (5,382
    )
    
    
    (1,564
    )
    
    
    (1,616
    )
    
    
    2,401Net Income (Loss)
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715
    
    
    $
    5,407
    
    
    $
    (1,504
    )Net Income per shareBasic
    
    $
    1.09
    
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.22
    
    
    $
    (0.06
    )Diluted
    
    $
    1.08
    
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.22
    
    
    $
    (0.06
    )Transactions with related parties
included above:Revenue
    
    $
    94,897
    
    
    $
    64,251
    
    
    $
    59,350
    
    
    $
    51,971
    
    
    $
    41,312Selling, General and
Administrative Expenses
    
    $
    4,308
    
    
    $
    6,208
    
    
    $
    8,864
    
    
    $
    9,103
    
    
    $
    9,049Interest Expense
    
    $
    1,290
    
    
    $
    2,269
    
    
    $
    965
    
    
    $
    503
    
    
    $
    679
 14




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As of December 31,(in
thousands)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Cash
    
    $
    30,456
    
    
    $
    6,988
    
    
    $
    5,688
    
    
    $
    
    
    
    $
    Accounts Receivable, net
    
    
    30,497
    
    
    
    9,077
    
    
    
    16,770
    
    
    
    7,925
    
    
    
    10,403Goodwill(1)
    
    
    9,324
    
    
    
    11,540
    
    
    
    14,797
    
    
    
    1,618
    
    
    
    1,618Intangible Assets, net(1)
    
    
    33,719
    
    
    
    36,391
    
    
    
    38,945
    
    
    
    
    
    
    
    Premises and Equipment, net
    
    
    11,408
    
    
    
    9,304
    
    
    
    12,173
    
    
    
    9,826
    
    
    
    11,242Total Assets
    
    
    120,556
    
    
    
    76,675
    
    
    
    92,845
    
    
    
    22,205
    
    
    
    24,706Lines of Credit and Other Secured
Borrowings
    
    
    
    
    
    
    1,123
    
    
    
    147
    
    
    
    
    
    
    
    Capital Lease Obligations
    
    
    664
    
    
    
    1,356
    
    
    
    3,631
    
    
    
    3,219
    
    
    
    2,603Total Liabilities
    
    
    34,208
    
    
    
    16,129
    
    
    
    17,171
    
    
    
    7,357
    
    
    
    8,471
 
 (1)
    
    The operations of NCI are included in our financial statements effective June 6, 2007,
the date of acquisition. NCI is a receivables management company specializing in
contingency collections and customer relationship management for credit card issuers and
other consumer credit providers. Total goodwill and intangibles were $41.4 million, $46.3
million and $52.1 million, at December 31, 2009, 2008 and 2007, respectively. NCI revenues
were $63.1 million, $69.6 million and $36.0 million for the years ended December 31, 2009,
2008 and 2007, respectively. NCI operating expenses (including both cost and revenue and
selling, general and administrative expenses) were $69.0 million, $74.8 million and $38.4
million for the years ended December 31, 2009, 2008 and 2007, respectively. 15




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with our consolidated
financial statements and the related notes included within this Annual Report on Form 10-K.
  PageSECTION 1 Overview
    
    
    17The overview section provides a summary of Altisource and our
reportable business segments. We also include a discussion of
factors affecting our consolidated results of operations as well as
items specific to each business group. In addition, we provide a
brief description of our basis of presentation for our financial
results.SECTION 2 Consolidated Results of Operations
    
    
    19The consolidated results of operations section provides an analysis
of our results on a consolidated basis for the years ending December
31, 2009, 2008 and 2007. Significant subsections within this section
are as follows:Summary Consolidated Results
    
    
    19Revenue
    
    
    19Cost of Revenue
    
    
    20Selling, General and Administrative Expenses
    
    
    21EBITDA
    
    
    22Income Taxes
    
    
    22Recent Accounting Pronouncements
    
    
    23SECTION 3 Segment Results of Operations
    
    
    23The segment results of operations section provides an analysis of our
results on a reportable operating segment basis for the years ended
December 31, 2009, 2008 and 2007. We discuss known trends and
uncertainties. Significant subsections within this section are as
follows:Mortgage Services
    
    
    26Financial Services
    
    
    29Technology Products
    
    
    31SECTION 4 Liquidity and Capital Resources
    
    
    33The liquidity and capital resources section provides discussion of
our ability to generate adequate amounts of cash to meet our current
and future needs. Significant subsections within this section are as
follows:Liquidity
    
    
    33Cash Flows
    
    
    34Liquidity Requirements after December 31, 2009
    
    
    35Capital Resources
    
    
    35SECTION 5 Critical Accounting Policies
    
    
    35SECTION 6  Off-Balance Sheet Arrangements
    
    
    37SECTION 7  Contractual Obligations, Commitments and Contingencies
    
    
    37SECTION 8 Other Matters
    
    
    38The other matters section provides a discussion of related party
transactions and provisions of the various separation related
agreements with Ocwen.
 16




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SECTION 1  OVERVIEW
 Our Business
   Existing Customer Penetration
  New Customer Acquisition.
 Invest in New Service Offerings.
 Highest Quality at Lowest Operating Costs.
 17




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Separation
  Basis of Presentation
   Factors Affecting Comparability
 Basis of Presentation
 
    
    $3.4 million of one-time costs associated with the Separation;
    
    $1.9 million of facility closure costs recognized within the Financial Services
segment associated with the closure of two collection facilities;
    
    $2.3 million of settlement gain recognized within the Financial Services
segment; and
    
    $1.4 million of settlement losses recognized in the fourth quarter in the
Financial Services segment with respect to the Noble dialer arbitration.
 18




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SECTION 2  CONSOLIDATED RESULTS OF OPERATIONS
 
 Summary Consolidated Results
 SECTION 3  SEGMENT RESULTS
OF OPERATIONS
  Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue
    
    $
    202,812
    
    
    $
    160,363
    
    
    $
    134,906
    
    
    $
    42,449
    
    
    
    26
    %
    
    $
    25,457
    
    
    
    19
    %Cost of Revenue
    
    
    126,797
    
    
    
    115,048
    
    
    
    96,954
    
    
    
    11,749
    
    
    
    10
    
    
    
    18,094
    
    
    
    19Gross Profit
    
    
    76,015
    
    
    
    45,315
    
    
    
    37,952
    
    
    
    30,700
    
    
    
    68
    
    
    
    7,363
    
    
    
    19Selling, General and
Administrative Expenses
    
    
    39,473
    
    
    
    28,088
    
    
    
    27,930
    
    
    
    11,385
    
    
    
    41
    
    
    
    158
    
    
    
    1Income from Operations
    
    
    36,542
    
    
    
    17,227
    
    
    
    10,022
    
    
    
    19,315
    
    
    
    112
    
    
    
    7,205
    
    
    
    72Other Income (Expense), net
    
    
    1,034
    
    
    
    (2,626
    )
    
    
    (1,743
    )
    
    
    3,660
    
    
    
    139
    
    
    
    (883
    )
    
    
    (51
    )Income Before Income Taxes
    
    
    37,576
    
    
    
    14,601
    
    
    
    8,279
    
    
    
    22,975
    
    
    
    157
    
    
    
    6,322
    
    
    
    76Income Tax Provision
    
    
    (11,605
    )
    
    
    (5,382
    )
    
    
    (1,564
    )
    
    
    (6,223
    )
    
    
    (116
    )
    
    
    (3,818
    )
    
    
    (244
    )Net Income
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715
    
    
    $
    16,752
    
    
    
    182
    %
    
    $
    2,504
    
    
    
    37
    %Transactions with Related
Parties:Revenue
    
    $
    94,897
    
    
    $
    64,251
    
    
    $
    59,350
    
    
    $
    30,646
    
    
    
    48
    %
    
    $
    4,901
    
    
    
    8
    %Selling, General and
Administrative Expenses
    
    $
    4,308
    
    
    $
    6,208
    
    
    $
    8,864
    
    
    $
    (1,900
    )
    
    
    (31
    )%
    
    $
    (2,656
    )
    
    
    (30
    )%Interest Expense
    
    $
    1,290
    
    
    $
    2,269
    
    
    $
    965
    
    
    $
    (979
    )
    
    
    (43
    )%
    
    $
    1,304
    
    
    
    135
    %
 
 Revenue
 Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Mortgage Services
    
    $
    103,098
    
    
    $
    54,956
    
    
    $
    64,260
    
    
    $
    48,142
    
    
    
    88
    %
    
    $
    (9,304
    )
    
    
    (14
    )%Financial Services
    
    
    64,434
    
    
    
    73,835
    
    
    
    41,293
    
    
    
    (9,401
    )
    
    
    (13
    )
    
    
    32,542
    
    
    
    79Technology Products
    
    
    47,453
    
    
    
    45,283
    
    
    
    36,235
    
    
    
    2,170
    
    
    
    5
    
    
    
    9,048
    
    
    
    25Corporate and Eliminations
    
    
    (12,173
    )
    
    
    (13,711
    )
    
    
    (6,882
    )
    
    
    1,538
    
    
    
    11
    
    
    
    (6,829
    )
    
    
    (99
    )Total Revenue
    
    $
    202,812
    
    
    $
    160,363
    
    
    $
    134,906
    
    
    $
    42,449
    
    
    
    26
    %
    
    $
    25,457
    
    
    
    19
    %Transactions with Related Parties:Mortgage Services
    
    $
    74,089
    
    
    $
    41,635
    
    
    $
    40,646
    
    
    $
    32,454
    
    
    
    78
    %
    
    $
    989
    
    
    
    2
    %Financial Services
    
    
    98
    
    
    
    1,181
    
    
    
    1,044
    
    
    
    (1,083
    )
    
    
    (92
    )
    
    
    137
    
    
    
    13Technology Products(1)
    
    
    20,710
    
    
    
    35,416
    
    
    
    24,542
    
    
    
    (14,436
    )
    
    
    (41
    )
    
    
    10,604
    
    
    
    43
 
 (1)
    
    Includes revenue earned from other segments related to RealSuite and IT infrastruture services of $1.8 million and $13.7 million,
respectively in 2008 and $1.5 million and $6.9 million, respectively in 2007.  19




---



##### Table of Contents




    
    Completion of our national platform for default services which will allow us to
capture a greater share of revenues related to loans serviced by Ocwen;
    
    Rollout nationally our Title Agency business;
    
    Inclusion of MPA since the February 2010 acquisition date; and
    
    Greater penetration of existing Financial Services clients.
  
 Cost of Revenue
  Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Compensation and Benefits
    
    $
    51,251
    
    
    $
    59,311
    
    
    $
    44,886
    
    
    $
    (8,060
    )
    
    
    (14
    )%
    
    $
    14,425
    
    
    
    32
    %Outside Fees and Services
    
    
    59,103
    
    
    
    35,825
    
    
    
    32,830
    
    
    
    23,278
    
    
    
    65
    
    
    
    2,995
    
    
    
    9Technology and
Communication
    
    
    16,443
    
    
    
    19,912
    
    
    
    19,238
    
    
    
    (3,469
    )
    
    
    (17
    )
    
    
    674
    
    
    
    4Total Cost of Revenue
    
    $
    126,797
    
    
    $
    115,048
    
    
    $
    96,954
    
    
    $
    11,749
    
    
    
    10
    %
    
    $
    18,094
    
    
    
    19
    %Gross Margin Percentage
    
    
    37
    %
    
    
    28
    %
    
    
    28
    %
   20




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##### Table of Contents



Selling, General and Administrative Expenses
  Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Occupancy and Equipment
    
    $
    8,456
    
    
    $
    8,125
    
    
    $
    7,999
    
    
    $
    331
    
    
    
    4
    %
    
    $
    126
    
    
    
    2
    %Corporate Allocations
    
    
    4,096
    
    
    
    6,208
    
    
    
    8,864
    
    
    
    (2,112
    )
    
    
    (34
    )
    
    
    (2,656
    )
    
    
    (30
    )Professional Services
    
    
    10,252
    
    
    
    3,270
    
    
    
    3,121
    
    
    
    6,982
    
    
    
    214
    
    
    
    149
    
    
    
    5Other
    
    
    16,669
    
    
    
    10,485
    
    
    
    7,946
    
    
    
    6,184
    
    
    
    59
    
    
    
    2,539
    
    
    
    32Total Selling, General
and Administrative
Expenses
    
    $
    39,473
    
    
    $
    28,088
    
    
    $
    27,930
    
    
    $
    11,385
    
    
    
    41
    %
    
    $
    158
    
    
    
    1
    %Operating Margin Percentage
    
    
    18
    %
    
    
    11
    %
    
    
    7
    %
  SECTION 1  OVERVIEW, Separation
   21




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##### Table of Contents



EBITDA
  Years ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Income Before Income Taxes
    
    $
    37,576
    
    
    $
    14,601
    
    
    $
    8,279
    
    
    $
    22,975
    
    
    
    157
    %
    
    $
    6,322
    
    
    
    76
    %Interest, net
    
    
    1,644
    
    
    
    2,655
    
    
    
    1,926
    
    
    
    (1,011
    )
    
    
    (38
    )
    
    
    729
    
    
    
    38Depreciation and
Amortization
    
    
    5,432
    
    
    
    7,836
    
    
    
    6,979
    
    
    
    (2,404
    )
    
    
    (31
    )
    
    
    857
    
    
    
    12Amortization of
Intangibles
    
    
    2,672
    
    
    
    2,554
    
    
    
    1,555
    
    
    
    118
    
    
    
    5
    
    
    
    999
    
    
    
    64EBITDA
    
    $
    47,324
    
    
    $
    27,646
    
    
    $
    18,739
    
    
    $
    19,678
    
    
    
    71
    %
    
    $
    8,907
    
    
    
    48
    %
 
 (1)
    
    See SECTION 3  SEGMENT RESULTS OF OPERATIONS below for a reconciliation of the most
directly comparable GAAP measure to EBITDA.   
 Income Taxes
   22




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##### Table of Contents



Recent Accounting Pronouncements
  
 SECTION 3  SEGMENT RESULTS OF OPERATIONS
  For the Year Ended December 31, 2009Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    103,098
    
    
    $
    64,434
    
    
    $
    47,453
    
    
    $
    (12,173
    )
    
    $
    202,812Cost of Revenue
    
    
    60,735
    
    
    
    52,871
    
    
    
    24,477
    
    
    
    (11,286
    )
    
    
    126,797Gross Profit
    
    
    42,363
    
    
    
    11,563
    
    
    
    22,976
    
    
    
    (887
    )
    
    
    76,015Selling, General and
Administrative Expenses
    
    
    5,625
    
    
    
    19,267
    
    
    
    4,731
    
    
    
    9,850
    
    
    
    39,473Income (Loss) from Operations
    
    
    36,738
    
    
    
    (7,704
    )
    
    
    18,245
    
    
    
    (10,737
    )
    
    
    36,542Other income (expense), net
    
    
    31
    
    
    
    1,324
    
    
    
    (319
    )
    
    
    (2
    )
    
    
    1,034Income (Loss) Before Income
Taxes
    
    $
    36,769
    
    
    $
    (6,380
    )
    
    $
    17,926
    
    
    $
    (10,739
    )
    
    $
    37,576Reconciliation to EBITDAIncome (Loss) Before
Income Taxes
    
    $
    36,769
    
    
    $
    (6,380
    )
    
    $
    17,926
    
    
    $
    (10,739
    )
    
    $
    37,576Interest, net
    
    
    28
    
    
    
    1,314
    
    
    
    318
    
    
    
    (16
    )
    
    
    1,644Depreciation(2)
    
    
    48
    
    
    
    2,402
    
    
    
    2,906
    
    
    
    76
    
    
    
    5,432Amortization of Intangibles
    
    
    
    
    
    
    2,672
    
    
    
    
    
    
    
    
    
    
    
    2,672EBITDA
    
    $
    36,845
    
    
    $
    8
    
    
    $
    21,150
    
    
    $
    (10,679
    )
    
    $
    47,324Transactions with Related
Parties Included Above:Revenue
    
    $
    74,089
    
    
    $
    98
    
    
    $
    20,710
    
    
    $
    
    
    
    $
    94,897Selling, General and
Administrative Expenses
    
    $
    2,712
    
    
    $
    467
    
    
    $
    1,517
    
    
    $
    (388
    )
    
    $
    4,308Interest Expense
    
    $
    30
    
    
    $
    1,029
    
    
    $
    231
    
    
    $
    
    
    
    $
    1,290
 23




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##### Table of Contents



For the Year Ended December 31, 2008Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    54,956
    
    
    $
    73,835
    
    
    $
    45,283
    
    
    $
    (13,711
    )
    
    $
    160,363Cost of Revenue
    
    
    36,392
    
    
    
    62,590
    
    
    
    29,777
    
    
    
    (13,711
    )
    
    
    115,048Gross Profit
    
    
    18,564
    
    
    
    11,245
    
    
    
    15,506
    
    
    
    
    
    
    
    45,315Selling, General and
Administrative Expenses
    
    
    5,027
    
    
    
    17,168
    
    
    
    6,118
    
    
    
    (225
    )
    
    
    28,088Income (Loss) from Operations
    
    
    13,537
    
    
    
    (5,923
    )
    
    
    9,388
    
    
    
    225
    
    
    
    17,227Other income (expense), net
    
    
    (58
    )
    
    
    (1,952
    )
    
    
    (391
    )
    
    
    (225
    )
    
    
    (2,626
    )Income (Loss) Before Income
Taxes
    
    $
    13,479
    
    
    $
    (7,875
    )
    
    $
    8,997
    
    
    $
    
    
    
    $
    14,601Reconciliation to EBITDAIncome (Loss) Before
Income Taxes
    
    $
    13,479
    
    
    $
    (7,875
    )
    
    $
    8,997
    
    
    $
    
    
    
    $
    14,601Interest, net
    
    
    58
    
    
    
    2,025
    
    
    
    572
    
    
    
    
    
    
    
    2,655Depreciation(2)
    
    
    34
    
    
    
    3,202
    
    
    
    4,600
    
    
    
    
    
    
    
    7,836Amortization of Intangibles
    
    
    
    
    
    
    2,554
    
    
    
    
    
    
    
    
    
    
    
    2,554EBITDA
    
    $
    13,571
    
    
    $
    (94
    )
    
    $
    14,169
    
    
    $
    
    
    
    $
    27,646Transactions with Related
Parties Included Above:Revenue
    
    $
    41,635
    
    
    $
    1,181
    
    
    $
    35,146
    
    
    $
    (13,711
    )
    
    $
    64,251Selling, General and
Administrative Expenses
    
    $
    3,633
    
    
    $
    595
    
    
    $
    1,980
    
    
    $
    
    
    
    $
    6,208Interest Expense
    
    $
    58
    
    
    $
    1,833
    
    
    $
    378
    
    
    $
    
    
    
    $
    2,269
 24




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##### Table of Contents



For the Year Ended December 31, 2007Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    64,260
    
    
    $
    41,293
    
    
    $
    36,235
    
    
    $
    (6,882
    )
    
    $
    134,906Cost of Revenue
    
    
    44,158
    
    
    
    32,324
    
    
    
    27,354
    
    
    
    (6,882
    )
    
    
    96,954Gross Profit
    
    
    20,102
    
    
    
    8,969
    
    
    
    8,881
    
    
    
    
    
    
    
    37,952Selling, General and
Administrative Expenses
    
    
    7,876
    
    
    
    14,787
    
    
    
    6,359
    
    
    
    (1,092
    )
    
    
    27,930Income (Loss) from Operations
    
    
    12,226
    
    
    
    (5,818
    )
    
    
    2,522
    
    
    
    1,092
    
    
    
    10,022Other income (expense), net
    
    
    (90
    )
    
    
    (1,269
    )
    
    
    708
    
    
    
    (1,092
    )
    
    
    (1,743
    )Income (Loss) Before Income
Taxes
    
    $
    12,136
    
    
    $
    (7,087
    )
    
    $
    3,230
    
    
    $
    
    
    
    $
    8,279Reconciliation to EBITDAIncome (Loss) Before
Income Taxes
    
    $
    12,136
    
    
    $
    (7,087
    )
    
    $
    3,230
    
    
    $
    
    
    
    $
    8,279Interest, net
    
    
    90
    
    
    
    1,300
    
    
    
    536
    
    
    
    
    
    
    
    1,926Depreciation(2)
    
    
    292
    
    
    
    980
    
    
    
    5,707
    
    
    
    
    
    
    
    6,979Amortization of Intangibles
    
    
    
    
    
    
    1,555
    
    
    
    
    
    
    
    
    
    
    
    1,555EBITDA
    
    $
    12,518
    
    
    $
    (3,252
    )
    
    $
    9,473
    
    
    $
    
    
    
    $
    18,739Transactions with Related
Parties Included Above:Revenue
    
    $
    40,646
    
    
    $
    1,044
    
    
    $
    24,542
    
    
    $
    (6,882
    )
    
    $
    59,350Selling, General and
Administrative Expenses
    
    $
    4,507
    
    
    $
    1,817
    
    
    $
    2,540
    
    
    $
    
    
    
    $
    8,864Interest Expense
    
    $
    90
    
    
    $
    544
    
    
    $
    331
    
    
    $
    
    
    
    $
    965
 
 (1)
    
    Intercompany transactions primarily consist of information technology
infrastructure services and charges for the use of certain REAL products from our Technology
Products segment to our other two segments. Generally, we reflect these charges within
technology and communication in the segment receiving the services, except for consulting
services, which we reflect in professional services.(2)
    
    Includes depreciation and amortization of $2.0 million, $2.8 million and $0.4
million in the years ended December 31, 2009, 2008 and 2007, respectively, for assets
reflected in the Technology Products segment but utilized by the Financial Services segment. 25




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##### Table of Contents



Mortgage Services
  Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue
    
    $
    103,098
    
    
    $
    54,956
    
    
    $
    64,260
    
    
    $
    48,142
    
    
    
    88
    %
    
    $
    (9,304
    )
    
    
    (14
    )%Cost of Revenue
    
    
    60,735
    
    
    
    36,392
    
    
    
    44,158
    
    
    
    24,343
    
    
    
    67
    
    
    
    (7,766
    )
    
    
    (18
    )Gross Profit
    
    
    42,363
    
    
    
    18,564
    
    
    
    20,102
    
    
    
    23,799
    
    
    
    128
    
    
    
    (1,538
    )
    
    
    (8
    )Selling, General and
Administrative Expenses
    
    
    5,625
    
    
    
    5,027
    
    
    
    7,876
    
    
    
    598
    
    
    
    12
    
    
    
    (2,849
    )
    
    
    (36
    )Income from Operations
    
    $
    36,738
    
    
    $
    13,537
    
    
    $
    12,226
    
    
    $
    23,201
    
    
    
    171
    %
    
    $
    1,311
    
    
    
    11
    %EBITDA(1)
    
    $
    36,845
    
    
    $
    13,571
    
    
    $
    12,518
    
    
    $
    23,274
    
    
    
    171
    %
    
    $
    1,053
    
    
    
    8
    %Transactions with Related Parties:Revenue
    
    $
    74,089
    
    
    $
    41,635
    
    
    $
    40,646
    
    
    $
    32,454
    
    
    
    78
    %
    
    $
    989
    
    
    
    2
    %Selling, General and
Administrative Expenses
    
    $
    2,712
    
    
    $
    3,633
    
    
    $
    4,507
    
    
    $
    (921
    )
    
    
    (25
    )%
    
    $
    (874
    )
    
    
    (19
    )%Interest Expense
    
    $
    30
    
    
    $
    58
    
    
    $
    90
    
    
    $
    (28
    )
    
    
    (48
    )%
    
    $
    (32
    )
    
    
    (36
    )%
 
 (1)
    
    See table at the beginning of this section for a reconciliation of the most
directly comparable GAAP measure to EBITDA.   26




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##### Table of Contents




    
    We expect to complete our national rollout toward the end of 2010. This will
allow us to capture 50  55% of the available referrals from the loan portfolio
serviced by Ocwen (currently we capture 30  35%). We typically generate revenue 1 
6 months after the initial referral is placed with us;
    
    Ocwen has sufficient equity to acquire additional portfolios. Referrals
typically begin to accrue to us 3 to 6 months after the portfolio is acquired;
    
    Given the existing volume of loans in various stages of default and
foreclosure, we believe the default services market is likely to grow through 2010;
    
    The acquisition of MPA should position Mortgage Services to grow if the economy
were to improve more quickly than expected;
    
    We generate significant amounts of free cash flow that allow us to invest in
new and existing services at attractive margins; and
    
    Given our small market position in very significant markets, we believe we have
an ability to capture additional market share.
 Revenue
 Years Ended December 31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue:Residential
Property Valuation
    
    $
    26,800
    
    
    $
    28,882
    
    
    $
    38,998
    
    
    $
    (2,082
    )
    
    
    (7
    )%
    
    $
    (10,116
    )
    
    
    (26
    )%Closing and Title
Services
    
    
    17,444
    
    
    
    13,173
    
    
    
    14,042
    
    
    
    4,271
    
    
    
    32
    
    
    
    (869
    )
    
    
    (6
    )Default Management
Services
    
    
    9,194
    
    
    
    51
    
    
    
    
    
    
    
    9,143
    
    
    
    N/M
    
    
    
    51
    
    
    
    100Asset Management
Services
    
    
    30,464
    
    
    
    1,167
    
    
    
    
    
    
    
    29,297
    
    
    
    N/M
    
    
    
    1,167
    
    
    
    100Component Services
    
    
    19,196
    
    
    
    11,683
    
    
    
    11,220
    
    
    
    7,513
    
    
    
    64
    
    
    
    463
    
    
    
    4Total Revenue
    
    $
    103,098
    
    
    $
    54,956
    
    
    $
    64,260
    
    
    $
    48,142
    
    
    
    88
    %
    
    $
    (9,304
    )
    
    
    (14
    )%Transactions with Related Parties:Residential
Property Valuation
    
    $
    25,762
    
    
    $
    27,301
    
    
    $
    26,604
    
    
    $
    (1,539
    )
    
    
    (6
    )%
    
    $
    697
    
    
    
    3
    %Closing and Title
Services
    
    
    13,496
    
    
    
    13,173
    
    
    
    14,042
    
    
    
    323
    
    
    
    2
    
    
    
    (869
    )
    
    
    (6
    )Default Management
Services
    
    
    4,367
    
    
    
    
    
    
    
    
    
    
    
    4,367
    
    
    
    100
    
    
    
    
    
    
    
    Asset Management
Services
    
    
    30,464
    
    
    
    1,161
    
    
    
    
    
    
    
    29,303
    
    
    
    N/M
    
    
    
    1,161
    
    
    
    100Revenue
    
    $
    74,089
    
    
    $
    41,635
    
    
    $
    40,646
    
    
    $
    32,454
    
    
    
    78
    %
    
    $
    989
    
    
    
    2
    %Expense
Reimbursements:Default Management
Services
    
    $
    1,770
    
    
    $
    
    
    
    $
    
    
    
    $
    1,770
    
    
    
    100
    %
    
    $
    
    
    
    
    
    %Asset Management
Services
    
    $
    14,308
    
    
    $
    
    
    
    $
    
    
    
    $
    14,308
    
    
    
    100
    %
    
    $
    
    
    
    
    
    %
 
   27




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##### Table of Contents



Residential Property Valuation.
 Closing and Title Services
 Default Management Services
 Asset Management Services.
 Component Services
  Cost of Revenue
   Selling, General and Administrative Expenses
  28




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##### Table of Contents



Financial Services
  Variance 2009 vs.
    
    
    Variance 2008 vs.Years Ended December 31,
    
    
    2008
    
    
    2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue
    
    $
    64,434
    
    
    $
    73,835
    
    
    $
    41,293
    
    
    $
    (9,401
    )
    
    
    (13
    )%
    
    $
    32,542
    
    
    
    79
    %Cost of Revenue
    
    
    52,871
    
    
    
    62,590
    
    
    
    32,324
    
    
    
    (9,719
    )
    
    
    (16
    )
    
    
    30,266
    
    
    
    94Gross Profit
    
    
    11,563
    
    
    
    11,245
    
    
    
    8,969
    
    
    
    318
    
    
    
    3
    
    
    
    2,276
    
    
    
    25Selling, General and
Administrative Expenses
    
    
    19,267
    
    
    
    17,168
    
    
    
    14,787
    
    
    
    2,099
    
    
    
    12
    
    
    
    2,381
    
    
    
    16Income from Operations
    
    $
    (7,704
    )
    
    $
    (5,923
    )
    
    $
    (5,818
    )
    
    $
    (1,781
    )
    
    
    (30
    )%
    
    $
    (105
    )
    
    
    (2
    )%EBITDA(1)
    
    $
    8
    
    
    $
    (94
    )
    
    $
    (3,252
    )
    
    $
    102
    
    
    
    (109
    )
    
    $
    3,158
    
    
    
    97
    %Transactions with Related Parties:Revenue
    
    $
    98
    
    
    $
    1,181
    
    
    $
    1,044
    
    
    $
    (1,083
    )
    
    
    (92
    )%
    
    $
    137
    
    
    
    13
    %Selling, General and
Administrative Expenses
    
    $
    467
    
    
    $
    595
    
    
    $
    1,817
    
    
    $
    (128
    )
    
    
    (22
    )%
    
    $
    (1,222
    )
    
    
    (67
    )%Interest expense
    
    $
    1,029
    
    
    $
    1,833
    
    
    $
    544
    
    
    $
    (804
    )
    
    
    (44
    )%
    
    $
    1,289
    
    
    
    237
    %
 
 N/M  not meaningful.(1)
    
    See table at the beginning of this section for a reconciliation of the most directly
comparable GAAP measure to EBITDA.   29




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##### Table of Contents



Revenue
 Variance 2009 vs.
    
    
    Variance 2008 vs.Years Ended December 31,
    
    
    2008
    
    
    2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue:Asset Recovery
Management
    
    $
    51,019
    
    
    $
    62,771
    
    
    $
    36,802
    
    
    $
    (11,752
    )
    
    
    (19
    )%
    
    $
    25,969
    
    
    
    71
    %Customer
Relationship
Management
    
    
    13,415
    
    
    
    11,064
    
    
    
    4,491
    
    
    
    2,351
    
    
    
    21
    
    
    
    6,573
    
    
    
    146Total Revenue
    
    $
    64,434
    
    
    $
    73,835
    
    
    $
    41,293
    
    
    $
    (9,401
    )
    
    
    (13
    )%
    
    $
    32,542
    
    
    
    79
    %Transactions with Related Parties:Asset Recovery
Management
    
    $
    98
    
    
    $
    1,181
    
    
    $
    1,044
    
    
    $
    (1,083
    )
    
    
    (92
    )%
    
    $
    137
    
    
    
    13
    %
  Asset Recovery Management.
 Customer Relationship Management
  Cost of Revenue
   Selling, General and Administrative Expenses
  30




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##### Table of Contents



Technology Products
  Variance 2009 vs.
    
    
    Variance 2008 vs.Years Ended December 31,
    
    
    2008
    
    
    2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue
    
    $
    47,453
    
    
    $
    45,283
    
    
    $
    36,235
    
    
    $
    2,170
    
    
    
    5
    %
    
    $
    9,048
    
    
    
    25
    %Cost of Revenue
    
    
    24,477
    
    
    
    29,777
    
    
    
    27,354
    
    
    
    (5,300
    )
    
    
    (18
    )
    
    
    2,423
    
    
    
    9Gross Profit
    
    
    22,976
    
    
    
    15,506
    
    
    
    8,881
    
    
    
    7,470
    
    
    
    48
    
    
    
    6,625
    
    
    
    75Selling, General and
Administrative Expenses
    
    
    4,731
    
    
    
    6,118
    
    
    
    6,359
    
    
    
    (1,387
    )
    
    
    (23
    )
    
    
    (241
    )
    
    
    (4
    )Income from
Operations
    
    $
    18,245
    
    
    $
    9,388
    
    
    $
    2,522
    
    
    $
    8,857
    
    
    
    94
    %
    
    $
    6,866
    
    
    
    272
    %EBITDA(1)
    
    $
    21,150
    
    
    $
    14,169
    
    
    $
    9,473
    
    
    $
    6,981
    
    
    
    49
    %
    
    $
    4,696
    
    
    
    50
    %Transactions with Related
Parties:Revenue(2)
    
    $
    20,710
    
    
    $
    35,146
    
    
    $
    24,542
    
    
    $
    (14,436
    )
    
    
    (41
    )%
    
    $
    10,604
    
    
    
    43
    %Selling, General and
Administrative Expenses
    
    $
    1,517
    
    
    $
    1,980
    
    
    $
    2,540
    
    
    $
    (463
    )
    
    
    (23
    )%
    
    $
    (560
    )
    
    
    (22
    )%Interest expense
    
    $
    231
    
    
    $
    378
    
    
    $
    331
    
    
    $
    (147
    )
    
    
    (39
    )%
    
    $
    47
    
    
    
    14
    %
 
 (1)
    
    See table at the beginning of this section for a reconciliation of the most directly
comparable GAAP measure to EBITDA.(2)
    
    Includes revenue earned from other segments related to RealSuite and IT infrastruture services of $1.8 million and $13.7 million,
respectively in 2008 and $1.5 million and $6.9 million, respectively in 2007.  31




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Revenues
 Variance 2009 vs.
    
    
    Variance 2008 vs.Years Ended December 31,
    
    
    2008
    
    
    2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Revenue:REALSuite
    
    $
    25,784
    
    
    $
    20,463
    
    
    $
    18,328
    
    
    $
    5,321
    
    
    
    26
    %
    
    $
    2,135
    
    
    
    12
    %IT infrastructure services
    
    
    21,669
    
    
    
    24,820
    
    
    
    17,907
    
    
    
    (3,151
    )
    
    
    (13
    )
    
    
    6,913
    
    
    
    39Total Revenue
    
    $
    47,453
    
    
    $
    45,283
    
    
    $
    36,235
    
    
    $
    2,170
    
    
    
    5
    %
    
    $
    9,048
    
    
    
    25
    %Transactions with Related
Parties(1):REALSuite
    
    $
    9,899
    
    
    $
    9,134
    
    
    $
    7,800
    
    
    $
    765
    
    
    
    8
    %
    
    $
    1,334
    
    
    
    17
    %IT infrastructure services
    
    
    10,811
    
    
    
    26,012
    
    
    
    16,742
    
    
    
    (15,201
    )
    
    
    (58
    )
    
    
    9,270
    
    
    
    55Revenue
    
    $
    20,710
    
    
    $
    35,146
    
    
    $
    24,542
    
    
    $
    (14,436
    )
    
    
    (41
    )%
    
    $
    10,604
    
    
    
    43
    %
 
 (1)
    
    Includes revenue earned from other segments related to RealSuite and IT infrastruture services of $1.8 million and $13.7 million,
respectively in 2008 and $1.5 million and $6.9 million, respectively in 2007.  REALSuite
  IT infrastructure services.
  Cost of Revenue
  
    
    $1.9 million reduction in Compensation costs as we integrated the Financial Services
technology personnel into the existing technology group and eliminated certain positions;
 32




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##### Table of Contents




    
    $2.5 million reduction in Depreciation expense as several assets became fully depreciated
in 2008 and have not been replaced;
    
    $0.9 million reduction in Expenses for Hardware and Software Maintenance as we analyzed
usage of these assets and eliminated unused items; and
    
    $0.6 million net reduction in Telephony as we reduced the number of personnel, renegotiated
contracts with service providers and improved technology to drive down costs.
   Selling, General and Administrative Expenses
   
 SECTION 4  LIQUIDITY AND CAPITAL RESOURCES
 
 Liquidity
  th
  33




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##### Table of Contents



Cash Flows
  December
31,
    
    
    Variance 2009 vs. 2008
    
    
    Variance 2008 vs. 2007(dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    $
    
    
    %Net Income Adjusted for
Non-Cash Items
    
    $
    33,192
    
    
    $
    21,055
    
    
    $
    13,660
    
    
    $
    12,137
    
    
    
    58
    %
    
    $
    7,395
    
    
    
    54
    %Working Capital
    
    
    92
    
    
    
    7,850
    
    
    
    (5,631
    )
    
    
    (7,758
    )
    
    
    (99
    )
    
    
    13,481
    
    
    
    239Cash Flow from Operating
Activities
    
    
    33,284
    
    
    
    28,905
    
    
    
    8,029
    
    
    
    4,379
    
    
    
    15
    
    
    
    20,876
    
    
    
    260Cash Flow from Investing
Activities
    
    
    (7,536
    )
    
    
    (5,216
    )
    
    
    (56,777
    )
    
    
    (2,320
    )
    
    
    (44
    )
    
    
    51,561
    
    
    
    91Cash Flow from Financing
Activities
    
    
    (2,280
    )
    
    
    (22,389
    )
    
    
    54,436
    
    
    
    20,109
    
    
    
    90
    
    
    
    (76,825
    )
    
    
    (141
    )Net Change in Cash
    
    
    23,468
    
    
    
    1,300
    
    
    
    5,688
    
    
    
    22,168
    
    
    
    N/M
    
    
    
    (4,388
    )
    
    
    (77
    )Cash at Beginning of Period
    
    
    6,988
    
    
    
    5,688
    
    
    
    
    
    
    
    1,300
    
    
    
    23
    
    
    
    5,688
    
    
    
    100Cash at End of Period
    
    $
    30,456
    
    
    $
    6,988
    
    
    $
    5,688
    
    
    $
    23,468
    
    
    
    336
    %
    
    $
    1,300
    
    
    
    23
    %
 
  Cash Flow from Operating Activities
   Cash Flow from Investing Activities
   34




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##### Table of Contents



Cash Flow from Financing Activities
  
 Liquidity Requirements after December 31, 2009
   
 Capital Resources
  
 SECTION 5  CRITICAL ACCOUNTING POLICIES
  Revenue Recognition
  35




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##### Table of Contents



Goodwill and Identifiable Intangible Assets
  Goodwill
   Identifiable Intangible Assets
  36




---



##### Table of Contents



Accounting for Income Taxes
   
 SECTION 6  OFF-BALANCE SHEET ARRANGEMENTS
  
 SECTION 7  CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More than(in thousands)
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsNon-Cancelable Operating Lease Obligations
    
    $
    9,991
    
    
    $
    4,110
    
    
    $
    5,415
    
    
    $
    466
    
    
    $
    Capital Lease Obligations  Principal
    
    
    664
    
    
    
    536
    
    
    
    128
    
    
    
    
    
    
    
    Contractual Interest Payments(1)
    
    
    26
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    10,681
    
    
    $
    4,672
    
    
    $
    5,543
    
    
    $
    466
    
    
    $
    
 
 (1)
    
    Represents estimated future interest payments on capital leases, based on applicable interest
rates as of December 31, 2009. 37




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##### Table of Contents



SECTION 8  OTHER MATTERS
 Related Party  Ocwen
   38




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency Exchange Risk
  39




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    41Report of Independent Registered Certified Public Accounting Firm
    
    
    42Balance Sheets as of December 31, 2009 and 2008
    
    
    43Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007
    
    
    44Consolidated Statements of Changes in Stockholders and Invested Equity for the Years Ended
December 31, 2009, 2008 and 2007
    
    
    45Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    
    46Notes to Consolidated and Combined Consolidated Financial Statements
    
    
    47
 40




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
       /s/ Deloitte & Touche LLP
 
 41




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##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
   
 /s/ PricewaterhouseCoopers LLP
   42




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Balance Sheets
(Dollars in Thousands, Except Per Share Data)
 December 31,December 31,
    
    20082009
    
    (Combined(Consolidated)
    
    Consolidated)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    30,456
    
    
    $
    6,988Accounts Receivable, net
    
    
    30,497
    
    
    
    9,077Prepaid Expenses and Other Current Assets
    
    
    2,904
    
    
    
    3,021Deferred Tax Assets, net
    
    
    1,546
    
    
    
    268Total Current Assets
    
    
    65,403
    
    
    
    19,354Premises and Equipment, net
    
    
    11,408
    
    
    
    9,304Intangible Assets, net
    
    
    33,719
    
    
    
    36,391Goodwill
    
    
    9,324
    
    
    
    11,540Other Non-current Assets
    
    
    702
    
    
    
    86Total Assets
    
    $
    120,556
    
    
    $
    76,675LIABILITIES AND EQUITYCurrent Liabilities:Accounts Payable and Accrued Expenses
    
    $
    24,192
    
    
    $
    4,767Capital Lease Obligations  Current
    
    
    536
    
    
    
    916Line of Credit and Other Secured Borrowings
    
    
    
    
    
    
    1,123Other Current Liabilities
    
    
    5,939
    
    
    
    6,213Total Current Liabilities
    
    
    30,667
    
    
    
    13,019Capital Lease Obligations  Non-current
    
    
    128
    
    
    
    440Deferred Tax Liability, net
    
    
    2,769
    
    
    
    2,670Other Non-current Liabilities
    
    
    644
    
    
    
    Commitment and Contingencies (Note 14)Stockholders and Invested EquityCommon Stock ($1.00 par value;
100,000,000 shares authorized;
24,144,914 shares issued and
outstanding in 2009; EUR 25 par
value, 263,412 shares
authorized, issued and
outstanding in 2008
    
    
    24,145
    
    
    
    6,059Retained Earnings
    
    
    11,665
    
    
    
    Additional Paid-in Capital
    
    
    50,538
    
    
    
    Invested Equity
    
    
    
    
    
    
    54,487Total Stockholders Equity
    
    
    86,348
    
    
    
    60,546Total Liabilities and Equity
    
    $
    120,556
    
    
    $
    76,675
  43




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Statements of Operations
(Dollars in Thousands, Except Share Data)
 For the Years Ended December 31,2008
    
    20072009
    
    (Combined
    
    (Combined(Consolidated)
    
    Consolidated)
    
    Consolidated)Revenue
    
    $
    202,812
    
    
    $
    160,363
    
    
    $
    134,906Cost of Revenue
    
    
    126,797
    
    
    
    115,048
    
    
    
    96,954Gross Profit
    
    
    76,015
    
    
    
    45,315
    
    
    
    37,952Selling, General and Administrative Expenses
    
    
    39,473
    
    
    
    28,088
    
    
    
    27,930Income from Operations
    
    
    36,542
    
    
    
    17,227
    
    
    
    10,022Other Income (Expense), net
    
    
    1,034
    
    
    
    (2,626
    )
    
    
    (1,743
    )Income Before Income Taxes
    
    
    37,576
    
    
    
    14,601
    
    
    
    8,279Income Tax Provision
    
    
    (11,605
    )
    
    
    (5,382
    )
    
    
    (1,564
    )Net Income
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715Earnings Per ShareBasic
    
    $
    1.08
    
    
    $
    0.38
    
    
    $
    0.28Diluted
    
    $
    1.07
    
    
    $
    0.38
    
    
    $
    0.28Weighted Average Shares OutstandingBasic
    
    
    24,061,912
    
    
    
    24,050,340
    
    
    
    24,050,340Diluted
    
    
    24,260,651
    
    
    
    24,050,340
    
    
    
    24,050,340Transactions with Related Parties included
above:Revenue
    
    $
    94,897
    
    
    $
    64,251
    
    
    $
    59,350Selling, General and Administrative Expenses
    
    $
    4,308
    
    
    $
    6,208
    
    
    $
    8,864Interest Expense
    
    $
    1,290
    
    
    $
    2,269
    
    
    $
    965
  44




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Consolidated Statements of Changes in Stockholders and Invested Equity
(Dollars in Thousands)
 AdditionalInvested
    
    Common Stock
    

    Retained

    
    Paid-inEquity
    
    Shares
    
    
    
    
    
    Earnings
    
    Capital
    
    TotalBalance, January 1, 2007
    
    $
    8,789
    
    
    
    263,412
    
    
    $
    6,059
    
    
    $
    
    
    
    $
    
    
    
    $
    14,848Net Income
    
    
    6,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,715Contribution for Acquisition
    
    
    56,980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,980Net Transfers to Parent
    
    
    (2,869
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,869
    )Balance, December 31, 2007
    
    
    69,615
    
    
    
    263,412
    
    
    
    6,059
    
    
    
    
    
    
    
    
    
    
    
    75,674Net Income
    
    
    9,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,219Net Transfers to Parent
    
    
    (24,347
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,347
    )Balance, December 31, 2008
    
    
    54,487
    
    
    
    263,412
    
    
    
    6,059
    
    
    
    
    
    
    
    
    
    
    
    60,546
    
    
    Comprehensive IncomeShare Issuance due to
Conversion to a Luxembourg
Societé Anonyme
    
    
    (3,283
    )
    
    
    9,078,495
    
    
    
    3,283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Net Income for
Pre-separation Period
    
    
    14,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,306
    
    
    
    14,306Net transfers to Ocwen
    
    
    (1,354
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,354
    )
    
    
    Consummation of Spin-off
Transaction and Distribution to
Common Stock
    
    
    (64,156
    )
    
    
    14,732,428
    
    
    
    14,732
    
    
    
    
    
    
    
    49,424
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    296
    
    
    
    Exercise of stock options
    
    
    
    
    
    
    70,579
    
    
    
    71
    
    
    
    
    
    
    
    818
    
    
    
    889
    
    
    
    Net Income for
Post-separation Period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,665
    
    
    
    
    
    
    
    11,665
    
    
    
    11,665Balance, December 31, 2009
    
    $
    
    
    
    
    24,144,914
    
    
    $
    24,145
    
    
    $
    11,665
    
    
    $
    50,538
    
    
    $
    86,348
    
    
    $
    25,971
  45




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Statements of Cash Flows
(Dollars in Thousands)
 For the Years Ended December 31,2008
    
    20072009
    
    (Combined
    
    (Combined(Consolidated)
    
    Consolidated)
    
    Consolidated)Cash flows from operating activities:Net income
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715Reconciling Items:Depreciation and Amortization
    
    
    5,432
    
    
    
    7,836
    
    
    
    6,979Amortization of Intangible Assets
    
    
    2,672
    
    
    
    2,554
    
    
    
    1,555Share-based compensation expense
    
    
    296
    
    
    
    
    
    
    
    Deferred Income Taxes, net
    
    
    (1,179
    )
    
    
    1,197
    
    
    
    (1,589
    )Loss on Disposal of Premises and Equipment
    
    
    
    
    
    
    249
    
    
    
    Changes in Operating Assets and Liabilities, net of Acquisitions:Accounts Receivable, net
    
    
    (21,420
    )
    
    
    7,693
    
    
    
    (4,487
    )Prepaid Expenses and Other Current Assets
    
    
    117
    
    
    
    305
    
    
    
    587Other Assets
    
    
    (616
    )
    
    
    57
    
    
    
    207Accounts Payable and Accrued Expenses
    
    
    19,425
    
    
    
    (3,370
    )
    
    
    (2,551
    )Other Current and Non-Current Liabilities
    
    
    2,586
    
    
    
    3,165
    
    
    
    613Net Cash Flow from Operating Activities
    
    
    33,284
    
    
    
    28,905
    
    
    
    8,029Cash flows from investing activities:Additions to Premises and Equipment, net
    
    
    (7,536
    )
    
    
    (5,216
    )
    
    
    (4,236
    )Acquisition of NCI Holdings, Inc., net of Cash Acquired
    
    
    
    
    
    
    
    
    
    
    (52,541
    )Net Cash Flow from Investing Activities
    
    
    (7,536
    )
    
    
    (5,216
    )
    
    
    (56,777
    )Cash flows from Financing Activities:Repayment of Short-Term Borrowings
    
    
    
    
    
    
    (147
    )
    
    
    Principal Payments on Capital Lease Obligations
    
    
    (692
    )
    
    
    (2,275
    )
    
    
    (811
    )Proceeds from Borrowing of Long-Term Debt
    
    
    
    
    
    
    
    
    
    
    27,500Repayment of Long-Term Debt
    
    
    
    
    
    
    
    
    
    
    (27,500
    )Borrowings from Line of Credit
    
    
    
    
    
    
    33,417
    
    
    
    Payments of Line of Credit
    
    
    (1,123
    )
    
    
    (32,294
    )
    
    
    Proceeds from Stock Option Exercises
    
    
    889
    
    
    
    
    
    
    
    Net (Distribution to) Contribution from Parent
    
    
    (1,354
    )
    
    
    (21,090
    )
    
    
    55,247Net Cash Flow from Financing Activities
    
    
    (2,280
    )
    
    
    (22,389
    )
    
    
    54,436Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    23,468
    
    
    
    1,300
    
    
    
    5,688Cash and Cash Equivalents at the Beginning of the Year
    
    
    6,988
    
    
    
    5,688
    
    
    
    Cash and Cash Equivalents at the End of the Year
    
    $
    30,456
    
    
    $
    6,988
    
    
    $
    5,688Supplemental Cash Flow InformationInterest Paid
    
    $
    25
    
    
    $
    121
    
    
    $
    750Income Taxes Paid
    
    $
    795
    
    
    $
    26
    
    
    $
    Non-cash Investing and Financing ActivitiesReduction in Income Tax Payable from Tax Amortizable Goodwill
    
    $
    2,216
    
    
    $
    3,622
    
    
    $
    1,136Increase in Common Stock due to the Companys Conversion to a
Luxembourg Société Anonyme
    
    $
    3,283
    
    
    $
    
    
    
    $
    
  46




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements
 1. ORGANIZATION AND BASIS OF PRESENTATION
    Separation
  Basis of Presentation, Consolidated
 Basis of Presentation, Combined Consolidated
  47




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 RetainedEarningsCommon
    
    (Accumulated
    
    Invested(in thousands)
    
    Stock
    
    Deficit)
    
    Equity
    
    TotalDecember 31, 2008:Altisource Portfolio Solutions S.A.
    
    $
    6,059
    
    
    $
    
    
    
    $
    54,487
    
    
    $
    60,546NCI Holdings, Inc.
    
    
    29,480
    
    
    
    (8,379
    )
    
    
    
    
    
    
    21,101Premium Title Services, Inc.
    
    
    400
    
    
    
    (628
    )
    
    
    
    
    
    
    (228
    )Portfolio Management Outsourcing
Solutions, LLC
    
    
    
    
    
    
    (213
    )
    
    
    
    
    
    
    (213
    )Eliminations
    
    
    (29,880
    )
    
    
    9,220
    
    
    
    
    
    
    
    (20,660
    )Total Stockholders Equity
    
    $
    6,059
    
    
    $
    
    
    
    $
    54,487
    
    
    $
    60,546
    48




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Accounting
 Principles of Consolidation
 Use of Estimates
 Cash and Cash Equivalents
 Accounts Receivable, Net
 Premises and Equipment, Net
 Furniture and Fixtures
    
    5 yearsOffice Equipment
    
    5 yearsComputer Hardware and Software
    
    2   3 yearsLeasehold Improvements
    
    Shorter of useful life or term of lease
    Business Combinations
 49




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Goodwill and Intangible Assets, Net 
     Fair Value of Financial Instruments 
 Foreign Currency Translation and Transactions
 Defined Contribution 401(k) Plan
 Equity-based Compensation 
 Earnings Per Share
 50




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Revenue Recognition
 Mortgage Services
 Financial Services
 Technology Products
 Income Taxes
  51




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  3. ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED
    4. TRANSACTIONS WITH RELATED PARTIES
   2009Mortgage Services
    
    
    72
    %Technology Products
    
    
    44Financial Services
    
    
    Consolidated Revenues
    
    
    47
  52




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Allocation of Corporate Costs
   Separation Related Expenditures
  Agreements with Ocwen
  Separation Agreement
 Transition Services Agreement
 Tax Matters Agreement
 Employee Matters Agreement
 Intellectual Property Agreement
 53




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Services Agreement Technology Products Services Agreement
 Data Center and Disaster Recovery Agreement
 5. ACCOUNTS RECEIVABLE, NET
  (in thousands)
    
    December 31,2009
    
    2008Third-party Accounts Receivable
    
    $
    11,638
    
    
    $
    8,498Unbilled Fees
    
    
    9,073
    
    
    
    1,356Receivable from Ocwen
    
    
    10,066
    
    
    
    Other Receivables
    
    
    416
    
    
    
    31,193
    
    
    
    9,854Allowance for Doubtful Accounts
    
    
    (696
    )
    
    
    (777
    )Total
    
    $
    30,497
    
    
    $
    9,077
  (in thousands)Balance, January 1, 2007
    
    $
    765Bad Debt Expense
    
    
    1,779Recoveries
    
    
    (1,134
    )Write-offs
    
    
    (451
    )Balance, December 31, 2007
    
    
    959Bad Debt Expense
    
    
    864Recoveries
    
    
    (449
    )Write-offs
    
    
    (597
    )Balance, December 31, 2008
    
    
    777Bad Debt Expense
    
    
    338Recoveries
    
    
    (205
    )Write-offs
    
    
    (214
    )Balance, December 31, 2009
    
    $
    696
 54




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
  (in thousands)
    
    December 31,2009
    
    2008Prepaid Expenses
    
    $
    1,471
    
    
    $
    1,792Other Current Assets
    
    
    1,433
    
    
    
    1,229Total
    
    $
    2,904
    
    
    $
    3,021
 7. PREMISES AND EQUIPMENT, NET
  (in thousands)
    
    December 31,2009
    
    2008Computer Hardware and Software
    
    $
    23,591
    
    
    $
    86,714Office Equipment and Other
    
    
    9,203
    
    
    
    6,072Furniture and Fixtures
    
    
    2,663
    
    
    
    1,270Leasehold Improvements
    
    
    3,441
    
    
    
    2,04738,898
    
    
    
    96,103Less: Accumulated Depreciation and Amortization
    
    
    (27,490
    )
    
    
    (86,799
    )Total
    
    $
    11,408
    
    
    $
    9,304
  8. GOODWILL AND INTANGIBLE ASSETS, NET
 Goodwill
  55




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Technology
    
    Financial(in thousands)
    
    Products
    
    Services
    
    TotalBalance, January 1, 2008
    
    $
    1,618
    
    
    $
    13,179
    
    
    $
    14,797Purchase Price Adjustments (a)
    
    
    
    
    
    
    365
    
    
    
    365Tax Amortizable Goodwill (b)
    
    
    
    
    
    
    (3,622
    )
    
    
    (3,622
    )Balance, December 31, 2008
    
    
    1,618
    
    
    
    9,922
    
    
    
    11,540Tax Amortizable Goodwill (b)
    
    
    
    
    
    
    (2,216
    )
    
    
    (2,216
    )Balance, December 31, 2009
    
    $
    1,618
    
    
    $
    7,706
    
    
    $
    9,324
 
 (a)
    
    Purchase price adjustments related to the finalization of the NCI purchase accounting, which
included fair valuing the assets acquired and liabilities assumed, recording of deal related
costs and deferred taxes.(b)
    
    Prior to our acquisition of NCI in 2007, NCI made an acquisition which created tax-deductible
goodwill that amortizes for tax purposes over time. When we acquired NCI in 2007, we recorded
a lesser amount of goodwill for financial reporting purposes than what had previously been
recorded at NCI for tax purposes. This difference between the amount of goodwill recorded for
financial reporting purposes and the amount recorded for taxes is referred to as Component 2
goodwill and it results in our recording periodic reductions of our book goodwill balance in
our consolidated financial statements. The reduction of book goodwill also resulted in a
reduction of equity of $2.2 million in 2009 and $3.6 million in 2008. We will continue to
amortize the remaining Component 2 goodwill for U.S. tax purposes, which will result in our
reducing book goodwill to zero and then reducing intangible assets by the remaining tax
benefits of the Component 2 goodwill as they are realized in our tax returns. The balance of
Component 2 goodwill remaining was $19.3 million as of December 31, 2009, which should
generate $12.3 million of reductions of goodwill and then intangible assets when the benefit
can be realized for U.S. tax purposes. Intangible Assets, Net
   WeightedAverage EstimatedUseful Life (Years)
    
    Gross Carrying Amount
    
    Accumulated Amortization
    
    Net Book Value2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Definite-lived
Intangible AssetsTrademarks
    
    
    5
    
    
    $
    2,800
    
    
    $
    2,800
    
    
    $
    1,447
    
    
    $
    887
    
    
    $
    1,353
    
    
    $
    1,913Customer Lists
    
    
    19
    
    
    
    37,700
    
    
    
    37,700
    
    
    
    5,334
    
    
    
    3,222
    
    
    
    32,366
    
    
    
    34,478Total Intangible Assets
    
    
    
    
    
    $
    40,500
    
    
    $
    40,500
    
    
    $
    6,781
    
    
    $
    4,109
    
    
    $
    33,719
    
    
    $
    36,391
  56




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  (in thousands)
    
    December 31,2009
    
    2008Accounts Payable
    
    $
    1,114
    
    
    $
    283Income Taxes Payable, Net
    
    
    4,853
    
    
    
    Payable to Ocwen
    
    
    2,716
    
    
    
    Accrued Expenses  General
    
    
    8,373
    
    
    
    2,518Accrued Salaries and Benefits
    
    
    7,136
    
    
    
    1,966Total
    
    $
    24,192
    
    
    $
    4,767
  (in thousands)
    
    December 31,2009
    
    2008Mortgage Charge-Off and Deficiency Collections
    
    $
    2,458
    
    
    $
    2,313Deferred Revenue
    
    
    989
    
    
    
    1,505Facility closure cost accrual, current portion
    
    
    272
    
    
    
    Other
    
    
    2,220
    
    
    
    2,395Total
    
    $
    5,939
    
    
    $
    6,213
 Facility Closure Costs
  Facility
    
    Termination(in thousands)
    
    Lease Costs
    
    Costs
    
    Benefits
    
    TotalBalance, January 1, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Additions Charged to Operations
    
    
    1,110
    
    
    
    747
    
    
    
    447
    
    
    
    2,304Disposals or Transfers of Property
    
    
    
    
    
    
    (747
    )
    
    
    
    
    
    
    (747
    )Payments
    
    
    (194
    )
    
    
    
    
    
    
    (447
    )
    
    
    (641
    )Balance, December 31, 2009
    
    
    916
    
    
    
    
    
    
    
    
    
    
    
    916Less: Long-term Portion
    
    
    (644
    )
    
    
    
    
    
    
    
    
    
    
    (644
    )Facility Closure Cost Accrual,
Current Portion
    
    $
    272
    
    
    $
    
    
    
    $
    
    
    
    $
    272
  10. LINE OF CREDIT AND OTHER SECURED BORROWINGS
  57




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  11. INCOME TAXES
   For the Years Ended December 31,2009
    
    2008
    
    2007Current:Domestic  Luxembourg
    
    $
    4,827
    
    
    $
    4
    
    
    $
    401Foreign  U.S. Federal
    
    
    8,321
    
    
    
    202
    
    
    
    1,567Foreign  U.S. State
    
    
    
    
    
    
    (379
    )
    
    
    (89
    )Foreign  Non U.S.
    
    
    26
    
    
    
    736
    
    
    
    13313,174
    
    
    
    563
    
    
    
    2,012Deferred:Domestic  Luxembourg
    
    
    (107
    )
    
    
    
    
    
    
    Foreign  U.S. Federal
    
    
    (1,581
    )
    
    
    (102
    )
    
    
    (664
    )Foreign  U.S. State
    
    
    (66
    )
    
    
    1,299
    
    
    
    136Foreign  Non U.S.
    
    
    185
    
    
    
    
    
    
    
    (1,056
    )(1,569
    )
    
    
    1,197
    
    
    
    (1,584
    )Benefit Applied to Reduce Goodwill
    
    
    
    
    
    
    3,622
    
    
    
    1,136Total
    
    $
    11,605
    
    
    $
    5,382
    
    
    $
    1,564
 58




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  December 31,(in thousands)
    
    2009
    
    2008Current Deferred Tax Assets:Allowance for Doubtful Accounts and Other Reserves
    
    $
    1,074
    
    
    $
    349Accrued Expenses
    
    
    751
    
    
    
    561Current Deferred Tax Liabilities:Prepaid Expense
    
    
    (279
    )
    
    
    (642
    )Current Deferred Tax Asset, Net:
    
    $
    1,546
    
    
    $
    268Non-current Deferred Tax Assets:Non Operating Loss Carryforwards  U.S. Federal
    
    $
    6,644
    
    
    $
    6,908Non Operating Loss Carryforwards  U.S. State
    
    
    1,623
    
    
    
    1,964Depreciation
    
    
    1,680
    
    
    
    1,684Non-U.S. Deferred Tax Asset
    
    
    692
    
    
    
    1,056U.S. State Taxes
    
    
    
    
    
    
    103Other
    
    
    193
    
    
    
    Non-current Deferred Tax Liabilities:Intangible assets
    
    
    (11,013
    )
    
    
    (11,986
    )Restricted stock
    
    
    
    
    
    
    (474
    )U.S. State Taxes
    
    
    (1,068
    )
    
    
    Other
    
    
    
    
    
    
    (63
    )(1,249
    )
    
    
    (808
    )Valuation Allowance
    
    
    (1,520
    )
    
    
    (1,862
    )Non-current Deferred Tax Liabilities, net
    
    $
    (2,769
    )
    
    
    (2,670
    )Net Deferred Tax Liability
    
    $
    (1,223
    )
    
    
    (2,402
    )
     59




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  For the Years Ended December 31,2009
    
    2008
    
    2007Statutory Tax Rate
    
    
    28.6
    %
    
    
    29.6
    %
    
    $
    29.6
    %Differential of Tax Rates in Non-Luxembourg Jurisdictions
    
    
    2.6
    
    
    
    11.0
    
    
    
    (0.8
    )Valuation Allowances
    
    
    (0.9
    )
    
    
    9.1
    
    
    
    1.8Indefinite Deferral on Earnings of Non- U.S. Affiliates
    
    
    
    
    
    
    (12.8
    )
    
    
    (11.7
    )Indefinite Deferral on Earnings of Non- Luxembourg Affiliates
    
    
    0.6
    
    
    
    
    
    
    
    30.9
    %
    
    
    36.9
    %
    
    
    18.9
    %
   12. EARNINGS PER SHARE
    For the Years Ended December 31,(dollars in thousands, except per share amounts)
    
    2009
    
    2008
    
    2007Net Income
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715Weighted-Average Common Shares Outstanding, Basic
    
    
    24,061,912
    
    
    
    24,050,340
    
    
    
    24,050,340
 60




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 For the Years Ended December 31,(dollars in thousands, except per share amounts)
    
    2009
    
    2008
    
    2007Dilutive Effect of Stock Options
    
    
    195,673
    
    
    
    
    
    
    
    Dilutive Effect of Restricted Shares
    
    
    3,066
    
    
    
    
    
    
    
    Weighted-Average Common Shares Outstanding, Diluted
    
    
    24,260,651
    
    
    
    24,050,340
    
    
    
    24,050,340Earnings Per ShareBasic
    
    $
    1.08
    
    
    $
    0.38
    
    
    $
    0.28Diluted
    
    $
    1.07
    
    
    $
    0.38
    
    
    $
    0.28
  13. STOCKHOLDERS EQUITY AND EQUITY-BASED COMPENSATION
 Common Stock
  Equity Incentive Plan
 Prior to Separation
   
    
    a new Altisource stock award to acquire the number of shares of Altisource common stock
equal to the product of (a) the number of Ocwen stock awards held on the Separation date and
(b) the distribution ratio of one share of Altisource common stock for every three shares of
Ocwen common stock; and
    
    an adjusted Ocwen award for the same number of shares of Ocwen common stock with a reduced
exercise price for stock option awards. Each company will record compensation expense for the
stock awards held by its employees even though some of the awards relate to the common stock
of the other company. As a result of the Separation, we did not record any incremental
compensation expense.
 Post-Separation
  61




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Equity-Based Compensation
   Stock Options
 Service-based Options.
 Market-based Options
  Black-Scholes
    
    BinomialRisk-free
Interest Rate
    
    
    2.64
    %
    
    
    0.50  3.86
    %Expected
Stock Price Volatility
    
    
    39
    %
    
    
    38  46
    %Expected
Dividend Yield
    
    
    
    
    
    
    Expected
Option Life (in years)
    
    
    5
    
    
    
    Contractual Life (in years)
    
    
    
    
    
    
    10Fair Value
    
    $
    5.35
    
    
    $4.54 and $5.33
  December 31, 2009Weighted-Average
Fair Value at Date of Grant
    
    $
    5.14Intrinsic
Value of Options Exercised
    
    $
    344,623Fair Value
of Options Vested
    
    $
    441,213
  62




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
   WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicNumber of
    
    
    Exercise
    
    
    Term
    
    
    ValueOptions
    
    
    Price
    
    
    (in years)
    
    
    (in thousands)Outstanding at December 31, 2008
    
    
    
    
    
    $
    Issued at Separation
    
    
    3,115,173
    
    
    
    9.76Granted
    
    
    146,666
    
    
    
    14.15Exercised
    
    
    (70,579
    )
    
    
    12.58Forfeited
    
    
    (621
    )
    
    
    12.78Outstanding at December 31, 2009
    
    
    3,190,639
    
    
    $
    9.90
    
    
    
    7.5
    
    
    $
    35,374Exercisable at December 31, 2009
    
    
    1,148,949
    
    
    $
    9.82
    
    
    
    5.4
    
    
    $
    12,831
  Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    Weighted
    
    WeightedAverage
    
    Average
    
    
    
    
    
    Average
    
    AverageExercise
    
    
    
    
    
    Remaining
    
    Exercise
    
    
    
    
    
    Remaining
    
    ExercisePrice Range
    
    Number
    
    Contractual Life
    
    Price
    
    Number
    
    Contractual Life
    
    Price$1.00 - $3.00
    
    
    26,109
    
    
    
    3.1
    
    
    $
    2.23
    
    
    
    26,109
    
    
    
    3.1
    
    
    $
    2.23$3.01 - $6.00
    
    
    117,173
    
    
    
    2.0
    
    
    
    4.31
    
    
    
    117,173
    
    
    
    2.0
    
    
    
    4.31$6.01 - $9.00
    
    
    160,933
    
    
    
    2.0
    
    
    
    7.66
    
    
    
    160,933
    
    
    
    2.0
    
    
    
    7.66$9.01 - $12.00(a)
    
    
    2,439,736
    
    
    
    8.3
    
    
    
    9.62
    
    
    
    568,972
    
    
    
    7.8
    
    
    
    9.80$12.01 - $15.00(a)
    
    
    446,688
    
    
    
    6.3
    
    
    
    14.17
    
    
    
    275,762
    
    
    
    4.4
    
    
    
    14.183,190,639
    
    
    
    
    
    
    
    
    
    
    
    1,148,949
 
 (a)
    
    These options contain market-based components as described above. All other options are
time-based awards. 63




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Restricted Shares
  WeightedAverageGrant DateRestricted Shares
    
    Fair ValueOutstanding at December 31, 2008
    
    
    
    
    
    $
    Issued at Separation
    
    
    3,294
    
    
    
    18.00Vested
    
    
    
    
    
    
    Forfeited
    
    
    (58
    )
    
    
    13.00Outstanding at December 31, 2009
    
    
    3,236
    
    
    $
    18.00
 14. COMMITMENTS AND CONTINGENCIES
 Litigation
 Noble Systems Corp.
 Nationwide Inflection, LLC.
  Taxation
  64




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Leases
  Capital Lease
    
    
    OperatingLease(in thousands)
    
    Obligations
    
    
    Obligations2010
    
    $
    562
    
    
    $
    4,1102011
    
    
    96
    
    
    
    3,4582012
    
    
    32
    
    
    
    1,9572013
    
    
    
    
    
    
    2782014
    
    
    
    
    
    
    188690
    
    
    $
    9,991Less: Amounts Representing Interest
    
    
    (26
    )Capital Lease Obligations
    
    
    664Less: Current Portion Under Capital Lease Obligation
    
    
    (536
    )Long-term Portion Under Capital Lease Obligation
    
    $
    128
  15. COST OF REVENUE
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Compensation and Benefits
    
    $
    51,251
    
    
    $
    59,311
    
    
    $
    44,886Outside Fees and Services
    
    
    59,103
    
    
    
    35,825
    
    
    
    32,830Technology and Communications
    
    
    16,443
    
    
    
    19,912
    
    
    
    19,238$
    126,797
    
    
    $
    115,048
    
    
    $
    96,954
 65




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 16. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Occupancy and Equipment
    
    $
    8,456
    
    
    $
    8,125
    
    
    $
    7,999Corporate Allocations
    
    
    4,096
    
    
    
    6,208
    
    
    
    8,864Professional Services
    
    
    10,252
    
    
    
    3,270
    
    
    
    3,121Other
    
    
    16,669
    
    
    
    10,485
    
    
    
    7,946$
    39,473
    
    
    $
    28,088
    
    
    $
    27,930
  17. OTHER INCOME (EXPENSE), NET
  For the Years Ended December 31,(in thousands)
    
    2009
    
    2008
    
    2007Interest Income
    
    $
    16
    
    
    $
    16
    
    
    $
    6Interest Expense
    
    
    (1,660
    )
    
    
    (2,607
    )
    
    
    (1,932
    )Other, net
    
    
    2,678
    
    
    
    (35
    )
    
    
    183$
    1,034
    
    
    $
    (2,626
    )
    
    $
    (1,743
    )
   18. SEGMENT REPORTING
   Mortgage Services Financial Services Technology
Products
 66




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Corporate Items and Eliminations
  For the Year Ended December 31, 2009Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    103,098
    
    
    $
    64,434
    
    
    $
    47,453
    
    
    $
    (12,173
    )
    
    $
    202,812Cost of Revenue
    
    
    60,735
    
    
    
    52,871
    
    
    
    24,477
    
    
    
    (11,286
    )
    
    
    126,797Gross Profit
    
    
    42,363
    
    
    
    11,563
    
    
    
    22,976
    
    
    
    (887
    )
    
    
    76,015Selling, General and
Administrative Expenses
    
    
    5,625
    
    
    
    19,267
    
    
    
    4,731
    
    
    
    9,850
    
    
    
    39,473Income (Loss) from Operations
    
    
    36,738
    
    
    
    (7,704
    )
    
    
    18,245
    
    
    
    (10,737
    )
    
    
    36,542Other income (expense), net
    
    
    31
    
    
    
    1,324
    
    
    
    (319
    )
    
    
    (2
    )
    
    
    1,034Income (Loss) Before Income
Taxes
    
    $
    36,769
    
    
    $
    (6,380
    )
    
    $
    17,926
    
    
    $
    (10,739
    )
    
    $
    37,576Depreciation
    
    $
    48
    
    
    $
    2,402
    
    
    $
    2,906
    
    
    $
    76
    
    
    $
    5,432Amortization of Intangibles
    
    $
    
    
    
    $
    2,672
    
    
    $
    
    
    
    $
    
    
    
    $
    2,672Transactions with Related
Parties Included Above:Revenue
    
    $
    74,089
    
    
    $
    98
    
    
    $
    20,710
    
    
    $
    
    
    
    $
    94,897Selling, General and
Administrative Expenses
    
    $
    2,712
    
    
    $
    467
    
    
    $
    1,517
    
    
    $
    (388
    )
    
    $
    4,308Interest Expense
    
    $
    30
    
    
    $
    1,029
    
    
    $
    231
    
    
    $
    
    
    
    $
    1,290
 67




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 For the Year Ended December 31, 2008Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    54,956
    
    
    $
    73,835
    
    
    $
    45,283
    
    
    $
    (13,711
    )
    
    $
    160,363Cost of Revenue
    
    
    36,392
    
    
    
    62,590
    
    
    
    29,777
    
    
    
    (13,711
    )
    
    
    115,048Gross Profit
    
    
    18,564
    
    
    
    11,245
    
    
    
    15,506
    
    
    
    
    
    
    
    45,315Selling, General and
Administrative Expenses
    
    
    5,027
    
    
    
    17,168
    
    
    
    6,118
    
    
    
    (225
    )
    
    
    28,088Income (Loss) from Operations
    
    
    13,537
    
    
    
    (5,923
    )
    
    
    9,388
    
    
    
    225
    
    
    
    17,227Other income (expense), net
    
    
    (58
    )
    
    
    (1,952
    )
    
    
    (391
    )
    
    
    (225
    )
    
    
    (2,626
    )Income (Loss) Before Income
Taxes
    
    $
    13,479
    
    
    $
    (7,875
    )
    
    $
    8,997
    
    
    $
    
    
    
    $
    14,601Depreciation
    
    $
    34
    
    
    $
    3,202
    
    
    $
    4,600
    
    
    $
    
    
    
    $
    7,836Amortization of Intangibles
    
    $
    
    
    
    $
    2,554
    
    
    $
    
    
    
    $
    
    
    
    $
    2,554Transactions with Related
Parties Included Above:Revenue
    
    $
    41,635
    
    
    $
    1,181
    
    
    $
    35,146
    
    
    $
    (13,711
    )
    
    $
    64,251
 For the Year Ended December 31, 2007Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations(1)
    
    AltisourceRevenue
    
    $
    64,260
    
    
    $
    41,293
    
    
    $
    36,235
    
    
    $
    (6,882
    )
    
    $
    134,906Cost of Revenue
    
    
    44,158
    
    
    
    32,324
    
    
    
    27,354
    
    
    
    (6,882
    )
    
    
    96,954Gross Profit
    
    
    20,102
    
    
    
    8,969
    
    
    
    8,881
    
    
    
    
    
    
    
    37,952Selling, General and
Administrative Expenses
    
    
    7,876
    
    
    
    14,787
    
    
    
    6,359
    
    
    
    (1,092
    )
    
    
    27,930Income (Loss) from Operations
    
    
    12,226
    
    
    
    (5,818
    )
    
    
    2,522
    
    
    
    1,092
    
    
    
    10,022Other income (expense), net
    
    
    (90
    )
    
    
    (1,269
    )
    
    
    708
    
    
    
    (1,092
    )
    
    
    (1,743
    )Income (Loss) Before Income
Taxes
    
    $
    12,136
    
    
    $
    (7,087
    )
    
    $
    3,230
    
    
    $
    
    
    
    $
    8,279Depreciation
    
    $
    292
    
    
    $
    980
    
    
    $
    5,707
    
    
    $
    
    
    
    $
    6,979Amortization of Intangibles
    
    $
    
    
    
    $
    1,555
    
    
    $
    
    
    
    $
    
    
    
    $
    1,555Transactions with Related
Parties Included Above:Revenue
    
    $
    40,646
    
    
    $
    1,044
    
    
    $
    24,542
    
    
    $
    (6,882
    )
    
    $
    59,350
 68




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Corporate Items and
    
    Consolidated(in thousands)
    
    Mortgage Services
    
    Financial Services
    
    Technology Products
    
    Eliminations
    
    AltisourceTotal Assets:December 31, 2009
    
    $
    8,259
    
    
    $
    51,579
    
    
    $
    15,677
    
    
    $
    45,041
    
    
    $
    120,556December 31, 2008
    
    $
    3,361
    
    
    $
    59,744
    
    
    $
    8,836
    
    
    $
    4,734
    
    
    $
    76,675
 19. QUARTERLY FINANCIAL DATA (UNAUDITED)
 2009 Quarter EndedDecember 31,
    
    September 30,
    
    June 30,
    
    March 31,Revenue
    
    $
    56,326
    
    
    $
    54,064
    
    
    $
    49,803
    
    
    $
    42,619Gross Profit
    
    
    21,334
    
    
    
    20,611
    
    
    
    19,454
    
    
    
    14,616Income Before Income Taxes
    
    
    8,956
    
    
    
    12,092
    
    
    
    10,009
    
    
    
    6,519Net Income
    
    
    5,873
    
    
    
    8,644
    
    
    
    7,015
    
    
    
    4,439Net Income Per ShareBasic
    
    $
    0.25
    
    
    $
    0.36
    
    
    $
    0.29
    
    
    $
    0.18Diluted
    
    $
    0.24
    
    
    $
    0.36
    
    
    $
    0.29
    
    
    $
    0.18Weighted Average Shares OutstandingBasic
    
    
    24,082,947
    
    
    
    24,050,340
    
    
    
    24,050,340
    
    
    
    24,050,340Diluted
    
    
    24,338,474
    
    
    
    24,050,340
    
    
    
    24,050,340
    
    
    
    24,050,340
 2008 Quarter EndedDecember 31,
    
    September 30,
    
    June 30,
    
    March 31,Revenue
    
    $
    38,940
    
    
    $
    38,007
    
    
    $
    40,868
    
    
    $
    42,548Gross Profit
    
    
    12,528
    
    
    
    9,080
    
    
    
    10,835
    
    
    
    12,872Income Before Income Taxes
    
    
    5,042
    
    
    
    1,311
    
    
    
    3,424
    
    
    
    4,824Net Income
    
    
    2,343
    
    
    
    943
    
    
    
    2,463
    
    
    
    3,470Net Income Per ShareBasic and Diluted
    
    $
    0.10
    
    
    $
    0.04
    
    
    $
    0.10
    
    
    $
    0.14Weighted Average
Shares OutstandingBasic and Diluted
    
    
    24,050,340
    
    
    
    24,050,340
    
    
    
    24,050,340
    
    
    
    24,050,340
 20. SUBSEQUENT EVENTS
 Acquisition of The Mortgage Partnership of America, L.L.C.
  69




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated Financial Statements (continued)
    Noble Systems Corp Arbitration
  70




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
    Managements Report on Internal Control Over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION
  71




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
  72




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a)
    
    The following documents are filed as part of this annual report.1.
    
    Financial StatementsSee Item 8 above.2.
    
    Financial Statement Schedules:Schedules for which provision is made in the applicable accounting regulations of the SEC
are not required under the related instructions or are not applicable, and therefore have
been omitted.3.
    
    Exhibits:
 ExhibitNumber
    
    Exhibit Description2.1
    
    Form of Separation Agreement between Altisource Portfolio Solutions S.A. and Ocwen Financial
Corporation (incorporated by reference to Exhibit 2.1 of the Registrants Form 10-12B/A 
Amendment No. 1 to Form 10, as filed with the Commission on June 29, 2009)3.1
    
    Articles of Incorporation of Altisource Portfolio Solutions S.A. (incorporated by reference
to Exhibit 2.1 of the Registrants Form 10-12B/A  Amendment No. 1 to Form 10, as filed with
the Commission on June 29, 2009)10.1
    
    Separation Agreement, dated as of August 10, 2009, by and between Altisource Portfolio
Solutions S.A. and Ocwen Financial Corporation (incorporated by reference to Exhibit 10.1 of
the Registrants Current Report on Form 8-K, as filed with the Commission on August 13, 2009)10.2
    
    Form of Tax Matters Agreement between Altisource Solutions S.à r.l. and Ocwen Financial
Corporation (incorporated by reference to Exhibit 10.2 of the Registrants Current Report on
Form 8-K, as filed with the Commission on August 13, 2009)10.3
    
    Form of Employee Matters Agreement between Altisource Solutions S.à r.l. and Ocwen Financial
Corporation (incorporated by reference to Exhibit 10.3 of the Registrants Current Report on
Form 8-K, as filed with the Commission on August 13, 2009)10.4
    
    Intellectual Property Agreement, dated as of August 10, 2009, by and between Altisource
Solutions S.à r.l. and Ocwen Financial Corporation (incorporated by reference to Exhibit 10.8
of the Registrants Current Report on Form 8-K, as filed with the Commission on August 13,
2009)10.5
    
    Form of Services Agreement between Altisource Solutions S.à r.l. and Ocwen Financial
Corporation (incorporated by reference to Exhibit 10.5 of the Registrants Current Report on
Form 8-K, as filed with the Commission on August 13, 2009)10.6
    
    Form of Technology Products Services Agreement between Altisource Solutions S.à r.l. and
Ocwen Financial Corporation (incorporated by reference to Exhibit 10.6 of the Registrants
Current Report on Form 8-K, as filed with the Commission on August 13, 2009)10.7
    
    Form of Data Center and Disaster Recovery Services Agreement between Altisource Solutions S.à
r.l. and Ocwen Financial Corporation (incorporated by reference to Exhibit 10.7 of the
Registrants Current Report on Form 8-K, as filed with the Commission on August 13, 2009)
 73




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ExhibitNumber
    
    Exhibit Description10.8
    
    Form of Altisource Portfolio Solutions S.A. 2009 Equity Incentive Plan (incorporated by
reference to Exhibit 10.8 of Amendment No. 1 to the Registration Statement on Form 10, as
filed with the Commission on June 29, 2009)10.9
    
    Employment Agreement by and between Altisource Solutions S.à r.l. and William B. Shepro
(incorporated by reference to Exhibit 10.9 of Amendment No. 1 to the Registration Statement on
Form 10, as filed with the Commission on June 29, 2009)10.10
    
    Employment Agreement by and between Altisource Solutions S.à r.l. and Robert D. Stiles
(incorporated by reference to Exhibit 10.10 of Amendment No. 1 to the Registration Statement
on Form 10, as filed with the Commission on June 29, 2009)10.11
    
    Employment Agreement by and between Altisource Solutions S.à r.l. and Kevin J. Wilcox
(incorporated by reference to Exhibit 10.11 of Amendment No. 1 to the Registration Statement
on Form 10, as filed with the Commission on June 29, 2009)10.12*
    
    Purchase and Sale Agreement, dated as of February 12, 2010, by and among Altisource
Portfolio Solutions S.A., and the Equity Interest Holders of The Mortgage Partnership of
America, L.L.C. and the Management Owners10.13*
    
    Form of Put Option Agreements21.1*
    
    Subsidiaries of the Registrant.23.1*
    
    Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP).23.2*
    
    Consent of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP).24.1
    
    Power of Attorney (included on signature page).31.1*
    
    Section 302 Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).31.2*
    
    Section 302 Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).32.1*
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith (certain appendices, exhibits and/or similar attachments to this agreement have
been omitted pursuant to Item 601(b)(2) of Regulation S-X. The registrant will furnish
supplementally a copy of any omitted appendix, exhibit or similar attachment to the SEC upon
request) 74




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##### Table of Contents



SIGNATURES
   Altisource Portfolio Solutions S.A.
By:/s/ William B. SheproName:
    William B. SheproTitle:
    Chief Executive Officer
(Principal Executive Officer)/s/ Robert D. StilesName:
    Robert D. StilesTitle:
    Chief Financial Officer
(Principal Financial Officer andPrincipal Accounting
Officer)  /s/ William B. SheproName:
    William B. SheproTitle:
    Chief Executive Officer
(Principal Executive Officer)/s/ Robert D. StilesName:
    Robert D. StilesTitle:
    Chief Financial Officer
(Principal Financial Officer andPrincipal Accounting
Officer) 75




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title/s/ William B. Erbey

William B. Erbey
    
    Chairman of the Board of Directors/s/ Robert L. DeNormandie

Robert L. DeNormandie
    
    Director/s/ Roland Müller-Ineichen

Roland Müller-Ineichen
    
    Director/s/ Timo Vättö

Timo Vättö
    
    Director/s/ William B. Shepro

William B. Shepro
    
    Director and Chief Executive Officer
(Principal Executive Officer)/s/ Robert D. Stiles

Robert D. Stiles
    
    Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
 76