##### 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, 2010
 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
    
    Not Applicable(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 291, Route dArlon
L-1150 Luxembourg
Grand Duchy of Luxembourg
(352) 24 69 79 00
 
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $1.00 par value
    
    NASDAQ Global Select Market
 
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 Form 10-K. o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART IITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    10ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    13ITEM 2. PROPERTIES
    
    
    13ITEM 3. LEGAL PROCEEDINGS
    
    
    13ITEM 4. RESERVED
    
    
    14PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    15ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    17ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    18ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    45ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    46ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
    
    
    81ITEM 9A. CONTROLS AND PROCEDURES
    
    
    81ITEM 9B. OTHER INFORMATION
    
    
    81PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    82ITEM 11. EXECUTIVE COMPENSATION
    
    
    82ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    82ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    82ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    82PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    83SIGNATURES
    
    
    85Exhibit 10.14Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 ITEM 1.
    
    BUSINESS
 This Annual Report on Form 10-K and the documents incorporated herein by reference contain
forward-looking statements based on expectations, estimate, and projections based on the date of
this filing. Actual results may differ materially from those expressed in forward-looking
statements. See Item 1A of Part 1 Risk Factors.
 Overview
    
    
    Recognized revenue of $301.4 million, representing a 49% increase over the
year-ended December 31, 2009.
 
    
    Recognized diluted earnings per share of $1.88 representing a 76% increase over the
year-ended December 31, 2009.
 
    
    Generated $52.8 million of operating cash flow representing on average $0.21 for
every dollar of Service Revenue generated.
  
    
    Acquired The Mortgage Partnership of America, LLC (MPA), manager of Best Partners
Mortgage Cooperative, Inc. (BPMC) doing business as Lenders One Mortgage Cooperative
(Lenders One). Lenders One is a national alliance of independent mortgage bankers.
 
    
    Returned $17.8 million to shareholders through the repurchase of 0.7 million shares.
 
    
    Expended $11.6 million on capital projects to facilitate the growth of operations,
primarily as a result of the growth of the residential loan portfolio of our largest
customer Ocwen Financial Corporation (Ocwen).
    - 3 -




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Reportable Segments
   Mortgage Services
     - 4 -




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For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Revenue:Asset Management Services
    
    $
    78,999
    
    
    $
    30,464
    
    
    $
    1,167Component Services and Other
    
    
    40,473
    
    
    
    19,196
    
    
    
    11,683Residential Property Valuation
    
    
    33,502
    
    
    
    26,800
    
    
    
    28,882Closing and Title Services
    
    
    28,056
    
    
    
    17,444
    
    
    
    13,173Default Management Services
    
    
    23,741
    
    
    
    9,194
    
    
    
    51Total Revenue
    
    $
    204,771
    
    
    $
    103,098
    
    
    $
    54,956Transactions with Related Parties:Asset Management Services
    
    $
    78,999
    
    
    $
    30,464
    
    
    $
    1,161Residential Property Valuation
    
    
    32,525
    
    
    
    25,762
    
    
    
    27,301Closing and Title Services
    
    
    17,379
    
    
    
    13,496
    
    
    
    13,173Default Management Services
    
    
    6,752
    
    
    
    4,367
    
    
    
    Total
    
    $
    135,655
    
    
    $
    74,089
    
    
    $
    41,635Reimbursable Expenses (included in Revenue)(1):Asset Management Services
    
    $
    41,920
    
    
    $
    14,308
    
    
    $
    Default Management Services
    
    
    2,328
    
    
    
    1,769
    
    
    
    Closing and Title Services
    
    
    302
    
    
    
    
    
    
    
    Total
    
    $
    44,550
    
    
    $
    16,077
    
    
    $
    
 (1)
    
    Reimbursable Expenses include costs we incur that we are able to pass through to our
customers without any mark-up.
 Residential Property Valuation.
 Closing and Title Services
 Default Management Services.
 Asset Management
 Component Services and Other
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Financial Services
    For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Revenue:Asset Recovery Management
    
    $
    48,050
    
    
    $
    51,019
    
    
    $
    62,771Customer Relationship Management
    
    
    11,929
    
    
    
    13,415
    
    
    
    11,064Total Revenue
    
    $
    59,979
    
    
    $
    64,434
    
    
    $
    73,835Transactions with Related Parties:Asset Recovery Management
    
    $
    166
    
    
    $
    98
    
    
    $
    1,181Reimbursable Expenses (included in Revenue)(1):Asset Recovery Management
    
    $
    2,899
    
    
    $
    
    
    
    $
    
 (1)
    
    Reimbursable Expenses include costs we incur that we are able to pass through to our
customers without any mark-up.
 Asset Recovery Management.
 Customer Relationship Management.
 Technology Services
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For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Revenue:REALSuite
    
    $
    31,214
    
    
    $
    25,784
    
    
    $
    20,463IT Infrastructure Services
    
    
    20,799
    
    
    
    21,669
    
    
    
    24,820Total Revenue
    
    $
    52,013
    
    
    $
    47,453
    
    
    $
    45,283Transactions with Related Parties(1):REALSuite
    
    $
    11,226
    
    
    $
    9,899
    
    
    $
    9,134IT Infrastructure Services
    
    
    7,941
    
    
    
    10,811
    
    
    
    26,012Total
    
    $
    19,167
    
    
    $
    20,710
    
    
    $
    35,146
 (1)
    
    Includes revenue earned from other segments related to RealSuite and IT
infrastructure services of $1.8 million and $13.7 million, respectively in 2008.
  REALServicing ® ®
 REALTrans ®
 REALRemit ®
 IT Infrastructure Services.
 Corporate Items and Eliminations
  Customers
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For the Years Ended December 31,2010
    
    
    2009Mortgage Services
    
    
    66
    %
    
    
    72
    %Technology Services
    
    
    37
    
    
    
    44Financial Services
    
    
    < 1
    
    
    
    < 1Consolidated Revenues
    
    
    51
    %
    
    
    47
    %
  Sales and Marketing
   Intellectual Property
    - 8 -




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Competition
    Employees
  ConsolidatedUnited States
    
    
    India
    
    
    Other
    
    
    AltisourceMortgage Services
    
    
    92
    
    
    
    1,832
    
    
    
    29
    
    
    
    1,953Financial Services(1)
    
    
    655
    
    
    
    463
    
    
    
    
    
    
    
    1,118Technology Services
    
    
    19
    
    
    
    506
    
    
    
    
    
    
    
    525Corporate
    
    
    23
    
    
    
    210
    
    
    
    35
    
    
    
    268Total Employees
    
    
    789
    
    
    
    3,011
    
    
    
    64
    
    
    
    3,864
 (1)
    
    We also have an outsource agreement with an unrelated third-party that has
approximately 625 employees in India supporting the assignment.
  Seasonality
   - 9 -




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Government Regulation
   Available Information
 http://www.sec.gov
 www.altisource.com
 
 ITEM 1A.
    
    RISK FACTORS
  Our ability to grow is affected by our ability to retain and expand our existing client
relationships and our ability to attract new customers.
  
    
    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.
   - 10 -




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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.
     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.
  The Companys growth objectives are dependent on the timing and market acceptance of our new
service offerings.
   - 11 -




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Our intellectual property rights are valuable and any inability to protect them could reduce the
value of 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.
  Our business is subject to extensive regulation, and failure to comply with existing or new
regulations may adversely impact us.
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Altisource is a Luxembourg company, and it may be difficult to enforce judgments against it or its
directors and executive officers.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  
    
    the United States, principally Arizona, New York (used primarily by the Financial
Services segment), California (used primarily by the Mortgage Services and Financial
Services segments), Missouri (used primarily by the Mortgage Services segment) and
Georgia (used by all segments);
 
    
    India, principally Bangalore (used by all segments), Goa (used primarily by the
Financial Services segment) and Mumbai (used primarily by the Mortgage Services and
Financial Services segments); and
 
    
    Montevideo, Uruguay (used primarily by the Corporate segment).
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
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ITEM 4.
    
    (Removed and Reserved)
  - 14 -




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
  2010Quarter Ended
    
    Low
    
    
    HighMarch 31
    
    $
    21.13
    
    
    $
    27.02June 30
    
    
    21.84
    
    
    
    28.19September 30
    
    
    24.29
    
    
    
    31.14December 31
    
    
    24.40
    
    
    
    30.64
 2009Quarter Ended
    
    Low
    
    
    HighSeptember 30
    
    $
    10.10
    
    
    $
    14.51December 31
    
    
    14.41
    
    
    
    21.21
  Dividends
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Issuer Purchases of Equity Securities
  MaximumTotal number
    
    
    numberof shares
    
    
    of shares thatpurchased as
    
    
    maypart of
    
    
    yet beTotal
    
    
    Weighted
    
    
    publicly
    
    
    purchasednumber of
    
    
    average
    
    
    announced
    
    
    under theshares
    
    
    price paid
    
    
    plans
    
    
    plans orPeriod
    
    purchased
    
    
    per share
    
    
    or programs
    
    
    programsCommon shares:October 1  31, 2010
    
    
    65,317
    
    
    $
    25.86
    
    
    
    65,317
    
    
    
    3,633,203November 1  30, 2010
    
    
    435,607
    
    
    
    27.31
    
    
    
    435,607
    
    
    
    3,197,596December 1  31, 2010
    
    
    69,093
    
    
    
    27.37
    
    
    
    69,093
    
    
    
    3,128,503Total common shares
    
    
    570,017
    
    
    $
    27.15
    
    
    
    570,017
    
    
    
    3,128,503
 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.
  
 8/10/2009
    
    
    9/30/2009
    
    
    12/31/2009
    
    
    03/31/10
    
    
    06/30/10
    
    
    09/30/10
    
    
    12/31/10Altisource
    
    $
    100.00
    
    
    $
    118.36
    
    
    $
    172.05
    
    
    $
    183.61
    
    
    $
    202.79
    
    
    $
    255.25
    
    
    $
    235.33S&P 500
    
    
    100.00
    
    
    
    104.54
    
    
    
    110.72
    
    
    
    115.65
    
    
    
    101.94
    
    
    
    112.86
    
    
    
    124.38NASDAQ Composite
    
    
    100.00
    
    
    
    106.53
    
    
    
    113.90
    
    
    
    120.37
    
    
    
    105.87
    
    
    
    118.89
    
    
    
    133.16
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ITEM 6.
    
    SELECTED CONSOLIDATED FINANCIAL DATA
    Years Ended December 31,(in thousands, except per share data)
    
    2010(1)
    
    
    2009
    
    
    2008
    
    
    2007(2)
    
    
    2006Revenue
    
    $
    301,378
    
    
    $
    202,812
    
    
    $
    160,363
    
    
    $
    134,906
    
    
    $
    96,603Cost of Revenue
    
    
    189,059
    
    
    
    126,797
    
    
    
    115,048
    
    
    
    96,954
    
    
    
    72,163Gross Profit
    
    
    112,319
    
    
    
    76,015
    
    
    
    45,315
    
    
    
    37,952
    
    
    
    24,440Selling, General and Administrative
Expenses
    
    
    57,352
    
    
    
    39,473
    
    
    
    28,088
    
    
    
    27,930
    
    
    
    17,622Income from Operations
    
    
    54,967
    
    
    
    36,542
    
    
    
    17,227
    
    
    
    10,022
    
    
    
    6,818Other Income (Expense), net
    
    
    804
    
    
    
    1,034
    
    
    
    (2,626
    )
    
    
    (1,743
    )
    
    
    205Income before Income Taxes
    
    
    55,771
    
    
    
    37,576
    
    
    
    14,601
    
    
    
    8,279
    
    
    
    7,023Income Tax Benefit (Provision)
    
    
    403
    
    
    
    (11,605
    )
    
    
    (5,382
    )
    
    
    (1,564
    )
    
    
    (1,616
    )Net Income
    
    
    56,174
    
    
    
    25,971
    
    
    
    9,219
    
    
    
    6,715
    
    
    
    5,407Net Income Attributable to Non
Controlling Interests
    
    
    (6,903
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income Attributable to Altisource
    
    $
    49,271
    
    
    $
    25,971
    
    
    $
    9,219
    
    
    $
    6,715
    
    
    $
    5,407Net Income per Share(3)Basic
    
    $
    1.96
    
    
    $
    1.08
    
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.22Diluted
    
    $
    1.88
    
    
    $
    1.07
    
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.22Transactions with Related Parties
included above:Revenue
    
    $
    154,988
    
    
    $
    94,897
    
    
    $
    64,251
    
    
    $
    59,350
    
    
    $
    51,971Selling, General and Administrative
Expenses
    
    
    1,056
    
    
    
    4,308
    
    
    
    6,208
    
    
    
    8,864
    
    
    
    9,103Interest Expense
    
    
    
    
    
    
    1,290
    
    
    
    2,269
    
    
    
    965
    
    
    
    503
  - 17 -




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As of December 31,(in thousands)
    
    2010(1)
    
    
    2009
    
    
    2008
    
    
    2007(2)
    
    
    2006Cash and Cash Equivalents
    
    $
    22,134
    
    
    $
    30,456
    
    
    $
    6,988
    
    
    $
    5,688
    
    
    $
    Accounts Receivable, net
    
    
    53,495
    
    
    
    30,497
    
    
    
    9,077
    
    
    
    16,770
    
    
    
    7,925Premises and Equipment, net
    
    
    17,493
    
    
    
    11,408
    
    
    
    9,304
    
    
    
    12,173
    
    
    
    9,826Intangible Assets, net
    
    
    72,428
    
    
    
    33,719
    
    
    
    36,391
    
    
    
    38,945
    
    
    
    Goodwill
    
    
    11,836
    
    
    
    9,324
    
    
    
    11,540
    
    
    
    14,797
    
    
    
    1,618Total Assets
    
    
    197,800
    
    
    
    120,556
    
    
    
    76,675
    
    
    
    92,845
    
    
    
    22,205Lines of Credit and Other
Secured Borrowings
    
    
    
    
    
    
    
    
    
    
    1,123
    
    
    
    147
    
    
    
    Capital Lease Obligations
    
    
    1,532
    
    
    
    664
    
    
    
    1,356
    
    
    
    3,631
    
    
    
    3,219Total Liabilities
    
    
    45,902
    
    
    
    34,208
    
    
    
    16,129
    
    
    
    17,171
    
    
    
    7,357
 (1)
    
    The operations of MPA are included in our financial statements
effective February 12, 2010, the date of acquisition (see Note 4 to the
consolidated financial statements). Total goodwill and intangibles were $51.6
million at December 31, 2010. MPA and its consolidated subsidiary contributed
$18.0 million of revenue, including $6.9 million attributable to
non-controlling interests, for the year ended December 31, 2010. Operating
expenses (including both Cost of Revenue and Selling, General and
Administrative Expenses) were $4.9 million for the year ended December 31,
2010.(2)
    
    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 $31.1 million, $41.4 million
and $46.3 million, at December 31, 2010, 2009 and 2008, respectively. NCI
revenues were $60.0 million, $63.1 million and $69.6 million for the years
ended December 31, 2010, 2009 and 2008, respectively. NCI operating expenses
(including both Cost of Revenue and Selling, General and Administrative
Expenses) were $62.9 million, $69.0 million and $74.8 million for the years
ended December 31, 2010, 2009 and 2008, respectively.(3)
    
    For all periods prior to the Separation, the number of shares
issued in the capitalization (24.1 million) is being used for diluted earnings
per share (EPS) as for basic EPS as no common stock of Altisource was traded
prior to August 10, 2009 and no Altisource equity awards were outstanding prior
to that date.
 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
    
    Overview.This section, beginning on page 19, provides a description of recent
developments we believe are important in understanding the results of operations and
financial condition or in understanding anticipated future trends.
 
    
    Consolidated Results of Operations.This section, beginning on page 22, provides an
analysis of our consolidated results of operations for the three years ended December
31, 2010. In addition, a brief description is provided of significant transactions and
events that affect the comparability of results being analyzed.
 
    
    Segment Results of Operations.This section, beginning on page 28, provides an
analysis of each business segment for the three years ended December 31, 2010 as well
as our Corporate segment. In addition, we discuss significant transactions, events and
trends that may affect the comparability of the results being analyzed.
 
    
    Liquidity and Capital Resources.This section, beginning on page 41, provides an
analysis of our cash flows for the three years ended December 31, 2010. We also
discuss restrictions on cash movements, future commitments and capital resources.
  - 18 -




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
    
    Critical Accounting Judgments.This section, beginning on page 43, identifies those
accounting principles we believe are most important to our financial results and that
require significant judgment and estimates on the part of management in application.
We provide all of our significant accounting policies in Note 2 to the accompanying
consolidated financial statements.
 
    
    Other Matters.This section, beginning on page 44, provides a discussion of
off-balance sheet arrangements to the extent they exist. In addition, we provide a
tabular discussion of contractual obligations and discuss any significant commitments
or contingencies.
 FORWARD-LOOKING STATEMENTS
 www.sec.gov
 OVERVIEW
 Our Business
   Strategic Update
  Existing Customer Penetration
  - 19 -




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New Customer Acquisition
 Invest in New Service Offerings
 Highest Quality at Lowest Operating Costs
  Improve operating effectiveness.
 Expand Service Offerings.
 Balance Service Offerings.
 Bring Financial Services to Profitability
 Enhance Leadership Team
   - 20 -




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##### Table of Contents



Basis of Presentation
  Acquisition of MPA
  Stock Repurchase Plan
  Factors Affecting Comparability
  
    
    In February 2010, we acquired all of the outstanding membership interests of MPA.
MPA was formed with the purpose of managing BPMC which operates as Lenders One.
Lenders One is a national alliance of independent mortgage bankers that provides its
Members with education and training along with revenue enhancing, cost reducing and
market share expanding opportunities. The results of operations of BPMC have been
consolidated under the variable interest model since the acquisition date;
 
    
    During 2010, to further align the interests of management with shareholders, we
expanded our use of equity compensation. For the year ended December 31, 2010, we have
recognized $3.1 million of equity compensation expense as compared to $0.3 million for
the full year ending December 31, 2009. Contributing to the increase was the
attainment of certain market performance criteria which triggered vesting of a portion
of the awards and acceleration in the expense recognition of these grants;
 
    
    In the fourth quarter of 2010, we recognized $2.8 million of goodwill
impairment related to the Financial Services segment;
 
    
    During the year ended December 31, 2009, we recognized $3.4 million of one-time
costs in our Corporate segment in anticipation of the Separation from Ocwen; and
 
    
    During the year ended December 31, 2009, we recognized $1.9 million of facility
closure costs, $1.4 million of litigation settlement losses (both recognized in
Selling, General and Administrative Expenses) and a $2.3 million litigation settlement
gain in Other Income in our Financial Services segment.
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CONSOLIDATED RESULTS OF OPERATIONS
 Summary Consolidated Results
   Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Service Revenue
    
    $
    247,026
    
    
    
    32
    %
    
    $
    186,735
    
    
    
    16
    %
    
    $
    160,363Reimbursable Expenses
    
    
    47,449
    
    
    
    195
    
    
    
    16,077
    
    
    
    100
    
    
    
    Cooperative Non-controlling Interests
    
    
    6,903
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Total Revenue
    
    
    301,378
    
    
    
    49
    
    
    
    202,812
    
    
    
    26
    
    
    
    160,363Cost of Revenue
    
    
    189,059
    
    
    
    (49
    )
    
    
    126,797
    
    
    
    (10
    )
    
    
    115,048Gross Profit
    
    
    112,319
    
    
    
    48
    
    
    
    76,015
    
    
    
    68
    
    
    
    45,315Gross Profit/Service Revenue
    
    
    45
    %
    
    
    
    
    
    
    41
    %
    
    
    
    
    
    
    28
    %Selling, General and Administrative Expenses
    
    
    57,352
    
    
    
    (45
    )
    
    
    39,473
    
    
    
    (41
    )
    
    
    28,088Income from Operations
    
    
    54,967
    
    
    
    50
    
    
    
    36,542
    
    
    
    112
    
    
    
    17,227Income from Operations/Service Revenue
    
    
    22
    %
    
    
    
    
    
    
    20
    %
    
    
    
    
    
    
    11
    %Other Income (Expense), net
    
    
    804
    
    
    
    (22
    )
    
    
    1,034
    
    
    
    139
    
    
    
    (2,626
    )Income Before Income Taxes
    
    
    55,771
    
    
    
    48
    
    
    
    37,576
    
    
    
    157
    
    
    
    14,601Income Tax Benefit (Provision)
    
    
    403
    
    
    
    104
    
    
    
    (11,605
    )
    
    
    (116
    )
    
    
    (5,382
    )Net Income
    
    
    56,174
    
    
    
    116
    
    
    
    25,971
    
    
    
    182
    
    
    
    9,219Net Income Attributable to Non-controlling
Interests
    
    
    (6,903
    )
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    Net Income Attributable to Altisource
    
    $
    49,271
    
    
    
    90
    %
    
    $
    25,971
    
    
    
    182
    %
    
    $
    9,219Transactions with Related Parties:Revenue
    
    $
    154,988
    
    
    
    
    
    
    $
    94,897
    
    
    
    
    
    
    $
    64,251Selling, General and Administrative Expenses
    
    
    1,056
    
    
    
    
    
    
    
    4,308
    
    
    
    
    
    
    
    6,208Interest Expense
    
    
    
    
    
    
    
    
    
    
    1,290
    
    
    
    
    
    
    
    2,269
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
  - 22 -




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##### Table of Contents



Revenue
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Mortgage Services:Service Revenue
    
    $
    153,318
    
    
    
    76
    %
    
    $
    87,021
    
    
    
    58
    %
    
    $
    54,956Reimbursable Expenses
    
    
    44,550
    
    
    
    177
    
    
    
    16,077
    
    
    
    100
    
    
    
    Cooperative Non-controlling Interest
    
    
    6,903
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Mortgage Services  Total Revenue
    
    
    204,771
    
    
    
    99
    
    
    
    103,098
    
    
    
    88
    
    
    
    54,956Financial Services:Service Revenue
    
    
    57,080
    
    
    
    (11
    )
    
    
    64,434
    
    
    
    (13
    )
    
    
    73,835Reimbursable Expenses
    
    
    2,899
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Financial Services  Total Revenue
    
    
    59,979
    
    
    
    (7
    )
    
    
    64,434
    
    
    
    (13
    )
    
    
    73,835Technology Services
    
    
    52,013
    
    
    
    10
    
    
    
    47,453
    
    
    
    5
    
    
    
    45,283Eliminations
    
    
    (15,385
    )
    
    
    (26
    )
    
    
    (12,173
    )
    
    
    11
    
    
    
    (13,711
    )Total Revenue
    
    $
    301,378
    
    
    
    49
    %
    
    $
    202,812
    
    
    
    26
    %
    
    $
    160,363Transactions with Related Parties:Mortgage Services
    
    $
    135,655
    
    
    
    
    
    
    $
    74,089
    
    
    
    
    
    
    $
    41,635Financial Services
    
    
    166
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    1,181Technology Services(1)
    
    
    19,167
    
    
    
    
    
    
    
    20,710
    
    
    
    
    
    
    
    35,146
 (1)
    
    Includes revenue earned from other segments related to REALSuite and IT infrastructure services of $1.8 million and $13.7 million, respectively in 2008.(*)
    
    Represents percentage change (better/(worse)) from prior period.
  - 23 -




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- 24 -




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##### Table of Contents



Cost of Revenue
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Compensation and Benefits
    
    $
    62,791
    
    
    
    (23
    )%
    
    $
    51,251
    
    
    
    14
    %
    
    $
    59,311Outside Fees and Services
    
    
    60,583
    
    
    
    (41
    )
    
    
    43,026
    
    
    
    (20
    )
    
    
    35,825Reimbursable Expenses
    
    
    47,449
    
    
    
    (195
    )
    
    
    16,077
    
    
    
    (100
    )
    
    
    Technology and Communication
    
    
    18,236
    
    
    
    (11
    )
    
    
    16,443
    
    
    
    17
    
    
    
    19,912Cost of Revenue
    
    $
    189,059
    
    
    
    (49
    )%
    
    $
    126,797
    
    
    
    (10
    )%
    
    $
    115,048Gross Profit PercentageGross Profit/Service Revenue
    
    
    45
    %
    
    
    
    
    
    
    41
    %
    
    
    
    
    
    
    28
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
         - 25 -




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##### Table of Contents



Selling, General and Administrative Expenses
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Compensation and Benefits
    
    $
    19,116
    
    
    
    N/M
    
    
    $
    4,096
    
    
    
    34
    %
    
    $
    6,208Professional Services
    
    
    8,026
    
    
    
    22
    %
    
    
    10,252
    
    
    
    (214
    )
    
    
    3,270Occupancy Related Costs
    
    
    12,154
    
    
    
    (44
    )
    
    
    8,456
    
    
    
    (4
    )
    
    
    8,125Amortization of Intangible Assets
    
    
    4,891
    
    
    
    (83
    )
    
    
    2,672
    
    
    
    (5
    )
    
    
    2,554Goodwill Impairment
    
    
    2,816
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    10,349
    
    
    
    26
    
    
    
    13,997
    
    
    
    (77
    )
    
    
    7,931Total Selling, General and
Administrative Expenses
    
    $
    57,352
    
    
    
    (45
    )%
    
    $
    39,473
    
    
    
    (41
    )%
    
    $
    28,088Operating Margin PercentageIncome from Operations/Service Revenue
    
    
    22
    %
    
    
    
    
    
    
    20
    %
    
    
    
    
    
    
    11
    %
 N/M  Not meaningful.(*)
    
    Represents percentage change (better/(worse)) from prior period.
 SECTION 1  OVERVIEW, Separation
      - 26 -




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##### Table of Contents



EBITDA
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Income Before Income Taxes
    
    $
    55,771
    
    
    
    48
    %
    
    $
    37,576
    
    
    
    157
    %
    
    $
    14,601Interest, net
    
    
    87
    
    
    
    95
    
    
    
    1,644
    
    
    
    38
    
    
    
    2,655Depreciation and Amortization
    
    
    7,158
    
    
    
    (32
    )
    
    
    5,432
    
    
    
    31
    
    
    
    7,836Amortization of Intangibles
    
    
    4,891
    
    
    
    (83
    )
    
    
    2,672
    
    
    
    (5
    )
    
    
    2,554Goodwill Impairment
    
    
    2,816
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income attributable to
Non-controlling Interests
    
    
    (6,903
    )
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    EBITDA
    
    $
    63,820
    
    
    
    35
    %
    
    $
    47,324
    
    
    
    71
    %
    
    $
    27,646EBITDA Margin:EBITDA/Service Revenue
    
    
    26
    %
    
    
    
    
    
    
    25
    %
    
    
    
    
    
    
    17
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.(1)
    
    See SECTION 3  SEGMENT RESULTS OF OPERATIONS below for a reconciliation of the most directly comparable GAAP measure to EBITDA.
     - 27 -




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##### Table of Contents



Income Taxes
     Recent Accounting Pronouncements
  SEGMENT RESULTS OF OPERATIONS
   - 28 -




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##### Table of Contents



For the Year Ended December 31, 2010CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    AltisourceRevenue
    
    $
    204,771
    
    
    $
    59,979
    
    
    $
    52,013
    
    
    $
    (15,385
    )
    
    $
    301,378Cost of Revenue
    
    
    124,485
    
    
    
    49,781
    
    
    
    28,909
    
    
    
    (14,116
    )
    
    
    189,059Gross Profit
    
    
    80,286
    
    
    
    10,198
    
    
    
    23,104
    
    
    
    (1,269
    )
    
    
    112,319Selling, General and Administrative
Expenses
    
    
    14,890
    
    
    
    19,567
    
    
    
    4,985
    
    
    
    17,910
    
    
    
    57,352Income (Loss) from Operations
    
    
    65,396
    
    
    
    (9,369
    )
    
    
    18,119
    
    
    
    (19,179
    )
    
    
    54,967Other income (expense), net
    
    
    781
    
    
    
    (50
    )
    
    
    (60
    )
    
    
    133
    
    
    
    804Income (Loss) Before Income Taxes
    
    $
    66,177
    
    
    $
    (9,419
    )
    
    $
    18,059
    
    
    $
    (19,046
    )
    
    $
    55,771Reconciliation to EBITDAIncome (Loss) Before Income Taxes
    
    $
    66,177
    
    
    $
    (9,419
    )
    
    $
    18,059
    
    
    $
    (19,046
    )
    
    $
    55,771Interest, net
    
    
    (11
    )
    
    
    55
    
    
    
    64
    
    
    
    (21
    )
    
    
    87Depreciation(1)
    
    
    268
    
    
    
    1,972
    
    
    
    4,499
    
    
    
    419
    
    
    
    7,158Amortization of Intangibles
    
    
    2,218
    
    
    
    2,673
    
    
    
    
    
    
    
    
    
    
    
    4,891Goodwill Impairment
    
    
    
    
    
    
    2,816
    
    
    
    
    
    
    
    
    
    
    
    2,816Net Income attributable to Non
controlling interests
    
    
    (6,903
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,903
    )EBITDA
    
    $
    61,749
    
    
    $
    (1,903
    )
    
    $
    22,622
    
    
    $
    (18,648
    )
    
    $
    63,820Transactions with Related Parties
Included Above:Revenue
    
    $
    135,655
    
    
    $
    166
    
    
    $
    19,167
    
    
    $
    
    
    
    $
    154,988Selling, General and
Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,056
    
    
    
    1,056Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 For the Year Ended December 31, 2009CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    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(1)
    
    
    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
  - 29 -




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##### Table of Contents



For the Year Ended December 31, 2008CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    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(1)
    
    
    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
 (1)
    
    Includes depreciation and amortization of $1.0 million, $2.0 million and $2.8 million in the years ended December 31, 2010, 2009 and 2008,
respectively, for assets reflected in the Technology Services segment but utilized by the Financial Services segment.
  - 30 -




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##### Table of Contents



Mortgage Services
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Service Revenue
    
    $
    153,318
    
    
    
    76
    %
    
    $
    87,021
    
    
    
    58
    %
    
    $
    54,956Reimbursable Expenses
    
    
    44,550
    
    
    
    177
    
    
    
    16,077
    
    
    
    100
    
    
    
    Cooperative Non-controlling Interest
    
    
    6,903
    
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    Total Revenue
    
    
    204,771
    
    
    
    99
    
    
    
    103,098
    
    
    
    88
    
    
    
    54,956Cost of Revenue
    
    
    124,485
    
    
    
    (105
    )
    
    
    60,735
    
    
    
    (67
    )
    
    
    36,392Gross Profit
    
    
    80,286
    
    
    
    90
    
    
    
    42,363
    
    
    
    128
    
    
    
    18,564Gross Profit/Service Revenue
    
    
    52
    %
    
    
    
    
    
    
    49
    %
    
    
    
    
    
    
    34
    %Selling, General and Administrative Expenses
    
    
    14,890
    
    
    
    (165
    )
    
    
    5,625
    
    
    
    (12
    )
    
    
    5,027Income from Operations
    
    $
    65,396
    
    
    
    78
    %
    
    $
    36,738
    
    
    
    171
    %
    
    $
    13,537Income from Operations/Service Revenue
    
    
    43
    %
    
    
    
    
    
    
    42
    %
    
    
    
    
    
    
    25
    %EBITDA(1)
    
    $
    61,749
    
    
    
    68
    %
    
    $
    36,845
    
    
    
    171
    %
    
    $
    13,571Transactions with Related Parties:Revenue
    
    $
    135,655
    
    
    
    
    
    
    $
    74,089
    
    
    
    
    
    
    $
    41,635Selling, General and Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    2,712
    
    
    
    
    
    
    
    3,633Interest Expense
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    58
 (*)
    
    Represents percentage change (better/(worse)) from prior period.(1)
    
    See table at the beginning of this section for a reconciliation of the most directly comparable GAAP measure to EBITDA.
      - 31 -




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##### Table of Contents



Revenue
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Revenue:Asset Management Services
    
    $
    78,999
    
    
    
    159
    %
    
    $
    30,464
    
    
    
    N/M
    
    
    $
    1,167Component Services and Other
    
    
    40,473
    
    
    
    111
    
    
    
    19,196
    
    
    
    64
    %
    
    
    11,683Residential Property Valuation
    
    
    33,502
    
    
    
    25
    
    
    
    26,800
    
    
    
    (7
    )
    
    
    28,882Closing and Title Services
    
    
    28,056
    
    
    
    61
    
    
    
    17,444
    
    
    
    (32
    )
    
    
    13,173Default Management Services
    
    
    23,741
    
    
    
    158
    
    
    
    9,194
    
    
    
    N/M
    
    
    
    51Total Revenue
    
    $
    204,771
    
    
    
    99
    %
    
    $
    103,098
    
    
    
    88
    %
    
    $
    54,956Reimbursable Expenses:Asset Management Services
    
    $
    41,920
    
    
    
    
    
    
    $
    14,308
    
    
    
    
    
    
    $
    Default Management Services
    
    
    2,328
    
    
    
    
    
    
    
    1,769
    
    
    
    
    
    
    
    Closing and Title Services
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reimbursable Expenses
    
    $
    44,550
    
    
    
    
    
    
    $
    16,077
    
    
    
    
    
    
    $
    Transactions with Related Parties:Asset Management Services
    
    $
    78,999
    
    
    
    
    
    
    $
    30,464
    
    
    
    
    
    
    $
    1,161Residential Property Valuation
    
    
    32,525
    
    
    
    
    
    
    
    25,762
    
    
    
    
    
    
    
    27,301Closing and Title Services
    
    
    17,379
    
    
    
    
    
    
    
    13,496
    
    
    
    
    
    
    
    13,173Default Management Services
    
    
    6,752
    
    
    
    
    
    
    
    4,367
    
    
    
    
    
    
    
    Revenue
    
    $
    135,655
    
    
    
    
    
    
    $
    74,089
    
    
    
    
    
    
    $
    41,635
 (*)
    
    Represents percentage change (better/(worse)) from prior period.N/M  not meaningful.
  Asset Management Services. www.altisourcehomes.com www.gohoming.com
 Component Services and Other
 Residential Property Valuation.
  - 32 -




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##### Table of Contents



Closing and Title Services
 Default Management Services
 Cost of Revenue
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Expenditures
    
    $
    79,935
    
    
    
    (79
    )%
    
    $
    44,658
    
    
    
    (23
    )%
    
    $
    36,392Reimbursable Expenses
    
    
    44,550
    
    
    
    (177
    )
    
    
    16,077
    
    
    
    (100
    )
    
    
    Cost of Revenue
    
    $
    124,485
    
    
    
    (105
    )%
    
    $
    60,735
    
    
    
    (67
    )%
    
    $
    36,392Gross Profit Percentage:Gross Profit/Service Revenue
    
    
    52
    %
    
    
    
    
    
    
    49
    %
    
    
    
    
    
    
    34
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   Selling, General and Administrative Expenses
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Total Selling, General and
Administrative Expenses
    
    $
    14,890
    
    
    
    (165
    )%
    
    $
    5,625
    
    
    
    (12
    )%
    
    $
    5,027Operating Percentage:Income from Operations/Service Revenue
    
    
    43
    %
    
    
    
    
    
    
    42
    %
    
    
    
    
    
    
    25
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
  - 33 -




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##### Table of Contents



EBITDA
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008EBITDA
    
    $
    61,749
    
    
    
    68
    %
    
    $
    36,845
    
    
    
    171
    %
    
    $
    13,571EBITDA Margin:EBITDA/Service Revenue
    
    
    40
    %
    
    
    
    
    
    
    42
    %
    
    
    
    
    
    
    25
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   - 34 -




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##### Table of Contents



Financial Services
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Service Revenue
    
    $
    57,080
    
    
    
    (11
    )%
    
    $
    64,434
    
    
    
    (13
    )%
    
    $
    73,835Reimbursable Expenses
    
    
    2,899
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Total Revenue
    
    
    59,979
    
    
    
    (7
    )
    
    
    64,434
    
    
    
    (13
    )
    
    
    73,835Cost of Revenue
    
    
    49,781
    
    
    
    6
    
    
    
    52,871
    
    
    
    16
    
    
    
    62,590Gross Profit
    
    
    10,198
    
    
    
    (12
    )
    
    
    11,563
    
    
    
    3
    
    
    
    11,245Gross Profit/Service Revenue
    
    
    18
    %
    
    
    
    
    
    
    18
    %
    
    
    
    
    
    
    15
    %Selling, General and Administrative Expenses
    
    
    19,567
    
    
    
    (2
    )
    
    
    19,267
    
    
    
    (12
    )
    
    
    17,168Loss from Operations
    
    $
    (9,369
    )
    
    
    (22
    )%
    
    $
    (7,704
    )
    
    
    (30
    )%
    
    $
    (5,923
    )Loss from Operations/Service Revenue
    
    
    (16
    )%
    
    
    
    
    
    
    (12
    )%
    
    
    
    
    
    
    (8
    %)EBITDA(1)
    
    $
    (1,903
    )
    
    
    N/M
    
    
    $
    8
    
    
    
    109
    %
    
    $
    (94
    )Transactions with Related Parties:Revenue
    
    $
    166
    
    
    
    
    
    
    $
    98
    
    
    
    
    
    
    $
    1,181Selling, General and Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    467
    
    
    
    
    
    
    
    595Interest expense
    
    
    
    
    
    
    
    
    
    
    1,029
    
    
    
    
    
    
    
    1,833
 (*)
    
    Represents percentage change (better/(worse)) from prior period.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.
    - 35 -




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##### Table of Contents



Revenue
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Revenue:Asset Recovery Management
    
    $
    48,050
    
    
    
    (6
    )%
    
    $
    51,019
    
    
    
    (19
    )%
    
    $
    62,771Customer Relationship Management
    
    
    11,929
    
    
    
    (11
    )
    
    
    13,415
    
    
    
    21
    
    
    
    11,064Total Revenue
    
    $
    59,979
    
    
    
    (7
    )%
    
    $
    64,434
    
    
    
    (13
    )%
    
    $
    73,835Reimbursable Expenses:Asset Recovery Management
    
    $
    2,899
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Transactions with Related Parties:Asset Recovery Management
    
    $
    166
    
    
    
    
    
    
    $
    98
    
    
    
    
    
    
    $
    1,181
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
  Asset Recovery Management.
 Customer Relationship Management
 Cost of Revenue
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Expenditures
    
    $
    46,882
    
    
    
    11
    %
    
    $
    52,871
    
    
    
    16
    %
    
    $
    62,590Reimbursable Expenses
    
    
    2,899
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    Cost of Revenue
    
    $
    49,781
    
    
    
    6
    %
    
    $
    52,871
    
    
    
    16
    %
    
    $
    62,590Gross Profit Percentage:Gross Profit/Service Revenue
    
    
    18
    %
    
    
    
    
    
    
    18
    %
    
    
    
    
    
    
    15
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   - 36 -




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##### Table of Contents



Selling, General and Administrative Expenses
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Total Selling, General and
Administrative Expenses
    
    $
    19,567
    
    
    
    (2
    )%
    
    $
    19,267
    
    
    
    (12
    )%
    
    $
    17,168Operating Percentage:Loss from Operations/Service Revenue
    
    
    (16
    )%
    
    
    
    
    
    
    (12
    )%
    
    
    
    
    
    
    (8
    )%
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
  EBITDA
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008EBITDA
    
    $
    (1,903
    )
    
    
    N/M
    
    
    $
    8
    
    
    
    109
    %
    
    $
    (94
    )EBITDA Margin:EBITDA/Service Revenue
    
    
    (3
    )%
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.N/M  Not meaningful.
    - 37 -




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##### Table of Contents



Technology Services
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Revenue
    
    $
    52,013
    
    
    
    10
    %
    
    $
    47,453
    
    
    
    5
    %
    
    $
    45,283Cost of Revenue
    
    
    28,909
    
    
    
    (18
    )
    
    
    24,477
    
    
    
    18
    
    
    
    29,777Gross Profit
    
    
    23,104
    
    
    
    1
    
    
    
    22,976
    
    
    
    48
    
    
    
    15,506Gross Profit Percentage
    
    
    44
    %
    
    
    
    
    
    
    48
    %
    
    
    
    
    
    
    34
    %Selling, General and
Administrative Expenses
    
    
    4,985
    
    
    
    (5
    )
    
    
    4,731
    
    
    
    23
    
    
    
    6,118Income from Operations
    
    $
    18,119
    
    
    
    (1
    )%
    
    $
    18,245
    
    
    
    94
    %
    
    $
    9,388Operating Income Percentage
    
    
    35
    %
    
    
    
    
    
    
    38
    %
    
    
    
    
    
    
    21
    %EBITDA(1)
    
    $
    22,622
    
    
    
    7
    %
    
    $
    21,150
    
    
    
    49
    %
    
    $
    14,169Transactions with Related Parties:Revenue(2)
    
    $
    19,167
    
    
    
    
    
    
    $
    20,710
    
    
    
    
    
    
    $
    35,146Selling, General and
Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    1,517
    
    
    
    
    
    
    
    1,980Interest expense
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    378
 (*)
    
    Represents percentage change (better/(worse)) from prior period.(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 infrastructure services of $1.8 million and $13.7 million, respectively in 2008.N/M  Not meaningful.
  
    
    The re-architecture and enhancement of our REALSuite of services;
 
    
    The deployment of business process management and business intelligence reporting
systems to more effectively manage our operations; and
 
    
    The development and early stage incubation of technology solutions based off our
REALSuite technologies.
   - 38 -




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##### Table of Contents



Revenues
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Revenue:REALSuite
    
    $
    31,214
    
    
    
    21
    %
    
    $
    25,784
    
    
    
    26
    %
    
    $
    20,463IT Infrastructure Services
    
    
    20,799
    
    
    
    (4
    )
    
    
    21,669
    
    
    
    (13
    )
    
    
    24,820Total Revenue
    
    $
    52,013
    
    
    
    10
    %
    
    $
    47,453
    
    
    
    5
    %
    
    $
    45,283Transactions with Related Parties(1):REALSuite
    
    $
    11,226
    
    
    
    
    
    
    $
    9,899
    
    
    
    
    
    
    $
    9,134IT Infrastructure Services
    
    
    7,941
    
    
    
    
    
    
    
    10,811
    
    
    
    
    
    
    
    26,012Revenue
    
    $
    19,167
    
    
    
    
    
    
    $
    20,710
    
    
    
    
    
    
    $
    35,146
 (*)
    
    Represents percentage change (better/(worse)) from prior period.(1)
    
    Includes revenue earned from other segments related to REALSuite and IT infrastructure services of $1.8 million and $13.7 million, respectively in 2008.
  REALSuite
 IT Infrastructure Services.
 Cost of Revenue
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Cost of Revenue
    
    $
    28,909
    
    
    
    (18
    )%
    
    $
    24,477
    
    
    
    18
    %
    
    $
    29,777Gross Margin Percentage:Cost of Revenue/Total Revenue
    
    
    44
    %
    
    
    
    
    
    
    48
    %
    
    
    
    
    
    
    34
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   - 39 -




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##### Table of Contents




    
    $1.9 million reduction in Compensation costs as we integrated the Financial Services
technology personnel into the existing technology group and eliminated certain
positions;
 
    
    $2.5 million reduction in Depreciation expense as several assets became fully
depreciated in 2008 and were not 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
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Total Selling, General and
Administrative Expenses
    
    $
    4,985
    
    
    
    (5
    )%
    
    $
    4,731
    
    
    
    23
    %
    
    $
    6,118Operating Percentage:Operating Income/Total Revenue
    
    
    35
    %
    
    
    
    
    
    
    38
    %
    
    
    
    
    
    
    21
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   EBITDA
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008EBITDA
    
    $
    22,622
    
    
    
    7
    %
    
    $
    21,150
    
    
    
    49
    %
    
    $
    14,169EBITDA Margin:EBITDA/Total Revenue
    
    
    43
    %
    
    
    
    
    
    
    45
    %
    
    
    
    
    
    
    31
    %
 (*)
    
    Represents percentage change (better/(worse)) from prior period.
   - 40 -




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##### Table of Contents



Corporate
  Selling, General and Administrative Expenses
 Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Total Selling,
General and
Administrative
Expenses
    
    $
    17,910
    
    
    
    (82
    )%
    
    $
    9,850
    
    
    
    N/M
    
    
    $
    (225
    )
 (*)
    
    Represents percentage change (better/(worse)) from prior period.N/M  Not meaningful.
  LIQUIDITY AND CAPITAL RESOURCES
 Liquidity
   Cash Flows
  Years Ended December 31,(dollars in thousands)
    
    2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    2008Net Income Adjusted for Non-Cash Items
    
    $
    73,030
    
    
    
    120
    %
    
    $
    33,192
    
    
    
    58
    %
    
    $
    21,055Working Capital
    
    
    (20,218
    )
    
    
    N/M
    
    
    
    92
    
    
    
    (99
    )
    
    
    7,850Cash Flow from Operating Activities
    
    
    52,812
    
    
    
    59
    
    
    
    33,284
    
    
    
    15
    
    
    
    28,905Cash Flow from Investing Activities
    
    
    (39,489
    )
    
    
    N/M
    
    
    
    (7,536
    )
    
    
    (44
    )
    
    
    (5,216
    )Cash Flow from Financing Activities
    
    
    (21,645
    )
    
    
    N/M
    
    
    
    (2,280
    )
    
    
    (90
    )
    
    
    (22,389
    )Net Change in Cash
    
    
    (8,322
    )
    
    
    (135
    )
    
    
    23,468
    
    
    
    N/M
    
    
    
    1,300Cash at Beginning of Period
    
    
    30,456
    
    
    
    N/M
    
    
    
    6,988
    
    
    
    23
    
    
    
    5,688Cash at End of Period
    
    $
    22,134
    
    
    
    (27
    )
    
    $
    30,456
    
    
    
    N/M
    
    
    $
    6,988
 (*)
    
    Represents percentage change (better/(worse)) from prior period.N/M  Not meaningful.
  - 41 -




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##### Table of Contents



Cash Flow from Operating Activities
   Cash Flow from Investing Activities
   Cash Flow from Financing Activities
   Liquidity Requirements after December 31, 2010
   Capital Resources
   - 42 -




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##### Table of Contents



CRITICAL ACCOUNTING JUDGMENTS
  Revenue Recognition
  Goodwill and Identifiable Intangible Assets
 Goodwill
     - 43 -




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##### Table of Contents



Identifiable Intangible Assets
  Accounting for Income Taxes
  OTHER MATTERS
 Off-Balance Sheet Arrangements
  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
    
    $
    11,571
    
    
    $
    4,867
    
    
    $
    5,102
    
    
    $
    972
    
    
    $
    630Capital Lease Obligations  Principal
    
    
    1,531
    
    
    
    679
    
    
    
    852
    
    
    
    
    
    
    
    Contractual Interest Payments(1)
    
    
    84
    
    
    
    59
    
    
    
    25
    
    
    
    
    
    
    
    Total
    
    $
    13,186
    
    
    $
    5,605
    
    
    $
    5,979
    
    
    $
    972
    
    
    $
    630
 (1)
    
    Represents estimated future interest payments on capital leases, based on applicable interest rates as of December 31, 2010.
   - 44 -




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##### Table of Contents



Related Party  Ocwen
   
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency Exchange Risk
   - 45 -




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##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Certified Public Accounting Firm
    
    
    47Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    50Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008
    
    
    51Consolidated Statements of Changes in Stockholders and Invested Equity for
the Years Ended December 31, 2010, 2009 and 2008
    
    
    52Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
    
    
    53Notes to Consolidated and Combined Consolidated Financial Statements
    
    
    54
  - 46 -




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        /s/ Deloitte & Touche LLP
  - 47 -




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
    Internal Control
 Integrated Framework .
  /s/ Deloitte & Touche LLP
  - 48 -




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##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
     /s/ PricewaterhouseCoopers LLP
 
  - 49 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
 
 Consolidated Balance Sheets
 (Dollars in Thousands, Except Per Share Data)
 December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    22,134
    
    
    $
    30,456Accounts Receivable, net
    
    
    53,495
    
    
    
    30,497Prepaid Expenses and Other Current Assets
    
    
    13,076
    
    
    
    2,904Deferred Tax Assets, net
    
    
    551
    
    
    
    1,546Total Current Assets
    
    
    89,256
    
    
    
    65,403Restricted Cash
    
    
    1,045
    
    
    
    Premises and Equipment, net
    
    
    17,493
    
    
    
    11,408Deferred Tax Assets, net
    
    
    1,206
    
    
    
    Intangible Assets, net
    
    
    72,428
    
    
    
    33,719Goodwill
    
    
    11,836
    
    
    
    9,324Other Non-current Assets
    
    
    4,536
    
    
    
    702Total Assets
    
    $
    197,800
    
    
    $
    120,556LIABILITIES AND EQUITYCurrent Liabilities:Accounts Payable and Accrued Expenses
    
    $
    35,384
    
    
    $
    24,192Capital Lease Obligations  Current
    
    
    680
    
    
    
    536Other Current Liabilities
    
    
    5,616
    
    
    
    5,939Total Current Liabilities
    
    
    41,680
    
    
    
    30,667Capital Lease Obligations  Non-current
    
    
    852
    
    
    
    128Deferred Tax Liability, net
    
    
    
    
    
    
    2,769Other Non-current Liabilities
    
    
    3,370
    
    
    
    644Commitment and Contingencies (Note 17)Stockholders and Invested EquityCommon Stock ($1.00 par value; 100,000 shares authorized;
25,413 shares issued and 24,881 outstanding in 2010; 24,145
shares issued and outstanding in 2009)
    
    
    25,413
    
    
    
    24,145Retained Earnings
    
    
    58,546
    
    
    
    11,665Additional Paid-in Capital
    
    
    79,297
    
    
    
    50,538Treasury Stock, at cost ($1.00 par value; 532 shares in 2010)
    
    
    (14,418
    )
    
    
    Altisource Equity
    
    
    148,838
    
    
    
    86,348Noncontrolling Interests
    
    
    3,060
    
    
    
    Total Equity
    
    
    151,898
    
    
    
    86,348Total Liabilities and Equity
    
    $
    197,800
    
    
    
    120,556
 See notes to consolidated and combined consolidated financial statements.
  - 50 -




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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 31,20082010
    
    
    2009
    
    
    (Combined(in thousands, except earnings per share)
    
    (Consolidated)
    
    
    (Consolidated)
    
    
    Consolidated)Revenue
    
    $
    301,378
    
    
    $
    202,812
    
    
    $
    160,363Cost of Revenue
    
    
    189,059
    
    
    
    126,797
    
    
    
    115,048Gross Profit
    
    
    112,319
    
    
    
    76,015
    
    
    
    45,315Selling, General and Administrative Expenses
    
    
    57,352
    
    
    
    39,473
    
    
    
    28,088Income from Operations
    
    
    54,967
    
    
    
    36,542
    
    
    
    17,227Other Income (Expense), net
    
    
    804
    
    
    
    1,034
    
    
    
    (2,626
    )Income Before Income Taxes and Non-controlling
Interests
    
    
    55,771
    
    
    
    37,576
    
    
    
    14,601Income Tax Benefit (Provision)
    
    
    403
    
    
    
    (11,605
    )
    
    
    (5,382
    )Net Income
    
    
    56,174
    
    
    
    25,971
    
    
    
    9,219Net Income Attributable to Noncontrolling Interests
    
    
    (6,903
    )
    
    
    
    
    
    
    Net Income Attributable to Altisource
    
    $
    49,271
    
    
    $
    25,971
    
    
    $
    9,219Earnings Per ShareBasic
    
    $
    1.96
    
    
    $
    1.08
    
    
    $
    0.38Diluted
    
    $
    1.88
    
    
    $
    1.07
    
    
    $
    0.38Weighted Average Shares OutstandingBasic
    
    
    25,083
    
    
    
    24,062
    
    
    
    24,050Diluted
    
    
    26,259
    
    
    
    24,261
    
    
    
    24,050Transactions with Related Parties included above:Revenue
    
    $
    154,988
    
    
    $
    94,897
    
    
    $
    64,251Selling, General and Administrative Expenses
    
    
    1,056
    
    
    
    4,308
    
    
    
    6,208Interest Expense
    
    
    
    
    
    
    1,290
    
    
    
    2,269
 See notes to consolidated and combined consolidated financial statements.
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
 
 Consolidated Statements of Changes in Stockholders and Invested Equity
 (In Thousands)
 Altisource EquityAdditional
    
    
    
    
    
    
    Non-Invested
    
    
    Common Stock
    
    
    Retained
    
    
    Paid-in
    
    
    Treasury
    
    
    controlling
    
    
    
    
    
    
    ComprehensiveEquity
    
    
    Shares
    
    
    
    
    
    
    Earnings
    
    
    Capital
    
    
    Stock, at cost
    
    
    Interests
    
    
    Total
    
    
    IncomeBalance, January 1, 2008
    
    $
    69,615
    
    
    
    263
    
    
    $
    6,059
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    75,674Net Income
    
    
    9,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,219Net Transfers to Parent
    
    
    (24,347
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,347
    )Balance, December 31, 2008
    
    
    54,487
    
    
    
    263
    
    
    
    6,059
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,546Share Issuance due to Conversion to a Luxembourg
Societé Anonyme
    
    
    (3,283
    )
    
    
    9,079
    
    
    
    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
    
    
    
    14,732
    
    
    
    
    
    
    
    49,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    Exercise of Stock Options
    
    
    
    
    
    
    71
    
    
    
    71
    
    
    
    
    
    
    
    818
    
    
    
    
    
    
    
    
    
    
    
    889
    
    
    
    Net Income for Post-separation Period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,665
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,665
    
    
    
    11,665Balance, December 31, 2009
    
    
    
    
    
    
    24,145
    
    
    
    24,145
    
    
    
    11,665
    
    
    
    50,538
    
    
    
    
    
    
    
    
    
    
    
    86,348
    
    
    $
    25,971Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,271
    
    
    
    
    
    
    
    
    
    
    
    6,903
    
    
    
    56,174
    
    
    $
    56,174Acquisition of The Mortgage Partnership of
America, L.L.C.
    
    
    
    
    
    
    959
    
    
    
    959
    
    
    
    
    
    
    
    22,941
    
    
    
    
    
    
    
    3,268
    
    
    
    27,168
    
    
    
    Contributions from Non-controlling Interest Holders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    41
    
    
    
    Distributions to Non-controlling Interest Holders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,152
    )
    
    
    (7,152
    )
    
    
    Share-based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,110
    
    
    
    
    
    
    
    
    
    
    
    3,110
    
    
    
    Exercise of Stock Options
    
    
    
    
    
    
    298
    
    
    
    298
    
    
    
    (2,390
    )
    
    
    2,708
    
    
    
    3,370
    
    
    
    
    
    
    
    3,986
    
    
    
    Delivery of Vested Restricted Stock
    
    
    
    
    
    
    11
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    Repurchase of Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,788
    )
    
    
    
    
    
    
    (17,788
    )
    
    
    Balance, December 31, 2010
    
    $
    
    
    
    
    25,413
    
    
    $
    25,413
    
    
    $
    58,546
    
    
    $
    79,297
    
    
    $
    (14,418
    )
    
    $
    3,060
    
    
    $
    151,898
    
    
    $
    56,174
 See notes to consolidated and combined consolidated financial statements.
  - 52 -




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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
 
 Statements of Cash Flows
 (Dollars in Thousands)
 For the Years Ended December 31,20082010
    
    
    2009
    
    
    (Combined(in thousands)
    
    (Consolidated)
    
    
    (Consolidated)
    
    
    Consolidated)CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    56,174
    
    
    $
    25,971
    
    
    $
    9,219Reconciling Items:Depreciation and Amortization
    
    
    7,158
    
    
    
    5,432
    
    
    
    7,836Amortization of Intangible Assets
    
    
    4,891
    
    
    
    2,672
    
    
    
    2,554Goodwill Impairment
    
    
    2,816
    
    
    
    
    
    
    
    Share-based Compensation Expense
    
    
    3,110
    
    
    
    296
    
    
    
    Deferred Income Taxes
    
    
    (1,119
    )
    
    
    (1,179
    )
    
    
    1,197Loss on Disposal of Premises and Equipment
    
    
    
    
    
    
    
    
    
    
    249Changes in Operating Assets and Liabilities, net of
Acquisitions:Accounts Receivable
    
    
    (16,725
    )
    
    
    (21,420
    )
    
    
    7,693Prepaid Expenses and Other Current Assets
    
    
    (9,851
    )
    
    
    117
    
    
    
    305Other Assets
    
    
    (2,799
    )
    
    
    (616
    )
    
    
    57Accounts Payable and Accrued Expenses
    
    
    8,180
    
    
    
    19,425
    
    
    
    (3,370
    )Other Current and Non-current Liabilities
    
    
    977
    
    
    
    2,586
    
    
    
    3,165Net Cash Flow from Operating Activities
    
    
    52,812
    
    
    
    33,284
    
    
    
    28,905CASH FLOWS FROM INVESTING ACTIVITIES:Additions to Premises and Equipment
    
    
    (11,614
    )
    
    
    (7,536
    )
    
    
    (5,216
    )Acquisition of MPA, net of Cash Acquired
    
    
    (26,830
    )
    
    
    
    
    
    
    Change in Restricted Cash
    
    
    (1,045
    )
    
    
    
    
    
    
    Net Cash Flow from Investing Activities
    
    
    (39,489
    )
    
    
    (7,536
    )
    
    
    (5,216
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal Payments on Capital Lease Obligations
    
    
    (743
    )
    
    
    (692
    )
    
    
    (2,275
    )Proceeds from Stock Option Exercises
    
    
    3,997
    
    
    
    889
    
    
    
    Purchase of Treasury Stock
    
    
    (17,788
    )
    
    
    
    
    
    
    Contributions from Non-controlling Interests
    
    
    41
    
    
    
    
    
    
    
    Distributions to Non-controlling Interests
    
    
    (7,152
    )
    
    
    
    
    
    
    Net Distribution to Parent
    
    
    
    
    
    
    (1,354
    )
    
    
    (21,090
    )Borrowings from Line of Credit
    
    
    
    
    
    
    
    
    
    
    33,417Payments of Line of Credit
    
    
    
    
    
    
    (1,123
    )
    
    
    (32,294
    )Repayment of Short-Term Borrowings
    
    
    
    
    
    
    
    
    
    
    (147
    )Net Cash Flow from Financing Activities
    
    
    (21,645
    )
    
    
    (2,280
    )
    
    
    (22,389
    )Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (8,322
    )
    
    
    23,468
    
    
    
    1,300Cash and Cash Equivalents at the Beginning of the Year
    
    
    30,456
    
    
    
    6,988
    
    
    
    5,688Cash and Cash Equivalents at the End of the Year
    
    $
    22,134
    
    
    $
    30,456
    
    
    $
    6,988Supplemental Cash Flow InformationInterest Paid
    
    $
    108
    
    
    $
    25
    
    
    $
    121Income Taxes Paid
    
    
    6,069
    
    
    
    795
    
    
    
    26Non-cash Investing and Financing ActivitiesShares issued in Connection with MPA Acquisition
    
    $
    23,900
    
    
    $
    
    
    
    $
    Reduction in Income Tax Payable from Tax
Amortizable Goodwill
    
    
    3,029
    
    
    
    2,216
    
    
    
    3,622Increase in Common Stock due to the Companys
Conversion to a Luxembourg Société Anonyme
    
    
    
    
    
    
    3,283
    
    
    
    
 See notes to consolidated and combined consolidated financial statements.
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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
   - 54 -




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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
 Restricted Cash
  - 55 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 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
 Goodwill
   - 56 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Intangible Assets, Net 
  Fair Value of Financial Instruments
  AssumptionsRisk-free Interest Rate
    
    
    0.12%  1.02
    %Expected Stock Price Volatility
    
    
    30%  58
    %Expected Dividend Yield
    
    
    Contractual Life (in years)
    
    
    0.25  3.25Fair Value
    
    $
    0.00  $3.91
  Foreign Currency Translation and Transactions
 Defined Contribution 401(k) Plan
  - 57 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Equity-based Compensation 
 Earnings Per Share
 Revenue Recognition
 Mortgage Services
 Financial Services
 Technology Services
  - 58 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Income Taxes
   3. TRANSACTIONS WITH RELATED PARTIES
   For the Years Ended December 31,2010
    
    
    2009Mortgage Services
    
    
    66
    %
    
    
    72
    %Technology Services
    
    
    37
    
    
    
    44Financial Services
    
    
    < 1
    
    
    
    < 1Consolidated Revenues
    
    
    51
    %
    
    
    47
    %
   - 59 -




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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
  Transition Services
  Separation Related Expenditures
  4. ACQUISITION OF MPA
   - 60 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  (in thousands)
    
    ConsiderationCash
    
    $
    29,000Common Stock
    
    
    23,900Put Option Agreements at Fair Value
    
    
    1,289Working Capital Adjustment
    
    
    835Total Consideration
    
    $
    55,024
  AssumptionsRisk-free Interest Rate
    
    
    0.345%  1.914
    %Expected Stock Price Volatility
    
    
    40%   55
    %Expected Dividend Yield
    
    
    Contractual Life (in years)
    
    
    1  4Fair Value
    
    $
    0.74  $3.90
  (in thousands)Cash
    
    $
    2,170Accounts Receivable
    
    
    4,279Prepaid Expenses and Other Current Assets
    
    
    321Premises and Equipment
    
    
    18Identifiable Intangible Assets
    
    
    43,600Goodwill
    
    
    10,21860,606Accounts Payable and Accrued Expenses
    
    
    (2,176
    )Other Current Liabilities
    
    
    (138
    )Non-controlling Interests
    
    
    (3,268
    )Total Purchase Price
    
    $
    55,024
   - 61 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  EstimatedLife(in Years)Premises and Equipment
    
    
    2  5Management Agreement(1)
    
    
    20Trademarks(1)
    
    
    20Non-compete(1)
    
    
    4Goodwill
    
    
    Indefinite
 (1)
    
    The identifiable assets are subject to amortization on a straight-line basis as this best approximates the benefit period related to these assets.
    Year EndedDecember 31,(in thousands)
    
    2010Revenue
    
    $
    18,039Net Income Before Income Taxes and Non-controlling Interests
    
    
    13,863
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Years Ended December 31,2010
    
    
    2009As
    
    
    
    
    
    
    As(in thousands, except per share amounts)
    
    Reported
    
    
    Pro Forma
    
    
    Reported
    
    
    Pro FormaRevenue
    
    $
    301,378
    
    
    $
    303,022
    
    
    $
    202,812
    
    
    $
    223,810Net Income Attributable to Altisource
    
    
    49,271
    
    
    
    49,143
    
    
    
    25,971
    
    
    
    30,283Earnings Per Share  Diluted
    
    
    1.88
    
    
    
    1.87
    
    
    
    1.07
    
    
    
    1.20
 5. ACCOUNTS RECEIVABLE, NET
  December 31,Quarter Ended
    
    2010
    
    
    2009Third-party Accounts Receivable
    
    $
    19,039
    
    
    $
    11,638Unbilled Fees
    
    
    32,055
    
    
    
    9,073Receivable from Ocwen
    
    
    3,950
    
    
    
    10,066Other Receivables
    
    
    583
    
    
    
    41655,627
    
    
    
    31,193Allowance for Doubtful Accounts
    
    
    (2,132
    )
    
    
    (696
    )Total
    
    $
    53,495
    
    
    $
    30,497
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  (in thousands)Balance, January 1, 2008
    
    $
    959Bad Debt Expense
    
    
    864Recoveries
    
    
    (449
    )Write-offs
    
    
    (597
    )Balance, December 31, 2008
    
    
    777Bad Debt Expense
    
    
    338Recoveries
    
    
    (205
    )Write-offs
    
    
    (214
    )Balance, December 31, 2009
    
    $
    696Bad Debt Expense
    
    
    1,735Recoveries
    
    
    (106
    )Write-offs
    
    
    (193
    )Balance, December 31, 2010
    
    $
    2,132
  6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
  December 31,(in thousands)
    
    2010
    
    
    2009Prepaid Expenses
    
    $
    5,134
    
    
    $
    2,435Income Tax Receivable
    
    
    7,327
    
    
    
    Other Current Assets
    
    
    615
    
    
    
    469Total
    
    $
    13,076
    
    
    $
    2,904
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 7. PREMISES AND EQUIPMENT, NET
  December 31,(in thousands)
    
    2010
    
    
    2009Computer Hardware and Software
    
    $
    32,931
    
    
    $
    23,591Office Equipment and Other
    
    
    9,717
    
    
    
    9,203Furniture and Fixtures
    
    
    2,226
    
    
    
    2,663Leasehold Improvements
    
    
    4,501
    
    
    
    3,44149,375
    
    
    
    38,898Less: Accumulated Depreciation and Amortization
    
    
    (31,882
    )
    
    
    (27,490
    )Total
    
    $
    17,493
    
    
    $
    11,408
  8. GOODWILL AND INTANGIBLE ASSETS, NET
 Goodwill
 ®
  Mortgage
    
    
    Technology
    
    
    Financial(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    TotalBalance, January 1, 2009
    
    $
    
    
    
    $
    1,618
    
    
    $
    9,922
    
    
    $
    11,540Component 2 Amortization (a)
    
    
    
    
    
    
    
    
    
    
    (2,216
    )
    
    
    (2,216
    )Balance, December 31, 2009
    
    
    
    
    
    
    1,618
    
    
    
    7,706
    
    
    
    9,324Acquisition of MPA
    
    
    10,218
    
    
    
    
    
    
    
    
    
    
    
    10,218Component 2 Amortization (a)
    
    
    
    
    
    
    
    
    
    
    (4,890
    )
    
    
    (4,890
    )Impairment Loss (b)
    
    
    
    
    
    
    
    
    
    
    (2,816
    )
    
    
    (2,816
    )Balance, December 31, 2010
    
    $
    10,218
    
    
    $
    1,618
    
    
    $
    
    
    
    $
    11,836
 a)
    
    Prior to our acquisition of NCI in 2007, NCI completed 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
by reducing certain 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 $11.4 million as of December 31, 2010 which should generate $6.8 million of
reductions of intangible assets when the benefit can be realized for U.S. tax purposes.b)
    
    Based on the fourth quarter goodwill impairment test, management determined it was
prudent to impair the remaining $2.8 million of goodwill in the Financial Services segment.
This determination was made after considering quantitative and qualitative factors
including past performance and execution risk.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Intangible Assets, Net
   WeightedAverageEstimated
    
    
    Gross
    
    
    AccumulatedUseful Life
    
    
    Carrying Amount
    
    
    Amortization
    
    
    Net Book Value(in thousands)
    
    (Years)
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Definite-lived Intangible AssetsTrademarks
    
    
    16
    
    
    $
    10,200
    
    
    $
    2,800
    
    
    $
    2,346
    
    
    $
    1,447
    
    
    $
    7,854
    
    
    $
    1,353Customer Lists
    
    
    19
    
    
    
    37,700
    
    
    
    37,700
    
    
    
    7,447
    
    
    
    5,334
    
    
    
    30,253
    
    
    
    32,366Operating Agreement
    
    
    20
    
    
    
    35,000
    
    
    
    
    
    
    
    1,604
    
    
    
    
    
    
    
    33,396
    
    
    
    Non Competing Agreement
    
    
    4
    
    
    
    1,200
    
    
    
    
    
    
    
    275
    
    
    
    
    
    
    
    925
    
    
    
    Total Intangible Assets
    
    
    
    
    
    $
    84,100
    
    
    $
    40,500
    
    
    $
    11,672
    
    
    $
    6,781
    
    
    $
    72,428
    
    
    $
    33,719
  9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  December 31,(in thousands)
    
    2010
    
    
    2009Accounts Payable
    
    $
    5,960
    
    
    $
    1,114Income Taxes Payable, net
    
    
    3,807
    
    
    
    4,853Payable to Ocwen
    
    
    2,418
    
    
    
    2,716Accrued Expenses  General
    
    
    11,189
    
    
    
    8,373Accrued Salaries and Benefits
    
    
    12,010
    
    
    
    7,136Total
    
    $
    35,384
    
    
    $
    24,192
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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)
    
    2010
    
    
    2009Mortgage Charge-Off and Deficiency Collections
    
    $
    8
    
    
    $
    2,458Deferred Revenue
    
    
    2,542
    
    
    
    989Facility Closure Cost Accrual, Current Portion
    
    
    253
    
    
    
    272Other
    
    
    2,813
    
    
    
    2,220Total
    
    $
    5,616
    
    
    $
    5,939
 Facility Closure Costs
  Lease
    
    
    Facility
    
    
    Termination(in thousands)
    
    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
    
    
    $
    
    
    
    $
    
    
    
    $
    272Balance, December 31, 2009
    
    $
    916
    
    
    $
    
    
    
    $
    
    
    
    $
    916Payments
    
    
    (244
    )
    
    
    
    
    
    
    
    
    
    
    (244
    )Balance, December 31, 2010
    
    
    672
    
    
    
    
    
    
    
    
    
    
    
    672Less: Long-term Portion
    
    
    (419
    )
    
    
    
    
    
    
    
    
    
    
    (419
    )Facility Closure Cost Accrual,
Current Portion
    
    $
    253
    
    
    $
    
    
    
    $
    
    
    
    $
    253
 10. LINE OF CREDIT AND OTHER SECURED BORROWINGS
   - 67 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 11. COST OF REVENUE
  For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Compensation and Benefits
    
    $
    62,791
    
    
    $
    51,251
    
    
    $
    59,311Outside Fees and Services
    
    
    60,583
    
    
    
    43,026
    
    
    
    35,825Reimbursable Expenses
    
    
    47,449
    
    
    
    16,077
    
    
    
    Technology and Communications
    
    
    18,236
    
    
    
    16,443
    
    
    
    19,912$
    189,059
    
    
    $
    126,797
    
    
    $
    115,048
 12. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Compensation and Benefits
    
    $
    19,116
    
    
    $
    4,096
    
    
    $
    6,208Professional Services
    
    
    8,026
    
    
    
    10,252
    
    
    
    3,270Occupancy Related Costs
    
    
    12,154
    
    
    
    8,456
    
    
    
    8,125Amortization of Intangible Assets
    
    
    4,891
    
    
    
    2,672
    
    
    
    2,554Goodwill Impairment
    
    
    2,816
    
    
    
    
    
    
    
    Other
    
    
    10,349
    
    
    
    13,997
    
    
    
    7,931$
    57,352
    
    
    $
    39,473
    
    
    $
    28,088
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 13. OTHER INCOME (EXPENSE), NET
  For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Interest Income
    
    $
    31
    
    
    $
    16
    
    
    $
    16Interest Expense
    
    
    (119
    )
    
    
    (1,660
    )
    
    
    (2,607
    )Change in Fair Value of Put Option
    
    
    557
    
    
    
    
    
    
    
    Other, net
    
    
    335
    
    
    
    2,678
    
    
    
    (35
    )$
    804
    
    
    $
    1,034
    
    
    $
    (2,626
    )
   14. INCOME TAXES
  For the Years Ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008Current:Domestic  Luxembourg
    
    $
    (1,031
    )
    
    $
    4,827
    
    
    $
    4Foreign  U.S. Federal
    
    
    
    
    
    
    8,321
    
    
    
    202Foreign  U.S. State
    
    
    561
    
    
    
    
    
    
    
    (379
    )Foreign  Non U.S.
    
    
    1,186
    
    
    
    26
    
    
    
    736$
    716
    
    
    $
    13,174
    
    
    $
    563Deferred:Domestic  Luxembourg
    
    $
    395
    
    
    $
    (107
    )
    
    $
    Foreign  U.S. Federal
    
    
    (1,014
    )
    
    
    (1,581
    )
    
    
    (102
    )Foreign  U.S. State
    
    
    (68
    )
    
    
    (66
    )
    
    
    1,299Foreign  Non U.S.
    
    
    (432
    )
    
    
    185
    
    
    
    (1,119
    )
    
    
    (1,569
    )
    
    
    1,197Benefit Applied to Reduce Goodwill
    
    
    
    
    
    
    
    
    
    
    3,622Total
    
    $
    (403
    )
    
    $
    11,605
    
    
    $
    5,382
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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)
    
    2010
    
    
    2009Current Deferred Tax Assets:Allowance for Doubtful Accounts and Other Reserves
    
    $
    143
    
    
    $
    1,074Accrued Expenses
    
    
    807
    
    
    
    751Current Deferred Tax Liabilities:Prepaid Expense
    
    
    (399
    )
    
    
    (279
    )Current Deferred Tax Asset, Net:
    
    $
    551
    
    
    $
    1,546Non-current Deferred Tax Assets:Non Operating Loss Carryforwards  U.S. Federal
    
    
    8,891
    
    
    
    6,644Non Operating Loss Carryforwards  U.S. State
    
    
    2,058
    
    
    
    1,623Depreciation
    
    
    58
    
    
    
    1,680Non-U.S. Deferred Tax Asset
    
    
    916
    
    
    
    692Other
    
    
    416
    
    
    
    193Non-current Deferred Tax Liabilities:Intangible Assets
    
    
    (9,258
    )
    
    
    (11,013
    )U.S. State Taxes
    
    
    
    
    
    
    (1,068
    )3,081
    
    
    
    (1,249
    )Valuation Allowance
    
    
    (1,875
    )
    
    
    (1,520
    )Non-current Deferred Tax Asset (Liability), net
    
    $
    1,206
    
    
    $
    (2,769
    )Net Deferred Tax Asset (Liability)
    
    $
    1,757
    
    
    $
    (1,223
    )
    - 70 -




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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 31,2010
    
    
    2009
    
    
    2008Statutory Tax Rate
    
    
    28.6
    %
    
    
    28.6
    %
    
    
    29.6
    %Foreign Rate Differential
    
    
    (23.0
    )
    
    
    2.6
    
    
    
    11.0Tax Adjustment for Retroactive Ruling
    
    
    (7.0
    )
    
    
    
    
    
    
    Change in Valuation Allowances
    
    
    0.5
    
    
    
    (0.9
    )
    
    
    9.1State Tax Expense
    
    
    0.3
    
    
    
    
    
    
    
    Indefinite Deferral on Earnings of
Non-U.S. Affiliates
    
    
    
    
    
    
    
    
    
    
    (12.8
    )Indefinite Deferral on Earnings of
Non-Luxembourg Affiliates
    
    
    
    
    
    
    0.6
    
    
    
    Other
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.8
    )%
    
    
    30.9
    %
    
    
    36.9
    %
    - 71 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 15. EARNINGS PER SHARE
    For the Years Ended December 31,(in thousands, except per share amounts)
    
    2010
    
    
    2009
    
    
    2008Net Income
    
    $
    49,271
    
    
    $
    25,971
    
    
    $
    9,219Weighted-Average Common Shares
Outstanding, Basic
    
    
    25,083
    
    
    
    24,062
    
    
    
    24,050Dilutive Effect of Stock Options
    
    
    1,176
    
    
    
    196
    
    
    
    Dilutive Effect of Restricted Shares
    
    
    
    
    
    
    3
    
    
    
    Weighted-Average Common Shares
Outstanding, Diluted
    
    
    26,259
    
    
    
    24,261
    
    
    
    24,050Earnings Per ShareBasic
    
    $
    1.96
    
    
    $
    1.08
    
    
    $
    0.38Diluted
    
    $
    1.88
    
    
    $
    1.07
    
    
    $
    0.38
   - 72 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 16. STOCKHOLDERS EQUITY AND EQUITY-BASED COMPENSATION
 Common Stock
  Treasury Stock
  Equity Incentive Plan
 Prior to Separation
  Post-Separation
  Equity-Based Compensation
   Stock Options
 Service-based Options.
  - 73 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Market-based Options
  2010
    
    
    2009Black-Scholes
    
    
    Binomial
    
    
    Black-Scholes
    
    
    BinomialRisk-free Interest Rate
    
    
    1.50  3.20
    %
    
    
    0.02  3.66
    %
    
    
    2.64
    %
    
    
    0.50  3.86
    %Expected Stock Price Volatility
    
    
    47  50
    %
    
    
    51  52
    %
    
    
    39
    %
    
    
    38  46
    %Expected Dividend Yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected Option Life (in years)
    
    
    6.25  7
    
    
    
    
    
    
    
    5
    
    
    
    Contractual Life (in years)
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    10Fair Value
    
    $
    11.95  $13.24
    
    
    $
    10.05  $12.42
    
    
    $
    5.35
    
    
    $
    4.54 and $5.33
  December 312010
    
    
    2009Weighted-Average Fair Value at Date of Grant
    
    
    
    
    
    $
    18.18
    
    
    $
    5.14Intrinsic Value of Options Exercised
    
    (in thousands)
    
    $
    7,530
    
    
    $
    345Fair Value of Options Vested
    
    (in thousands)
    
    $
    926
    
    
    $
    441
    - 74 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  Weighted
    
    
    AggregateWeighted
    
    
    Average
    
    
    IntrinsicAverage
    
    
    Contractual
    
    
    ValueNumber of
    
    
    Exercise
    
    
    Term
    
    
    (inOptions
    
    
    Price
    
    
    (in years)
    
    
    thousands)Outstanding at December 31, 2009
    
    
    3,190,639
    
    
    $
    9.90Granted
    
    
    927,501
    
    
    
    23.58Exercised
    
    
    (422,485
    )
    
    
    9.43Forfeited
    
    
    (244,042
    )
    
    
    11.19Outstanding at December 31, 2010
    
    
    3,451,613
    
    
    $
    13.46
    
    
    
    7.3
    
    
    $
    52,641Exercisable at December 31, 2010
    
    
    1,333,283
    
    
    $
    10.00
    
    
    
    5.8
    
    
    $
    24,945
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    Average
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageExercise Price
    
    
    
    
    
    Contractual
    
    
    Exercise
    
    
    
    
    
    
    Contractual
    
    
    ExerciseRange
    
    Number
    
    
    Life
    
    
    Price
    
    
    Number
    
    
    Life
    
    
    Price$2.00  $6.00
    
    
    67,037
    
    
    
    2.09
    
    
    $
    2.95
    
    
    
    67,037
    
    
    
    2.1
    
    
    $
    2.95$6.01  $9.00
    
    
    115,433
    
    
    
    1.28
    
    
    
    7.50
    
    
    
    115,433
    
    
    
    1.3
    
    
    
    7.50$9.01  $12.00
    
    
    2,070,835
    
    
    
    7.4
    
    
    
    9.61
    
    
    
    904,588
    
    
    
    7.2
    
    
    
    9.69$12.01 
$15.00(a)
    
    
    303,308
    
    
    
    4.7
    
    
    
    14.21
    
    
    
    246,225
    
    
    
    3.7
    
    
    
    14.22$15.01 
$18.00(a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $18.01 
$21.00(a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $21.01 
$24.00(a)
    
    
    375,000
    
    
    
    9.1
    
    
    
    22.01
    
    
    
    
    
    
    
    
    
    
    
    $24.01 
$27.00(a)
    
    
    520,000
    
    
    
    9.4
    
    
    
    24.86
    
    
    
    
    
    
    
    
    
    
    
    3,451,613
    
    
    
    
    
    
    
    
    
    
    
    1,333,283
 (a)
    
    These options contain market-based components as described above. All other options are time-based awards.
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
  (in thousands, except share prices)
    
    Market Based OptionsOrdinary
    
    
    ExtraordinaryVesting Price
    
    Performance
    
    
    Performance$40.00  $45.00
    
    
    188
    
    
    
    8$45.01  $50.00
    
    
    250
    
    
    
    $50.01  $55.00
    
    
    10
    
    
    
    $65.01  $70.00
    
    
    
    
    
    
    94$70.01  $75.00
    
    
    
    
    
    
    125$75.01  $80.00
    
    
    
    
    
    
    5448
    
    
    
    232Weighted Average Share Price
    
    $
    47.33
    
    
    $
    69.97
 Restricted Shares
  WeightedAverageRestricted
    
    
    Grant DateShares
    
    
    Fair ValueOutstanding at December 31, 2009
    
    
    3,236
    
    
    $
    18.00Issued at Separation
    
    
    
    
    
    
    Vested
    
    
    (3,236
    )
    
    
    18.00Forfeited
    
    
    
    
    
    
    Treasury stock repurchased
    
    
    
    
    
    
    Outstanding at December 31, 2010
    
    
    
 17. COMMITMENTS AND CONTINGENCIES
 Litigation
 Noble Systems Corp.
  - 76 -




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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Nationwide Inflection, LLC.
  Leases
  OperatingCapital Lease
    
    
    Lease(in thousands)
    
    Obligations
    
    
    Obligations2011
    
    $
    738
    
    
    $
    4,8672012
    
    
    619
    
    
    
    3,4082013
    
    
    258
    
    
    
    1,6952014
    
    
    
    
    
    
    7622015
    
    
    
    
    
    
    2101,615
    
    
    $
    10,942Less: Amounts Representing Interest
    
    
    (84
    )Capital Lease Obligations
    
    
    1,531Less: Current Portion Under Capital Lease Obligation
    
    
    (679
    )Long-term Portion Under Capital Lease Obligation
    
    $
    852
  18. SEGMENT REPORTING
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 Mortgage Services Financial Services Technology
Services Corporate Items and Eliminations
  For the Year Ended December 31, 2010CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    AltisourceRevenue
    
    $
    204,771
    
    
    $
    59,979
    
    
    $
    52,013
    
    
    $
    (15,385
    )
    
    $
    301,378Cost of Revenue
    
    
    124,485
    
    
    
    49,781
    
    
    
    28,909
    
    
    
    (14,116
    )
    
    
    189,059Gross Profit
    
    
    80,286
    
    
    
    10,198
    
    
    
    23,104
    
    
    
    (1,269
    )
    
    
    112,319Selling, General and
Administrative Expenses
    
    
    14,890
    
    
    
    19,567
    
    
    
    4,985
    
    
    
    17,910
    
    
    
    57,352Income (Loss) from Operations
    
    
    65,396
    
    
    
    (9,369
    )
    
    
    18,119
    
    
    
    (19,179
    )
    
    
    54,967Other Income (Expense), net
    
    
    781
    
    
    
    (50
    )
    
    
    (60
    )
    
    
    133
    
    
    
    804Income (Loss) Before Income Taxes
    
    $
    66,177
    
    
    $
    (9,419
    )
    
    $
    18,059
    
    
    $
    (19,046
    )
    
    $
    55,771Transactions with Related
Parties Included Above:Revenue
    
    $
    135,655
    
    
    $
    166
    
    
    $
    19,167
    
    
    $
    
    
    
    $
    154,988Selling, General and
Administrative Expenses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,056
    
    
    $
    1,056Interest Expense
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 For the Year Ended December 31, 2009CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    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
    )
    
    $
    37,576Transactions with Related
Parties Included Above:Revenue
    
    $
    74,089
    
    
    $
    98
    
    
    $
    20,710
    
    
    $
    
    
    
    $
    94,897$
    2,712
    
    
    $
    467
    
    
    $
    1,517
    
    
    $
    (388
    )
    
    $
    4,308$
    30
    
    
    $
    1,029
    
    
    $
    231
    
    
    $
    
    
    
    $
    1,290
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 For the Year Ended December 31, 2008CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    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
    
    
    $
    
    
    
    $
    14,601Transactions with Related
Parties Included Above:Revenue
    
    $
    41,635
    
    
    $
    1,181
    
    
    $
    35,146
    
    
    $
    (13,711
    )
    
    $
    64,251
 CorporateMortgage
    
    
    Financial
    
    
    Technology
    
    
    Items and
    
    
    Consolidated(in thousands)
    
    Services
    
    
    Services
    
    
    Services
    
    
    Eliminations
    
    
    AltisourceTotal Assets:December 31, 2010
    
    $
    93,173
    
    
    $
    43,202
    
    
    $
    31,469
    
    
    $
    29,956
    
    
    $
    197,800December 31, 2009
    
    $
    8,259
    
    
    $
    51,579
    
    
    $
    15,677
    
    
    $
    45,041
    
    
    $
    120,556
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##### Table of Contents



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Consolidated and Combined Consolidated Financial Statements (continued)
 19. QUARTERLY FINANCIAL DATA (UNAUDITED)
   2010 Quarter Ended(1)(in thousands, except per share amounts)
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,Revenue
    
    $
    91,477
    
    
    $
    77,580
    
    
    $
    71,347
    
    
    $
    60,974Gross Profit
    
    
    35,060
    
    
    
    28,667
    
    
    
    26,972
    
    
    
    21,620Income Before Income Taxes and
Non-controlling Interests
    
    
    17,121
    
    
    
    14,635
    
    
    
    14,536
    
    
    
    9,479Net Income
    
    
    19,553
    
    
    
    11,884
    
    
    
    17,643
    
    
    
    7,094Net Income Attributable to Altisource
    
    
    16,786
    
    
    
    9,832
    
    
    
    16,346
    
    
    
    6,307Net Income Per ShareBasic
    
    $
    0.67
    
    
    $
    0.39
    
    
    $
    0.65
    
    
    $
    0.26Diluted
    
    $
    0.64
    
    
    $
    0.37
    
    
    $
    0.62
    
    
    $
    0.25Weighted Average Shares OutstandingBasic
    
    
    25,091
    
    
    
    25,318
    
    
    
    25,226
    
    
    
    24,690Diluted
    
    
    26,183
    
    
    
    26,544
    
    
    
    26,247
    
    
    
    25,663
 2009 Quarter Ended(1)(in thousands, except per share amounts)
    
    December 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 and
Non-controlling Interests
    
    
    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
    
    
    24,083
    
    
    
    24,050
    
    
    
    24,050
    
    
    
    24,050Diluted
    
    
    24,339
    
    
    
    24,050
    
    
    
    24,050
    
    
    
    24,050
 (1)
    
    The sum of quarterly amounts, including per share amounts, may not equal amounts reported
for year-to-date periods. This is due to the effects of rounding and changes in the number of
weighted-average shares outstanding for each period.
  - 80 -




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  Changes in Internal Control Over Financial Reporting
  Limitations on Controls
  
 ITEM 9B.
    
    OTHER INFORMATION
   - 81 -




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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 AND RELATED TRANSACTIONS
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   - 82 -




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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
    
    
    Tax Matters Agreement, dated as of August 10, 2009, 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
    
    
    Employee Matters Agreement, dated as of August 10, 2009, between Altisource Solutions S.à
r.l. and Ocwen Financial Corporation (incorporated by reference to Exhibit 10.4 of the
Registrants Current Report on Form 8-K, as filed with the Commission on August 13, 2009)10.4
    
    
    Technology Products Services Agreement, dated as of August 10, 2009, 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)10.5
    
    
    Services Agreement, dated as of August 10, 2009, 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)10.6
    
    
    Data Center and Disaster Recovery Services Agreement, dated as of August 10, 2009, 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)
  - 83 -




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description10.7
    
    
    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)10.8
    
    
    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 Owners (incorporate by reference to Exhibit 10.12 of the
Companys 10-K as filed with the Commission on March 17, 2010)10.13
    
    
    Form of Put Option Agreements (incorporate by reference to Exhibit 10.13 of the
Companys 10-K as filed with the Commission on March 17, 2010)10.14
    *
    
    Form of Non-qualified Stock Option Agreement, pursuant to the 2009 Equity Incentive Plan21.1
    *
    
    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
    
    Denotes management contract or compensatory arrangement
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##### Table of Contents



SIGNATURES
   Altisource Portfolio Solutions S.A.By:
    /s/ William B. SheproName:
    William B. SheproTitle:
    Director and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ Robert D. StilesName:
    Robert D. StilesTitle:
    Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)  By:
    /s/ William B. SheproName:
    William B. SheproTitle:
    Director and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ Robert D. StilesName:
    Robert D. StilesTitle:
    Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)  - 85 -




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ William C. Erbey
    
    Chairman of the Board of Directors
    
    February 18, 2011William C. Erbey/s/ William B. Shepro
    
    Director and Chief Executive Officer
    
    February 18, 2011William B. Shepro
    
    (Principal Executive Officer)/s/ Silke Andresen-Kienz

Silke Andresen-Kienz
    
    Director
    
    February 18, 2011/s/ Roland Müller-Ineichen
    
    Director
    
    February 18, 2011Roland Müller-Ineichen/s/ Timo Vättö
    
    Director
    
    February 18, 2011Timo Vättö/s/ Robert D. Stiles
    
    Chief Financial Officer
    
    February 18, 2011Robert D. Stiles
    
    (Principal Financial Officer andPrincipal Accounting Officer)
  - 86 -