Information Technology. Mortgage information operating revenues decreased 10.6% in 2005 over 2004 and increased 1.7% in 2004 over 2003. The decrease in 2005 over 2004 was primarily attributable to an increase in estimated servicing life of the tax service loan portfolio due to a slowdown in prepayment speeds, which results in the deferral of a larger portion of the tax service fee in early years. Also impacting operating revenues for the mortgage information segment for the year was the decline in mortgage originations year over year. The increase in 2004 over 2003 was primarily attributable to $166.4 million of operating revenues contributed by new
acquisitions, offset in part by the decline in mortgage originations and a $10.2 million decrease in operating revenues as a result of an increase in the estimated servicing life of the tax service loan portfolio due to a slowdown in prepayment speeds.
Corporate expenses include investment gains and losses, personnel and other operating expenses associated with the Company’s corporate facilities, certain corporate-wide and technology initiatives and unallocated interest expense.
In July 2004, the Company sold unsecured debt securities in the aggregate principal amount of $150.0 million. These securities, which bear interest at 5.7%, are due August 2014. The Company used the proceeds from the sale of the securities for general corporate purposes.
In the first quarter of 2004, the Company began the expansion of its office campus. This expansion was completed in the fourth quarter of 2005 with the addition of two 4-story office buildings totaling approximately 226,000 square feet, a two-story, free standing, 52,000 square foot technology center and a two-story parking structure, bringing the total square footage of the Company’s campus at MacArthur Place to approximately 490,000 square feet. The two new office buildings are occupied primarily by the Company’s property information segment and trust company. The expansion was paid for with internally generated funds.
In addition, the Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of such exchange the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds held by the Company for the purpose of completing such transactions totaled $2.6 billion and $1.9 billion at December 31, 2005 and 2004, respectively. Though the Company is the legal and beneficial owner of such proceeds and property, due to the structure utilized to facilitate these transactions the proceeds and property are not considered assets of the Company for accounting purposes and, therefore, are not included in the accompanying consolidated balance sheets. The Company remains contingently liable to the customer for the transfers of property, disbursements of proceeds and the return on the proceeds.
The fair value of the Company’s deferrable interest subordinated notes was $120.9 million and $100.0 million at December 31, 2005 and 2004, respectively and was estimated based on the current rates offered to the Company for debt of the same type and remaining maturity.
At December 31, 2005, the Company had available net operating-loss carryforwards totaling approximately $210.1 million for income tax purposes, of which $10.9 million has an indefinite expiration. The remaining $199.2 million begins to expire at various times beginning in 2008 and ending in 2025.
preferred share fraction equal to 1/100,000 of a share of Series A Junior Participating Preferred Shares of the Company at an exercise price of $265 per preferred share fraction. Each fraction is designed to be equivalent in voting and dividend rights to one common share.