Discontinued Operations and Disposal Groups

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

3. DISCONTINUED OPERATIONS

The Company entered into the Purchase Agreement on November 6, 2019 (the "Purchase Agreement"), pursuant to which SIRVA will acquire Cartus Relocation Services, the Company's global employee relocation business. Under the terms of the Purchase Agreement, the Company will receive $375 million in cash at closing, subject to certain adjustments set forth in the Purchase Agreement, and a $25 million deferred payment after the closing of the transaction. The $375 million purchase price is subject to adjustments for cash, indebtedness, working capital, securitization obligations and other items, as defined and described in the Purchase Agreement. The transaction is expected to close in the next couple of months, subject to the satisfaction of closing conditions described in the Purchase Agreement.

The transaction includes all of Cartus Relocation Services, but does not include Realogy Leads Group. Realogy Leads Group is comprised of the Company's affinity and broker-to-broker business, as well as the broker network made up of agents and brokers from Realogy’s residential real estate brands and certain independent real estate brokers (which was formerly referred to as the Cartus Broker Network).

As a result of the pending transaction, the Company met the requirements under ASC 360 and ASC 205 and accordingly the assets and liabilities of Cartus Relocation Services are classified as held for sale in the Consolidated Balance Sheets and the operating results of Cartus Relocation Services are reported as discontinued operations and reflected in "Net (loss) income from discontinued operations" on the Consolidated Statements of Operations for all periods presented. The cash flows related to discontinued operations have been segregated and are included in the Consolidated Statements of Cash Flows.

The following table summarizes the operating results of discontinued operations described above and reflected within "Net (loss) income from discontinued operations" in the Company’s Consolidated Statements of Operations for each of the periods presented:


	Year Ended December 31,
	2019		2018		2017
Net revenues	$	272	$	297	$	304
Total expenses	281		305		297
(Loss) income from discontinued operations	(9)		(8)		7
Estimated loss on the sale of discontinued operations (a)	(22)		—		—
Income tax expense (benefit) from discontinued operations (b)	36		(2)		1
Net (loss) income from discontinued operations	$	(67)	$	(6)	$	6

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(a)Adjustment to record assets and liabilities held for sale at the lower of carrying value or fair value less any costs to sell based on the Purchase Agreement.

(b)Income tax expense for the year ended December 31, 2019 relates to tax expense as a result of the expected taxable gain on the sale of Cartus Relocation Services, primarily as a result of the Company's low tax basis in goodwill, trademarks and other intangibles.

Assets and liabilities held for sale related to discontinued operations presented in the Consolidated Balance Sheets at December 31, 2019 and 2018 are as follows:


	December 31,
	2019 (a)		2018
Carrying amounts of the major classes of assets held for sale
Cash and cash equivalents	$	28	$	22
Restricted cash	3		11
Trade receivables	46		61
Relocation receivables	203		231
Other current assets	12		13
Total current assets			338
Property and equipment, net	36		31
Operating lease assets, net	36		—
Goodwill	176		176
Trademarks	76		76
Other intangibles, net	156		174
Other non-current assets	—		4
Total non-current assets			461
Allowance for reduction of assets held for sale (b)	(22)
Total assets classified as held for sale	$	750	$	799

Carrying amounts of the major classes of liabilities held for sale
Accounts payable	$	53	$	64
Securitization obligations	206		231
Current portion of operating lease liabilities	6		—
Accrued expenses and other current liabilities	62		57
Total current liabilities			352
Long-term operating lease liabilities	29		—
Other non-current liabilities	—		3
Total non-current liabilities			3
Total liabilities classified as held for sale	$	356	$	355

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(a)The assets and liabilities of Cartus Relocation Services are classified as current on the December 31, 2019 balance sheet because it is probable that the sale will occur and proceeds will be collected within one year.

(b)Adjustment to record assets and liabilities held for sale at the lower of carrying value or fair value less any costs to sell based on the Purchase Agreement.

Securitization Obligations

Securitization Obligations in the table above are further broken out as follows:


	December 31,
	2019		2018
Securitization Obligations:
Apple Ridge Funding LLC	$	195	$	218
Cartus Financing Limited	11		13
Total Securitization Obligations	$	206	$	231

Realogy Group has secured obligations through Apple Ridge Funding LLC under a securitization program which expires in June 2020. As of December 31, 2019, the Company had $250 million of borrowing capacity under the Apple Ridge Funding LLC securitization program with $195 million being utilized leaving $55 million of available capacity.

Realogy Group, through a special purpose entity known as Cartus Financing Limited, has agreements providing for a £10 million revolving loan facility and a £5 million working capital facility which expires in August 2020. As of December 31, 2019, there were $11 million of outstanding borrowings under the facilities leaving $9 million of available capacity. These Cartus Financing Limited facilities are secured by the relocation assets of a U.K. government contract in this special purpose entity and are therefore classified as permitted securitization financings as defined in Realogy Group’s Senior Secured Credit Agreement and the indentures governing the Unsecured Notes.

The Apple Ridge entities and the Cartus Financing Limited entity are consolidated special purpose entities that are utilized to securitize relocation receivables and related assets. These assets are generated from advancing funds on behalf of clients of Realogy Group’s relocation business in order to facilitate the relocation of their employees. Assets of these special purpose entities are not available to pay Realogy Group’s general obligations. Under the Apple Ridge program, provided no termination or amortization event has occurred, any new receivables generated under the designated relocation management agreements are sold into the securitization program and as new eligible relocation management agreements are entered into, the new agreements are designated to the program. The Apple Ridge program has restrictive covenants and trigger events, including performance triggers linked to the age and quality of the underlying assets, foreign obligor limits, multicurrency limits, financial reporting requirements, restrictions on mergers and change of control, any uncured breach of Realogy Group’s senior secured leverage ratio under Realogy Group’s Senior Secured Credit Facility, and cross-defaults to Realogy Group’s material indebtedness. The occurrence of a trigger event under the Apple Ridge securitization facility could restrict our ability to access new or existing funding under this facility or result in termination of the facility, either of which would adversely affect the operation of our relocation business.

Certain of the funds that Realogy Group receives from relocation receivables and related assets must be utilized to repay securitization obligations. These obligations were collateralized by $200 million and $238 million of underlying relocation receivables and other related relocation assets at December 31, 2019 and 2018, respectively. Substantially all relocation related assets are realized in less than twelve months from the transaction date.

Interest incurred in connection with borrowings under these facilities amounted to $8 million and $9 million for the years ended December 31, 2019 and 2018, respectively. These securitization obligations represent floating rate debt for which the average weighted interest rate was 4.2% and 3.8% for the years ended December 31, 2019 and 2018, respectively.