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Basis Of Presentation Basis of Presentation (Policies) | 9 Months Ended
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Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Fair Value Measurement, Policy | The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.
Level Input: |  | Input Definitions:
Level I |  | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II |  | Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III |  | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
The availability of observable inputs can vary from asset to asset and is affected by a wide variety of factors, including, for example, the type of asset, whether the asset is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level III. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The fair value of financial instruments is generally determined by reference to quoted market values. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The fair value of interest rate swaps is determined based upon a discounted cash flow approach. The Company measures financial instruments at fair value on a recurring basis and recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. The following table summarizes fair value measurements by level at September 30, 2022 for assets and liabilities measured at fair value on a recurring basis:
| Level I |  | Level II |  | Level III |  | Total
Deferred compensation plan assets (included in other non-current assets) | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Interest rate swaps (included in other current assets) | — |  |  | 1 |  |  | — |  |  | 1 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 14 |  |  | 14 |
The following table summarizes fair value measurements by level at December 31, 2021 for assets and liabilities measured at fair value on a recurring basis:
| Level I |  | Level II |  | Level III |  | Total
Deferred compensation plan assets (included in other non-current assets) | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Interest rate swaps (included in other current and non-current liabilities) | — |  |  | 46 |  |  | — |  |  | 46 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 9 |  |  | 9 |
The fair value of the Company’s contingent consideration for acquisitions is measured using a probability weighted-average discount rate to estimate future cash flows based upon the likelihood of achieving future operating results for individual acquisitions. These assumptions are deemed to be unobservable inputs and as such the Company’s contingent consideration is classified within Level III of the valuation hierarchy. The Company reassesses the fair value of the contingent consideration liabilities on a quarterly basis. The following table presents changes in Level III financial liabilities measured at fair value on a recurring basis:
|  | Level III
Fair value of contingent consideration at December 31, 2021 |  | $ | 9 |
Additions: contingent consideration related to acquisitions completed during the period |  | 12 |
Reductions: payments of contingent consideration |  | (4) |
Changes in fair value (reflected in general and administrative expenses) |  | (3) |
Fair value of contingent consideration at September 30, 2022 |  | $ | 14 |
The following table summarizes the principal amount of the Company’s indebtedness compared to the estimated fair value, primarily determined by quoted market values, at:
| September 30, 2022 |  | December 31, 2021
Debt | Principal Amount |  | Estimated Fair Value (a) |  | Principal Amount |  | Estimated Fair Value (a)
Revolving Credit Facility | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Extended Term Loan A | 225 |  |  | 219 |  |  | 232 |  |  | 231 |
7.625% Senior Secured Second Lien Notes | — |  |  | — |  |  | 550 |  |  | 583 |
4.875% Senior Notes | 340 |  |  | 332 |  |  | 407 |  |  | 418 |
9.375% Senior Notes | — |  |  | — |  |  | 550 |  |  | 596 |
5.75% Senior Notes | 900 |  |  | 648 |  |  | 900 |  |  | 923 |
5.25% Senior Notes | 1,000 |  |  | 683 |  |  | — |  |  | — |
0.25% Exchangeable Senior Notes | 403 |  |  | 283 |  |  | 403 |  |  | 399 |
_______________ (a)The fair value of the Company's indebtedness is categorized as Level II.
Income Tax, Policy | Income Taxes The Company's provision for income taxes in interim periods is computed by applying its estimated annual effective tax rate against the income before income taxes for the period. In addition, non-recurring or discrete items are recorded in the period in which they occur. The provision for income taxes was an expense of $8 million and $48 million for the three months ended September 30, 2022 and 2021, respectively, and an expense of $52 million and $125 million for the nine months ended September 30, 2022 and 2021, respectively.
Derivatives, Policy | Derivative Instruments The Company records derivatives and hedging activities on the balance sheet at their respective fair values. During September 2022, the Company terminated $550 million of its interest rate swaps. As of September 30, 2022, the Company had interest rate swaps with an aggregate notional value of $450 million, which have a commencement date of November 2017 and an expiration date of November 2022. The Company has not elected to utilize hedge accounting for these interest rate swaps; therefore, any change in fair value is recorded in the Condensed Consolidated Statements of Operations. The fair value of derivative instruments was as follows:
Not Designated as Hedging Instruments |  | Balance Sheet Location |  | September 30, 2022 |  | December 31, 2021
Interest rate swap contracts |  | Other current assets |  | $ | 1 |  |  | $ | — |
| Other current and non-current liabilities |  | — |  |  | 46 |
The effect of derivative instruments on earnings was as follows:
Derivative Instruments Not Designated as Hedging Instruments |  | Location of Gain Recognized for Derivative Instruments |  | Gain Recognized on Derivatives
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Interest rate swap contracts |  | Interest expense |  | $ | (5) |  |  | $ | (1) |  |  | $ | (40) |  |  | $ | (8) |
Revenue, Policy | Revenue Revenue is recognized upon the transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services in accordance with the revenue accounting standard. The Company's revenue is disaggregated by major revenue categories on our Condensed Consolidated Statements of Operations and further disaggregated by business segment as follows:
| Three Months Ended September 30,
| Franchise Group |  | Owned Brokerage Group |  | Title Group |  | Corporate and Other |  | Total Company
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Gross commission income (a) | $ | — |  |  | $ | — |  |  | $ | 1,469 |  |  | $ | 1,689 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,469 |  |  | $ | 1,689 |
Service revenue (b) | 75 |  |  | 66 |  |  | 5 |  |  | 7 |  |  | 109 |  |  | 242 |  |  | — |  |  | — |  |  | 189 |  |  | 315 |
Franchise fees (c) | 208 |  |  | 247 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (94) |  |  | (108) |  |  | 114 |  |  | 139 |
Other (d) | 23 |  |  | 29 |  |  | 12 |  |  | 9 |  |  | 4 |  |  | 8 |  |  | (3) |  |  | (3) |  |  | 36 |  |  | 43 |
Net revenues | $ | 306 |  |  | $ | 342 |  |  | $ | 1,486 |  |  | $ | 1,705 |  |  | $ | 113 |  |  | $ | 250 |  |  | $ | (97) |  |  | $ | (111) |  |  | $ | 1,808 |  |  | $ | 2,186 |
| Nine Months Ended September 30,
| Franchise Group |  | Owned Brokerage Group |  | Title Group |  | Corporate and Other |  | Total Company
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Gross commission income (a) | $ | — |  |  | $ | — |  |  | $ | 4,473 |  |  | $ | 4,616 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,473 |  |  | $ | 4,616 |
Service revenue (b) | 204 |  |  | 173 |  |  | 17 |  |  | 22 |  |  | 431 |  |  | 683 |  |  | — |  |  | — |  |  | 652 |  |  | 878 |
Franchise fees (c) | 625 |  |  | 687 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (287) |  |  | (296) |  |  | 338 |  |  | 391 |
Other (d) | 83 |  |  | 83 |  |  | 35 |  |  | 29 |  |  | 16 |  |  | 23 |  |  | (12) |  |  | (11) |  |  | 122 |  |  | 124 |
Net revenues | $ | 912 |  |  | $ | 943 |  |  | $ | 4,525 |  |  | $ | 4,667 |  |  | $ | 447 |  |  | $ | 706 |  |  | $ | (299) |  |  | $ | (307) |  |  | $ | 5,585 |  |  | $ | 6,009 |
______________ (a)Gross commission income at Owned Brokerage Group is recognized at a point in time at the closing of a homesale transaction. (b)Service revenue primarily consists of title and escrow fees at Title Group and are recognized at a point in time at the closing of a homesale transaction. Service revenue at Franchise Group includes relocation fees, which are recognized as revenue when or as the related performance obligation is satisfied dependent on the type of service performed, and fees related to leads and related services, which are recognized at a point in time at the closing of a homesale transaction or at the completion of the related service. (c)Franchise fees at Franchise Group primarily include domestic royalties which are recognized at a point in time when the underlying franchisee revenue is earned (upon close of the homesale transaction). (d)Other revenue is comprised of brand marketing funds received from franchisees at Franchise Group and other miscellaneous revenues across all of the business segments. The following table shows the change in the Company's contract liabilities (deferred revenue) related to revenue contracts by reportable segment for the period:
| Beginning Balance at January 1, 2022 |  | Additions during the period |  | Recognized as Revenue during the period |  | Ending Balance at September 30, 2022
Franchise Group: |  |  |  |  |  |  |
Deferred area development fees (a) | $ | 41 |  |  | $ | 2 |  |  | $ | (3) |  |  | $ | 40 |
Deferred brand marketing fund fees (b) | 25 |  |  | 70 |  |  | (68) |  |  | 27 |
Deferred outsourcing management fees (c) | 4 |  |  | 46 |  |  | (45) |  |  | 5 |
Other deferred income related to revenue contracts | 9 |  |  | 31 |  |  | (27) |  |  | 13 |
Total Franchise Group | 79 |  |  | 149 |  |  | (143) |  |  | 85 |
Owned Brokerage Group: |  |  |  |  |  |  |
Advanced commissions related to development business (d) | 11 |  |  | 2 |  |  | (2) |  |  | 11 |
Other deferred income related to revenue contracts | 3 |  |  | 3 |  |  | (2) |  |  | 4 |
Total Owned Brokerage Group | 14 |  |  | 5 |  |  | (4) |  |  | 15 |
Total | $ | 93 |  |  | $ | 154 |  |  | $ | (147) |  |  | $ | 100 |
_______________ (a)The Company collects initial area development fees ("ADF") for international territory transactions, which are recorded as deferred revenue when received and recognized into franchise revenue over the average 25 year life of the related franchise agreement as consideration for the right to access and benefit from Anywhere’s brands. In the event an ADF agreement is terminated prior to the end of its term, the unamortized deferred revenue balance will be recognized into revenue immediately upon termination. (b)Revenues recognized include intercompany marketing fees paid by Owned Brokerage Group. (c)The Company earns revenues from outsourcing management fees charged to clients that may cover several of the various relocation services according to the clients' specific needs. Outsourcing management fees are recorded as deferred revenue when billed (usually at the start of the relocation) and are recognized as revenue over the average time period required to complete the transferee's move, or a phase of the move that the fee covers, which is typically 3 to 6 months depending on the move type. (d)New development closings generally have a development period of between 18 and 24 months from contracted date to closing.
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy | Allowance for Doubtful Accounts The Company estimates the allowance necessary to provide for uncollectible accounts receivable. The estimate is based on historical experience, combined with a review of current conditions and forecasts of future losses, and includes specific accounts for which payment has become unlikely. The process by which the Company calculates the allowance begins in the individual business units where specific problem accounts are identified and reserved primarily based upon the age profile of the receivables and specific payment issues, combined with reasonable and supportable forecasts of future losses.
New Accounting Pronouncements, Policy | The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). Recently issued standards were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. Recently Adopted Accounting Pronouncements On January 1, 2022, the Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for instruments with characteristics of liabilities and equity, including convertible debt. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock resulting in fewer embedded conversion features being separately recognized from the host contract and the interest rate of more convertible debt instruments being closer to the coupon interest rate, as compared with prior guidance. In addition, ASU 2020-06 changes the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments requiring the use of the if-converted method. ASU 2020-06 is effective for reporting periods beginning on or after December 15, 2021 and permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. In accordance with the transition guidance, the Company applied the new guidance to its Exchangeable Senior Notes that were outstanding as of January 1, 2022 with the cumulative effect of adoption recognized as an adjustment to the opening balance of Accumulated deficit. Upon adoption, the Company re-combined the liability and equity components associated with the Exchangeable Senior Notes into single liability and derecognized the unamortized debt discount and related equity component. This resulted in an increase to Long-term debt of $65 million, a reduction to Additional paid-in capital of $53 million, net of taxes, and a reduction to Deferred tax liabilities of $17 million. The Company recorded a cumulative effect of adoption adjustment of $5 million, net of taxes, as a reduction to Accumulated deficit on January 1, 2022 related to the reversal of cumulative interest expense recognized for the amortization of the debt discount on its Exchangeable Senior Notes since issuance. The cumulative effect of adoption on the Company's consolidated balance sheets as of January 1, 2022 is summarized below:
| Balance as of December 31, 2021 |  | Impact of the adoption of ASU 2020-06 |  | Balance as of January 1, 2022 after the adoption of ASU 2020-06
LIABILITIES AND EQUITY |  |  |  |  |
Long-term debt | $ | 2,940 |  |  | $ | 65 |  |  | $ | 3,005 |
Deferred income taxes | 353 |  |  | (17) |  |  | 336 |
Total liabilities | 5,018 |  |  | 48 |  |  | 5,066 |
Equity: |  |  |  |  |
Additional paid-in capital | 4,947 |  |  | (53) |  |  | 4,894 |
Accumulated deficit | (2,712) |  |  | 5 |  |  | (2,707) |
Total stockholders' equity | 2,186 |  |  | (48) |  |  | 2,138 |
Total equity | 2,192 |  |  | (48) |  |  | 2,144 |
Total liabilities and equity | $ | 7,210 |  |  | $ | — |  |  | $ | 7,210 |
Furthermore, upon adoption, the Company is required to use the "if converted" method when calculating the dilutive impact of convertible debt on earnings per share, however this change did not have a financial impact upon adoption as the Company's Exchangeable Senior Notes have been antidilutive since issuance.

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