RE/MAX HOLDINGS, INC., 10-K filed on 2/22/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Jan. 31, 2019
Jun. 30, 2018
Entity Registrant Name RE/MAX Holdings, Inc.    
Entity Central Index Key 0001581091    
Document Period End Date Dec. 31, 2018    
Current Fiscal Year End Date --12-31    
Document Type 10-K    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Filer Category Large Accelerated Filer    
Entity Shell Company false    
Entity Public Float     $ 927.1
Entity Small Business false    
Entity Emerging Growth Company false    
Common Class A      
Entity Common Stock, Shares Outstanding   17,754,416  
Common Class B      
Entity Common Stock, Shares Outstanding   1  
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 59,974 $ 50,807
Accounts and notes receivable, current portion, less allowances of $7,980 and $7,223, respectively 21,185 20,284
Income taxes receivable 533 963
Other current assets 5,855 7,974
Total current assets 87,547 80,028
Property and equipment, net of accumulated depreciation of $13,280 and 12,326, respectively 4,390 2,905
Franchise agreements, net 103,157 119,349
Other intangible assets, net 22,965 8,476
Goodwill 150,684 135,213
Deferred tax assets, net 53,698 62,841
Other assets, net of current portion 4,399 4,023
Total assets 426,840 412,835
Current liabilities:    
Accounts payable 1,890 517
Accrued liabilities 13,143 15,390
Income taxes payable 208 97
Deferred revenue 25,489 25,268
Current portion of debt 2,622 2,350
Current portion of payable pursuant to tax receivable agreements 3,567 6,252
Total current liabilities 46,919 49,874
Debt, net of current portion 225,165 226,636
Payable pursuant to tax receivable agreements, net of current portion 37,220 46,923
Deferred tax liabilities, net 400 151
Deferred revenue, net of current portion 20,224 20,228
Other liabilities, net of current portion 17,637 19,897
Total liabilities 347,565 363,709
Commitments and contingencies (note 15)
Stockholders' equity:    
Additional paid-in capital 460,101 451,199
Retained earnings 21,138 8,400
Accumulated other comprehensive income, net of tax 328 459
Total stockholders' equity attributable to RE/MAX Holdings, Inc. 481,569 460,060
Non-controlling interest (402,294) (410,934)
Total stockholders' equity 79,275 49,126
Total liabilities and stockholders' equity 426,840 412,835
Common Class A    
Stockholders' equity:    
Common stock 2 2
Common Class B    
Stockholders' equity:    
Common stock
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Accounts Receivable, allowance $ 7,980 $ 7,223
Property and equipment, accumulated depreciation $ 13,280 $ 12,326
Common Class A | Common Stock    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 180,000,000 180,000,000
Common stock, shares issued 17,754,416 17,696,991
Common stock, shares outstanding 17,754,416 17,696,991
Common Class B | Common Stock    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 1,000 1,000
Common stock, shares issued 1 1
Common stock, shares outstanding 1 1
v3.10.0.1
Consolidated Statements of Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue:      
Total revenue $ 212,626 $ 193,714 $ 175,642
Operating expenses:      
Selling, operating and administrative expenses 120,179 106,946 88,037
Depreciation and amortization 20,678 20,512 16,094
Loss on sale or disposition of assets, net 63 660 178
Gain on reduction in tax receivable agreement liability (note 4) (6,145) (32,736)  
Total operating expenses 134,775 95,382 104,309
Operating income 77,851 98,332 71,333
Other expenses, net:      
Interest expense (12,051) (9,996) (8,596)
Interest income 676 352 160
Foreign currency transaction (losses) gains (312) 174 (86)
Loss on early extinguishment of debt     (796)
Total other expenses, net (11,687) (9,470) (9,318)
Income before provision for income taxes 66,164 88,862 62,015
Provision for income taxes (15,799) (57,047) (15,167)
Net income 50,365 31,815 46,848
Less: net income attributable to non-controlling interest (note 4) 23,321 21,577 24,627
Net income attributable to RE/MAX Holdings, Inc. $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock      
Basic $ 1.52 $ 0.58 $ 1.26
Diluted $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding      
Basic 17,737,649 17,688,533 17,628,741
Diluted 17,767,499 17,731,800 17,677,768
Cash dividends declared per share of Class A common stock $ 0.80 $ 0.72 $ 0.60
Common Class A      
Other expenses, net:      
Net income attributable to RE/MAX Holdings, Inc. $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock      
Basic $ 1.52 $ 0.58 $ 1.26
Diluted $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding      
Basic 17,737,649 17,688,533 17,628,741
Diluted 17,767,499 17,731,800 17,677,768
Cash dividends declared per share of Class A common stock $ 0.80 $ 0.72 $ 0.60
Continuing franchise fees      
Revenue:      
Total revenue $ 101,104 $ 93,694 $ 81,197
Annual dues      
Revenue:      
Total revenue 35,894 33,767 32,653
Broker fees      
Revenue:      
Total revenue 46,871 43,801 37,209
Franchise sales and other revenue      
Revenue:      
Total revenue $ 28,757 $ 22,452 24,471
Brokerage revenue      
Revenue:      
Total revenue     $ 112
v3.10.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Comprehensive Income                      
Net income $ 11,066 $ 15,541 $ 14,591 $ 9,167 $ (403) $ 7,290 $ 15,539 $ 9,388 $ 50,365 $ 31,815 $ 46,848
Change in cumulative translation adjustment                 (253) 1,037 146
Other comprehensive (loss) income, net of tax                 (253) 1,037 146
Comprehensive income                 50,112 32,852 46,994
Less: comprehensive income attributable to non-controlling interest                 23,199 22,108 24,715
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax                 $ 26,913 $ 10,744 $ 22,279
v3.10.0.1
Consolidated Statement of Stockholders' Equity - USD ($)
$ in Thousands
Previously Reported [Member]
Common Stock
Common Class A
Previously Reported [Member]
Common Stock
Common Class B
Previously Reported [Member]
Additional paid-in capital
Previously Reported [Member]
Retained earnings
Previously Reported [Member]
Accumulated other comprehensive income (loss), net of tax
Previously Reported [Member]
Non-controlling interest
Previously Reported [Member]
Restatement Adjustment [Member]
Common Stock
Common Class A
Restatement Adjustment [Member]
Common Stock
Common Class B
Restatement Adjustment [Member]
Additional paid-in capital
Restatement Adjustment [Member]
Retained earnings
Restatement Adjustment [Member]
Accumulated other comprehensive income (loss), net of tax
Restatement Adjustment [Member]
Non-controlling interest
Restatement Adjustment [Member]
Common Stock
Common Class A
Common Stock
Common Class B
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of tax
Non-controlling interest
Total
Cumulative effect adjustment from change in accounting principle                     $ (4,875)   $ (11,596) $ (16,471)              
Adjusted balance                             $ 2   $ 446,209 $ (644) $ (105) $ (422,519) $ 22,943
Beginning balance, Value at Dec. 31, 2015 $ 2   $ 446,209 $ 4,231 $ (105) $ (410,923) $ 39,414                            
Beginning balance, Shares at Dec. 31, 2015 17,584,351 1                         17,584,351 1          
Net income                                   22,221   24,627 46,848
Distributions paid to non-controlling unitholders                                       (17,927) (17,927)
Equity-based compensation expense and related dividend equivalents, value                                 2,330       2,330
Dividends paid to Class A common stockholders                                   (10,578)     (10,578)
Change in accumulated other comprehensive (loss) income                                     58 88 146
Payroll taxes related to net settled restricted stock units                                 (516)       (516)
Payroll taxes related to net settled restricted stock units (in shares)                             (13,639)            
Issuance of Class A common stock, equity-based compensation plans, value                                 101       101
Issuance of Class A common stock, equity-based compensation plans, shares                             81,836            
Other                                 466       466
Ending balance, Value at Dec. 31, 2016               $ 2   $ 448,713 10,955 $ (47) (415,782) 43,841              
Ending balance, Shares at Dec. 31, 2016               17,652,548 1                        
Cumulative effect adjustment from change in accounting principle                                 123 (44)   (51) 28
Net income                                   10,238   21,577 31,815
Distributions paid to non-controlling unitholders                                       (17,260) (17,260)
Equity-based compensation expense and related dividend equivalents, value                                 2,900 (53)     2,847
Equity-based compensation expense and related dividend equivalents, shares                             58,426            
Dividends paid to Class A common stockholders                                   (12,740)     (12,740)
Change in accumulated other comprehensive (loss) income                                     506 531 1,037
Payroll taxes related to net settled restricted stock units                                 (816)       (816)
Payroll taxes related to net settled restricted stock units (in shares)                             (13,983)            
Other                                 402       402
Ending balance, Value at Dec. 31, 2017               $ 2   $ 451,199 $ 8,400 $ 459 $ (410,934) $ 49,126             49,126
Ending balance, Shares at Dec. 31, 2017               17,696,991 1           17,696,991 1          
Net income                                   27,044   23,321 50,365
Distributions paid to non-controlling unitholders                                       (14,559) (14,559)
Equity-based compensation expense and related dividend equivalents, value                                 9,314 (113)     9,201
Equity-based compensation expense and related dividend equivalents, shares                             73,462            
Dividends paid to Class A common stockholders                                   (14,193)     (14,193)
Change in accumulated other comprehensive (loss) income                                     (131) (122) (253)
Payroll taxes related to net settled restricted stock units                                 (895)       (895)
Payroll taxes related to net settled restricted stock units (in shares)                             (16,037)            
Other                                 483       483
Ending balance, Value at Dec. 31, 2018                             $ 2   $ 460,101 $ 21,138 $ 328 $ (402,294) $ 79,275
Ending balance, Shares at Dec. 31, 2018                             17,754,416 1          
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income $ 50,365 $ 31,815 $ 46,848
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 20,678 20,512 16,094
Bad debt expense 2,257 1,109 1,195
(Gain) loss on sale or disposition of assets and sublease, net (139) 4,260 (171)
Loss on early extinguishment of debt     796
Equity-based compensation expense 9,176 2,900 2,330
Deferred income tax expense 9,552 47,965 3,367
Fair value adjustments to contingent consideration (1,289) 180 100
Payments pursuant to tax receivable agreements (6,305) (13,371) (1,344)
Non-cash change in tax receivable agreement liability (6,145) (32,736)  
Other 1,082 1,145 1,029
Changes in operating assets and liabilities:      
Accounts and notes receivable, current portion (3,241) (2,825) (3,841)
Advances from/to affiliates 581 (106) 71
Other current and noncurrent assets 2,170 (2,724) 186
Other current and noncurrent liabilities (3,497) 2,815 (1,956)
Income taxes receivable/payable 560 (1,133) (71)
Deferred revenue and deposits, current portion 259 3,482 (254)
Net cash provided by operating activities 76,064 63,288 64,379
Cash flows from investing activities:      
Purchases of property, equipment and software and capitalization of trademark costs (7,787) (2,198) (4,502)
Acquisitions, net of cash acquired of $362, $0 and $131, respectively (25,888) (35,720) (112,934)
Dispositions     200
Other investing activity, net     (96)
Net cash (used in) provided by investing activities (33,675) (37,918) (117,332)
Cash flows from financing activities:      
Proceeds from issuance of debt     233,825
Payments on debt (3,171) (2,366) (203,298)
Capitalized debt amendment costs     (1,379)
Distributions paid to non-controlling unitholders (14,559) (17,260) (17,927)
Dividends and dividend equivalents paid to Class A common stockholders (14,306) (12,793) (10,578)
Proceeds from exercise of stock options     101
Payment of payroll taxes related to net settled restricted stock units (895) (816) (516)
Payment of contingent consideration (221)    
Net cash (used in) provided by financing activities (33,152) (33,235) 228
Effect of exchange rate changes on cash (70) 1,063 122
Net increase (decrease) in cash and cash equivalents 9,167 (6,802) (52,603)
Cash and cash equivalents, beginning of year 50,807 57,609 110,212
Cash and cash equivalents, end of period 59,974 50,807 57,609
Supplemental disclosures of cash flow information:      
Cash paid for interest 11,525 9,972 7,797
Net cash paid for income taxes 5,769 10,078 11,912
Schedule of non-cash investing and financing activities:      
Note receivable received as consideration for sale of brokerage operations assets     150
Increase in accounts payable for capitalization of trademark costs and purchases of property, equipment and software $ 1,080 $ 295 150
Contingent consideration issued in a business acquisition     $ 6,300
v3.10.0.1
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Cash Flows      
Cash acquired $ 362 $ 0 $ 131
v3.10.0.1
Business and Organization
12 Months Ended
Dec. 31, 2018
Business and Organization  
Business and Organization

1. Business and Organization

RE/MAX Holdings, Inc. (“RE/MAX Holdings”) completed an initial public offering (the “IPO”) of its shares of Class A common stock on October 7, 2013. RE/MAX Holdings’ only business is to act as the sole manager of RMCO, LLC (“RMCO”). As of December 31, 2018, RE/MAX Holdings owns 58.57% of the common membership units in RMCO, while RIHI, Inc. (“RIHI”) owns the remaining 41.43% of common membership units in RMCO. RE/MAX Holdings and its consolidated subsidiaries, including RMCO, are referred to hereinafter as the “Company.”

The Company is a franchisor in the real estate industry, franchising real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages within the United States (“U.S.”) under the Motto Mortgage brand. RE/MAX, founded in 1973, has over 120,000 agents operating in over 8,000 offices and a presence in more than 110 countries and territories. Motto Mortgage (“Motto”), founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. During the first quarter of 2018, the Company acquired all membership interests in booj, LLC, formerly known as Active Website, LLC, (“booj”), a real estate technology company. The Company sold certain operating assets and liabilities of its owned brokerage offices during the first quarter of 2016 to existing RE/MAX franchisees. Since then, RE/MAX is 100% franchised, and no longer operates any real estate brokerage offices and therefore, no longer recognizes brokerage revenue.

The Company’s revenue is derived from:

·

Continuing franchise fees which consist of fixed contractual fees paid monthly by regional franchise owners and franchisees based on the number of RE/MAX agents in the respective franchised region or office and the number of Motto offices;

·

Annual dues from RE/MAX agents;

·

Broker fees, which consist of a small percentage of fees received by agents on real estate commissions when an agent sells a home; and

·

Franchise sales and other revenue which consist of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises, master franchise fees, preferred marketing arrangements, approved supplier programs, event-based revenue from training and other programs and revenue from booj’s legacy customers.

See Note 2, Summary of Significant Accounting Policies for information on the Company’s revenue recognition policies.

RE/MAX Holdings Capital Structure

RE/MAX Holdings has two classes of common stock, Class A common stock and Class B common stock, which are described as follows:

Class A common stock

Holders of shares of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Additionally, holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Company’s Board of Directors, subject to any statutory or contractual restrictions on the payment of dividends.

Holders of shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights.

Class B common stock

RIHI is the sole holder of Class B common stock and is controlled by David Liniger, the Company’s Chairman and Co-Founder, and Gail Liniger, the Company’s Vice Chair and Co-Founder. On October 7, 2018, pursuant to the terms of the Company’s Certificate of Incorporation, RIHI lost its previous effective control of a majority of the voting power of RE/MAX Holdings common stock. RIHI owns all RE/MAX Holdings’ Class B common stock which, prior to October 7, 2018, entitled RIHI to a number of votes on matters presented to RE/MAX Holdings stockholders equal to two times the number of RMCO common units that RIHI held. Effective October 7, 2018, the voting power of Class B common stock was reduced to equal the number of RMCO common units held, and therefore RIHI lost the controlling vote of RE/MAX Holdings. As a result of this change in the voting rights of the Class B common stock, RIHI no longer controls a majority of the voting power of RE/MAX Holdings’ common stock, and RE/MAX Holdings is no longer considered a “controlled company” under the corporate governance standards of the New York Stock Exchange (the “NYSE”). See Item 1. Business above for further information.

Holders of shares of Class B common stock do not have preemptive, subscription, redemption or conversion rights.

Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters presented to the Company’s stockholders for their vote or approval, except as otherwise required by applicable law.

v3.10.0.1
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements (“financial statements”) and notes thereto included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements include the accounts of RE/MAX Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of December 31, 2018 and 2017, the results of its operations and comprehensive income, changes in its stockholders’ equity and its cash flows for the years ended December 31, 2018, 2017 and 2016.

During 2018, the Company completed the acquisition of booj, and during 2017 and 2016, the Company completed the acquisitions of various independent regions. Their results of operations, cash flows and financial positions are included in the financial statements from their respective dates of acquisition. See Note 6, Acquisitions for additional information.

Reclassifications

Other than the change in accounting principle discussed in Note 3, Revenue, there have been no reclassifications to the financial statements during the current year.  

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

RE/MAX Holdings consolidates RMCO and records a non-controlling interest in the accompanying Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, respectively.

Revenue Recognition

The Company generates all its revenue from contracts with customers. The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of RE/MAX and Motto trademarks; distinctive sales and promotional materials; access to technology; standardized supplies and other materials used in RE/MAX and Motto offices; and recommended procedures for operation of RE/MAX and Motto offices. The Company concluded that these benefits are highly related and all a part of one performance obligation, a license of symbolic intellectual property that is billed through a variety of fees including franchise sales, continuing franchise fees, broker fees, and annual dues, described below. The Company has other performance obligations associated with contracts with customers in other revenue for training, marketing and events, and legacy booj customers. The method used to measure progress is over the passage of time for most streams of revenue. The following is a description of principal activities from which the Company generates its revenue. 

Continuing Franchise Fees

Revenue from continuing franchise fees consists of fixed contractual fees paid monthly by franchise owners and franchisees based on the number of RE/MAX agents in the respective franchised region or office and the number of Motto offices. This revenue is recognized in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents and number of Motto offices.

Annual Dues

Annual dues revenue consists of fixed contractual fees paid annually based on the number of RE/MAX agents. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents.

The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Consolidated Balance Sheets, and consists of the following in aggregate (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

New billings

 

Revenue recognized(a)

 

Balance at end of period

Year Ended December 31, 2018

 

$

15,297

 

$

36,474

 

$

(35,894)

 

$

15,877


(a)

Revenue recognized related to the beginning balance was $14.0 million for the year ended December 31, 2018.

(b)

 

Broker Fees

Revenue from broker fees represents fees received from the Company’s RE/MAX franchised regions or franchise offices that are based on a percentage of RE/MAX agents’ gross commission income on home sale transactions. Revenue from broker fees is recognized as a sales-based royalty and recognized in the month when a home sale transaction occurs. Motto franchisees do not pay any fees based on the number or dollar value of loans brokered.

Franchise Sales

Franchise sales is comprised of revenue from the sale or renewal of franchises. An initial fee is charged upon a franchise sale. Those initial fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

New billings

 

Revenue recognized(a)

 

Balance at end of period

Year Ended December 31, 2018

 

$

27,943

 

$

8,732

 

$

(9,115)

 

$

27,560


(a)

Revenue recognized related to the beginning balance was $7.4 million for the year ended December 31, 2018.

Commissions Related to Franchise Sales

Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Consolidated Balance Sheets) consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Expense recognized

 

Additions to contract cost for new activity

 

Balance at end of period

Year Ended December 31, 2018

 

$

3,532

 

$

(1,229)

 

$

1,445

 

$

3,748

Other Revenue

Other revenue is primarily revenue from preferred marketing arrangements and event-based revenue from training and other programs. Revenue from preferred marketing arrangements involves both flat fees paid in advance as well as revenue sharing, both of which are generally recognized over the period of the arrangement and are recorded net as the Company does not control the good or service provided. Event-based revenue is recognized when the event occurs and until then is included in “Deferred revenue”. Other revenue also includes revenue from booj’s operations for its external customers as booj continues to provide technology products and services, such as websites, mobile apps, reporting and site tools, to its existing customers at the date of acquisition.

Selling, Operating and Administrative Expenses

Selling, operating and administrative expenses primarily consist of personnel costs, including salaries, benefits, payroll taxes and other compensation expenses, professional fees, rent and related facility operations expense, as well as expenses for marketing, and expanding and supporting the Company’s franchise. 

Cash and Cash Equivalents

Cash and cash equivalents include bank deposits and other highly liquid investments purchased with an original purchase maturity of three months or less. 

Fair Value of Financial Instruments

The carrying amounts of financial instruments, net of any allowances, including cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature.  

Accounts and Notes Receivable

Accounts receivable arising from monthly billings do not bear interest. The Company provides limited financing of certain franchise sales through the issuance of notes receivable that either bear interest at a rate of prime plus 2% or at a stated amount, which is fixed at the inception of the note with the associated interest recorded in “Interest income” in the accompanying Consolidated Statements of Income. Amounts collected on notes receivable are included in “Net cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows.

The Company records allowances against its accounts and notes receivable balances for estimated probable losses. Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The allowance for doubtful accounts and notes is based on historical experience, general economic conditions, and the attributes of specific accounts.

The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Additions/charges to cost and expense for allowances for doubtful accounts

 

Deductions/write-offs

 

Balance at end of period

Year Ended December 31, 2018

 

$

7,223

 

$

2,257

 

$

(1,500)

 

$

7,980

Year Ended December 31, 2017, as adjusted*

    

 

6,458

 

 

1,109

 

 

(344)

 

 

7,223

Year Ended December 31, 2016, as adjusted*

 

 

5,406

 

 

1,195

 

 

(143)

 

 

6,458


*See Note 3, Revenue for more information.

Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation

Accumulated other comprehensive income (loss) includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with stockholders and is comprised of foreign currency translation adjustments.

As of December 31, 2018,  the Company, directly and through its franchisees, conducted operations in over 110 countries and territories, including the U.S. and Canada. The functional currency for the Company’s domestic operations is the U.S. dollar and for its Canadian subsidiary is the Canadian Dollar.

Assets and liabilities of the Canadian subsidiary are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of income and cash flows are translated at the average exchange rates in effect during the applicable period. Exchange rate fluctuations on translating consolidated foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded as a component of “Accumulated other comprehensive income,” and periodic changes are included in comprehensive income. When the Company sells a part or all of its investment in a foreign entity resulting in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, it releases any related cumulative translation adjustment into net income.

Foreign currency denominated monetary assets and liabilities and transactions occurring in currencies other than the Company’s or the Company’s consolidated foreign subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the accompanying Consolidated Balance Sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the accompanying Consolidated Statements of Income as “Foreign currency transaction (losses) gains.” 

Property and Equipment

Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter.

Franchise Agreements and Other Intangible Assets

The Company’s franchise agreements result from franchise rights acquired from Independent Region acquisitions and are initially recorded at fair value. The Company amortizes the franchise agreements over their estimated useful life on a straight-line basis.

The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation-operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of three to five years. Purchased software licenses are amortized over their estimated useful lives.

In addition, the Company owns the principal trademarks, service marks and trade names that it uses in conjunction with operating its business. These intangible assets increase when the Company pays to file trademark applications in the U.S. and certain other jurisdictions globally. The Company’s trademarks are amortized on a straight-line basis over their estimated useful lives.

The Company reviews its franchise agreements and other intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated from such asset. If not recoverable, the excess of the carrying amount of an asset over its estimated discounted cash flows would be charged to operations as an impairment loss. For each of the years ended December 31, 2018,  2017 and 2016, there were no material impairments indicated for such assets.

Goodwill

Goodwill is an asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. The Company assesses goodwill for impairment at least annually or whenever an event occurs, or circumstances change that would indicate impairment may have occurred at the reporting unit level. Reporting units are driven by the level at which segment management reviews operating results. The Company previously performed its required impairment testing annually on August 31. In 2018, the Company elected to change the date of its required annual impairment testing to October 1. This change in method of applying an accounting principal resulted in the Company performing two annual impairment tests in 2018, on August 31 and October 1. The Company elected to implement this change to better align with its budget and planning process.

The Company’s impairment assessment begins with a qualitative assessment to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount. The initial qualitative assessment includes comparing the overall financial performance of the reporting units against the planned results as well as other factors which might indicate that the reporting unit’s value has declined since the last assessment date. If it is determined in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the standard two-step quantitative impairment test is performed. The first step of the quantitative impairment test consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. If the first step of the quantitative impairment test indicates that the estimated fair value of a reporting unit is less than its carrying value, then impairment potentially exists, and the second step of the quantitative impairment test is performed to measure the amount of goodwill impairment. Goodwill impairment exists when the estimated implied fair value of a reporting unit’s goodwill is less than its carrying value. 

The Company did not record any goodwill impairments during the years ended December 31, 2018,  2017 and 2016.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. Further, the Company records its income taxes receivable and payable based upon its estimated income tax liability.

RMCO complies with the requirements of the Internal Revenue Code that are applicable to limited liability companies that have elected to be treated as partnerships, which allow for the complete pass-through of taxable income or losses to RMCO’s unitholders, who are individually responsible for any federal tax consequences. Provision for Income Taxes includes the federal income tax obligation related to RE/MAX Holdings’ allocated portion of RMCO’s income. RMCO is subject to certain state and local taxes, and its global subsidiaries are subject to tax in certain jurisdictions.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 

Equity-Based Compensation

The Company recognizes compensation expense associated with equity-based compensation as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All equity-based compensation is required to be measured at fair value on the grant date, is expensed over the requisite service, generally over a three-year period, and forfeitures are accounted for as they occur. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 13, Equity-Based Compensation for additional discussion regarding details of the Company’s equity-based compensation plans.

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 became effective prospectively for the Company on January 1, 2018. The Company concluded that the acquisition of booj meets the definition of a business. See Note 6, Acquisitions for additional information. The Company has also concluded that it expects future Independent Region acquisitions to be accounted for as an acquisition of a business.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies classification for certain cash receipts and cash payments on the Consolidated Statement of Cash Flows. ASU 2016-15 became effective for the Company on January 1, 2018 and required a retrospective transition method for each period presented. Under the new guidance, the contingent consideration payments related to the purchase of Full House Mortgage Connection, Inc. (“Full House”), a franchisor of mortgage brokerages that created concepts used to develop Motto, are classified as financing outflows up to the $6.3 million acquisition date fair value and any cash payments paid in excess of the acquisition date fair value are classified as operating outflows. See Note 6, Acquisitions for additional information. The adoption of this standard had no other material impact on its financial statements and related disclosures. 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), with several subsequent amendments, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP when it became effective for the Company on January 1, 2018. See Note 3, Revenue for more information.

New Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Income for costs after adoption. ASU 2018-15 is effective for the Company beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. The Company plans to adopt this ASU prospectively to all new implementation costs incurred after adoption. Given this implementation approach, the adoption of the standard on January 1, 2020 will have no immediate impact.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which eliminates certain disclosure requirements for fair value measurements and requires new or modified disclosures. ASU 2018-13 is effective for the Company beginning January 1, 2020; early adoption is permitted. Certain changes are applied retrospectively to each period presented and others are to be applied either in the period of adoption or prospectively. The Company believes the amendments of ASU 2018-13 will not have a significant impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for the Company beginning January 1, 2019. The standard is to be applied either in the period of adoption or retrospectively to each period effected by the Tax Cuts and Jobs Act. The Company believes the amendments of ASU 2018-02 will not have a significant impact on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed. The Company has not yet adopted ASU 2017-04.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the assets and liabilities that arise from all leases on the consolidated balance sheets. ASU 2016-02 is required to be adopted by the Company on January 1, 2019. The Company plans to elect the transition package of three practical expedients permitted within the standard, which among other things, allows the carryforward of historical lease classifications. The Company will not retrospectively recast prior periods presented and will instead adjust assets and liabilities on January 1, 2019. The Company has determined that the adoption of this standard will increase both “Total assets” and “Total liabilities” on the Consolidated Balance Sheets by approximately $54.0 million, primarily related to building leases. The Company does not expect any material change to the Consolidated Statements of Income in 2019. 

v3.10.0.1
Impacts of Adopting New Revenue Recognition
12 Months Ended
Dec. 31, 2018
Impacts of Adopting New Revenue Recognition  
Impacts of Adopting New Revenue Recognition

3. Impacts of Adopting New Revenue Recognition

Changes in Revenue Recognition Policies

The Company adopted the new revenue standard (Topic 606) on January 1, 2018. The Company applied the new revenue standard retrospectively and has recast the 2017 and 2016 financial statements as though the new revenue standard had been applied in all periods presented. The adoption of the new guidance changed the timing of recognition of franchise sales and franchise renewal revenue and related commissions paid on franchise sales and renewals, as discussed below. 

Franchise sales is comprised of revenue from the sale or renewal of franchises. The Company previously recognized revenue at the time of sale. Under the new revenue standard, the franchise sale initial fees are considered to be a part of the license of symbolic intellectual property, which is now recognized over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. Correspondingly, the commissions related to franchise sales are recorded as an asset (the current portion in “Other current assets” and long-term portion in “Other assets, net of current portion”) and are recognized over the contractual term of the franchise agreement in “Selling, operating and administrative expenses”. Previously, such commissions were expensed as incurred.

The following tables summarize the impacts of the new revenue standard adoption on the Company’s financial statements (in thousands, except per share information):

Consolidated Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

As of December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Accounts and notes receivable, current portion, net

 

$

21,304

 

$

(1,020)

 

$

20,284

Income taxes receivable

 

 

870

 

 

93

 

 

963

Other current assets

 

 

6,924

 

 

1,050

 

 

7,974

Deferred tax assets, net

 

 

59,151

 

 

3,690

 

 

62,841

Other assets, net of current portion

 

 

1,563

 

 

2,460

 

 

4,023

Income taxes payable

 

 

133

 

 

(36)

 

 

97

Deferred revenue

 

 

18,918

 

 

6,350

 

 

25,268

Deferred revenue, net of current

 

 

 —

 

 

20,228

 

 

20,228

Retained earnings

 

 

16,027

 

 

(7,627)

 

 

8,400

Accumulated other comprehensive income, net of tax

 

 

515

 

 

(56)

 

 

459

Non-controlling interest

 

 

398,348

 

 

12,586

 

 

410,934

Consolidated Statement of Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

24,667

 

$

(2,215)

 

$

22,452

Selling, operating and administrative expenses

 

 

107,268

 

 

(322)

 

 

106,946

Provision for income taxes (a)

 

 

55,576

 

 

1,471

 

 

57,047

Net income (a)

 

 

35,179

 

 

(3,364)

 

 

31,815

Net income attributable to non-controlling interest

 

 

22,364

 

 

(787)

 

 

21,577

Net income attributable to RE/MAX Holdings, Inc.

 

 

12,815

 

 

(2,577)

 

 

10,238

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock:

 

 

 

 

 

 

 

 

 

Basic

 

 

0.72

 

 

(0.14)

 

 

0.58

Diluted

 

 

0.72

 

 

(0.14)

 

 

0.58


(a)

Includes an adjustment in 2017 to the deferred tax asset arising from deferred revenue under Topic 606 due to the drop in the U.S. tax rates from 35% to 21% under the Tax Cuts and Jobs Act.

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

25,131

 

$

(660)

 

$

24,471

Selling, operating and administrative expenses

 

 

88,213

 

 

(176)

 

 

88,037

Provision for income taxes

 

 

15,273

 

 

(106)

 

 

15,167

Net income

 

 

47,226

 

 

(378)

 

 

46,848

Net income attributable to non-controlling interest

 

 

24,830

 

 

(203)

 

 

24,627

Net income attributable to RE/MAX Holdings, Inc.

 

 

22,396

 

 

(175)

 

 

22,221

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock:

 

 

 

 

 

 

 

 

 

Basic

 

 

1.27

 

 

(0.01)

 

 

1.26

Diluted

 

 

1.27

 

 

(0.01)

 

 

1.26

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Change in cumulative translation adjustment

 

 

1,074

 

 

(37)

 

 

1,037

Comprehensive income

 

 

36,253

 

 

(3,401)

 

 

32,852

Comprehensive income attributable to non-controlling interest

 

 

22,895

 

 

(787)

 

 

22,108

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

13,358

 

 

(2,614)

 

 

10,744

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Change in cumulative translation adjustment

 

 

165

 

 

(19)

 

 

146

Comprehensive income

 

 

47,391

 

 

(397)

 

 

46,994

Comprehensive income attributable to non-controlling interest

 

 

24,918

 

 

(203)

 

 

24,715

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

22,473

 

 

(194)

 

 

22,279

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Deferred income tax expense

 

 

46,494

 

 

1,471

 

 

47,965

Accounts and notes receivable, current portion

 

 

(2,924)

 

 

99

 

 

(2,825)

Other current and noncurrent assets

 

 

(2,414)

 

 

(310)

 

 

(2,724)

Other current and noncurrent liabilities

 

 

1,583

 

 

1,232

 

 

2,815

Deferred revenue and deposits, current portion

 

 

2,610

 

 

872

 

 

3,482

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Deferred income tax expense

 

 

3,473

 

 

(106)

 

 

3,367

Other current and noncurrent assets

 

 

362

 

 

(176)

 

 

186

Other current and noncurrent liabilities

 

 

(2,616)

 

 

660

 

 

(1,956)

Disaggregated Revenue

In the following table, segment revenue is disaggregated by geographical area for the years ended December 31, 2018, 2017 and 2016 (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

U.S.

 

$

170,496

 

$

160,537

 

$

145,488

Canada

 

 

23,771

 

 

23,189

 

 

22,071

Global

 

 

10,237

 

 

9,431

 

 

8,079

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642


*See above within Note 3, Revenue for more information.

In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S. and Canada for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

Company-owned Regions

 

$

133,925

 

$

125,092

 

$

103,756

Independent Regions

 

 

46,289

 

 

44,799

 

 

47,498

Global and Other

 

 

24,290

 

 

23,266

 

 

24,384

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642


*See above within Note 3, Revenue for more information.

Transaction Price Allocated to the Remaining Performance Obligations

The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2019

    

2020

    

2021

    

2022

    

2023

    

Thereafter

    

Total

Annual dues

 

$

15,877

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

15,877

Franchise sales

 

 

7,415

 

 

6,116

 

 

4,706

 

 

3,171

 

 

1,652

 

 

4,500

 

 

27,560

Total

 

$

23,292

 

$

6,116

 

$

4,706

 

$

3,171

 

$

1,652

 

$

4,500

 

$

43,437

Using the transition requirements of the new standard, the Company has elected not to disclose the amount of the transaction price allocated to the remaining performance obligations or when the Company expects to recognize that amount as revenue for the years ended December 31, 2017 and 2016.

v3.10.0.1
Non-controlling Interest
12 Months Ended
Dec. 31, 2018
Noncontrolling Interest  
Non-controlling Interest

4. Non-controlling Interest

RE/MAX Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:

d

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

2018

 

 

2017

 

 

    

Shares

    

Ownership %

    

 

Shares

    

Ownership %

 

Non-controlling interest ownership of common units in RMCO

 

12,559,600

 

41.43

%

 

12,559,600

 

41.51

%

RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO)

 

17,754,416

 

58.57

%

 

17,696,991

 

58.49

%

Total common units in RMCO

 

30,314,016

 

100.00

%

 

30,256,591

 

100.00

%

The weighted average ownership percentages for the applicable reporting periods are used to calculate the net income attributable to RE/MAX Holdings. A reconciliation of “Income before provision for income taxes” to “Net income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

 

2017

 

 

2016

 

 

2018

 

 

As adjusted*

 

 

As adjusted*

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

Weighted average ownership percentage of RMCO (a)

 

58.55

%

 

41.45

%

 

100.00

%

 

 

58.48

%

 

41.52

%

 

100.00

%

 

 

58.40

%

 

41.60

%

 

100.00

%

Income before provision for income taxes

$

41,238

 

$

24,926

 

$

66,164

 

 

$

65,493

 

$

23,369

 

$

88,862

 

 

$

36,165

 

$

25,850

 

$

62,015