Clayton Emphasizes Surveillance as Issuance Withers.(sales and earnings of Clayton Holdings Inc.)(Financial report)

Shelton, CT -- Clayton Holdings, a provider of analytics, consulting and outsourced services here, reported a loss of $91.7 million in the fourth quarter, reflecting a loss of $92.8 million related to impairment of goodwill and other assets in its transaction management business.

However, the company said that excluding impairment and losses related to the extinguishment of debt, its adjusted net income from continuing operations was $3.5 million, or $0.16 per share.

Frank Filipps, chairman and CEO of the company, said the impairment reflects a prolonged downturn in the nonprime mortgage securities business.

"The new issuance market for nonconforming securities remained virtually shut down in the fourth quarter and our volumes were negatively impacted. However, our strong cash generation enabled us to repay $25 million of debt and renegotiate our bank credit facility, giving us greater flexibility to weather this market," Mr. Filipps said in a news release.

On a conference call for investors and analysts, Mr. Filipps said Clayton's transaction management business depends upon new issuance of mortgage securities for volume. He noted that in December 2007, just $1.5 billion in alt-A and subprime MBS issuance occurred, compared with $80 billion in ...