Exhibit 99.1
Homestore Reports Fourth Quarter and Full Year 2004 Results
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--March 9, 2005--
Year Highlighted by Revenue Growth, Positive Earnings Before
Interest, Depreciation and Amortization (EBITDA) and Positive Cash
Flow; Class Action Settlement Finalized
Homestore, Inc. (NASDAQ:HOMS), the leading provider of real estate media
and technology solutions, today reported financial results for the fourth
quarter and full year ended December 31, 2004. Total revenue for the fourth
quarter was $54.3 million, compared to $51.9 million in the fourth quarter of
2003. Revenue for the full year 2004 was $216.9 million, compared to $205.9
million for the full year 2003.
Net income for the fourth quarter was $6.0 million, or $0.04 per share,
compared to a loss of $(12.1) million, or $(0.10) per share, for the fourth
quarter of 2003. The net income for the current quarter includes a gain on the
disposition of assets totaling $7.3 million, and a revision in estimates to
previous restructuring charges of $971,000. Results for the fourth quarter of
2003 included an impairment charge of $1.8 million and restructuring charges
totaling $4.1 million. The net loss for the full year ended December 31, 2004
was $(7.9) million, or $(0.06) per share, compared with a net loss of $(47.1)
million, or $(0.40) per share for the full year 2003.
Homestore's EBITDA (earnings before interest, restructuring charges and
certain other non-cash expenses, principally stock-based charges, depreciation,
and amortization) for the fourth quarter of 2004, was $2.9 million, compared to
a loss of $(915,000) for the fourth quarter of 2003. Homestore's EBITDA for the
full year 2004 was $2.6 million, compared to an EBITDA loss of $(17.8) million
for the full year 2003. The Company has reported EBITDA because management uses
it to monitor and assess the Company's performance and believes it is helpful to
investors in understanding the Company's business.
"We are pleased that 2004 proved to be such a pivotal year in the
turnaround of Homestore. Revenue grew in all our business segments. We generated
positive EBITDA and positive cash flow for the first full year in our corporate
history, strengthening our balance sheet with approximately $60 million in cash
and positive working capital," said Mike Long, Homestore's chief executive
officer. "Finalizing the settlement of our shareholder class action lawsuit
announced earlier this week, along with other legal resolutions achieved during
the year, combines with our improving operational performance and robust
investment strategy to make 2005 a very exciting year for Homestore."
The results for the current and prior periods reflect the reclassification
of the Company's WyldFyre and Computers for Tracts (CFT) software businesses as
discontinued operations. WyldFyre was sold on October 6, 2004. CFT was sold on
December 21, 2004.
At December 31, 2004, Homestore had $59.9 million in cash and short-term
investments available to fund operations. The increase of $11.9 million from
last quarter includes approximately $9.5 million in net proceeds from the sale
of WyldFyre and CFT.
CONFERENCE CALL
As previously announced, Homestore will host a conference call, which will
be broadcast live over the Internet today, Wednesday, March 9, 2005, at 2:00
p.m. PST (5:00 p.m. EST). Chief Executive Officer, Mike Long, and Chief
Financial Officer, Lew Belote, will discuss the Company's fourth quarter and
full year 2004 results. In order to participate in the call, investors should
log on to http://ir.homestore.com and click on "Event Calendar." Please connect
to the above Web site ten minutes prior to the call to load any necessary audio
software. A replay of the call will be available in the same section of the
Company's Web site two hours after the end of the call, and will be available
until midnight on March 16 at 706-645-9291, conference code 4027785. For
additional information regarding the Company's results, please go to the "SEC
Filings" section at http://ir.homestore.com to view annual reports as filed with
the Securities and Exchange Commission on Form 10-K. Homestore's Form 10-K for
the year ended December 31, 2004 is expected to be filed with the Securities and
Exchange Commission on, or before, March 15, 2005.
USE OF NON-GAAP FINANCIAL MEASURES
To supplement its consolidated financial statements presented in accordance
with generally accepted accounting principles in the United States ("GAAP"),
Homestore uses a non-GAAP measure of income (loss) from operations excluding
restructuring, impairment and certain other non-cash expenses, which is referred
to as EBITDA. A reconciliation of this non-GAAP measure to GAAP is provided in
the attached tables. These non-GAAP adjustments are provided to enhance the
user's overall understanding of Homestore's current financial performance and
its prospects for the future. Homestore believes these non-GAAP results provide
useful information to both management and investors by excluding certain
expenses that it believes are not indicative of its core operating results and a
more consistent basis for comparison between quarters. Further, this non-GAAP
method is the primary basis management uses for planning and forecasting its
future operations. The presentation of this additional information should not be
considered in isolation or as a substitute for results prepared in accordance
with GAAP.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements, including
information about management's view of Homestore's future expectations, plans
and prospects, within the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. These statements involve known and unknown risks,
uncertainties and other factors which may cause the results of Homestore, its
subsidiaries, divisions and concepts to be materially different than those
expressed or implied in such statements. These risk factors and others are
included from time to time in documents Homestore files with the Securities and
Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs
and Form 8-Ks. Other unknown or unpredictable factors also could have material
adverse effects on Homestore's future results. The forward-looking statements
included in this press release are made only as of the date hereof. Homestore
cannot guarantee future results, levels of activity, performance or
achievements. Accordingly, you should not place undue reliance on these
forward-looking statements. Finally, Homestore expressly disclaims any intent or
obligation to update any forward-looking statements to reflect subsequent events
or circumstances.
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(restated for discontinued operations)
(unaudited)
Three Months Ended
----------------------------------
December September December
31, 30, 31,
2004 2004 2003
---------- ----------- ----------
Revenue $ 54,334 $ 54,782 $ 49,998
Related party revenue -- -- 1,862
---------- ----------- ----------
Total revenue 54,334 54,782 51,860
Cost of revenue 12,457 12,655 13,359
---------- ----------- ----------
Gross profit 41,877 42,127 38,501
Operating expenses:
Sales and marketing 19,976 21,415 24,225
Product and website development 3,847 3,812 3,970
General and administrative 17,014 22,371 13,825
Amortization of intangible assets 1,462 1,990 2,492
Litigation settlement -- -- --
Impairment of long-lived assets -- -- 1,758
Restructuring charges 971 -- 4,100
---------- ----------- ----------
Total operating expenses 43,270 49,588 50,370
---------- ----------- ----------
Loss from operations (1,393) (7,461) (11,869)
Interest income (expense), net 258 474 (136)
Other income (expense), net 124 2,234 (75)
---------- ----------- ----------
Loss from continuing operations (1,011) (4,753) (12,080)
Gain on disposition of discontinued
operations 7,294 -- --
Income (loss) from discontinued
operations (251) 180 23
---------- ----------- ----------
Net income (loss) $ 6,032 $ (4,573) $(12,057)
========== =========== ==========
Basic and diluted net income (loss)
per share
Continuing operations $ (0.01) $ (0.03) $ (0.10)
Discontinued operations 0.05 0.00 0.00
========== =========== ==========
Net income (loss) $ 0.04 $ (0.03) $ (0.10)
========== =========== ==========
Shares used to calculate basic and
diluted per share amounts
Basic 146,323 145,823 120,273
---------- ----------- ----------
Diluted 154,902 145,823 120,273
========== =========== ==========
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Year Ended
December December
31, 31,
2004 2003
---------- -----------
Revenue $216,860 $ 198,227
Related party revenue -- 7,695
---------- -----------
Total revenue 216,860 205,922
Cost of revenue 50,829 56,569
---------- -----------
Gross profit 166,031 149,353
Operating expenses:
Sales and marketing 88,388 101,122
Product and website development 15,362 17,065
General and administrative 68,442 65,333
Amortization of intangible assets 7,894 21,863
Litigation settlement 2,168 63,600
Impairment of long-lived assets -- 26,999
Restructuring charges 1,316 4,100
---------- -----------
Total operating expenses 183,570 300,082
---------- -----------
Loss from operations (17,539) (150,729)
Interest income (expense), net 672 (406)
Gain on settlement of distribution agreement -- 104,071
Other income (expense), net 2,366 691
---------- -----------
Loss from continuing operations (14,501) (46,373)
Gain on disposition of discontinued operations 7,294 2,530
Income from discontinued operations (679) 3,281
---------- -----------
Net loss $ (7,886) $ (47,124)
========== ===========
Basic and diluted loss per share
Continuing operations $ (0.11) $ (0.39)
Discontinued operations 0.05 (0.01)
---------- -----------
Net loss $ (0.06) $ (0.40)
========== ===========
Shares used to calculate basic and diluted per
share amounts 136,518 118,996
========== ===========
HOMESTORE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
IMPACT OF RESTRUCTURING, IMPAIRMENT AND CERTAIN OTHER NON-CASH
EXPENSES ON LOSS FROM OPERATIONS (EBITDA)
(in thousands)
(unaudited)
Three Months Ended
----------------------------------
December September December
31, 30, 31,
2004 2004 2003
---------- ----------- ----------
Loss from operations $ (1,393) $ (7,461) $(11,869)
Plus:
Stock-based charges 134 134 105
Amortization of intangible assets 1,462 1,990 2,492
Depreciation 1,737 1,888 2,499
Litigation settlement -- -- --
Impairment of long-lived assets 1,758
Restructuring charges 971 -- 4,100
---------- ----------- ----------
Income (loss) from operations
excluding
restructuring, impairment and
certain other non-cash expenses
(EBITDA) $ 2,911 $ (3,449) $ (915)
========== =========== ==========
Twelve Months Ended
----------------------
December December
31, 31,
2004 2003
---------- -----------
Loss from operations $(17,539) $(150,729)
Plus:
Stock-based charges 819 5,109
Amortization of intangible assets 7,894 21,863
Depreciation 7,901 11,267
Litigation settlement 2,168 63,600
Impairment of long-lived assets -- 26,999
Restructuring charges 1,316 4,100
---------- -----------
Income (loss) from operations excluding
restructuring, impairment and certain other
non-cash expenses (EBITDA) $ 2,559 $ (17,791)
========== ===========
HOMESTORE, INC.
SEGMENT OPERATING RESULTS
(in thousands)
(unaudited)
Three Months Ended
----------------------------------
December September December
31, 30, 31,
2004 2004 2003
---------- ----------- ----------
Revenue:
Media services $ 37,562 $ 37,151 $ 36,508
Software 4,978 4,539 3,795
Print 11,794 13,092 11,557
---------- ----------- ----------
Total revenue 54,334 54,782 51,860
========== =========== ==========
Operating income (loss)
Media services 9,697 8,395 5,577
Software 223 175 (889)
Print (1,013) 367 (374)
Unallocated (10,300) (16,398) (16,183)
---------- ----------- ----------
Loss from operations $ (1,393) $ (7,461) $(11,869)
========== =========== ==========
Twelve Months Ended
-----------------------
December December
31, 31,
2004 2003
---------- -----------
Revenue:
Media services $150,053 $ 143,510
Software 18,210 15,018
Print 48,597 47,394
---------- -----------
Total revenue 216,860 205,922
========== ===========
Operating income (loss)
Media services 31,149 10,548
Software 462 (4,996)
Print (1,191) (1,608)
Unallocated (47,959) (154,673)
---------- -----------
Loss from operations $(17,539) $(150,729)
========== ===========
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve months ended
December 31,
-----------------------
2004 2003
----------- -----------
Cash flows from continuing operating
activities:
Loss from continuing operations $(14,501) $ (46,373)
Adjustments to reconcile net loss to net cash
provided by "used in" continuing operating
activities:
Depreciation 7,901 11,267
Amortization of intangible assets 7,894 21,863
Gain on sales of property and equipment (2,226) --
Impairment of long-lived assets -- 26,999
Provision for doubtful accounts 340 2,266
Stock-based charges 819 7,249
Gain on settlement of distribution
agreement -- (104,071)
Realized loss on sale of marketable
securities 180
Other non-cash items (40) 373
Changes in operating assets and liabilities,
net of discontinued operations:
Accounts receivable (430) 3,716
Prepaid distribution expense 10,509 22,812
Restricted cash (5,840) --
Other assets 5,710 1,108
Accounts payable and accrued expenses 2,493 37,971
Accrued distribution agreement (7,406) (22,162)
Deferred revenue 5,475 2,131
Deferred revenue from related parties -- (6,657)
---------- -----------
Net cash provided by "used in" continuing
operating activities 10,698 (41,328)
Net cash provided by discontinued operations 9,915 421
-----------------------
Net cash provided by "used in" operating
activities 20,613 (40,907)
-----------------------
Cash flows from investing activities:
Purchases of property and equipment (6,872) (8,722)
Maturities of short term investments 1,000 --
Purchases of short term investments (24,465) (21,575)
Proceeds from the sale of assets 6,737 1,320
---------- -----------
Net cash used in investing activities (23,600) (28,977)
---------- -----------
Cash flows from financing activities:
Proceeds from payment of stockholders' notes -- 61
Proceeds from exercise of stock options,
warrants and shares issuances under employee
stock
purchase plan 3,864 3,302
---------- -----------
Net cash provided by financing activities 3,864 3,363
---------- -----------
Change in cash and cash equivalents 877 (66,521)
---------- -----------
Cash and cash equivalents, beginning of period 13,942 80,463
---------- -----------
========== ===========
Cash and cash equivalents, end of period $ 14,819 $ 13,942
========== ===========
HOMESTORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2004 2003
-------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,819 $ 13,942
Short-term investments 45,040 21,575
Accounts receivable, net 12,532 14,576
Current portion of prepaid
distribution expense -- 10,509
Other current assets 12,498 10,585
------------- -------------
Total current assets 84,889 71,187
Property and equipment, net 15,242 21,454
Goodwill, net 19,502 20,477
Intangible assets, net 17,864 25,758
Restricted cash 5,840 --
Other assets 7,167 14,672
------------- -------------
============= =============
Total assets $ 150,504 $ 153,548
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,675 $ 1,409
Accrued expenses 39,894 42,576
Accrued litigation settlement -- 53,600
Accrued distribution obligation -- 7,406
Obligation under capital leases 1,774 1,535
Deferred revenue 39,487 31,348
Deferred revenue from related parties -- 4,042
------------- -------------
Total current liabilities 83,830 141,916
Obligation under capital leases 991 369
Deferred revenue 4,100 2,869
Other non-current liabilities 4,190 8,066
------------ ------------
Total liabilities 93,111 153,220
------------ ------------
Stockholders' equity:
Common stock 147 122
Additional paid-in capital 2,043,053 1,992,591
Treasury stock, at cost -- (14,470)
Deferred stock-based charges (406) (258)
Accumulated other comprehensive income 409 267
Accumulated deficit (1,985,810) (1,977,924)
------------- -------------
Total stockholders' equity 57,393 328
------------- -------------
Total liabilities and stockholders'
equity $ 150,504 $ 153,548
============= =============
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(restated for discontinued operations)
(in thousands, except per share amounts)
(unaudited)
Twelve
Three Months Ended Months
Ended
------------------------------------ ---------
March September December December
31, June 30, 30, 31, 31,
2004 2004 2004 2004 2004
------------------------------------ ---------
Revenue $53,424 $54,320 $54,782 $54,334 $216,860
Cost of revenues 13,250 12,467 12,655 12,457 50,829
-------- -------- --------- -------- ---------
Gross profits 40,174 41,853 42,127 41,877 166,031
-------- -------- --------- -------- ---------
Operating expenses:
Sales and marketing 24,259 22,738 21,415 19,976 88,388
Product & website
development 3,935 3,768 3,812 3,847 15,362
General and
administrative 13,991 15,066 22,371 17,014 68,442
Amortization of
intangible assets 2,328 2,114 1,990 1,462 7,894
Litigation settlement -- 2,168 -- -- 2,168
Impairment of long-
lived assets -- -- -- -- --
Restructuring charges 345 -- -- 971 1,316
-------- -------- --------- -------- ---------
Total operating expenses 44,858 45,854 49,588 43,270 183,570
-------- -------- --------- -------- ---------
Loss from operations (4,684) (4,001) (7,461) (1,393) (17,539)
Interest income
(expense), net (85) 25 474 258 672
Gain on settlement of
distribution agreement -- -- -- -- --
Other income (expense),
net (8) 16 2,234 124 2,366
-------- -------- --------- -------- ---------
Loss from continuing
operations (4,777) (3,960) (4,753) (1,011) (14,501)
Gain on disposition of
discontinued operations -- -- -- 7,294 7,294
Income (loss) from
discontinued operations (306) (302) 180 (251) (679)
-------- -------- --------- -------- ---------
Net income (loss) $(5,083) $(4,262) $(4,573) $6,032 $(7,886)
======== ======== ========= ======== =========
Basic and diluted net
income (loss) per share
Continuing operations $(0.04) $(0.03) $(0.03) $(0.01) $(0.11)
Discontinued operations (0.00) (0.00) (0.00) 0.05 0.05
======== ======== ========= ======== =========
Net income (loss) $(0.04) $(0.03) $(0.03) $0.04 $(0.06)
======== ======== ========= ======== =========
Shares used to calculate
basic and diluted per
share amounts
Basic 121,138 132,577 145,823 146,323 136,518
-------- -------- --------- -------- ---------
Diluted 121,138 132,577 145,823 154,902 136,518
======== ======== ========= ======== =========
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(restated for discontinued operations)
(in thousands, except per share amounts)
(unaudited)
Twelve
Three Months Ended Months
Ended
-------------------------------------- ---------
March September December December
31, June 30, 30, 31, 31,
2003 2003 2003 2003 2003
-------------------------------------- ---------
Revenue $51,946 $50,480 $51,636 $51,860 $205,922
Cost of revenues 14,382 14,348 14,480 13,359 56,569
-------- --------- --------- --------- ---------
Gross profits 37,564 36,132 37,156 38,501 149,353
-------- --------- --------- --------- ---------
Operating expenses:
Sales and marketing 26,195 25,312 25,390 24,225 101,122
Product & website
development 4,304 4,721 4,070 3,970 17,065
General and
administrative 16,985 17,943 16,580 13,825 65,333
Amortization of
intangible assets 7,423 6,181 5,767 2,492 21,863
Litigation
settlement -- 63,600 -- -- 63,600
Impairment of long-
lived assets -- 12,158 13,083 1,758 26,999
Restructuring
charges -- -- -- 4,100 4,100
-------- --------- --------- --------- ---------
Total operating
expenses 54,907 129,915 64,890 50,370 300,082
-------- --------- --------- --------- ---------
Loss from operations (17,343) (93,783) (27,734) (11,869) (150,729)
Interest income
(expense), net (20) (16) (234) (136) (406)
Gain on settlement of
distribution
agreement 104,071 -- -- -- 104,071
Other income
(expense), net 761 199 (194) (75) 691
-------- --------- --------- --------- ---------
Loss from continuing
operations 87,469 (93,600) (28,162) (12,080) (46,373)
Gain on disposition of
discontinued
operations 229 2,301 -- -- 2,530
Income (loss) from
discontinued
operations (494) (390) (2,420) 23 (3,281)
-------- --------- --------- --------- ---------
Net income (loss) $87,204 $(91,689) $(30,582) $(12,057) $(47,124)
======== ========= ========= ========= =========
Basic and diluted net
income (loss) per
share
Continuing operations $0.74 $(0.79) $(0.24) $(0.10) $(0.39)
Discontinued
operations (0.00) 0.01 (0.02) 0.00 (0.01)
======== ========= ========= ========= =========
Net income (loss) $0.74 $(0.78) $(0.26) $0.10 $(0.40)
======== ========= ========= ========= =========
Diluted net income
(loss) per share $0.73 $(0.79) $(0.24) $(0.10) $(0.39)
Continuing operation $(0.01) $0.01 $(0.02) $0.00 $(0.01)
-------- --------- --------- --------- ---------
Discontinued
operation $0.72 $(0.78) $(0.26) $0.10 $(0.40)
======== ========= ========= ========= =========
Shares used to
calculate basic and
diluted per share
amounts
Basic 118,151 118,114 119,418 120,273 118,996
Diluted 120,414 118,114 119,418 120,273 118,996
======== ========= ========= ========= =========
ABOUT HOMESTORE, INC.
Homestore, Inc. (NASDAQ:HOMS) is the leading provider of real estate media
and technology solutions. The Company operates the No. 1 network of home and
real estate Web sites including flagship site REALTOR.com(R), the official Web
site of the National Association of REALTORS(R) and HomeBuilder.com(TM), the
official new homes site of the National Association of Home Builders. Homestore
also operates RENTNET(R), an apartments, corporate housing and self-storage
resource, SeniorHousingNet(TM), a resource for senior housing and care, and
FactoryBuiltHousing.com, the official Web site of the Manufactured Housing
Institute, as well as Homestore.com(R), a home information resource. Homestore's
print businesses are Homestore(R) Plans and Publications and Welcome Wagon(R).
Homestore's professional software division includes TOP PRODUCER(R) Systems, a
leading provider of provider of real estate sales productivity applications. For
more information: http://ir.homestore.com.
CONTACT: Homestore, Inc.
Mollie O'Brien, 805-557-2303
investorrelations@homestore.com