Homestore.com (Nasdaq: HOMSE) has announced its full year 2001 financial results, including restated results for the first three quarters of 2001. The full year audited financial results were filed today with the Securities and Exchange Commission (SEC) on Form 10-K. On March 29, 2002, the restated results were filed with the SEC on Form 10-Q/A for each of the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001.
"We are pleased to have completed all restatements and brought our historical financial results up to date," said Mike Long, Homestore's Chief Executive Officer. "We appreciate the continued support and patience of our customers and investors while our employees have completed an extraordinary effort to correct two years of financial reporting in less than 90 days. We remain committed to being the reliable partner and service provider the real estate industry deserves while generating positive cash flow from operations by the end of 2002."
RESULTS FOR THE FULL YEAR 2001
For the full year ended December 31, 2001, Homestore reported revenue of $325.1 million, a 79 percent increase from revenue of $181.3 million for 2000. Excluding one-time charges of $975.6 million related to acquisitions, impairment of long-lived assets and the company's restructuring, the net loss for 2001 was $490.0 million, or $4.56 per share, compared to a net loss of $146.1 million or $1.83 per share in 2000. Including all charges, the net loss was $1,465.6 million, or $13.64 per share. Details related to the impairment charge are included below in the description of our fourth quarter results.
At December 31, 2001, Homestore had cash and cash equivalents available to fund operations of approximately $52.5 million, in addition to restricted cash of approximately $98.5 million. The company anticipates that cash and cash equivalents available to fund operations at March 31, 2002 will be approximately $28 million, in addition to restricted cash of approximately $91 million. Taking into account the proceeds from today's announced sale of ConsumerInfo.com, these anticipated balances would be approximately $85 million in unrestricted cash, and $160 million in restricted cash. Restricted cash will increase as a result of customary escrow items and the constructive trust associated with the sale of ConsumerInfo.com .
RESULTS FOR THE FOURTH QUARTER OF 2001
For the fourth quarter of 2001, revenue increased to $97.2 million from $52.6 million for the fourth quarter of 2000. Net loss for the quarter, excluding one-time charges totaling $960.0 million related to acquisitions, impairment of long-lived assets and the company's restructuring, was $146.6 million, or a loss of $1.26 per share, compared to a net loss of $53.6 million, or $0.65 per share, for the fourth quarter of 2000. Including all charges, the net loss was $1,106.6 million, or $9.51 per share.
The company's policy is to review its long-lived assets, primarily goodwill and other acquired intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In accordance with this policy, the company assessed the fair value of its long-lived and intangible assets. As a result of this assessment, the company has reduced the carrying value of these assets by $925.1 million to reflect their current fair market value.
"These filings resolve our historical accounting issues," said Lew Belote, Homestore's Chief Financial Officer. "They involve significant one-time charges that make comparative analysis difficult. These results are not indicative of current or future trends."
IMPACT OF RESTATEMENT ON NINE MONTH FINANCIALS
The company has determined that in the first nine months of 2001, certain transactions resulting in the recognition of $81.6 million in revenue, had been improperly recorded as independent cash transactions. The company determined these transactions were reciprocal exchanges that should have been evaluated as barter transactions. The company determined that there was insufficient basis to establish the fair value of these barter exchanges and the related $81.6 million of revenue has been reversed.
The company also determined that in the first nine months of 2001, revenue from software products and services of $37.4 million did not meet all revenue recognition requirements. Therefore the revenue has been recorded as deferred revenue at September 30, 2001 and will be recognized as revenue over the next one to two years as the services are delivered.
In addition, as previously announced, Homestore has elected early adoption of FASB's EITF 01-9, which requires all companies to report certain consideration given by a vendor to a customer as a reduction in revenue. For the first nine months of 2001, the effect was to reduce the company's previously reported revenue and expenses by $4.0 million, with no effect on net loss or net loss per share.
As a result of the adjustments described above, reported revenue for the nine months was reduced from $350.9 million to $227.9 million, the reported net loss increased from $245.8 million to $359.0 million and the reported net loss per share increased from $2.35 to $3.44.
For additional information regarding all of our SEC filings, please go to the Investor Relations section of www.homestore.com at: https://ir.shareholder.com/homs/shareholder.cfm
Source: Company Press Release