Homestore (NASDAQ:HOMS - News) reported its financial results for the quarter ended March 31, 2002 with first quarter revenue of $74.1 million, up 16 percent from revenue of $63.8 million for the first quarter of 2001. The loss from continuing operations was $(35.7) million, or $(0.30) per share compared to a loss of $(99.8) million, or $(1.05) per share for the first quarter 2001. The net loss for the quarter was $(34.8) million, or $(0.29) per share compared to a loss of $(99.8) million, or $(1.05) per share for the first quarter 2001.

The results for the current quarter reflect the classification of the company's ConsumerInfo division as discontinued operations. There was no effect on the first quarter of 2001 since this division was not acquired until the third quarter of 2001. The ConsumerInfo division was sold for $130 million in cash on April 2, 2002. The gain on the sale of approximately $10 million will be reflected in the company's second quarter results.

Included in Homestore's results for the quarter were certain non-recurring income and expenses. The company recorded other income for the quarter of approximately $10.8 million from the Real Estate Technology Trust, which provides technology services and products to Cendant's real estate franchisees. This non-recurring income arose from the restructuring of certain commercial agreements with the Real Estate Technology Trust. This was offset by the loss on the sale of marketable securities and other assets of $(4.1 million) also included in other income. The company also recorded one-time restructuring charges of $1.8 million in the first quarter primarily related to employee termination benefits, facility closure charges and contract cancellation fees.

At March 31, 2002, Homestore had cash and cash equivalents available to fund operations of $34.2 million, in addition to restricted cash of approximately $90.3 million. As of April 2, 2002, after taking into account the proceeds from the ConsumerInfo sale, Homestore had cash and cash equivalents of approximately $91 million and approximately $158 million in restricted cash.

"The first quarter was challenging for Homestore as management resources were diverted by the internal inquiry into our past accounting practices and our thorough review of our business units. Thanks to the dedicated effort of our employees, we have made progress in these first 120 days in realigning our resources and focusing on our customers and core products and services," said Mike Long, Homestore's Chief Executive Officer. "We began our second quarter as a more streamlined entity that is keenly focused on the success of our customers."

"While the results of the quarter partially reflect our restructuring efforts, they also include both non-recurring and one-time items," said Lew Belote, Homestore's Chief Financial Officer. "Consequently, these reported results are not necessarily indicative of current or future trends, so we are not yet in a position to give forward guidance to the financial community."

Published: May 15, 2002

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