Move Inc. (MOVE) filed Amended Quarterly Report for the period ended 2009-06-30.
Homestore Inc. is a leading destination on the Internet for real estate information, advertising products and services. The family of web sites, consisting of homestore.com, REALTOR.com, HomeBuilder.com, SpringStreet.com and CommercialSource.com provides the most comprehensive source of real estate listings and content on the Internet. Through the family of web sites, they provide a wide variety of information and tools for consumers, real estate industry professionals, advertisers and providers of real estate related products and services. Move Inc. has a market cap of $256.41 million; its shares were traded at around $1.66 with and P/S ratio of 1.06.
Highlight of Business Operations:
In the second quarter of 2008, we decided to divest our Welcome Wagon® business, which had been reported as part of our Consumer Media segment. On June 22, 2009, the Company closed the sale of the business for a sales price of $2.0 million. The Company received $1.0 million in cash and recorded a $1.0 million note receivable. The principal balance of the note is due on or before October 1, 2010. The outstanding principal bears an interest rate of 7% per annum, with quarterly interest payments due commencing on October 1, 2009. The transaction resulted in a gain on disposition of discontinued operations of $1.2 million for the three and six months ended June 30, 2009.
As part of the sale in 2002 of the Companys ConsumerInfo division to Experian Holdings, Inc. (Experian), $10.0 million of the purchase price was put in escrow to secure the Companys indemnification obligations (the Indemnity Escrow). Under the terms of the stock purchase agreement, the Companys maximum potential liability for claims by Experian was capped at $29.25 million less the balance in the Indemnity Escrow, which amount was approximately $8.5 million. During 2008, Experian demanded $29.25 million in indemnity payments. The Company denied liability for that sum and a bifurcated arbitration proceeding ensued to resolve the dispute. Subsequent to the completion of the first phase of the arbitration proceedings, on April 20, 2009, the parties settled the dispute and entered into a full release of all claims under which Experian received $7.4 million from the Indemnity Escrow and the Company received the balance of the escrow of $1.1 million, which is included in gain on disposition of discontinued operations for the three and six months ended June 30, 2009.
Revenue decreased $6.8 million, or 11%, to $54.6 million for the three months ended June 30 2009, compared to $61.4 million for the three months ended June 30, 2008. The decrease in revenue was due to decreases of $5.2 million in the Real Estate Services segment and $1.6 million in the Consumer Media segment. These changes by segment are explained in the segment information below.
Cost of revenue increased $1.6 million, or 14%, to $12.8 million for the three months ended June 30, 2009, compared to $11.2 million for the three months ended June 30, 2008. The increase was primarily due to higher product fulfillment costs of $0.8 million resulting from improvements made to the featured product lines, increased costs of $0.6 million associated with development services to NAR and other cost increases of $0.2 million.
General and administrative. General and administrative expenses decreased $8.8 million, or 44%, to $11.4 million for the three months ended June 30, 2009, compared to $20.2 million for the three months ended June 30, 2008. The decrease was primarily due to a decrease in personnel related costs of $5.4 million, including a $2.2 million decrease in non-cash stock based compensation, a $1.4 million decrease in legal costs, a $0.6 million decrease in consulting costs, a $0.5 million decrease in depreciation expense, a $0.4 million decrease in rent expense as a result of our restructuring efforts and other cost decreases of $0.5 million.
As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.comTM which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A deferred tax provision of $41,000 was recorded in the three months ended June 30, 2009 and 2008, respectively. A reversal of $40,000 to the tax provision was recorded in the three months ended June 30, 2009 as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income and an $80,000 tax provision was recorded in the three months ended June 30, 2009 for state income taxes. An additional $121,000 tax provision was recorded in the three months ended June 30, 2008 for state income taxes.
Ron Baron of Baron Funds.