Table of Contents

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2004
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from           to

Delaware		95-4438337
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
30700 Russell Ranch Road Westlake Village, California (Address of Principal Executive Offices)		91362 (Zip Code)

Aggregate market value of voting common stock held by non-affiliates of the registrant as of June 30, 2004*		$500,696,146
Number of shares of common stock outstanding as of February 28, 2005.		147,097,528

*	Based on the closing price of the common stock of $3.99 per share on that date, as reported on The NASDAQ National Market and, for purposes of this computation only, the assumption that all of the registrant’s directors, executive officers and beneficial owners of 10% or more of the registrant’s common stock are affiliates.

---

				Page
PART I
Item 1.		Business			3
Item 2.		Properties			26
Item 3.		Legal Proceedings			27
Item 4.		Submission of Matters to a Vote of Security Holders			27
PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			27
Item 6.		Selected Financial Data			29
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			55
Item 8.		Financial Statements and Supplementary Data			56
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			103
Item 9A.		Controls and Procedures			103
Item 9B.		Other Information			105
PART III
Item 10.		Directors and Executive Officers of the Registrant			105
Item 11.		Executive Compensation			105
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			105
Item 13.		Certain Relationships and Related Transactions			105
Item 14.		Principal Accounting Fees and Services			105
PART IV
Item 15.		Exhibits, Financial Statement Schedules			105
SIGNATURES					111
EXHIBIT 21.01
EXHIBIT 23.01
EXHIBIT 23.02
EXHIBIT 23.03
EXHIBIT 23.04
EXHIBIT 31.01
EXHIBIT 31.02
EXHIBIT 32.01
EXHIBIT 32.02
EXHIBIT 99.01
EX-10.55
EX-21.01
EX-23.01
EX-23.02
EX-23.03
EX-23.04
EX-31.01
EX-31.02
EX-32.01
EX-32.02
EX-99.01

1

---

Table of Contents

2

---

Table of Contents

Item 1.	Business

	Our Vision

	Our Operating Segments

3

---

Table of Contents

	Industry Relationships

4

---

Table of Contents

	Leading Consumer Websites

5

---

Table of Contents

	•	Homestore Home Finance. Our Home Finance channel contains information and decision support tools that help consumers understand and satisfy their home financing and mortgage needs. A variety of content, tools, and interactive guides are available to help consumers with mortgages, loans, credit, insurance, legal matters and taxes. Additionally, consumers have access to our “Find a Lender” directory, which provides access to a variety of lending professionals.
	•	Homestore Moving. Our Moving channel contains content, tools and interactive guides for consumers moving to new homes or relocating to another community. We also offer a database of self-serve storage locations across the country. These resources provide movers with custom moving quotes and other resources necessary for making moving decisions, such as salary calculators, school reports and neighborhood information.
	•	Homestore Home & Garden. Our Home & Garden channel is an online resource for consumers seeking to make improvements to their existing home, including remodeling, home improvement, landscaping and home maintenance needs. It provides an online resource for consumers seeking decorating ideas and information. The channel includes information for planning, budgeting and visualizing options, as well as specific advice on a room-by-room basis. The channel is designed to help consumers locate qualified professionals as well as provide them with do-it-yourself information.

	Technology

6

---

Table of Contents

	Media Services Segment

	•	Enhanced Listings. A major service offering for real estate agents and brokers is the enhancement of property listings. As the official website of the NAR, we present basic MLS property listings on the REALTOR.com® website at no charge to NAR members. For a fee we offer our professional customers the ability to enhance their listings by adding their own personal promotion in the forms of custom copy, photographs, text effects, links to their homepage and more.
	•	Virtual Tours. As a separate listing enhancement product to the REALTOR.com® suite of services, Homestore offers two virtual tour solutions. Hometour360 allows customers to create, host and distribute media rich virtual tours powered by industry leading image technologies IPIX and iseemedia. The new PicturePath Link solution allows other virtual tour products, purchased by our customers, to be distributed to REALTOR.com® in their full featured format.
	•	Online Brochures. Our primary service for rental, corporate housing and senior housing property owners and managers is an online brochure displayed on our RENTNET.com® website. We also offer a similar service to our home builder customers for display on our HomeBuilder.comtm website. Our online brochures include property photos, floor plan images, virtual tours, unit descriptions, community descriptions, interactive mapping, driving directions and links to property owners’ or managers’

7

---

Table of Contents

		websites. A variety of enhancements are also available to assist in increasing the visibility of specific properties to our online audience.

	•	Featured Homestm. Featured Homestm allows our REALTOR® customers to more prominently display their property listings on the REALTOR.com® website during geographically targeted property searches by consumers. Properties featured through the Featured Homestm product are viewed first in any search of their respective zip codes.
	•	Featured Agenttm. Featured Agenttm allows agents to promote themselves and their services on REALTOR.com® to a geographically targeted real estate audience.
	•	Featured Companytm. Featured Companytm allows brokers to promote themselves and their services to a geographically targeted real estate audience on REALTOR.com®.
	•	Featured Buildertm. Featured Buildertm allows builders to promote themselves and their services to a geographically targeted real estate audience on HomeBuilder.comtm.
	•	Sponsorships. Sponsorships allow advertisers to maximize their exposure on our websites by featuring fixed “buttons” or other prominent placements on certain pages on our websites. These advertisements present users with the opportunity to click-through directly to the advertiser’s site. Sponsorships may also include other advertising components such as content or online advertisements.

	•	One Placetm. One Placetm is a suite of services, including a website, that integrates with an interactive voice response system that is linked to a pager network. One Placetm enables REALTORS® to be paged when a potential homebuyer or homeseller submits an inquiry about a specific property listing. Additionally, if a prospective buyer contacts the REALTOR® after viewing a “for sale” sign, the interactive voice response system will provide the consumer with details about the property and then page the REALTOR® with a notification of the caller’s telephone number and the property listing for which the consumer has inquired.

	Software Segment

8

---

Table of Contents

	Print Segment

	•	New Mover Program. The New Mover Program integrates local merchant advertiser information into a welcome gift delivered through the mail to new homeowners shortly after their move. The welcome gift contains a customized neighborhood address book with exclusive merchant advertiser listings as well as coupons and special offers from local advertisers. Additionally, local advertisers receive the names and contact information of the new homeowners in their selected area that have received the welcome gift. This allows local merchants the opportunity to continue to build their relationship with these new homeowners through their own direct marketing initiatives. This service is sold to merchants on an annual subscription basis. Additionally, Welcome Wagon® offers local merchants solo marketing opportunities through its Pinpoint Mail product, which is sold on a per mailing basis.
	•	Early Advantage. Launched in the fourth quarter of 2004, Early Advantage is a shared direct mail product for advertisers to reach new movers at their existing addresses prior to their actual move.

	Media Services Segment

9

---

Table of Contents

	Software Segment

	Print Segment

10

---

Table of Contents

	•	it may be possible for a third party to copy or otherwise obtain and use our proprietary information without authorization or to develop similar technology independently;
	•	NAR could lose the use of the trademark REALTOR® or we could lose the use of such trademark or the REALTOR.com® domain name, or be unable to protect the other trademarks or website addresses that are important to our business, and therefore would need to devote substantial resources toward developing an independent brand identity;
	•	we could be subject to litigation with respect to our intellectual property rights;
	•	we may be required to license additional technology and information from others, which could require substantial expenditures by us; and
	•	legal standards relating to the validity, enforceability and scope of protection of proprietary rights in Internet-related businesses are uncertain and continue to evolve, and we can give no assurance regarding our ability to protect our intellectual property and other proprietary rights.

11

---

Table of Contents

12

---

Table of Contents

	We have a history of net losses and expect net losses for the foreseeable future.

	Our quarterly financial results are subject to significant fluctuations.

	•	the level of renewals for our services and the purchase of media services by real estate agents, brokers and rental property owners and managers;
	•	the amount of advertising sold on our websites and the timing of payments for this advertising;
	•	the amount and timing of our operating expenses;
	•	the amount and timing of non-cash stock-based charges, such as charges related to deferred compensation or warrants issued to real estate industry participants; and
	•	the impact of fees paid to professional advisors in connection with litigation and accounting matters.

	Litigation relating to accounting irregularities could have an adverse effect on our financial condition.

13

---

Table of Contents

	Limitations of our Director and Officer Liability Insurance and potential indemnification obligations may adversely affect our financial condition.

14

---

Table of Contents

	We continue to incur costs related to the SEC investigation of prior accounting irregularities.

	Contingent obligations to Cendant related to our Securities Class Action Lawsuit could have an adverse effect on our financial condition.

15

---

Table of Contents

	We could be required to expend substantial amounts in connection with continuing indemnification obligations to a purchaser of one of our businesses.

	Our employees, investors, customers, business partners and vendors may react adversely to the continuing litigation brought against us.

	We may be subject to litigation.

16

---

Table of Contents

	Our common stock price may be volatile, which could result in substantial losses for individual stockholders.

	•	actual or anticipated variations in our quarterly operating results;
	•	announcements of technological innovations or new products or services by us or our competitors;
	•	changes in financial estimates by securities analysts;
	•	conditions or trends in the Internet, technology and/or real estate and real estate-related industries;
	•	market prices for stocks of Internet companies and other companies whose businesses are heavily dependent on the Internet, which have generally proven to be highly volatile, particularly in recent quarters; and
	•	adverse publicity relating to litigation.

	The emergence of competitors and “referral fee” business models may adversely impact our business.

	Our future success depends upon our management’s ability to execute its business plan.

	Focusing on our core business may require sales of assets and/or discontinuing certain operations, which could lead to write-offs or unusual/non-recurring items in our financial statements.

17

---

Table of Contents

	Our agreement with the National Association of REALTORS® could be terminated.

	•	the acquisition of us or RealSelect by another party;
	•	if traffic on the REALTOR.com® site falls below 500,000 unique users per month;
	•	a substantial decrease in the number of property listings on our REALTOR.com® site; and
	•	a breach of any of our other obligations under the agreement that we do not cure within 30 days of being notified by NAR of the breach.

	Our agreement with NAR contains a number of provisions that could restrict our operations.

	•	we must make quarterly fixed payments to NAR as follows:

	•	For 2005, we must pay $1.5 million in four installments of $375,000 due on the last day of each calendar quarter of 2005.
	•	For 2006, we must pay $1.5 million plus or minus, as the case may be, the percentage change in the Consumer Price Index for 2005, in four equal installments due on the last day of each calendar quarter of 2006.
	•	For 2007 and beyond, we must pay the amount due during the prior calendar year plus or minus, as the case may be, the percentage change in the Consumer Price Index for the prior calendar year, in four equal installments due on the last day of each calendar quarter for that calendar year;

	•	we amended, and continue to amend, many of our agreements with the entities that provide us the information for our real property listings (“data content providers”) to reduce or eliminate the amounts that we must pay to data content providers. In exchange, in some cases, we shortened or are shortening the duration of these agreements, including those agreements under which we receive the real property listings on an exclusive basis;
	•	we are restricted in the type and subject matter of, and the manner in which we display, advertisements on the REALTOR.com® website;
	•	NAR has the right to approve how we use its trademarks, and we must comply with its quality standards for the use of these marks;
	•	we must meet performance standards relating to the availability time of the REALTOR.com® website;
	•	NAR has the right to review, approve and request changes to the content on certain pages of our REALTOR.com® website; and
	•	we are restricted in our ability to create additional websites or pursue other lines of business that engage in displaying real property advertisements in electronic form.

18

---

Table of Contents

	If our operating agreement for REALTOR.com® were terminated, NAR would be able to operate the REALTOR.com® website.

	We are subject to non-competition provisions with NAR, which could adversely affect our business.

	Our agreement with the National Association of Home Builders contains provisions that could restrict our operations.

	•	if NAR terminates our REALTOR.com® operating agreement, for six months thereafter NAHB can terminate its operating agreement with us on three months’ prior notice;
	•	we are restricted in the type and subject matter of advertisements on the pages of our HomeBuilder.comtm website that contain new home listings; and
	•	NAHB has the right to approve how we use its trademarks and we must comply with its quality standards for the use of its marks.

	Our RENTNET.com® website is subject to a number of restrictions on how it may be operated.

	•	if NAR terminates its consent for any reason, we will have to transfer to NAR all data and content, such as listings, on the rental site that were provided by REALTORS®;
	•	listings for rental units in smaller non-apartment properties generally must be received from a REALTOR® or a REALTOR®-controlled MLS in order to be listed on the website;
	•	if the consent is terminated, we could be required to operate our rental properties website at a different web address;
	•	if the consent is terminated for any reason, other than as a result of a breach by NAR, NAR will be permitted to use the REALTOR®-branded web address, resulting in increased competition;
	•	we cannot list properties for sale on the rental website for the duration of our REALTOR.com® operating agreement and for an additional two years;
	•	we are restricted in the type and subject matter of, and the manner in which we display, advertisements on the rental website; and
	•	we must offer REALTORS® preferred pricing for home pages or enhanced advertising on the rental website.

19

---

Table of Contents

	NAR could revoke its consent to our operating our RENTNET.com® website.

	•	the acquisition of us or RealSelect by another party;
	•	a substantial decrease in property listings on our REALTOR.com® website; and
	•	a breach of any of our obligations under the consent or the REALTOR.com® operating agreement that we do not cure within 30 days of being notified by NAR of the breach.

	The National Association of REALTORS® has significant influence over aspects of our RealSelect subsidiary’s corporate governance and has a representative on our Board.

	•	amend its certificate of incorporation or bylaws;
	•	pledge its assets;
	•	approve transactions with affiliates, stockholders or employees in excess of $100,000;
	•	change its executive officers;
	•	establish, or appoint any members to, a committee of its Board of Directors; or
	•	issue or redeem any of its equity securities.

	We must continue to obtain listings from Multiple Listing Services, real estate brokers and home builders.

20

---

Table of Contents

	It is important to our success that we support our real estate professional customers.

	Failure of real estate professionals to accept online media-based pricing may adversely affect our financial results.

	We must dedicate significant resources to market our subscription products and media services to real estate professionals.

	A failure to establish and maintain strategic online relationships that generate a significant amount of traffic could limit the growth of our business.

	The market for web-based subscription and advertising services relating to real estate is competitive.

21

---

Table of Contents

	Our future success depends largely on our ability to attract, retain and motivate personnel.

	Our investment strategy may not meet its objectives and could adversely affect our results of operations and financial position.

	We need to continue to develop our content and product and service offerings.

	Delaware law, our certificate of incorporation and bylaws, and other agreements contain provisions that could discourage a takeover.

22

---

Table of Contents

	We rely on intellectual property and proprietary rights.

	We may not be able to protect the website addresses that are important to our business.

	We could be subject to litigation with respect to our intellectual property rights.

	Our business is dependent on the strength of the real estate industry, which is both cyclical and seasonal.

	We may particularly be affected by general economic conditions.

23

---

Table of Contents

	•	perceived and actual economic conditions;
	•	interest rates;
	•	taxation policies;
	•	availability of credit;
	•	employment levels;
	•	wage and salary levels; and
	•	fears of terrorist attacks or the threat of war.

	Recessionary pressures traditionally impact real estate markets.

	We have risks associated with changing legislation in the real estate industry.

	We depend on increased use of the Internet to expand our real estate-related advertising products and services.

24

---

Table of Contents

	Government regulations and legal uncertainties could affect the growth of the Internet.

	Taxation of Internet transactions could slow the use of the Internet.

	We depend on continued improvements to our computer network and the infrastructure of the Internet.

25

---

Table of Contents

	Our internal network infrastructure could be disrupted.

	We could face liability for information on our websites and for products and services sold over the Internet.

Item 2.	Properties:

						Square				Lease
		Location				Feet				Expiration
Principal executive and corporate office(C)(MS)			Westlake Village, CA				137,762				2008
Technology facility(MS)			Thousand Oaks, CA				13,717				2006
Operations and customer service center(MS)			Scottsdale, AZ				36,175				2007
Welcome Wagon®(P)			Plainview, NY				48,148				2015
Top Producer®(SW)			Richmond, BC				33,702				2008
Homestore Plans and Publications(P)			St. Paul, MN				24,645				2006
Enterprise(MS)			Milwaukee, WI				13,016				2007

26

---

Table of Contents

Item 3.	Legal Proceedings

Item 4.	Submission of Matters to a Vote of Security Holders

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

			High				Low
2003
	First Quarter		$	1.51			$	0.51
	Second Quarter			2.03				0.48
	Third Quarter			3.95				1.62
	Fourth Quarter			4.93				2.51
2004
	First Quarter			5.58				3.49
	Second Quarter			5.95				3.70
	Third Quarter			4.29				1.81
	Fourth Quarter			3.31				2.25
2005
	First Quarter (through February 28, 2004)			3.24				2.10

27

---

Table of Contents

Number of

Number of

Weighted

Securities

Securities to be

Average Exercise

Remaining

Issued Upon

Price of

Available for

Exercise of

Outstanding

Future Issuance

Outstanding

Options,

(Excluding

Options, Warrants

Warrants and

Securities Reflected

Plan Category

and Rights

Rights

in Column (a))

(a)

(b)

(c)

(In thousands)

(In thousands)

Equity compensation plans approved by security holders

19,748

$

3.29

3,391

Equity compensation plans not approved by security holders

8,165

$

2.29

10,450

Total

27,913

$

2.99

13,841

28

---

Table of Contents

Item 6.	Selected Financial Data

				Year Ended December 31,
				2004				2003				2002				2001(3)				2000(3)
				(In thousands, except per share amounts)
Consolidated Statement of Operations Data:
Revenue(2)				$	216,860			$	198,227			$	219,867			$	254,103			$	174,706
Related party revenue					—				7,695				31,158				38,346				—
		Total revenue			216,860				205,922				251,025				292,449				174,706
Cost of revenue(2)					50,829				56,569				73,622				110,377				59,912
		Gross profit			166,031				149,353				177,403				182,072				114,794
Operating expenses:
	Sales and marketing(2)				88,388				101,122				161,554				239,790				158,993
	Product and website development(2)				15,362				17,065				25,497				32,397				14,259
	General and administrative(2)				68,442				65,333				83,042				168,695				58,278
	Amortization of goodwill and intangible assets(1)				7,894				21,863				34,699				199,291				42,868
	In-process research and development				—				—				—				—				4,048
	Restructuring charges(2)				1,316				4,100				12,057				50,234				—
	Impairment of long-lived assets				—				26,999				3,482				925,094				—
	Litigation settlement				2,168				63,600				23,000				—				—
	Total operating expenses				183,570				300,082				343,331				1,615,501				278,446

29

---

Table of Contents

		Year Ended December 31,
		2004				2003				2002				2001(3)				2000(3)
		(In thousands, except per share amounts)
Loss from operations			(17,539	)			(150,729	)			(165,928	)			(1,433,429	)			(163,652	)
Interest income (expense), net			672				(406	)			2,673				10,490				23,032
Gain on settlement of distribution agreement			—				104,071				—				—				—
Other income (expense), net			2,366				691				(5,694	)			(44,393	)			(7,045	)
Loss from continuing operations			(14,501	)			(46,373	)			(168,949	)			(1,467,332	)			(147,665	)
Gain on disposition of discontinued operations			7,294				2,530				11,790				—				—
Income (loss) from discontinued operations			(679	)			(3,281	)			(6,266	)			1,743				1,612
Net loss		$	(7,886	)		$	(47,124	)		$	(163,425	)		$	(1,465,589	)		$	(146,053	)
Basic and diluted net income (loss) per share applicable to common shareholders.
Continuing operations		$	(0.11	)		$	(0.39	)		$	(1.43	)		$	(13.66	)		$	(1.85	)
Discontinued operations		$	0.05			$	(0.01	)		$	0.05			$	0.02			$	0.02
Net loss		$	(0.06	)		$	(0.40	)		$	(1.39	)		$	(13.64	)		$	(1.83	)
Shares used to calculate basic and diluted per share amounts			136,518				118,996				117,900				107,433				79,758

(1)	We adopted SFAS No. 142 in 2002 and ceased amortizing goodwill as required by that standard.
(2)	The following chart summarizes the stock-based charges that have been included in the following captions for the periods presented:
(3)	Acquisitions during the year ended December 31, 2001 include Internet Pictures Corporation (“iPIX”), Computer for Tracts (“CFT”), Homewrite, Inc., Homebid.com, Inc., and Move.com Group which includes Welcome Wagon International, Inc., and RENTNET. Acquisitions during the year ended December 31, 2000 include Wyldfyre Technologies, Inc. (“Wyldfyre”), Top Producer Systems, Inc. (“Top Producer”), and The Hessel Group.

		Year Ended December 31,
		2004				2003				2002				2001				2000
		(In thousands)
Stock-based Charges:
Revenue		$	—			$	1,119			$	1,501			$	2,456			$	6,233
Cost of revenue			—				16				134				383				607
Sales and marketing			301				3,795				63,848				71,188				45,148
Product and website development			—				15				127				361				572
General and administrative			518				164				1,297				6,237				3,095
Restructuring charges			—				2,140				—				—				—
		$	819			$	7,249			$	66,907			$	80,625			$	55,655

30

---

Table of Contents

		December 31,
		2004				2003				2002				2001				2000
		(In thousands)
Consolidated Balance Sheet Data:
Cash and short-term investments		$	59,859			$	35,517			$	80,463			$	38,272			$	167,576
Working capital (deficiency)			1,059				(70,729	)			(80,763	)			(31,888	)			253,638
Total assets			150,504				153,548				379,208				615,037				893,350
Obligation under capital lease			2,765				1,904				—				—				—
Total stockholders’ equity			57,393				328				38,730				183,256				603,479

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

	•	numerous lawsuits, including a consolidated securities class action and derivative litigation;
	•	an SEC investigation of the company and our accounting practices;
	•	contractual disputes with our customers and partners;
	•	limited financial resources and the need for cost reduction measures;
	•	listing maintenance issues with The NASDAQ National Market; and
	•	replacement of the former executive management team, some of whom have pled guilty to criminal charges.

31

---

Table of Contents

	Our Business

	•	Market and economic conditions. In recent years, the U.S. economy has experienced low interest rates, and volatility in the equities markets. Against this backdrop, housing starts have remained strong, while the supply of apartment housing has generally exceeded demand. At the same time, our business model has shifted from a technology offering to a media model. The foregoing conditions have meant that homebuilders spent less on advertising, given the strong demand for new houses. Conversely, apartment owners have not spent as much money on advertising, as they have sought to achieve cost savings during the difficult market for apartment owners. Both of these trends have impacted our ability to grow our business. The impact of the recent rise in interest rates on job creation and other economic factors is difficult to gauge and creates uncertainty as to whether these trends will continue.
	•	Evolution of Our Product and Service Offerings and Pricing Structures.

32

---

Table of Contents

	•	Investment Strategy: Because of the limited resources we have available, we have instituted a staged investment strategy. Starting in Mid-2002, we began conceiving and executing the repositioning of REALTOR.com®, Top Producer®, and our retail advertising activities. Our improved performance is entirely related to the improvement in those three businesses, which, in turn, gives us increasing confidence in the longer term results that we should be able to generate from our current and planned investments in other areas of our business. We are now focusing on investing in and improving our RENTNET.com®, HomeBuilder.comtm, and Welcome Wagon® businesses and expect to continue to do so through much of 2005 and possibly into 2006. We believe that HomeBuilder.comtm and RENTNET.com® will begin contributing to our overall growth in the second half of 2005. The process of integrating Welcome Wagon® into our Media Services businesses will require patience, but could represent a very large market opportunity for us.

33

---

Table of Contents

		Year Ended December 31,
		2004				2003				2002
Revenue		$	9,137			$	12,788			$	33,107
Total expenses			9,816				16,069				39,373
Loss from discontinued operations		$	(679	)		$	(3,281	)		$	(6,266	)

			Year Ended December 31,
			2004				2003				2002
Gross proceeds from sale			$	10,981			$	2,300			$	130,000
Less:
	Cash subject to escrow			850				—				10,000
	Net assets sold			2,210				—				106,321
	Transaction costs			627				—				2,918
	Cash and Homestore stock received from purchase of iPlace			—				(230	)			(1,029	)
	Gain on disposition of discontinued operations		$	7,294			$	2,530			$	11,790

34

---

Table of Contents

	•	software revenue, which includes software licenses, software development, hardware services and support revenue which includes software maintenance, training, consulting and website hosting revenue; and
	•	advertising revenue for running online advertising on our websites or offline advertising placed in our publications.

	•	on a one-year term basis;
	•	on a perpetual basis; and
	•	on a monthly subscription basis.

	•	the execution of a license agreement;
	•	product delivery;
	•	fees are fixed or determinable;
	•	collectibility is reasonably assured; and
	•	all other significant obligations have been fulfilled.

35

---

Table of Contents

	•	impression based,
	•	fixed fee subscriptions; and
	•	variable, performance based agreements.

	Allowance for Doubtful Accounts

36

---

Table of Contents

	Valuation of Goodwill, Identified Intangibles and Other Long-lived Assets

	•	a significant decline in actual and projected revenue;
	•	a significant decline in the market value of our common stock;
	•	a significant decline in performance of certain acquired companies relative to their original projection;
	•	a significant difference between our net book value and our market value;
	•	a significant decline in our operating results relative to our operating forecasts;
	•	a loss of key customer relationships coupled with the renegotiation of existing arrangements;
	•	a significant change in the manner of our use of the acquired assets or the strategy for our overall business;
	•	a significant decrease in the market value of an asset;
	•	a shift in technology demands and development; and
	•	a significant turnover in key management or other personnel.

37

---

Table of Contents

	Legal Contingencies

	•	respond to highly competitive developments;
	•	attract, retain and motivate qualified personnel;
	•	implement and successfully execute our marketing plans;
	•	continue to upgrade our technologies;
	•	develop new distribution channels; and
	•	improve our operational and financial systems.

			Year Ended December 31,
			2004				2003				2002
			(In thousands)
Consolidated Statement of Operations Data:
Revenue(1)			$	216,860			$	198,227			$	219,867
Related party revenue				—				7,695				31,158
	Total revenue			216,860				205,922				251,025
Cost of revenue(1)				50,829				56,569				73,622
	Gross profit			166,031				149,353				177,403

38

---

Table of Contents

				Year Ended December 31,
				2004				2003				2002
				(In thousands)
Operating expenses:
	Sales and marketing(1)				88,388				101,122				161,554
	Product and website development(1)				15,362				17,065				25,497
	General and administrative(1)				68,442				65,333				83,042
	Amortization of intangible assets(1)				7,894				21,863				34,699
	Restructuring charges(1)				1,316				4,100				12,057
	Impairment of long-lived assets				—				26,999				3,482
	Litigation settlement				2,168				63,600				23,000
		Total operating expenses			183,570				300,082				343,331
Loss from operations					(17,539	)			(150,729	)			(165,928	)
Interest income (expense), net					672				(406	)			2,673
Gain on settlement of distribution agreement					—				104,071				—
Other income (expense), net					2,366				691				(5,694	)
Loss from continuing operations					(14,501	)			(46,373	)			(168,949	)
Gain on disposition of discontinued operations					7,294				2,530				11,790
Income from discontinued operations					(679	)			(3,281	)			(6,266	)
Net loss				$	(7,886	)		$	(47,124	)		$	(163,425	)

(1)	The following chart summarizes the stock-based charges that have been included in the following captions for the periods presented:

		Year Ended December 31,
		2004				2003				2002
		(In thousands)
Revenue		$	—			$	1,119			$	1,501
Cost of revenue			—				16				134
Sales and marketing			301				3,795				63,848
Product and website development			—				15				127
General and administrative			518				164				1,297
Restructuring charges			—				2,140				—
		$	819			$	7,249			$	66,907

39

---

Table of Contents

				Year Ended December 31,
				2004				2003				2002
				(In thousands)
As a Percentage of Revenue:
Revenue					100	%			96	%			88	%
Related party revenue					—				4				12
	Total revenue				100				100				100
Cost of revenue					23				27				29
	Gross profit				77				73				71
Operating expenses:
	Sales and marketing				41				49				65
	Product and website development				7				8				10
	General and administrative				32				32				33
	Amortization of intangible assets				4				11				14
	Restructuring charges				—				2				5
	Impairment of long-lived assets				—				13				1
	Litigation settlement				1				31				9
		Total operating expenses			85				146				137
Loss from operations					(8	)			(73	)			(66	)
Interest income (expense), net					—				—				1
Gain on settlement of distribution agreement					—				50				—
Other income (expense), net					1				—				(2	)
Loss from continuing operations					(7	)			(23	)			(67	)
Gain on disposition of discontinued operations					3				1				5
Income from discontinued operations					—				(1	)			(3	)
Net Loss					(4	)%			(23	) %			(65	)%

40

---

Table of Contents

41

---

Table of Contents

42

---

Table of Contents

										Lease
						Stock-based				Obligations
		Employee				Charges for				and
		Termination				Accelerated				Related				Asset				Contractual
		Benefits				Vesting				Charges				Write-offs				Obligations				Total
December 2001 restructuring charge		$	6,364			$	—			$	12,782			$	10,917			$	5,733			$	35,796
Cash paid			(3,511	)			—				(137	)			—				(141	)			(3,789	)
Non-cash charges			—				—				—				(10,917	)			—				(10,917	)
Restructuring accrual at December 31, 2001			2,853				—				12,645				—				5,592				21,090
March 2002 restructuring charge			1,720				—				309				260				—				2,289
September 2002 restructuring charge			1,590				—				2,033				—				—				3,623
Cash paid			(4,916	)			—				(5,920	)			—				(3,631	)			(14,467	)
Sale of a subsidiary			(156	)			—				—				—				—				(156	)
Change in estimates			(638	)			—				7,611				—				(798	)			6,175
Non-cash charges			—				—				488				(260	)			—				228
Restructuring accrual at December 31, 2002			453				—				17,166				—				1,163				18,782
December 2003 restructuring charge			1,401				2,140				—				—				—				3,541
Cash paid			(797	)			—				(6,476	)			—				(576	)			(7,849	)
Changes in estimates			(156	)			—				919				—				(203	)			560
Non-cash charges			—				(2,140	)			—				—				—				(2,140	)
Restructuring accrual at December 31, 2003		$	901			$	—			$	11,609			$	—			$	384			$	12,894
Cash paid			(809	)			—				(4,564	)			—				(11	)			(5,384	)
Changes in estimates			(71	)			—				1,359				—				28				1,316
Restructuring accrual at December 31, 2004		$	21			$	—			$	8,404			$	—			$	401			$	8,826

43

---

Table of Contents

		Year Ended
		December 31,
		2004				2003
Revenue		$	—			$	1,119
Cost of revenue			—				16
Sales and marketing			301				3,795
Product and website development			—				15
General and administrative			518				164
Restructuring charges			—				2,140
		$	819			$	7,249

	Interest Income (Expense), Net

	Gain on Settlement of Distribution Agreement

	Other Income (Expense), Net

	Gain on Disposition of Discontinued Operations and Income from Discontinued Operations

44

---

Table of Contents

	Income Taxes

	Segment Information

		Year Ended
		December 31, 2004																				December 31, 2003
		Media				Software				Print				Unallocated				Total				Media				Software				Print				Unallocated				Total
Revenue		$	150,053			$	18,210			$	48,597			$	—			$	216,860			$	143,510			$	15,018			$	47,394			$	—			$	205,922
Cost of revenue			24,905				5,473				19,619				832				50,829				29,796				6,001				19,363				1,409				56,569
Gross profit (loss)			125,148				12,737				28,978				(832	)			166,031				113,714				9,017				28,031				(1,409	)			149,353
Sales and marketing			63,358				4,771				19,547				712				88,388				69,485				6,234				19,434				5,969				101,122
Product and website development			10,405				4,705				251				1				15,362				11,261				5,341				442				21				17,065
General and administrative			20,236				2,799				10,371				35,036				68,442				22,420				2,438				9,763				30,712				65,333
Amortization of intangible assets			—				—				—				7,894				7,894				—				—				—				21,863				21,863
Litigation settlement			—				—				—				2,168				2,168				—				—				—				63,600				63,600
Restructuring charges			—				—				—				1,316				1,316				—				—				—				4,100				4,100
Impairment of long-lived assets			—				—				—				—				—				—				—				—				26,999				26,999
Total operating expenses			93,999				12,275				30,169				47,127				183,570				103,166				14,013				29,639				153,264				300,082
Income (loss) from operations		$	31,149				462			$	(1,191	)		$	(47,959	)		$	(17,539	)		$	10,548			$	(4,996	)		$	(1,608	)		$	(154,673	)		$	(150,729	)

45

---

Table of Contents

	Media Services

46

---

Table of Contents

	Revenue and Related Party Revenue

	Cost of Revenue

47

---

Table of Contents

48

---

Table of Contents

		Year Ended
		December 31,
		2003				2002
Revenue		$	1,119			$	1,501
Cost of revenue			16				134
Sales and marketing			3,795				63,848
Product and website development			15				127
General and administrative			164				1,297
Restructuring charges			2,140				—
		$	7,249			$	66,907

	Interest Income (Expense), Net

49

---

Table of Contents

	Gain on Settlement of Distribution Agreement

	Other Income (Expense), Net

	Gain on Disposition of Discontinued Operations and Income from Discontinued Operations

	Income Taxes

	Segment Information

50

---

Table of Contents

		Year Ended
		December 31, 2003																				December 31, 2002
		Media				Software				Print				Unallocated				Total				Media				Software				Print				Unallocated				Total
Revenue		$	143,510			$	15,018			$	47,394			$	—			$	205,922			$	160,506			$	33,216			$	57,303			$	—			$	251,025
Cost of revenue			29,796				6,001				19,363				1,409				56,569				38,581				12,078				20,983				1,980				73,622
Gross profit (loss)			113,714				9,017				28,031				(1,409	)			149,353				121,925				21,138				36,320				(1,980	)			177,403
Sales and marketing			69,485				6,234				19,434				5,969				101,122				65,715				9,435				21,814				64,590				161,554
Product and website development			11,261				5,341				442				21				17,065				14,007				11,266				237				(13	)			25,497
General and administrative			22,420				2,438				9,763				30,712				65,333				19,339				6,417				14,077				43,209				83,042
Amortization of intangible assets			—				—				—				21,863				21,863				—				—				—				34,699				34,699
Litigation settlement			—				—				—				63,600				63,600				—				—				—				23,000				23,000
Restructuring charges			—				—				—				4,100				4,100				—				—				—				12,057				12,057
Impairment of long-lived assets			—				—				—				26,999				26,999				—				—				—				3,482				3,482
Total operating expenses			103,166				14,013				29,639				153,264				300,082				99,061				27,118				36,128				181,024				343,331
Income (loss) from operations		$	10,548			$	(4,996	)		$	(1,608	)		$	(154,673	)		$	(150,729	)		$	22,864			$	(5,980	)		$	192			$	(183,004	)		$	(165,928	)

	Media Services

51

---

Table of Contents

	Software

	Print

52

---

Table of Contents

	Unallocated

53

---

Table of Contents

			Payments Due by Period
			Total				Due in One				Due in One				Due in Three				Over Five
			Payments Due				Year or Less				to Three Years				to Five Years				Years
Capital lease obligations			$	2,851			$	1,834			$	1,017			$	—			$	—
Operating lease obligations				24,736				6,726				12,017				2,045				3,948
Obligations under restructuring charges				8,564				4,420				4,065				79				—
Distribution agreements				19,750				14,900				4,850				—				—
Other purchase obligations				7,942				1,942				3,000				3,000				—
	Total		$	63,843			$	29,822			$	24,949			$	5,124			$	3,948

54

---

Table of Contents

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

55

---

Table of Contents

Item 8.	Financial Statements and Supplementary Data

			Page
Homestore, Inc. Consolidated Financial Statements
	Report of Ernst & Young LLP, Independent Registered Public Accounting Firm			57
	Report of Independent Registered Public Accounting Firm			58
	Consolidated Balance Sheets			59
	Consolidated Statements of Operations			60
	Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)			61
	Consolidated Statements of Cash Flows			62
	Notes to Consolidated Financial Statements			63

56

---

Table of Contents

	/s/ Ernst & Young LLP

57

---

Table of Contents

58

---

Table of Contents

				December 31,
				2004				2003
				(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents			$	14,819			$	13,942
	Short-term investments				45,040				21,575
	Accounts receivable, net of allowance for doubtful accounts of $1,399 and $5,377 at December 31, 2004 and 2003, respectively				12,532				14,576
	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				—
Deferred revenue from related parties					—				2,869
Other non-current liabilities					4,190				8,066
					93,111				153,220
Commitments and contingencies (Note 22)
	Convertible preferred stock				—				—
	Common stock, $.001 par value; 500,000 shares authorized, 146,868 and 126,905 shares issued at December 31, 2004 and December 31, 2003, respectively, and 146,868 and 120,871 shares outstanding at December 31, 2004 and December 31, 2003, respectively				147				122
	Additional paid-in capital				2,043,053				1,992,591
	Treasury stock, at cost; -0- and 6,034 shares at December 31, 2004 and December 31, 2003, respectively				—				(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

59

---

Table of Contents

				Year Ended December 31,
				2004				2003				2002
				(In thousands, except per share amounts)
Revenue (including non-cash equity charges, see note 2)				$	216,860			$	198,227			$	219,867
Related party revenue					—				7,695				31,158
	Total revenue				216,860				205,922				251,025
Cost of revenue (including non-cash equity charges, see note 2)					50,829				56,569				73,622
	Gross profit				166,031				149,353				177,403
Operating expenses:
	Sales and marketing (including non-cash equity charges, see note 2)				88,388				101,122				161,554
	Product and website development (including non-cash equity charges, see note 2)				15,362				17,065				25,497
	General and administrative (including non-cash equity charges, see note 2)				68,442				65,333				83,042
	Amortization of intangible assets				7,894				21,863				34,699
	Restructuring charges (including non-cash equity charges, see note 2)				1,316				4,100				12,057
	Impairment of long-lived assets				—				26,999				3,482
	Litigation settlement				2,168				63,600				23,000
		Total operating expenses			183,570				300,082				343,331
Loss from operations					(17,539	)			(150,729	)			(165,928	)
	Interest income (expense), net				672				(406	)			2,673
	Gain on settlement of distribution agreement				—				104,071				—
	Other income (expense), net				2,366				691				(5,694	)
Loss from continuing operations					(14,501	)			(46,373	)			(168,949	)
	Gain on disposition of discontinued operations				7,294				2,530				11,790
	Loss from discontinued operations				(679	)			(3,281	)			(6,266	)
Net loss				$	(7,886	)		$	(47,124	)		$	(163,425	)
Basic and diluted net income (loss) per share applicable to Common Stockholders:
	Continuing operations			$	(0.11	)		$	(0.39	)		$	(1.43	)
	Discontinued operations			$	0.05			$	(0.01	)		$	0.05
Net loss				$	(0.06	)		$	(0.40	)		$	(1.39	)
Shares used to calculate basic and diluted net loss per share applicable to common stockholders					136,518				118,996				117,900

60

---

Table of Contents

			Convertible																								Notes								Accumulated
			Preferred Stock								Common Stock								Additional								Receivable				Deferred				Other								Total
																			Paid-in				Treasury				from				Stock-based				Comprehensive				Accumulated				Stockholders’
			Shares				Amount				Shares				Amount				Capital				Stock				Stockholders				Charges				Income (loss)				Deficit				Equity
			(In thousands)
Balance at December 31, 2001				—			$	—				117,509			$	117			$	1,987,405			$	(18,062	)		$	(3,569	)		$	(11,692	)		$	(3,568	)		$	(1,767,375	)		$	183,256
Comprehensive income (loss):
	Net loss			—				—				—				—				—				—				—				—				—				(163,425	)			(163,425	)
	Realized loss on marketable securities			—				—				—				—				—				—				—				—				3,292				—				3,292
	Foreign currency translation			—				—				—				—				—				—				—				—				(148	)			—				(148	)
	Comprehensive loss			—				—				—				—				—				—				—				—				3,144				—				(160,281	)
Issuance of common stock under employee stock purchase plan and exercise of stock options				—				—				707				1				895				—				—				(90	)			—				—				806
Settlement of stock issuance obligation				—				—				—				—				(521	)			—				—				—				—				—				(521	)
Issuance of common stock				—				—				117				—				141				(57	)			—				—				—				—				84
Repayment from stockholders				—				—				—				—				—				—				3,463				—				—				—				3,463
Repurchase of common stock				—				—				(127	)			—				—				(169	)			—				—				—				—				(169	)
Reversal of stock- based charges related to dispositions				—				—				—				—				(2,124	)			—				—				1,502				—				—				(622	)
Stock-based charges				—				—				—				—				4,959				—				—				8,034				—				—				12,993
Shares returned from escrow relating to discontinued operations				—				—				(367	)			—				—				(279	)			—				—				—				—				(279	)
Balance at December 31, 2002				—			$	—				117,839			$	118			$	1,990,755			$	(18,567	)		$	(106	)		$	(2,246	)		$	(424	)		$	(1,930,800	)		$	38,730
Comprehensive income (loss):
	Net loss			—				—				—				—				—				—				—				—				—				(47,124	)			(47,124	)
	Realized loss on marketable securities			—				—				—				—				—				—				—				—				180				—				180
	Foreign currency translation			—				—				—				—				—				—				—				—				511				—				511
	Comprehensive loss			—				—				—				—				—				—				—				—				691				(47,124	)			(46,433	)
Issuance of common stock under employee stock purchase plan and exercise of stock options				—				—				2,838				3				3,299				—				—				—				—				—				3,302
Settlement of stock issuance obligation				—				—				168				—				—				—				—				—				—				—				—
Issuance of restricted stock				—				—				436				1				343				—				—				(344	)			—				—				—
Repayment from stockholders				—				—				—				—				—				—				68				—				—				—				68
Repurchase and retirement of treasury stock				—				—				(12	)			—				(4,416	)			4,386				—				30				—				—				—
Repurchase of common stock				—				—				(31	)			—				—				(38	)			38				—				—				—				—
Stock-based charges				—				—				—				—				2,610				—				—				2,302				—				—				4,912
Shares returned from escrow relating to discontinued operations				—				—				(367	)			—				—				(251	)			—				—				—				—				(251	)
Balance at December 31, 2003				—			$	—				120,871			$	122			$	1,992,591			$	(14,470	)		$	—			$	(258	)		$	267			$	(1,977,924	)		$	328
Comprehensive income (loss):
	Net loss			—				—				—				—				—				—				—				—				—				(7,886	)			(7,886	)
	Realized loss on marketable securities			—				—				—				—				—				—				—				—				2				—				2
	Foreign currency translation			—				—				—				—				—				—				—				—				140				—				140
	Comprehensive loss			—				—				—				—				—				—				—				—				142				(7,886	)			(7,744	)
Issuance of common stock under employee stock purchase plan and exercise of stock options				—				—				3,146				4				3,862				—				—				—				—				—				3,866
Issuance of restricted stock				—				—				148				—				667				—				—				(367	)			—				—				300
Retirement of treasury stock				—				—				—				(1	)			(14,469	)			14,470				—				—				—				—				—
Stock-based charges				—				—				—				—				—				—				—				219				—				—				219
Shares issued in settlement of litigation				—				—				22,703				22				60,402				—				—				—				—				—				60,424
Balance at December 31, 2004				—			$	—				146,868			$	147			$	2,043,053			$	—			$	—			$	(406	)		$	409			$	(1,985,810	)		$	57,393

61

---

Table of Contents

					Year Ended December 31,
					2004				2003				2002
					(In thousands)
Cash flows from continuing operating activities:
Loss from continuing operations					$	(14,501	)		$	(46,373	)		$	(168,949	)
Adjustments to reconcile net loss to net cash provided by (used in) continuing operating activities:
	Depreciation					7,901				11,267				13,705
	Amortization of intangible assets					7,894				21,863				34,699
	Accretion of distribution obligation					—				—				14,812
	Impairment of long-lived assets					—				26,999				3,482
	Provision for doubtful accounts					340				2,266				5,434
	Stock-based charges					819				7,249				66,907
	Gain on settlement of distribution agreement					—				(104,071	)			—
	Gain on sales of property and equipment					(2,226	)			—				—
	Realized loss on sale of marketable securities					—				180				3,168
	Write-off of capitalized software					—				—				2,849
	Other non-cash items					(40	)			588				2,137
	Changes in operating assets and liabilities, net of acquisitions and discontinued operations:
		Accounts receivable				(430	)			3,716				(1,138	)
		Prepaid distribution expense				10,509				22,812				10,869
		Restricted Cash				(5,840	)			—				—
		Other assets				5,710				1,108				4,756
		Accounts payable and accrued expenses				1,414				37,971				(51,621	)
		Accrued distribution agreement				(7,406	)			(22,162	)			—
		Deferred revenue				5,475				2,131				(22,054	)
		Deferred revenue from related parties				—				(6,657	)			(10,679	)
			Net cash provided by (used) in continuing operating activities			9,619				(41,113	)			(91,623	)
			Net cash provided by discontinued operations			9,915				421				116,265
			Net cash provided by (used in) operating activities			19,534				(40,692	)			24,642
Cash flows from investing activities:
Purchases of property and equipment						(3,716	)			(8,937	)			(2,911	)
Purchases of short-term investments						(24,465	)			(21,575	)			—
Maturities of short-term investments						1,000				—				14,394
Proceeds from sales of marketable securities						—				1,320				2,250
Proceeds from sales of property and equipment						6,737				—				—
			Net cash provided by (used in) investing activities			(20,444	)			(29,192	)			13,733
Cash flows from financing activities:
Proceeds from payment of stockholders’ notes						—				61				3,463
Proceeds from exercise of stock options, warrants and share issuances under employee stock purchase plan						3,866				3,302				800
Payments on capital lease obligations						(2,079	)			—				—
Repurchases of common stock						—				—				(169	)
Transfer from restricted cash						—				—				243
Settlement of stock issuance obligation						—				—				(521	)
Net cash provided by financing activities						1,787				3,363				3,816
Change in cash and cash equivalents						877				(66,521	)			42,191
Cash and cash equivalents, beginning of period						13,942				80,463				38,272
Cash and cash equivalents, end of period					$	14,819			$	13,942			$	80,463

62

---

Table of Contents

1.	Business

2.	Summary of Significant Accounting Policies

63

---

Table of Contents

64

---

Table of Contents

65

---

Table of Contents

		Range of
Type		Lives
Customer, merchant lists and relationships			2-5
Exclusive electronic listing and rights agreement			9
NAR operating agreement			15
Online traffic			3
Porting relationships			5
Purchased content			5
Purchased technology			3-5
Tradename, trademarks, brand name			5-15
Other			2-15

66

---

Table of Contents

67

---

Table of Contents

			2004				2003				2002
Net loss applicable to common stockholders:
	As reported		$	(7,886	)		$	(47,124	)		$	(163,425	)
	Add: Stock-based employee compensation charges included in reported net loss			300				3,069				7,021
	Deduct: Total stock-based compensation determined under the fair value-based method for all awards			(15,747	)			(20,067	)			(29,798	)
	Pro forma net loss		$	(23,333	)		$	(64,122	)		$	(186,202	)
Net loss per share — basic and diluted:
	As reported		$	(0.06	)		$	(0.40	)		$	(1.39	)
	Pro forma		$	(0.17	)		$	(0.54	)		$	(1.58	)

		Year Ended
		December 31,
		2004				2003				2002
Risk-free interest rates			3	%			3	%			4	%
Expected lives (in years)			4				4				4
Dividend yield			0	%			0	%			0	%
Expected volatility			130	%			144	%			147	%

		Year Ended December 31,
		2004				2003				2002
Revenue		$	—			$	1,119			$	1,501
Cost of revenue			—				16				134
Sales and marketing			301				3,795				63,848
Product and website development			—				15				127
General and administrative			518				164				1,297
Restructuring charges			—				2,140				—
		$	819			$	7,249			$	66,907

68

---

Table of Contents

69

---

Table of Contents

3.	Discontinued Operations

70

---

Table of Contents

		Year Ended December 31,
		2004				2003				2002
Revenue		$	9,137			$	12,788			$	33,107
Total expenses			9,816				16,069				39,373
Loss from discontinued operations		$	(679	)		$	(3,281	)		$	(6,266	)

			Year Ended December 31,
			2004				2003				2002
Gross proceeds from sale			$	10,981			$	2,300			$	130,000
Less:
	Cash subject to escrow			850				—				10,000
	Net assets sold			2,210				—				106,321
	Transaction costs			627				—				2,918
	Cash and Homestore stock received from purchase of iPlace			—				(230	)			(1,029	)
	Gain on disposition of discontinued operations		$	7,294			$	2,530			$	11,790

			December 31,
			2003
Total current assets			$	2,267
Property & equipment, net				484
Other long term assets				36
Goodwill, net				975
	Total assets		$	3,762
Total current liabilities				590
	Total liabilities		$	590

4.	Restructuring Charges

71

---

Table of Contents

72

---

Table of Contents

						Lease
						Obligations
		Employee				and
		Termination				Related				Asset				Contractual
		Benefits				Charges				Write-offs				Obligations				Total
Initial restructuring charge		$	6,364			$	12,782			$	10,917			$	5,733			$	35,796
Cash paid			(3,511	)			(137	)			—				(141	)			(3,789	)
Non-cash charges			—				—				(10,917	)			—				(10,917	)
Restructuring accrual at December 31, 2001			2,853				12,645				—				5,592				21,090
Cash paid			(2,274	)			(5,480	)			—				(3,631	)			(11,385	)
Change in estimates			(396	)			6,027				—				(798	)			4,833
Non-cash charges			—				488				—				—				488
Sale of a subsidiary			(156	)			—				—				—				(156	)
Restructuring accrual at December 31, 2002			27				13,680				—				1,163				14,870
Cash paid			(6	)			(4,970	)			—				(576	)			(5,552	)
Change in estimates			(10	)			1,290				—				(203	)			1,077
Non-cash charges			—				—				—				—				—
Sale of a subsidiary			—				—				—				—				—
Restructuring accrual at December 31, 2003		$	11			$	10,000			$	—			$	384			$	10,395
Cash paid			(5	)			(3,966	)			—				(11	)			(3,982	)
Change in estimates			—				987				—				28				1,015
Restructuring accrual at December 31, 2004		$	6			$	7,021			$	—			$	401			$	7,428

73

---

Table of Contents

						Lease
						Obligations
		Employee				and
		Termination				Related				Asset
		Benefits				Charges				Write-offs				Total
Initial restructuring charge		$	1,720			$	309			$	260			$	2,289
Non-cash charges			—				—				(260	)			(260	)
Cash paid			(1,452	)			(187	)			—				(1,639	)
Change in estimates			(242	)			1,584				—				1,342
Restructuring accrual at December 31, 2002			26				1,706				—				1,732
Cash paid			(12	)			(387	)			—				(399	)
Change in estimates			(14	)			46				—				32
Restructuring accrual at December 31, 2003		$	—			$	1,365			$	—			$	1,365
Cash paid			—				(386	)			—				(386	)
Change in estimates			—				372				—				372
Restructuring accrual at December 31, 2004		$	—			$	1,351			$	—			$	1,351

74

---

Table of Contents

						Lease
						Obligations
		Employee				and
		Termination				Related
		Benefits				Charges				Total
Initial restructuring charge		$	1,590			$	2,033			$	3,623
Cash paid			(1,190	)			(253	)			(1,443	)
Restructuring accrual at December 31, 2002			400				1,780				2,180
Cash paid			(268	)			(1,119	)			(1,387	)
Change in estimates			(132	)			(417	)			(549	)
Restructuring accrual at December 31, 2003		$	—			$	244			$	244
Cash paid			—				(212	)			(212	)
Change in estimates			—				—				—
			—				—				—
Restructuring accrual at December 31, 2004		$	—			$	32			$	32

						Stock-based
		Employee				Charges for
		Termination				Accelerated
		Benefits				Vesting				Total
Initial restructuring charge		$	1,401			$	2,140			$	3,541
Cash paid			(511	)			—				(511	)
Non-cash charges			—				(2,140	)			(2,140	)
Restructuring accrual at December 31, 2003		$	890			$	—			$	890
Cash paid			(804	)			—				(804	)
Change in estimates			(71	)			—				(71	)
Restructuring accrual at December 31, 2004		$	15			$	—			$	15

75

---

Table of Contents

5.	Impairment of Long-Lived Assets

6.	Top Producer Acquisition

76

---

Table of Contents

7.	Short-term Investments

						Unrealized				Unrealized				Estimated
		Book Value				Gains				Losses				Fair Value
December 31, 2004 Auction rate preferred instruments		$	45,040			$	—			$	—			$	45,040
December 31, 2003 Auction rate preferred instruments		$	21,575			$	—			$	—			$	21,575

77

---

Table of Contents

8.	Property and Equipment

		December 31,
		2004				2003
Computer software and equipment		$	37,415			$	32,275
Furniture, fixtures and office equipment			4,007				4,232
Leasehold improvements			6,352				5,829
Machinery and equipment			670				638
Land and building			—				5,060
			48,444				48,034
Less: accumulated depreciation			(33,202	)			(26,580	)
		$	15,242			$	21,454

9.	Goodwill and Other Intangible Assets

			As of December 31,
			2004				2003
Media services			$	1,307			$	1,307
Software				11,681				12,656
Print				6,514				6,514
	Total		$	19,502			$	20,477

78

---

Table of Contents

			As of December 31,
			2004								2003
			Gross				Accumulated				Gross				Accumulated
			Amount				Amortization				Amount				Amortization
Customer lists and relationships			$	18,786			$	18,407			$	18,786			$	18,081
Trade name, trademarks, websites and brand names				19,746				5,499				19,746				4,032
Online traffic				533				533				533				320
Purchased technology				9,325				8,642				9,325				6,822
Purchased content				7,631				7,631				7,631				5,248
Porting relationships				1,728				1,728				1,728				1,220
NAR® operating agreement				1,578				451				1,578				301
Other				5,844				4,416				5,844				3,389
	Total		$	65,171			$	47,307			$	65,171			$	39,413

Year Ended December 31,		Amount
2005			3,587
2006			1,834
2007			1,423
2008			1,423
2009			1,423

10.	Other Current Assets

		December 31,
		2004				2003
Prepaid commissions		$	6,226			$	4,804
Other			6,272				5,781
		$	12,498			$	10,585

79

---

Table of Contents

11.	Accrued Expenses

		December 31,
		2004				2003
Accrued payroll and related benefits		$	14,109			$	14,184
Accrued royalties			295				1,914
Accrued restructuring charges			4,656				6,000
Accrued professional fees			9,588				3,451
Other			11,246				17,027
		$	39,894			$	42,576

12.	Related-party Transactions

80

---

Table of Contents

13.	Segment Information

		December 31, 2004
		Media				Software				Print				Unallocated				Total
Revenue		$	150,053			$	18,210			$	48,597			$	—			$	216,860
Cost of revenue			24,905				5,473				19,619				832				50,829
Gross profit (loss)			125,148				12,737				28,978				(832	)			166,031
Sales and marketing			63,358				4,771				19,547				712				88,388
Product and website development			10,405				4,705				251				1				15,362
General and administrative			20,236				2,799				10,371				35,036				68,442
Amortization of intangible assets			—				—				—				7,894				7,894
Litigation settlement			—				—				—				2,168				2,168
Restructuring charges			—				—				—				1,316				1,316
Total operating expenses			93,999				12,275				30,169				47,127				183,570
Income (loss) from operations		$	31,149			$	462			$	(1,191	)		$	(47,959	)		$	(17,539	)

81

---

Table of Contents

		December 31, 2003
		Media				Software				Print				Unallocated				Total
Revenue		$	143,510			$	15,018			$	47,394			$	—			$	205,922
Cost of revenue			29,796				6,001				19,363				1,409				56,569
Gross profit (loss)			113,714				9,017				28,031				(1,409	)			149,353
Sales and marketing			69,485				6,234				19,434				5,969				101,122
Product and website development			11,261				5,341				442				21				17,065
General and administrative			22,420				2,438				9,763				30,712				65,333
Amortization of intangible assets			—				—				—				21,863				21,863
Litigation settlement			—				—				—				63,600				63,600
Restructuring charges			—				—				—				4,100				4,100
Impairment of long-lived assets			—				—				—				26,999				26,999
Total operating expenses			103,166				14,013				29,639				153,264				300,082
Income (loss) from operations		$	10,548			$	(4,996	)		$	(1,608	)		$	(154,673	)		$	(150,729	)

		December 31, 2002
		Media				Software				Print				Unallocated				Total
Revenue		$	160,506			$	33,216			$	57,303			$	—			$	251,025
Cost of revenue			38,581				12,078				20,983				1,980				73,622
Gross profit (loss)			121,925				21,138				36,320				(1,980	)			177,403
Sales and marketing			65,715				9,435				21,814				64,590				161,554
Product and website development			14,007				11,266				237				(13	)			25,497
General and administrative			19,339				6,417				14,077				43,209				83,042
Amortization of intangible assets			—				—				—				34,699				34,699
Litigation settlement			—				—				—				23,000				23,000
Restructuring charges			—				—				—				12,057				12,057
Impairment of long-lived assets			—				—				—				3,482				3,482
Total operating expenses			99,061				27,118				36,128				181,024				343,331
Income (loss) from operations		$	22,864			$	(5,980	)		$	192			$	(183,004	)		$	(165,928	)

14.	Stock Plans

	Option Plans

82

---

Table of Contents

											Weighted
			Number								Average
			of Shares				Price per Share				Exercise Price
Outstanding at December 31, 2001				14,658			$	0.02 to 89.25				24.16
	Granted			29,558				0.00 to 2.70				1.72
	Exercised			(406	)			0.00 to 2.00				0.48
	Cancelled			(19,495	)			0.06 to 89.25				16.42
Outstanding at December 31, 2002				24,315				0.03 to 89.25				3.32
	Granted			2,564				0.56 to 3.68				1.84
	Exercised			(1,595	)			0.30 to 3.57				1.59
	Cancelled			(2,735	)			0.30 to 89.25				6.25
Outstanding at December 31, 2003				22,549				0.30 to 89.25				2.87
	Granted			8,459				2.18 to 4.88				3.37
	Exercised			(1,739	)			0.30 to 3.00				1.39
	Cancelled			(1,356	)			0.30 to 89.25				5.40
Outstanding at December 31, 2004				27,913			$	0.30 to 89.25			$	2.99

83

---

Table of Contents

						Options
						Outstanding								Options Exercisable
						Weighted Average
		Number				Remaining				Average				Number				Average
Prices		of Shares				Contractual Life				Exercise Price				of Shares				Exercise Price
$0.30 to 0.84			3,024				7.85				0.45				1,640				0.43
0.85 to 1.44			985				7.65				1.28				566				1.31
1.72 to 1.76			11,676				7.07				1.76				8,704				1.76
2.07 to 2.25			4,094				8.47				2.25				1,315				2.25
2.31 to 3.57			2,915				9.54				2.96				609				3.03
2.58 to 3.99			32				8.55				3.75				12				3.71
4.09 to 4.09			2,900				9.36				4.09				272				4.09
4.17 to 69.63			2,261				7.52				12.63				1,120				19.31
72.13			21				5.16				72.13				20				72.13
89.25			5				5.09				89.25				5				89.25
$0.30 to $89.25			27,913				7.91			$	2.99				14,263			$	3.25

	Employee Stock Purchase Plan

84

---

Table of Contents

15.	Warrants

16.	Capitalization

85

---

Table of Contents

	Repurchase of Common Stock

86

---

Table of Contents

	Issuance of Common Stock

87

---

Table of Contents

88

---

Table of Contents

17.	Net Loss per Share

				Year Ended December 31,
				2004				2003				2002
Numerator:
		Loss from continuing operations		$	(14,501	)		$	(46,373	)		$	(168,949	)
		Gain on disposition of discontinued operations			7,294				2,530				11,790
		Loss from discontinued operations			(679	)			(3,281	)			(6,266	)
	Net loss			$	(7,886	)		$	(47,124	)		$	(163,425	)
Denominator:
	Weighted average shares outstanding				136,518				118,996				117,900
	Basic and diluted income (loss) per share:
	Loss from continuing operations			$	(0.11	)		$	(0.39	)		$	(1.43	)
	Income (loss) from discontinued operations			$	0.05			$	(0.01	)		$	0.05
	Net loss			$	(0.06	)		$	(0.40	)		$	(1.39	)

18.	Supplemental Cash Flow Information

	•	The Company paid $62,000 in interest.
	•	The Company sold two of its business units generating net proceeds of $9.5 million and a gain on sale of $7.3 million.
	•	The Company sold its Welcome Wagon® facility generating net proceeds of $6.3 million and a gain on sale of $1.4 million.
	•	The Company issued 20 million shares of stock and paid $3.0 million in settlement of the Securities Class Action lawsuit that had previously been accrued at $53.6 million.
	•	The Company issued 200,000 shares of stock and paid $150,000 in settlement of the derivative litigation suit which had previously been accrued at $710,000.
	•	The Company issued 2.3 million shares of stock in settlement of the Top Producer® litigation resulting in an additional charge of $793,000 against an existing accrual of $7.9 million.
	•	The Company granted 70,922 shares of restricted common stock to its Chief Executive Officer. These shares vest over three years. The expense associated with these shares was $300,000 and was recognized in 2004.

89

---

Table of Contents

	•	The Company issued 77,250 shares of restricted common stock to certain members of its Board of Directors. These shares vest over three years. The charge associated with these shares was $367,000 and is being recognized over the three-year vesting period.
	•	The Company funded $3.2 million of capital expenditure through an equipment lease financing arrangement.

	•	The Company paid $103,000 in interest.
	•	The Company was required to accelerate 1,162,945 options for terminated former executives and incurred a $2,609,000 expense in 2003.
	•	The Company issued 436,000 shares of restricted stock to certain members of the Company’s Board of Directors. These shares vest over three years. The charge associated with the issuance of these shares was $344,000 and is being recognized over the three-year vesting period.
	•	The Company funded $2.1 million of capital expenditures through an equipment lease financing arrangement.

	•	The Company paid $372,000 in interest.
	•	The Company also amended an agreement relating to earn-out payments of $14.8 million that were part of the original Top Producer® purchase agreement. The amendment revised the contingent obligation of $14.8 million and fixed it at $10.2 million. In connection with the amendment, the Company recorded additional goodwill of $9.3 million.
	•	The Company was required to accelerate 467,187 options for terminated former executives and incurred a $4.9 million expense in 2002.
	•	The Company issued 36,000 shares of restricted stock to certain members of the Company’s Board of Directors. These shares vest over one year. The charge associated with the issuance of these shares was $90,000 and is being recognized over the one-year vesting period. 12,000 of these shares were returned to the Company in 2003, prior to vesting.
	•	The Company issued a warrant to purchase 240,000 shares at $2.07 as part of a consulting agreement. The warrant was immediately vested and the charge associated with this warrant was not material to the Company’s operations.

19.	Defined Contribution Plan

90

---

Table of Contents

20.	Income Taxes

			December 31,				December 31,
			2004				2003
Deferred tax assets:
	Net operating loss carryforwards		$	357,067			$	325,470
	Deferred expenses			14,889				47,531
	Impairment charges			2,863				18,012
	Amortization of acquired intangible assets			3,748				—
	Other			624				31,187
				379,191				422,200
	Less: valuation allowance			(379,191	)			(409,283	)
Net deferred tax assets			$	—			$	12,917
Deferred tax liabilities:
	Amortization of acquired intangible assets		$	—			$	(12,917	)
Total gross deferred tax liabilities				—				(12,917	)
Net deferred tax asset (liability)			$	—			$	—

91

---

Table of Contents

21.	Settlements of Disputes and Litigation

	Settlement of AOL Dispute

	Settlement of Securities Class Action Lawsuit

92

---

Table of Contents

	Settlement of Cendant Dispute

93

---

Table of Contents

	Settlement of Derivative Litigation

94

---

Table of Contents

	Settlement of Other Securities Litigation

22.	Commitments and Contingencies

	Operating and Capital Leases

95

---

Table of Contents

				Capital				Operating
Year Ended December 31,				Leases				Leases
2005				$	1,834			$	10,724
2006					1,017				10,138
2007					—				5,943
2008					—				1,413
2009 and thereafter					—				4,659
		Total		$	2,851			$	32,877
Less: Amount representing interest					(86	)
		Net capital leases			2,765
Less: Current portion					(1,774	)
	Long-term capital leases			$	991

	Distribution Agreements

Year Ending December 31,
2005			$	14,900
2006				4,850
2007-2009				—
	Total		$	19,750

	Other Commitments

96

---

Table of Contents

Year Ending December 31,
2005			$	1,942
2006				1,500
2007				1,500
2008				1,500
2009				1,500
	Total		$	7,942

	Legal Proceedings

	Contingencies Related to Pending Litigation

	SEC Investigation

	Insurance Coverage Litigation

97

---

Table of Contents

	Other Litigation

98

---

Table of Contents

99

---

Table of Contents

100

---

Table of Contents

	Contingencies

101

---

Table of Contents

23.	Subsequent Events

	Stock Plans

24.	Quarterly Financial Data (unaudited)

			Three Months Ended
			Mar. 31,				June 30,				Sept. 30,				Dec. 31,				Mar. 31,				June 30,				Sept. 30,				Dec. 31,
			2004				2004				2004				2004				2003(1)				2003(2)				2003				2003
			(In thousands, except per share amounts)
Revenue			$	53,424			$	54,320			$	54,782			$	54,334			$	51,946			$	50,480			$	51,636			$	51,860
Gross profit				40,174				41,853				42,127				41,877				37,564				36,132				37,156				38,501
Income from continuing operations				(4,777	)			(3,960	)			(4,753	)			(1,011	)			87,469				(93,600	)			(28,162	)			(12,080	)
Income (loss) from discontinued operations				(306	)			(302	)			180				7,043				(265	)			1,911				(2,420	)			23
Net Income/(loss)			$	(5,083	)		$	(4,262	)		$	(4,573	)		$	6,032			$	87,204			$	(91,689	)		$	(30,582	)		$	(12,057	)
Basic net income (loss) per share:
	Continuing operations		$	(0.04	)		$	(0.03	)		$	(0.03	)		$	(0.01	)		$	0.74			$	(0.79	)		$	(0.24	)		$	(0.10	)
	Discontinued operations		$	—			$	—			$	—			$	0.05			$	—			$	0.01			$	(0.02	)		$	—
	Net income (loss)		$	(0.04	)		$	(0.03	)		$	(0.03	)		$	0.04			$	0.74			$	(0.78	)		$	(0.26	)		$	(0.10	)
Diluted net income (loss) per share:
	Continuing operations		$	(0.04	)		$	(0.03	)		$	(0.03	)		$	(0.01	)		$	0.72			$	(0.79	)		$	(0.24	)		$	(0.10	)
	Discontinued operations		$	—			$	—			$	—			$	0.05			$	—			$	0.01			$	(0.02	)		$	—
	Net income (loss)		$	(0.04	)		$	(0.03	)		$	(0.03	)		$	0.04			$	0.72			$	(0.78	)		$	(0.26	)		$	(0.10	)

(1)	Includes a one-time non-cash gain of $104,071 from the settlement of a distribution agreement.
(2)	Includes a litigation settlement charge of $63,600.

102

---

Table of Contents

Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9A.	Controls and Procedures

	/s/ W. MICHAEL LONG
	W. Michael Long
	Chief Executive Officer

	/s/ LEWIS R. BELOTE, III

	Lewis R. Belote, III
	Chief Financial Officer

103

---

Table of Contents

	/s/ Ernst & Young LLP

104

---

Table of Contents

Item 9B.	Other Information

Item 10.	Directors and Executive Officers of the Registrant

Item 11.	Executive Compensation

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.	Certain Relationships and Related Transactions

Item 14.	Principal Accounting Fees and Services

Item 15.	Exhibits, Financial Statement Schedules

105

---

Table of Contents

Number				Exhibit Title
	2.01			Agreement and Plan of Merger dated December 31, 1998 between NetSelect, Inc. and InfoTouch Corporation. (Incorporated by reference to Exhibit 2.01 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	2.02			Agreement and Plan of Reorganization dated June 20, 1998 among NetSelect, Inc., National New Homes Co., Inc., MultiSearch Solutions, Inc., Fred White, and R. Fred White III. (Incorporated by reference to Exhibit 2.02 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	2.03			Exchange Agreement dated March 31, 1998 among NetSelect, Inc., The Enterprise of America, Ltd., and Roger Scommegna. (Incorporated by reference to Exhibit 2.03 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	2.04			Agreement and Plan of Reorganization dated May 19, 1999 between NetSelect, Inc., Avenue Acquisition Corporation and SpringStreet, Inc. (Incorporated by reference to Exhibit 2.04 to our registration statement on Form S-1/ A (File No. 333-79689) filed June 17, 1999.)
	2.05			Stock Purchase Agreement dated October 12, 1999 among Homestore.com®, Inc., The Homebuyer’s Fair, Inc., certain shareholders of The Homebuyer’s Fair, Inc., and Central Newspapers, Inc., as Shareholder Agent. (Incorporated by reference to Exhibit 2.01 to our current report on Form 8-K filed November 15, 1999.)
	2.06			Stock Purchase Agreement dated October 12, 1999 among Homestore.com®, Inc., FAS-Hotline, Inc., the shareholders of FAS-Hotline, Inc., and Central Newspapers, Inc., as Shareholder Agent. (Incorporated by reference to Exhibit 2.02 to our current report on Form 8-K filed November 15, 1999.)
	2.07			Agreement and Plan of Reorganization dated October 26, 2000 among Homestore.com®, Inc., Metal Acquisition Corp., WW Acquisition Corp., Move.com, Inc., Welcome Wagon®International, Inc., Cendant Membership Services Holdings, Inc. and Cendant Corporation. (Incorporated by reference to Annex A to the definitive proxy statement filed November 29, 2000.)
	3.01.1			Amended and Restated Certificate of Incorporation dated August 10, 1999. (Incorporated by reference to Exhibit 3.01.1 to our quarterly report on Form 10-Q for the quarter ended March 31, 2003 filed May 14, 2003.)
	3.01.2			Certificate of Amendment of Certificate of Incorporation dated May 22, 2002. (Incorporated by reference to Exhibit 3.01.2 to our quarterly report on Form 10-Q for the quarter ended March 31, 2003 filed May 14, 2003.)
	3.02			Bylaws dated August 10, 1999. (Incorporated by reference to Exhibit 3.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)
	3.03.1			RealSelect, Inc.’s Certificate of Incorporation dated October 25, 1996. (Incorporated by reference to Exhibit 3.05.1 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	3.03.2			RealSelect, Inc.’s Certificate of Amendment to Certificate of Incorporation dated November 25, 1996. (Incorporated by reference to Exhibit 3.05.2 to our registration statement on Form S-1/ A (File No. 333-79689) filed June 17, 1999.)
	3.04			RealSelect, Inc.’s Amended By-laws dated December 1999. (Incorporated by reference to Exhibit 3.07 of our Form 10-K for the year ended December 31, 1999 filed March 10, 2000.)
	4.01			Form of Specimen Certificate for common stock. (Incorporated by reference to Exhibit 4.01 to our registration statement on Form S-1/ A (File No. 333-79689) filed July 8, 1999.)
	4.02.1			NetSelect, Inc. Second Amended and Restated Stockholders Agreement dated January 28, 1999. (Incorporated by reference to Exhibit 4.02.1 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	4.02.2			Amendment No. 1 to NetSelect, Inc. Second Amended and Restated Stockholders Agreement dated April 9, 1999. (Incorporated by reference to Exhibit 4.02.2 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)

106

---

Table of Contents

Number				Exhibit Title
	10.01.1			Operating Agreement dated November 26, 1996, between REALTORS® Information Network, Inc. and RealSelect, Inc. (Incorporated by reference to Exhibit 10.02 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.01.2			First Amendment to Operating Agreement dated December 27, 1996 between REALTORS® Information Network, Inc. and RealSelect, Inc. (Incorporated by reference to Exhibit 10.02.2 to our registration statement on Form S-1/ A (File No. 333-79689) filed June 17, 1999.)
	10.01.3			Amendment No. 2 to Operating Agreement dated May 28, 1999 between REALTORS® Information Network, Inc. and RealSelect, Inc. (Incorporated by reference to Exhibit 10.02.3 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)
	10.02			Master Agreement dated November 26, 1996, among NetSelect, Inc., NetSelect, L.L.C., RealSelect, Inc., CDW Internet, L.L.C., Whitney Equity Partners, L.P., Allen & Co., InfoTouch Corporation, and REALTORS® Information Network, Inc. (Incorporated by reference to Exhibit 10.03 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)
	10.03			Joint Ownership Agreement dated November 26, 1996, among National Association of REALTORS®, NetSelect, L.L.C., and NetSelect, Inc. (Incorporated by reference to Exhibit 10.04 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.04			Trademark License dated November 26, 1996, between National Association of REALTORS® and RealSelect, Inc. (Incorporated by reference to Exhibit 10.05 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.05			Agreement dated August 21, 1998 among RealSelect, Inc., REALTORS® Information Network, Inc., National Association of REALTORS®, NetSelect, Inc., and NetSelect L.L.C. (Incorporated by reference to Exhibit 10.29 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.06			Agreement dated May 28, 1999 among NetSelect, Inc., RealSelect, Inc., REALTORS® Information Network, Inc. and National Association of REALTORS®. (Incorporated by reference to Exhibit 10.30 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)
	10.07			Letter Agreement Regarding Rental Site Acquisition dated May 17, 1999 among National Association of REALTORS®, REALTORS® Information Network, Inc. and RealSelect, Inc. (Incorporated by reference to Exhibit 10.32 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)(1)
	10.08			Stock and Interest Purchase Agreement (NetSelect Series A and B Preferred) dated November 26, 1996, among NetSelect, Inc., NetSelect L.L.C., and InfoTouch Corporation. (Incorporated by reference to Exhibit 10.06 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.09			Stock Purchase Agreement dated March 16, 2002 between Experian Holdings, Inc. and Homestore.com®, Inc. (Incorporated by reference to Exhibit 2.1 to our Form 8-K filed March 19, 2002.)
	10.10			Distribution Agreement dated January 9, 2003 between America Online, Inc. and Homestore, Inc. (Incorporated by reference to Exhibit 10.10 to our annual report on Form 10-K filed March 26, 2003.)(1)
	10.11.1			Office Lease dated September 18, 1998 between RealSelect, Inc. and WHLNF Real Estate Limited Partnership for 225 West Hillcrest, Suite 100, Thousand Oaks, California. (Incorporated by reference to Exhibit 10.24.1 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.11.2			First Amendment to Office Lease dated March 31, 1999 between RealSelect, Inc. and WHLNF Real Estate Limited Partnership for 225 West Hillcrest, Suite 100, Thousand Oaks, California. (Incorporated by reference to Exhibit 10.24.2 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)
	10.12			Standard Office Lease Form, Westlake North Business Park dated March 7, 2000 between Westlake North Associates, LLC, and Homestore, Inc. for 30700 Russell Ranch Road, Westlake Village, California. (Incorporated by reference to Exhibit 10.33 to our Form 10-K for the year ended December 31, 2000 filed April 2, 2001.)

107

---

Table of Contents

Number				Exhibit Title
	10.13			NetSelect, Inc. 1996 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.16 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)(3)
	10.14			NetSelect, Inc. 1999 Equity Incentive Plan. (Incorporated by reference to Exhibit 10.17 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)(3)
	10.15			Homestore.com®, Inc. 1999 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.18 to our registration statement on Form S-1/A (File No. 333-79689) filed July 27, 1999.)(3)
	10.16			Homestore.com®, Inc. 1999 Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 10.19 to our registration statement on Form S-1/A (File No. 333-79689) filed July 27, 1999.)(3)
	10.17			Homestore.com®, Inc. 2002 Stock Incentive Plan. (Incorporated by reference to Exhibit 4.04 to our registration statement on Form S-8 (File No. 333-89172) filed May 24, 2002.)(3)
	10.18			InfoTouch Corporation 1994 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.20 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)(3)
	10.19			Move.com, Inc. 2000 Stock Incentive Plan. (Incorporated by reference to Exhibit 4.04 to our registration statement on Form S-8 (File No. 333-55828) filed February 16, 2001.)(3)
	10.20			Cendant Corporation Move.com Group 1999 Stock Option Plan as assumed by Cendant Corporation from Move.com, Inc. and amended and restated effective as of March 21, 2000. (Incorporated by reference to Exhibit 4.05 to our registration statement on Form S-8 (File No. 333-55828) filed February 16, 2001.)(3)
	10.21			1997 Stock Initiative Plan of Cendant Corporation as amended and restated through October 14, 1998. (Incorporated by reference to Exhibit 4.06 to our registration statement on Form S-8 (File No. 333-55828) filed February 16, 2001.)(3)
	10.22			Amendment to Amended and Restated 1997 Stock Incentive Plan of Cendant Corporation dated March 27, 2000. (Incorporated by reference to Exhibit 4.07 to our registration statement on Form S-8 (File No. 333-55828) filed February 16, 2001.)(3)
	10.23			Amendment to Amended and Restated 1997 Stock Incentive Plan of Cendant Corporation dated March 28, 2000. (Incorporated by reference to Exhibit 4.08 to our registration statement on Form S-8 (File No. 333-55828) filed February 16, 2001.)(3)
	10.24			Homestore 401(k) Plan. (Incorporated by reference to Exhibit 10.25 to our registration statement on Form S-1/ A (File No. 333-79689) filed June 17, 1999.)(3)
	10.25			Form of Indemnity Agreement between Homestore. Inc. and each of its directors and executive officers (Incorporated by reference to Exhibit 10.25 to our annual report on Form 10-K for the year ended December 31, 2003 filed March 15, 2004.)(3)
	10.26			Employment Agreement dated March 6, 2002 between Homestore.com®, Inc. and W. Michael Long. (Incorporated by reference to Exhibit 6.01(A) to our quarterly report on Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.27			2003 Executive Bonus Plan of W. Michael Long. (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)
	10.28			Employment Agreement dated March 6, 2002 between Homestore.com®, Inc. and Jack D. Dennison. (Incorporated by reference to Exhibit 6.03(A) to our quarterly report on Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.29			2003 Executive Bonus Plan of Jack D. Dennison. (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)
	10.30			Employment Agreement dated March 6, 2002 between Homestore.com®, Inc. and Lewis R. Belote III. (Incorporated by reference to Exhibit 6.02(A) to our quarterly report on Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.31			2003 Executive Bonus Plan of Lewis R. Belote III. (Incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)

108

---

Table of Contents

Number				Exhibit Title
	10.32			Executive Retention and Severance Agreement dated April 24, 2002 between Homestore.com®, Inc. and Allan P. Merrill. (Incorporated by reference to Exhibit 6.06(A) to our Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.33			Memorandum dated March 29, 2002 to Allan P. Merrill. (Incorporated by reference to Exhibit 6.07(A) to our Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.34			2003 Executive Bonus Plan of Allan P. Merrill. (Incorporated by reference to Exhibit 10.5 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)
	10.35			Executive Retention and Severance Agreement dated April 24, 2002 between Homestore.com®, Inc. and Patrick R. Whelan. (Incorporated by reference to Exhibit 6.10(A) to our Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.36			Memorandum dated March 29, 2002 to Patrick R. Whelan. (Incorporated by reference to Exhibit 6.11(A) to our Form 10-Q for the quarter ended March 31, 2002 filed May 14, 2002.)(3)
	10.37			Separation Agreement dated August 1, 2003 between Homestore, Inc. and Patrick R. Whelan. (Incorporated by reference to Exhibit 10.37 to our annual report on Form 10-K for the year ended December 31, 2003 filed March 15, 2004.)(3)
	10.38			Executive Retention and Severance Agreement dated September 30, 2002 between Homestore.com®, Inc. and Allan D. Dalton. (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.39			Offer Letter dated October 7, 2002 between Homestore.com®, Inc. and Allan D. Dalton. (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.40			Annual Bonus Plan, 2002 of Allan Dalton. (Incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.41			2003 Executive Bonus Plan of Allan D. Dalton. (Incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)
	10.42			Executive Retention and Severance Agreement dated September 30, 2002 between Homestore.com®, Inc. and Michael Douglas. (Incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.43			Offer Letter dated September 30, 2002 between Homestore.com®, Inc. and Michael R. Douglas. (Incorporated by reference to Exhibit 10.5 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.44			Annual Bonus Plan, 2002 of Michael R. Douglas. (Incorporated by reference to Exhibit 10.6 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 filed November 14, 2002.)(3)
	10.45			2003 Executive Bonus Plan of Michael R. Douglas. (Incorporated by reference to Exhibit 10.6 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)(3)
	10.46			Stipulation and Agreement of Settlement between California State Teachers’ Retirement System and Homestore, Inc. dated as of August 12, 2003. (Incorporated by reference to Exhibit 10.7 to our quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed November 13, 2003.)
	10.47			Settlement Agreement and Release dated August 5, 2003 among Homestore, Inc., Welcome Wagon® International, Inc., Cendant Corporation, Cendant Membership Services Holdings, Inc, Century 21 Real Estate Corporation, Coldwell Banker Real Estate Corporation, ERA Franchise Systems, Inc., NRT Incorporated, and Cendant Mortgage Corporation. (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)
	10.48			Registration Rights Agreement dated August 5, 2003 among Homestore, Inc., Cendant Corporation and Cendant Membership Services Holdings, Inc. (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)

109

---

Table of Contents

Number				Exhibit Title
	10.49			Listings License Agreement dated August 5, 2003 between Cendant Corporation and Homestore, Inc. (Incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)
	10.50			Source Code License and Maintenance Services Agreement dated August 5, 2003 between Homestore, Inc. and Cendant Corporation. (Incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)
	10.51			Option Agreement dated August 5, 2003 between Cendant Membership Services Holdings, Inc. and Homestore, Inc. (Incorporated by reference to Exhibit 10.5 to our quarterly report on Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003.)
	10.52			Distribution Agreement dated June 30, 2004 between America Online, Inc. and Homestore, Inc. (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2004 filed August 4, 2004.)
	10.53			Contract of Sale dated as of April 2004 between 115 south Service Road, LLC and Welcome Wagon® International, Inc. (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended June 30, 2004 filed August 4, 2004.)
	10.54			Asset Purchase Agreement dated October 6, 2004 between Homestore, Inc. and Wyld Acquisition Corp. (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended September 30, 2004 filed November 5, 2004.)
	10.55			Master Distribution Agreement dated February 2, 2005 among Homestore, Inc., Homestore Sales Company, Inc. and NRT Incorporated.(2)(4)
	14.01			Homestore, Inc. Code of Conduct and Business Ethics. (Incorporated by reference to Exhibit 14.1 to our current report on Form 8-K filed April 7, 2004.)
	21.01			Subsidiaries of Homestore, Inc.(2)
	23.01			Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.(2)
	23.02			Report of PricewaterhouseCoopers LLP on Financial Statement Schedule.(2)
	23.03			Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.(2)
	23.04			Report of Ernst & Young LLP on Financial Statement Schedule.(2)
	24.01			Power of Attorney (included on signature pages to this report).(2)
	31.01			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(2)
	31.02			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(2)
	32.01			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(2)
	32.02			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(2)
	99.01			Schedule II — Valuation and Qualifying Accounts.(2)

(1)	Confidential treatment has been granted with respect to certain information in these exhibits pursuant to a confidential treatment request.
(2)	Filed herewith.
(3)	Denotes management contracts and compensatory plans and arrangements.
(4)	Confidential treatment has been requested with respect to certain information in these exhibits pursuant to a confidential treatment request.

110

---

Table of Contents

	HOMESTORE, INC.

	By:	/s/ W. MICHAEL LONG

	W. Michael Long
	Chief Executive Officer

	By:	/s/ LEWIS R. BELOTE, III

	Lewis R. Belote, III
	Chief Financial Officer

Signature				Title		Date
Principal Executive Officer:
/s/ W. MICHAEL LONG   W. Michael Long				Chief Executive Officer and Director		March 11, 2005
Principal Financial Officer and Principal Accounting Officer:
/s/ LEWIS R. BELOTE, III   Lewis R. Belote, III				Chief Financial Officer		March 11, 2005
Additional Directors:
/s/ JOE F. HANAUER   Joe F. Hanauer				Chairman of the Board and Director		March 11, 2005

111

---

Table of Contents

Signature				Title		Date
/s/ TERRENCE M. MCDERMOTT   Terrence M. McDermott				Director		March 11, 2005
/s/ L. JOHN DOERR   L. John Doerr				Director		March 11, 2005
/s/ WILLIAM E. KELVIE   William E. Kelvie				Director		March 11, 2005
/s/ KENNETH K. KLEIN   Kenneth K. Klein				Director		March 11, 2005
/s/ V. PAUL UNRUH   V. Paul Unruh				Director		March 11, 2005
/s/ BRUCE G. WILLISON   Bruce G. Willison				Director		March 11, 2005

112