##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   Form 10-K/A Amendment No. 1
to R
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004£
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the transition period from
_______________to ________________
 Commission file number: 000-26659   Homestore, Inc. (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    95-4438337(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)30700 Russell Ranch RoadWestlake Village, California
    
    91362(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(805) 557-2300 Securities Registered Pursuant to Section 12(b) of the Act:
None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share
Warrants to purchase Common Stock, par value $.001 per share   Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes R  No £ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. R Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2). Yes R  No £ Aggregate market value of voting common stock held by
non-affiliates of the registrant as of June 30, 2004*
    
    $
    500,696,146Number of shares of common stock outstanding as of April 1, 2005
    
    
    147,230,947
   *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.




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TABLE OF CONTENTS PART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits, Financial Statement SchedulesSIGNATURESINDEXEXHIBIT 31.01EXHIBIT 31.02
  2




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PART III 
 Item 10.Directors and Executive Officers of the Registrant Directors and Executive Officers The following table sets forth information regarding the directors and executive officers of
Homestore, Inc. (the Company or we). Name
    
    Age
    
    PositionJoe F. Hanauer
    
    67
    
    Chairman of the Board and DirectorL. John Doerr
    
    53
    
    DirectorWilliam E. Kelvie
    
    57
    
    DirectorKenneth K. Klein(1)
    
    61
    
    DirectorW. Michael Long
    
    52
    
    Chief Executive Officer and DirectorTerrence M. McDermott
    
    62
    
    DirectorBruce G. Willison(1)
    
    56
    
    DirectorV. Paul Unruh(1)(2)
    
    56
    
    DirectorJack D. Dennison
    
    48
    
    Chief Operating OfficerLewis R. Belote, III
    
    49
    
    Chief Financial OfficerAllan P. Merrill
    
    38
    
    Executive Vice President, Strategy and Corporate DevelopmentMichael R. Douglas
    
    51
    
    Executive Vice President, General Counsel and SecretaryAllan D. Dalton
    
    56
    
    President and Chief Executive Officer, REALTOR.com®Stephen T. Feltner
    
    34
    
    President, Homebuilder.comSunil N. Mehrotra
    
    55
    
    President, Consumer Media ServicesMaria L. Pietroforte
    
    47
    
    President, RentNet
   (1)
    
    Member of audit committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934.(2)
    
    The board of directors has determined that Mr. Unruh meets the requirements of an audit
committee financial expert as defined in Securities and Exchange Commission (SEC) rules
and regulations. Mr. Unruh meets the requirements for being independent as defined by SEC
rules and regulations. Our bylaws provide that the authorized number of directors may be fixed by resolution of the
board of directors from time to time. Pursuant to our bylaws, the board has the authority to fix
the number of directors that serve on the board. Currently, the board has fixed the number of
directors at eight. Our bylaws also provide for the board to be divided into three classes as
nearly equal in size as possible with staggered three-year terms. The term of office for Class I,
Class II and Class III directors will expire at the annual meeting of stockholders to be held in
2006, 2007 and 2005, respectively, or upon a directors earlier death, resignation or removal. As
required by the settlement agreement that we entered into with the California State Teachers
Retirement System, the lead plaintiff in the securities class action lawsuit against us, to resolve
all outstanding claims against us in that lawsuit, our board of directors intends to submit to our
stockholders for their consideration and approval at our 2005 annual stockholders meeting an
amendment to our Amended and Restated Certificate of Incorporation, which, if approved by the
stockholders, will eliminate the classification of our board of directors. If the amendment is
approved by the stockholders, the terms of the directors elected at the annual stockholders meeting
in each of 2005, 2006 and 2007 will expire in 2008, and beginning with our 2008 annual stockholders
meeting, all directors will be elected at each annual meeting for a term of one year. As previously disclosed, on March 15, 2005, Terrence M. McDermott, one of our directors,
provided us with notice of his intention to resign as a director effective as of our 2005 annual
stockholders meeting. Mr. McDermotts term is scheduled to expire at our annual stockholders
meeting in 2006. Since December 2000, Mr. McDermott has served as the National Association of
Realtors® (the NAR) representative on our board of directors. By virtue of its ownership of our
sole outstanding share of Series A preferred stock, the NAR has the right to elect one of our
directors. In addition, if there is any vacancy in the office of a director elected by the holder
of the Series A preferred stock, then a director to hold office for the unexpired term of such
director may be elected by the vote or 2




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written consent of the holder of the Series A preferred stock. The NAR has informed us that it
intends to elect Alan Yassky as its representative to serve on our board of directors effective as
of Mr. McDermotts resignation. Mr. Yassky currently serves as the NARs representative on the
board of directors of RealSelect, Inc., a wholly-owned subsidiary of the Company. Joe F. Hanauerhas served as one of our directors since November 1996, as vice chairman of the
board from November 2001 to January 2002, chairman of the board since January 2002 and lead
independent director since December 2004; he was the National Association of REALTORS®
representative on the board through November 2000. Mr. Hanauer is a Class III director. Since 1988,
Mr. Hanauer, through Combined Investments, L.P., has directed investments in companies primarily
involved in real estate and financial services. Mr. Hanauer is a former chairman and director of
Grubb & Ellis Company and a former chairman of Coldwell Banker Residential Group, Inc. Mr. Hanauer
is a director of MAF Bancorp, Inc., a trustee of each of Calamos Investment Trust, Calamos Advisors
Trust and Calamos Convertible Opportunities and Income Fund, and a member of the National
Association of REALTORS®. L. John Doerrhas served as one of our directors since August 1998. Mr. Doerr is a Class III
director. Mr. Doerr has been a general partner of Kleiner Perkins Caufield & Byers, a venture
capital firm, since 1980. Prior to his tenure at Kleiner Perkins, Mr. Doerr was employed by Intel
Corporation for five years. He serves on the board of directors of Amazon.com, Inc., Google Inc.,
Intuit Inc., palmOne, Inc. and Sun Microsystems, Inc. William E. Kelviehas served as one of our directors since August 1998. Mr. Kelvie is a Class
II director. He has served as chief executive officer of Overture Corporation, an information
technology company, since July 2000. Prior to his tenure at Overture Corporation, Mr. Kelvie was
the executive vice president and chief information officer responsible for information technology
systems at the Federal National Mortgage Association (Fannie Mae), the worlds largest non-bank
financial services company, from 1992 to 2000. He then served as special adviser to the chief
executive officer of Fannie Mae until January 2003. Mr. Kelvie joined Fannie Mae in 1990 as senior
vice president and chief information officer. Prior to his tenure at Fannie Mae, Mr. Kelvie was a
partner with Nolan, Norton & Co., a management consulting company specializing in information
technology strategies and plans. He also served in various capacities with The Dexter Corporation,
a specialized manufacturing company, and The Travelers Insurance Company, an insurance and
financial services company. Kenneth K. Kleinhas served as one of our directors since August 1998. Mr. Klein is a Class II
director. He is president and chief executive officer of a privately held group of companies
involved in diversified residential and light commercial construction and land development,
including Kleinco Construction Services, Inc. of which Mr. Klein has served as president and chief
executive officer since 1980. Mr. Klein was national vice president of the National Association of
Home Builders during the calendar years 1999 and 2000. W. Michael Longhas served as our chief executive officer and as one of our directors since
January 2002. Mr. Long is a Class III director. From November 1999 to April 2001, Mr. Long served
as chairman of the board and as a director of WebMD Corporation (formerly Healtheon/WebMD
Corporation), a provider of healthcare information services and technology solutions. From July
1997 to November 1999, Mr. Long served as chief executive officer of Healtheon Corporation. From
August 1996 to July 1997, Mr. Long served as president and chief executive officer of CSC
Continuum, Inc., a unit of Computer Sciences Corporation. Prior to its acquisition by CSC, Mr. Long
was president and chief executive officer of The Continuum Company, Inc. Terrence M. McDermotthas served as one of our directors (as the NAR representative) since
December 2000. Mr. McDermott is a Class I director. He has served as executive vice president/chief
executive officer of the National Association of REALTORS® since 1997. From 1993 to 1997, Mr.
McDermott served as executive vice president and chief executive officer of the American Institute
of Architects. Mr. McDermott was president of Cahners Publishing Co. from 1987 to 1993, a firm he
joined in 1969. Bruce G. Willisonhas served as one of our directors since December 2002. Mr. Willison is a
Class I director. Since 1999, Mr. Willison has served as Dean of the UCLA Anderson School of
Management. This appointment followed a 26-year career in the banking industry, most recently as
president and chief operating officer of H.F. Ahmanson & Co., the parent company of Home Savings of
America. Prior to that, Mr. Willison held several executive positions at First Interstate Bancorp,
including chairman and chief executive officer of First Interstates 3




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Oregon operation and chairman, president, and chief executive officer of First Interstate Bank
of California, as well as vice chairman of the banks holding company, First Interstate Bancorp.
Mr. Willison began his banking career at Bank of America Corp. in 1973. Mr. Willison is a director
of Health Net, Inc., an integrated managed care organization. V. Paul Unruhhas served as one of our directors since May 2003. Mr. Unruh is a Class I
director. For 25 years, Mr. Unruh worked at Bechtel, a privately held global engineering and
construction services organization. Prior to his retirement in 2002, Mr. Unruh served as vice
chairman of Bechtel Group, Inc. from January 2001 to December 2002 and president of Bechtel
Enterprises, a development and financing subsidiary, from July 1997 to January 2001. His previous
responsibilities at Bechtel included both operating and financial positions, including chief
financial officer, treasurer and controller. Mr. Unruh is currently a director of VERITAS Software
Corporation and Heidrick and Struggles International, Inc., a provider of senior-level executive
search and leadership services. Prior to joining Bechtel in 1978, Mr. Unruh practiced as a
certified public accountant with what is now PricewaterhouseCoopers LLP for seven years. Jack D. Dennisonhas served as our chief operating officer since January 2002. From July 1998
to January 2001, Mr. Dennison served as executive vice president, general counsel and secretary of
WebMD Corporation. From 1996 to July 1998, Mr. Dennison served as vice president and deputy general
counsel to Computer Sciences Corporation. Prior to that time, Mr. Dennison was general counsel at
The Continuum Company, Inc. Lewis R. Belote, IIIhas served as our chief financial officer since January 2002. From May
1998 to April 2001, Mr. Belote served as senior vice president, finance of WebMD Corporation. From
June 1996 to May 1998, Mr. Belote served as senior vice president and chief financial officer for
ActaMed Corporation. Prior to 1996, Mr. Belote served for twelve years with the accounting firm of
Ernst & Young LLP. Allan P. Merrillhas served as executive vice president of strategy and corporate development
since October 2001. From April 2000 to October 2001, Mr. Merrill was president of Homebuilder.com,
one of our consumer websites. Mr. Merrill joined us following a 13-year tenure, from 1987 to March
2000, with the investment banking firm Warburg Dillon Read (now UBS Investment Bank), where he was
a managing director and served most recently as co-head of the Global Resources Group, overseeing
the construction and building materials, chemicals, forest products, mining and energy industry
groups. Mr. Merrill is a member of the Policy Advisory Board of the Joint Center for Housing
Studies at Harvard University. Michael R. Douglashas served as our executive vice president, general counsel, and secretary
since October 2002. From 1997 to October 2002, Mr. Douglas served as a product liability
consultant. From 1987 to 1997, Mr. Douglas was senior vice president, general counsel and secretary
at Fibreboard Corporation. Mr. Douglas has also served as director of law of the Asbestos Claims
Facility, litigation counsel for Jim Walter Corporation and as an attorney in private practice. Allan D. Daltonhas served as president and chief executive officer of REALTOR.com®, one of
our consumer websites and the official Internet site of the National Association of REALTORS®,
since October 2002. From August 2002 to October 2002, Mr. Dalton served as executive vice president
of Coldwell Banker New England Metro, the largest real estate services organization in New England.
From January 1998 to August 2002, Mr. Dalton was senior vice president of NRT, a residential real
estate brokerage company and a subsidiary of Cendant Corporation. Mr. Daltons 20-plus year career
in the real estate industry includes 12 years as president and co-owner of an independent real
estate brokerage with more than 20 offices. He has also served as executive vice president of
Coldwell Banker Hunneman. Stephen T. Feltnerhas served as president of Homebuilder.com, one of our consumer websites
and the official new homes site of the National Association of Home Builders, since December 2004.
Mr. Feltner has been with us since 1999, holding key management positions in both operations and
finance, including Vice President of Operations from February 2003 to December 2004, Assistant to
the Chief Executive Officer from June 2002 to February 2003, Vice President of Strategic Planning
from August 2001 to June 2002, Director of Strategic Planning from August 2000 to August 2001 and
Manager of Sales Operations from April 1999 to July of 2000. Prior to joining us, Mr. Feltner
served as the director of operations at Arch Wireless (formerly PageNet, Inc.), based in Los 4




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Angeles, California. A graduate of the UCLA Anderson School of Management, Mr. Feltner holds a
Master of Business Administration degree. Sunil N. Mehrotrahas served as president of Consumer Media Services, which includes our
Welcome Wagon, Homeplans and Retail advertising businesses, since December 2004. Since 2000 he has
served as adjunct professor of marketing management and strategy management in the MBA program at
the Graziadio School of Business Management at Pepperdine University. Mr. Mehrotra also founded
KnowledgeLINKS in 1996, a collaborative Internet commerce company, and served as its Chairman until
January 2002. Prior to 1996, Mr. Mehrotra served as executive vice president of Harman
Internationals consumer group, general manager of the RCA brand for Thomson Consumer Electronics,
vice president segment manager for Chase Manhattan Bank, managing consumer marketing and was
employed by General Electric as a product manager. Maria L. Pietrofortehas served as president of RentNet, one of our consumer websites, since
September 2004. Ms. Pietroforte formerly served as president of KSI Management Corporation, one of
Greater Washington D.C.s largest developers of rental properties from 2001 to June 2004. Prior to
that, Ms. Pietroforte was president of E&S Ring Company from 1997 to 2001, one of the largest
apartment managers in Los Angeles. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial
owners of more than 10% of our common stock (the Reporting Persons), to file with the SEC initial
reports of ownership and reports of changes in ownership of our common stock. Reporting Persons are
required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies of Section 16(a) reports received or written
representations from certain Reporting Persons, we believe that all reporting requirements under
Section 16(a) for the fiscal year ended December 31, 2004 were met in a timely manner by the
Reporting Persons. Code of Conduct and Business Ethics We have a strong commitment to business ethics and to complying with the laws that govern the
conduct of our businesses. We believe that a commitment to honesty and integrity is a valuable
asset that builds trust with our customers, suppliers, employees, stockholders and the communities
in which we operate. To implement our commitment, we have developed a code of conduct and business
ethics. The code applies to all of our employees, directors, officers, agents and consultants. We
have also established a compliance program that is intended to ensure that we have in place
policies and systems designed to prevent and detect violations of the code or any applicable law,
policy or regulation. A copy of the code is available at our website at
http://media.corporate-ir.net/media_files/IROL/11/111114/gov/HOMS_COC.pdf. We will post on our website any amendments to, or waivers from, a provision of the code that
applies to our principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions, and that relates to any of the
following: (i) honest and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships; (ii) full, fair, accurate,
timely, and understandable disclosure in reports and documents that we file with, or submit to, the
SEC and in other public communications made by us; (iii) compliance with applicable governmental
laws, rules and regulations; (iv) the prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; or (v) accountability for adherence to the
code. 5




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Item 11.Executive Compensation Summary Compensation Table The following table sets forth all compensation paid during 2004, 2003, and 2002 to all
persons who served as our chief executive officer during 2004 and our other five most highly
compensated executive officers during 2004. We collectively refer to these persons as the named
executive officers. Summary Compensation Table Long TermCompensationAnnual Compensation
    
    
    SecuritiesName and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonus($)
    
    
    Other Annual
    
    
    Underlying
    
    
    Restricted All OtherPosition
    
    Year
    
    
    Salary($)
    
    
    Sign-On
    
    
    Performance
    
    
    Compensation($)
    
    
    Options(#)
    
    
    Shares($)
    
    
    Compensation($)W. Michael Long(1)
    
    
    2004
    
    
    
    500,000
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    1,000,000
    
    
    
    250,000
    (2)
    
    
    Chief Executive
    
    
    2003
    
    
    
    500,000
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    300,000
    (3)
    
    
    Officer
    
    
    2002
    
    
    
    480,769
    
    
    
    500,000
    (4)
    
    
    500,000
    
    
    
    
    
    
    
    5,200,000
    
    
    
    
    
    
    
    Jack D. Dennison(1)
    
    
    2004
    
    
    
    400,000
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    Chief Operating
    
    
    2003
    
    
    
    400,000
    
    
    
    
    
    
    
    425,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,775
    (5)Officer
    
    
    2002
    
    
    
    384,616
    
    
    
    400,000
    (4)
    
    
    400,000
    
    
    
    
    
    
    
    2,600,000
    
    
    
    
    
    
    
    Allan D. Dalton(6)
    
    
    2004
    
    
    
    325,000
    
    
    
    
    
    
    
    406,250
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    President and CEO,
    
    
    2003
    
    
    
    325,000
    
    
    
    
    
    
    
    425,000
    
    
    
    17,526
    (7)
    
    
    
    
    
    
    
    
    
    
    90,933
    (8)REALTOR.com®
    
    
    2002
    
    
    
    68,750
    
    
    
    
    
    
    
    81,250
    
    
    
    28,249
    (7)
    
    
    1,200,000
    
    
    
    
    
    
    
    53,751
    (5)Lewis R. Belote,
III(1)
    
    
    2004
    
    
    
    350,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    Chief Financial
    
    
    2003
    
    
    
    350,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Officer
    
    
    2002
    
    
    
    336,539
    
    
    
    350,000
    (4)
    
    
    350,000
    
    
    
    
    
    
    
    1,730,000
    
    
    
    
    
    
    
    Michael R. Douglas(6)
    
    
    2004
    
    
    
    325,000
    
    
    
    
    
    
    
    325,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    Executive Vice
    
    
    2003
    
    
    
    325,000
    
    
    
    
    
    
    
    350,000
    
    
    
    78,292
    (7)
    
    
    
    
    
    
    
    
    
    
    156,129
    (9)President and
    
    
    2002
    
    
    
    68,750
    
    
    
    
    
    
    
    81,250
    
    
    
    25,227
    (7)
    
    
    1,200,000
    
    
    
    
    
    
    
    41,198
    (5)General CounselAllan P. Merrill
    
    
    2004
    
    
    
    325,000
    
    
    
    
    
    
    
    325,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    Executive Vice
    
    
    2003
    
    
    
    325,000
    
    
    
    
    
    
    
    350,000
    
    
    
    
    
    
    
    550,001
    (10)
    
    
    
    
    
    
    President, Strategy
    
    
    2002
    
    
    
    315,385
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    1,150,000
    
    
    
    
    
    
    
    and Corporate
Development
   (1)
    
    The executive officer joined us in January 2002.(2)
    
    Represents 115,740 shares of restricted stock granted to Mr. Long on March 17, 2005 in
consideration for his services to us during 2004. These shares will vest in full on March 17,
2008. The aggregate number of restricted stock held by Mr. Long as of December 31, 2004 was
70,922. The aggregate value of restricted stock held by Mr. Long as of December 31, 2004 is
$214,894.(3)
    
    Represents 70,922 shares of restricted stock granted to Mr. Long on March 31, 2004 in
consideration for his services to us during 2003. These shares will vest in full on March 31,
2007.(4)
    
    We provided this sign-on bonus to the executive officer as part of his employment agreement
in order to attract him to join us. 6




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(5)
    
    Represents relocation expenses paid by us.(6)
    
    The executive officer joined us in October 2002.(7)
    
    Represents amounts reimbursed for the payment of taxes and tax gross-up amounts associated
with relocation expenses.(8)
    
    Represents $13,357 of expense paid by us for travel on an airplane indirectly owned by Mr.
Long, and $77,576 of relocation expenses paid by us.(9)
    
    Represents $100,000 payment for the expected loss on the sale of executive officers
residence in connection with relocation and $56,129 of relocation expenses paid by us.(10)
    
    50,001 of which were granted in connection with an option exchange offer in which we
offered our employees the opportunity to exchange all outstanding options granted to them (or
assumed by us) between August 5, 1999 (the date of our initial public offering) and December
31, 2001 for new options. Stock Option Grants in 2004 The following table sets forth grants of stock options to the named executive officers in
2004. All options granted to the named executive officers in 2004 are either incentive stock options
or nonqualified stock options. The options expire ten years from the date of grant and were granted
at an exercise price equal to the fair market value of our common stock on the date of grant. Potential realizable values are computed by (a) multiplying the number of shares of common
stock subject to a given option by the exercise price per share, (b) assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10% rates shown in the
table for the entire ten-year term of the option, and (c) subtracting from that result the
aggregate option exercise price. The 5% and 10% assumed annual rates of stock price appreciation
are provided in accordance with the rules of the SEC and do not represent our estimate or
projection of future common stock prices. Number of
    
    
    Percent of
    
    
    
    
    
    
    
    
    
    
    Potential Realizable Value ofSecurities
    
    
    Total Options
    
    
    
    
    
    
    
    
    
    
    Assumed Annual Rates of StockUnderlying
    
    
    Granted to
    
    
    Exercise
    
    
    
    
    
    Price Appreciation forOptions
    
    
    Employees in
    
    
    Price
    
    
    
    Expiration
    
    Option Term ($)Name
    
    Granted (#)
    
    
    2004
    
    
    ($/Sh)
    
    
    
    Date

    
    
    5%
    
    
    10%W. Michael Long
    
    
    750,000
    (1)
    
    
    8.87
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    1,929,134
    
    
    
    4,888,805250,000
    (2)
    
    
    2.96
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    643,045
    
    
    
    1,629,602Jack D. Dennison
    
    
    375,000
    (1)
    
    
    4.43
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    964,567
    
    
    
    2,444,402125,000
    (2)
    
    
    1.48
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    321,522
    
    
    
    814,801Allan D. Dalton
    
    
    262,500
    (1)
    
    
    3.10
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    675,197
    
    
    
    1,711,08287,500
    (2)
    
    
    1.03
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    225,066
    
    
    
    570,361Lewis R. Belote, III
    
    
    262,500
    (1)
    
    
    3.10
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    675,197
    
    
    
    1,711,08287,500
    (2)
    
    
    1.03
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    225,066
    
    
    
    570,361Michael R. Douglas
    
    
    262,500
    (1)
    
    
    3.10
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    675,197
    
    
    
    1,711,08287,500
    (2)
    
    
    1.03
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    225,066
    
    
    
    570,361Allan P. Merrill
    
    
    262,500
    (1)
    
    
    3.10
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    675,197
    
    
    
    1,711,08287,500
    (2)
    
    
    1.03
    
    
    
    4.09
    
    
    
    5/11/2014
    
    
    
    225,066
    
    
    
    570,361
   (1)
    
    Option vests ratably on a quarterly basis over four years beginning on May 11, 2004(2)
    
    Option vests in full either on (i) May 11, 2007 if the Company meets certain performance
criteria for the fiscal year ended December 31, 2006, or (ii) May 11, 2009 if the Company
fails to meet such performance criteria. The percentage of total options granted to employees is based on options to purchase a total
of 8,459,534 shares of our common stock granted during 2004. If exercised, the options granted to
employees would represent 5.76% of the total number of shares of our common stock outstanding at
December 31, 2004. 7




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##### 



Aggregated Option Exercises in 2004 and Option Values at December 31, 2004 The following table sets forth the number of shares acquired and the value realized upon
exercise of stock options during 2004 and the number of shares of common stock subject to
exercisable and unexercisable stock options held as of December 31, 2004 by the named executive
officers. Also reported are values of in-the-money options, which represent the positive spread
between the exercise prices of outstanding stock options and the fair market value of $3.03 per
share, which was the closing price of our common stock on December 31, 2004. Number ofNumber of
    
    
    
    
    
    
    Securities Underlying
    
    
    Value of UnexercisedShares
    
    
    
    
    
    
    Unexercised Options at
    
    
    In-the-Money Options atAcquired on
    
    
    Value
    
    
    12/31/04
    
    
    12/31/04 ($)Name
    
    Exercise
    
    
    Realized
    
    
    Exercisable
    
    
    Unexercisable
    
    
    Exercisable
    
    
    UnexercisableW. Michael Long
    
    
    
    
    
    
    
    
    
    
    4,237,500
    
    
    
    1,962,500
    
    
    
    5,262,562
    
    
    
    1,341,437Jack D. Dennison
    
    
    
    
    
    
    
    
    
    
    2,118,750
    
    
    
    981,250
    
    
    
    2,631,281
    
    
    
    670,719Allan D. Dalton
    
    
    250,000
    
    
    
    930,872
    
    
    
    547,394
    
    
    
    752,606
    
    
    
    1,358,496
    
    
    
    1,149,504Lewis R. Belote, III
    
    
    
    
    
    
    
    
    
    
    1,411,405
    
    
    
    668,595
    
    
    
    1,750,813
    
    
    
    446,287Michael R. Douglas
    
    
    
    
    
    
    
    
    
    
    795,311
    
    
    
    754,689
    
    
    
    2,012,997
    
    
    
    1,115,003Allan P. Merrill
    
    
    
    
    
    
    
    
    
    
    1,035,936
    
    
    
    1,014,065
    
    
    
    976,207
    
    
    
    387,294
 Employment-Related Agreements Mr. Long We entered into an employment agreement with Mr. Long dated as of March 6, 2002 that provides
for his employment as our chief executive officer. Mr. Longs employment agreement provides for annual base compensation of $500,000. We provided
Mr. Long a signing bonus of $500,000 to be paid in four equal quarterly installments, the last of
which was paid on January 31, 2003. Under his 2004 executive bonus plan, Mr. Long was also eligible
to receive a performance bonus of up to twice his annual base compensation for 2004; he received
$500,000 and 115,740 shares of restricted stock which will vest in full on March 17, 2008. We granted Mr. Long a Sign-On Option, which fully vested on January 24, 2002, to purchase
1,300,000 shares of our common stock at an exercise price of $1.76 per share. We also granted Mr.
Long a Principal Option to purchase 3,900,000 shares of our common stock at an exercise price of
$1.76 per share. Mr. Longs Principal Option vests ratably on a monthly basis over 48 months
beginning on February 1, 2002. The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason. We agreed to provide residential accommodations to Mr. Long within reasonable commuting
distance of our offices, with costs not to exceed $5,000 per month. We will reimburse Mr. Long the
actual and reasonable fixed operating costs and the actual and reasonable business related variable
operating costs of an airplane indirectly owned by him; Mr. Long was reimbursed approximately $1.4
million for the use of this airplane in 2004. We also will reimburse him for actual and reasonable
business expenses. If the foregoing reimbursements are subject to 8




---



##### 



federal or state income taxes, we will pay an amount necessary to place Mr. Long in the same
after-tax position as he would have been in had no such taxes been imposed. If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Long will receive his annual base salary and
his full annual bonus for the fiscal year in which the termination occurs, payable in equal
installments over twelve months. In the event of termination without cause, constructive
termination, death or disability, Mr. Longs Principal Option will vest and become exercisable. In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Long an amount necessary to place him in
the same after-tax position as he would have been in had no such excise tax been imposed. On May 11, 2004, we granted Mr. Long options to purchase 1,000,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 750,000 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 250,000 shares of our common stock vests in full either on (i) May 11, 2007, if the
Company meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May
11, 2009, if the Company fails to meet such performance criteria. In the event of termination
upon a change of control, or termination without cause in the absence of a change of control,
subject to his provision of transition services if requested and his execution of a release of
claims, such options will vest and become exercisable for a period of one year following such
termination. Mr. Dennison We entered into an employment agreement with Mr. Dennison dated as of March 6, 2002 that
provides for his employment as our chief operating officer. Mr. Dennisons employment agreement provides for annual base compensation of $400,000. We
provided Mr. Dennison a signing bonus of $400,000 to be paid in four equal quarterly installments,
the last of which was paid on January 31, 2003. Under his 2004 executive bonus plan, Mr. Dennison
was also eligible to receive a performance bonus of up to twice his annual base compensation for
2004; he received $400,000. We granted Mr. Dennison a Sign-On Option, which fully vested on January 24, 2002, to
purchase 650,000 shares of our common stock at an exercise price of $1.76 per share. We also
granted Mr. Dennison a Principal Option to purchase 1,950,000 shares of our common stock at an
exercise price of $1.76 per share. Mr. Dennisons Principal Option vests ratably on a monthly basis
over 48 months beginning on February 1, 2002. The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason. We agreed to provide residential accommodations to Mr. Dennison for up to two years within
reasonable commuting distance of our offices, with costs not to exceed $5,000 per month. Mr.
Dennison relocated to our headquarters in 2003 at which time we ceased providing him with
residential accommodations. We reimburse Mr. Dennison for actual and reasonable business expenses.
In addition, Mr. Dennison was reimbursed for reasonable expenses associated with his relocation to
our headquarters as described above under Summary Compensation Table. If the foregoing
reimbursements are subject to federal or state income taxes, we will pay an amount necessary to
place Mr. Dennison in the same after-tax position as he would have been in had no such taxes been
imposed. If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Dennison will receive his annual base salary
and his full annual bonus for the fiscal year in which the termination occurs, payable in equal
installments over twelve months. In the event of termination without 9




---



##### 



cause, constructive termination, death or disability, Mr. Dennisons Principal Option will
vest and become exercisable. In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Dennison an amount necessary to place
him in the same after-tax position as he would have been in had no such excise tax been imposed. On May 11, 2004, we granted Mr. Dennison options to purchase 500,000 shares of our common
stock at an exercise price of $4.09 per share. An option to purchase 375,000 shares of our common
stock vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option
to purchase 125,000 shares of our common stock vests in full either on (i) May 11, 2007, if the
Company meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May
11, 2009, if the Company fails to meet such performance criteria. In the event of termination
upon a change of control, or termination without cause in the absence of a change of control,
subject to his provision of transition services if requested and his execution of a release of
claims, such options will vest and become exercisable for a period of one year following such
termination. Mr. Dalton On September 30, 2002, we entered into an executive retention and severance agreement with Mr.
Dalton pursuant to which he agreed to serve as President, REALTOR.com®. Additionally, we entered
into a compensation arrangement with Mr. Dalton that provides for annual base compensation of
$325,000. Under his 2004 executive bonus plan, Mr. Dalton was also eligible to receive a
performance bonus of up to twice his annual base compensation for 2004; he received $406,250. We reimburse Mr. Dalton for actual and reasonable business expenses. In addition, as described
above under Summary Compensation Table, Mr. Dalton was reimbursed for reasonable expenses
associated with his relocation to our headquarters. This included taxes and tax gross-up amounts
associated with payments made to relocate Mr. Dalton to our headquarters. We purchased a residence
in the fourth quarter of 2002 from Mr. Dalton for $1.95 million , based on its appraised value, to
facilitate his move to our headquarters. We sold this house in 2004 for approximately $1.4 million. Effective October 8, 2002, we granted Mr. Dalton an option to purchase 1,200,000 shares of our
common stock at an exercise price of $0.39 per share. This option vested as to 250,000 shares on
the date of grant and the remainder vests ratably on a monthly basis over 48 months beginning on
November 1, 2002. In the event of a termination without cause, subject to his provision of transition services
if requested and his execution of a release of claims, Mr. Dalton will receive a lump sum payment
in an amount equal to his annual base salary, payment of his continued medical coverage premiums
for up to 12 months, and a payment in an amount equal to 50% of his target bonus for the year in
which his termination occurs (the Minimum Bonus Payment). In addition, if the termination occurs
after June 30 of any year, and before January 1 of the next year, and our financial performance
goals for the year have been achieved, we will pay Mr. Dalton a prorated portion of his target
bonus less his Minimum Bonus Payment. All equity awards Mr. Dalton was granted by us prior to
September 30, 2002 will vest and any such options will remain exercisable for a period of 12 months
following the later of his termination date or the end of any transition services period. On May 11, 2004, we granted Mr. Dalton options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, subject to
his provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination. 10




---



##### 



Mr. Belote We entered into an employment agreement with Mr. Belote dated as of March 6, 2002 that
provides for his employment as our chief financial officer. Mr. Belotes employment agreement provides for annual base compensation of $350,000. We
provided Mr. Belote a signing bonus of $350,000 to be paid in four equal quarterly installments,
the last of which was paid on January 31, 2003. Under his 2004 executive bonus plan, Mr. Belote was
also eligible to receive a performance bonus of up to twice his annual base compensation for 2004;
he received $350,000. We granted Mr. Belote a Sign-On Option, which fully vested on January 24, 2002, to purchase
432,500 shares of our common stock at an exercise price of $1.76 per share. We also granted Mr.
Belote a Principal Option to purchase 1,297,500 shares of our common stock at an exercise price
of $1.76 per share. Mr. Belotes Principal Option vests ratably on a monthly basis over 48 months
beginning on February 1, 2002. The Sign-On Option and Principal Option may be exercised after a termination of employment
(but no later than their expiration date, January 23, 2012) as follows: (i) within 90 days after
termination for cause; (ii) within one year after voluntary termination prior to a change in
control; or (iii) within three years after termination for any other reason. We agreed to provide residential accommodations to Mr. Belote within reasonable commuting
distance of our offices, with costs not to exceed $5,000 per month. We will reimburse Mr. Belote
for actual and reasonable business expenses. If the foregoing reimbursements are subject to federal
or state income taxes, we will pay an amount necessary to place Mr. Belote in the same after-tax
position as he would have been in had no such taxes been imposed. If there is a termination of employment without cause, a termination for death or disability
or a constructive termination of employment, whether or not in connection with a change in control,
subject to his execution of a release of claims, Mr. Belote will receive his annual base salary and
his full annual bonus for the fiscal year in which the termination occurs, payable in equal
installments over twelve months. In the event of termination without cause, constructive
termination, death or disability, Mr. Belotes Principal Option will vest and become exercisable. In the event that any portion of the amounts payable are subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, we will pay Mr. Belote an amount necessary to place him
in the same after-tax position as he would have been in had no such excise tax been imposed. On May 11, 2004, we granted Mr. Belote options to purchase 350,000 shares of our common stock at an
exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock vests
ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to purchase
87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company meets
certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11, 2009, if
the Company fails to meet such performance criteria. In the event of termination upon a change of
control, or termination without cause in the absence of a change of control, subject to his
provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination. Mr. Douglas On September 30, 2002, we entered into an executive retention and severance agreement with Mr.
Douglas pursuant to which he agreed to serve as Executive Vice President, General Counsel and
Secretary. Additionally, we entered into a compensation arrangement with Mr. Douglas that provides
for annual base compensation of $325,000. Under his 2004 executive bonus plan, Mr. Douglas was also
eligible to receive a performance bonus of up to twice his annual base compensation for 2004; he
received $325,000. We will reimburse Mr. Douglas for actual and reasonable business expenses. In addition, Mr.
Douglas was reimbursed for reasonable expenses associated with his relocation to our headquarters
as described above under 11




---



##### 



Summary Compensation Table. In connection with the expected loss on the sale of his
residence, we paid $100,000 to Mr. Douglas in the first quarter of 2003 to facilitate his move to
our headquarters. Effective October 8, 2002, we granted Mr. Douglas an option to purchase 1,200,000 shares of
our common stock at an exercise price of $0.39 per share. This option vested as to 200,000 shares
on the date of grant and the remaining 1,000,000 options vests ratably on a monthly basis over 48
months beginning on October 1, 2002. In the event of a termination without cause, subject to his provision of transition services
if requested and his execution of a release of claims, Mr. Douglas will receive a lump sum payment
in an amount equal to his annual base salary, payment of his continued medical coverage premiums
for up to 12 months, and a payment in an amount equal to 50% of his target bonus for the year in
which his termination occurs (the Minimum Bonus Payment). In addition, if the termination occurs
after June 30 of any year, and before January 1 of the next year, and our financial performance
goals for the year have been achieved, we will pay Mr. Douglas a prorated portion of his target
bonus less his Minimum Bonus Payment. All equity awards Mr. Douglas was granted by us prior to
September 30, 2002 will vest and any such options will remain exercisable for a period of 12 months
following the later of his termination date or the end of any transition services period. On May 11, 2004, we granted Mr. Douglas options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, subject to
his provision of transition services if requested and his execution of a release of claims, such
options will vest and become exercisable for a period of one year following such termination. Mr. Merrill On April 24, 2002, we entered into an executive retention and severance agreement with Mr.
Merrill pursuant to which he agreed to continue to serve as executive vice president of strategy
and corporate development. Additionally, we entered into a new compensation arrangement with Mr.
Merrill that provides for annual base compensation of $325,000, effective January 21, 2002. Under
his 2004 executive bonus plan, Mr. Merrill was also eligible to receive a performance bonus of up
to twice his annual base compensation for 2004; he received $325,000. Effective January 17, 2002, we granted Mr. Merrill an option to purchase 450,000 shares of our
common stock at an exercise price of $2.25 per share. This option vests ratably on a monthly basis
over 48 months beginning on February 1, 2002. Additionally, effective January 24, 2002, we granted
Mr. Merrill an option to purchase 700,000 shares of our common stock at an exercise price of $1.76
per share. This option vested as to 87,500 shares on July 24, 2002 and the remainder vests ratably
on a monthly basis over 42 months beginning on August 1, 2002. In the event of a termination without cause, subject to his provision of transition services
if requested and his execution of a release of claims, Mr. Merrill will receive a lump sum payment
in an amount equal to his annual base salary, payment of his continued medical coverage premiums
for up to 12 months, and a payment in an amount equal to 50% of his target bonus for the year in
which his termination occurs (the Minimum Bonus Payment). In addition, if the termination occurs
after June 30 of any year, and before January 1 of the next year, and our financial performance
goals for the year have been achieved, we will pay Mr. Merrill a prorated portion of his target
bonus less his Minimum Bonus Payment. All equity awards Mr. Merrill was granted by us prior to
April 24, 2002 will vest and any such options will remain exercisable for a period of 12 months
following the later of his termination date or the end of any transition services period. On May 11, 2004, we granted Mr. Merrill options to purchase 350,000 shares of our common stock
at an exercise price of $4.09 per share. An option to purchase 262,500 shares of our common stock
vests ratably on a quarterly basis over four years beginning on May 11, 2004, and an option to
purchase 87,500 shares of our common stock vests in full either on (i) May 11, 2007, if the Company
meets certain performance criteria for the fiscal year ended December 31, 2006, or (ii) May 11,
2009, if the Company fails to meet such performance criteria. In the event of termination upon a
change of control, or termination without cause in the absence of a change of control, 12




---



##### 



subject to his provision of transition services if requested and his execution of a release of
claims, such options will vest and become exercisable for a period of one year following such
termination. Director Compensation Prior to 2002, directors did not generally receive cash compensation for their services as
directors, but were reimbursed for their reasonable and necessary expenses in attending meetings of
board of directors and committees of the board. Compensation for services was provided solely in
the form of stock options. However, in 2002, we began to pay cash compensation in addition to stock
options and the reimbursement of these expenses because these activities involved significant
additional efforts and time commitments. We intend to continue to pay cash compensation in addition
to equity compensation and expense reimbursements to directors due to the directors increased time
commitments as well as increased corporate governance responsibilities. Non-employee directors receive an annual retainer of $25,000 in cash, which is paid in
quarterly installments. Each committee chair receives an additional annual retainer of $5,000 in
cash, except the chairman of the audit committee receives $10,000 in cash. Each of these directors
also receives $1,500 in cash per meeting for each board meeting attended in person (and $1,000 for
each telephonic meeting attended after April 4, 2005) that requires a significant commitment of
time. In addition, members of the committees of the board receive, depending on the committee,
either $2,000 or $1,500 for each committee meeting attended (and either $1,500 or $1,000 for each
telephonic meeting attended after April 4, 2005) that requires a significant commitment of time. In
2004, Mr. Hanauer, in his capacity as chairman of the board, received an additional annual retainer
of $70,000 in cash, which was paid in quarterly installments. In 2004, each non-employee director (other than any director who is entitled to a seat on our
board of directors on a contractual basis) was granted 10,300 restricted shares of our common stock
under our 1999 Stock Incentive Plan. Mr. Hanauer, in his capacity as chairman of the board, was
granted an additional 15,450 restricted shares. No options were included as part of these 2004
grants to directors. Each restricted share will vest three years after the grant date. All
restricted stock will immediately vest if the director is not nominated for re-election, is
nominated for re-election and is not elected or must resign due to health reasons, or upon such
directors death. Upon a directors resignation or termination for other reasons, including but not
limited to business conflicts with us, all of the directors unvested restricted stock will be
terminated immediately. Compensation Committee Interlocks and Insider Participation During 2004, the management development and compensation committee was composed of three
non-employee directors, Messrs. Hanauer, Doerr and Willison, none of whom have any interlocking
relationships as defined by the SEC. In March 2005, Mr. Doerr resigned from the management
development and compensation committee. Messrs. Hanauer and Willison are the current members of
this committee. 13




---



##### 



Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Certain Beneficial Owners and Management The following table sets forth information relating to beneficial ownership of our common
stock as of April 1, 2005, by  
    each stockholder known by us to be the beneficial owner of 5% or more of our common stock,
    each of our directors,
    each of the executive officers listed in the summary compensation table, and
    all of our directors and executive officers as a group. Unless otherwise noted, the address for each stockholder listed is c/o Homestore, Inc., 30700
Russell Ranch Road, Westlake Village, California 91362. Shares of Series AShares of Common Stock
    
    
    Preferred StockBeneficially Owned
    
    
    Beneficially OwnedName of Beneficial Owner
    
    Number
    
    
    Percent
    
    
    Number
    
    
    PercentFMR Corp. (1)
    
    
    17,923,989
    
    
    
    12.2
    %
    
    
    
    
    
    
    Amerindo Investment
Advisors Inc (2)
    
    
    7,526,538
    
    
    
    5.1
    %
    
    
    
    
    
    
    W. Michael Long (3)
    
    
    4,928,308
    
    
    
    3.3
    %
    
    
    
    
    
    
    L. John Doerr (4)
    
    
    4,283,541
    
    
    
    2.9
    %
    
    
    
    
    
    
    National Association of
REALTORS® (5)
    
    
    4,025,640
    
    
    
    2.7
    %
    
    
    1
    
    
    
    100
    %Terrence M. McDermott (6)
    
    
    4,025,640
    
    
    
    2.7
    %
    
    
    1
    
    
    
    100
    %Jack D. Dennison (7)
    
    
    2,399,522
    
    
    
    1.6
    %
    
    
    
    
    
    
    Lewis R. Belote, III (8)
    
    
    1,609,725
    
    
    
    1.1
    %
    
    
    
    
    
    
    Allan P. Merrill (9)
    
    
    1,277,293
    
    
    
    *
    
    
    
    
    
    
    
    Michael R. Douglas (10)
    
    
    935,641
    
    
    
    *
    
    
    
    
    
    
    
    Joe F. Hanauer (11)
    
    
    831,966
    
    
    
    *
    
    
    
    
    
    
    
    Allan D. Dalton (12)
    
    
    690,489
    
    
    
    *
    
    
    
    
    
    
    
    Kenneth K. Klein (13)
    
    
    138,912
    
    
    
    *
    
    
    
    
    
    
    
    Bruce G. Willison (14)
    
    
    93,841
    
    
    
    *
    
    
    
    
    
    
    
    V. Paul Unruh (15)
    
    
    90,300
    
    
    
    *
    
    
    
    
    
    
    
    William E. Kelvie (16)
    
    
    90,112
    
    
    
    *
    
    
    
    
    
    
    
    All 16 directors and
executive officers as a
group
    
    
    21,925,291
    
    
    
    14.9
    %
    
    
    1
    
    
    
    100
    %
   *
    
    Represents beneficial ownership of less than 1%.(1)
    
    The information shown is as of December 31, 2004 and is based upon information disclosed by
FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson, Fidelity Management & Research Company
and Fidelity OTC Portfolio in an amendment to a Schedule 13G filed with the SEC. Such persons
reported that FMR Corp. and other members of the filing group have sole power to dispose or to
direct the disposition of 17,920,259 shares of our common stock. Sole power to vote these
shares resides in the respective boards of trustees of the funds that have invested in the
shares. Such persons also reported that Fidelity Management Trust Company and other members of
the filing group have sole power to dispose or to direct the disposition of and sole power to
vote or direct the voting of 3,730 shares of our common stock. The address of the above
persons is 82 Devonshire Street, Boston, Massachusetts 02109.(2)
    
    Based upon the information contained in a Schedule 13G filed on February 1, 2005 by these
persons, at December 31, 2004 the following entities and persons beneficially owned in the
aggregate 7,526,538 shares: 14




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##### 



Shares
    
    
    Sole
    
    
    Shared
    
    
    Sole
    
    
    SharedBeneficially
    
    
    Voting
    
    
    Voting
    
    
    Dispositive
    
    
    DispositiveEntity or Person
    
    Owned
    
    
    Power
    
    
    Power
    
    
    Power
    
    
    PowerAmerindo Investment
Advisors Inc.
    
    
    7,473,138
    
    
    
    
    
    
    
    7,473,138
    
    
    
    
    
    
    
    7,473,138Amerindo Investment
Advisors, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amerindo Investment
Advisors Inc. Profit
Sharing Plan
    
    
    7,500
    
    
    
    7,500
    
    
    
    
    
    
    
    7,500
    
    
    
    Amerindo Advisors
(UK) Limited
Retirement Benefits
Scheme
    
    
    45,900
    
    
    
    
    
    
    
    45,900
    
    
    
    
    
    
    
    45,900Alberto W. Vilar
    
    
    7,526,538
    
    
    
    7,500
    
    
    
    7,473,138
    
    
    
    7,500
    
    
    
    7,473,138Gary A. Tanaka
    
    
    7,519,038
    
    
    
    
    
    
    
    7,480,638
    
    
    
    
    
    
    
    7,480,638James P.F. Stableford
    
    
    45,900
    
    
    
    
    
    
    
    45,900
    
    
    
    
    
    
    
    45,900Renata Le Port
    
    
    45,900
    
    
    
    
    
    
    
    45,900
    
    
    
    
    
    
    
    45,900
  These entities and persons in the aggregate claim sole voting and sole dispositive power over
7,500 of these shares and shared voting and shared dispositive power over 7,473,138 of these shares. Except for 53,400 shares beneficially owned by Mr. Vilar and 45,900 shares beneficially
owned by each of Messrs. Tanaka and Stableford and Ms. Le Port, these persons and entities
disclaim beneficial ownership of all of these shares. The address of Amerindo Investment
Advisors Inc. is One Embarcadero Center, Suite 2310, San Francisco, California 94111.(3)
    Includes 186,662 shares of restricted stock, none of which will be vested or transferable as
of May 31, 2005. Also includes 4,737,500 shares issuable upon the exercise of options that are
vested and exercisable as of May 31, 2005.(4)
    Includes 45,300 shares of restricted stock, none of which will be vested or transferable as
of May 31, 2005. Also includes 55,312 shares issuable upon the exercise of options that are
held by Mr. Doerr, which are vested and exercisable as of May 31, 2005. Also includes
3,657,895 shares held by Kleiner Perkins Caufield & Byers VIII, 210,967 shares held by KPCB
VIII Founders Fund, and 1,615 shares held by KPCB Information Sciences Zaibatsu Fund II. Mr.
Doerr is a general partner of KPCB Associates VIII, which is the general partner of each of
Kleiner Perkins Caufield & Byers VIII and KPCB VIII Founders Fund, and a general partner of
KPCB Associates VII, which is the general partner of KPCB Information Sciences Zaibatsu Fund
II. Mr. Doerr disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest in these entities. Also includes 2,602 shares in the Brook H. Byers Trust
dated 1986 of which Mr. Doerr is trustee, with respect to which Mr. Doerr disclaims beneficial
ownership. The address of the Kleiner Perkins Caufield & Byers entities is 2750 Sand Hill
Road, Menlo Park, California 94025.(5)
    We have authorized the issuance of one share of Series A preferred stock, which is held by
the National Association of REALTORS®. Although the Series A preferred stockholder is
generally not entitled to notice of any stockholders meetings or to vote on any matters with
respect to any question upon which holders of our common stock or preferred stock have the
right to vote, except as may be required by law (in which case, the Series A preferred would
have one vote per share and would vote together with the common stock as a single class), the
holder of Series A preferred is entitled to elect one member of our board of directors. The
address of the National Association of REALTORS® is 430 North Michigan Avenue, Chicago,
Illinois 60611.(6)
    Includes 4,025,640 shares of common stock and one share of Series A Preferred Stock held by
National Association of REALTORS®, of which Mr. McDermott is the executive vice
president/chief executive officer. Mr. McDermott disclaims beneficial ownership of all of
these shares. 15




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##### 



(7)
    Includes 2,368,750 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2005.(8)
    Includes 1,579,374 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2005.(9)
    Includes 1,247,567 shares issuable upon the exercise of options that are vested and
exercisable as of May 31, 2005.(10)
    Includes 932,291 shares issuable upon the exercise of options that are vested and exercisable
as of May 31, 2005.(11)
    Includes 237,338 shares of restricted stock, none of which shares will be vested or
transferable as of May 31, 2005. Also includes 188,280 shares issuable upon the exercise of
options that are held by Mr. Hanauer that are vested and exercisable as of May 31, 2005. Also
includes 406,348 shares held by Ingleside Interests, L.P. Mr. Hanauer is a general partner of
this entity. Mr. Hanauer disclaims beneficial ownership of these shares except to the extent
of his pecuniary interest in this entity.(12)
    Includes 679,165 shares issuable upon the exercise of options that are vested and exercisable
as of May 31, 2005.(13)
    Includes 57,300 shares of restricted stock, of which 45,300 shares will not be vested or
transferable as of May 31, 2005. Also includes 63,812 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2005.(14)
    Includes 70,300 shares of restricted stock, none of which will be vested or transferable as
of May 31, 2005. Also includes 23,541 shares issuable upon the exercise of options that are
vested and exercisable as of May 31, 2005.(15)
    Includes 70,300 shares of restricted stock, none of which will be vested or transferable as
of May 31, 2005. Also includes 20,000 shares issuable upon the exercise of options that are
vested and exercisable as of May 31, 2005.(16)
    Includes 57,300 shares of restricted stock, of which 45,300 shares will not be vested or
transferable as of May 31, 2005. Also includes 32,812 shares issuable upon the exercise of
options that are vested and exercisable as of May 31, 2005. Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2004 regarding compensation plans
(including individual compensation arrangements) under which our equity securities are authorized
for issuance. Equity Compensation Plan Information Number of SecuritiesNumber of Securities
    
    
    
    
    
    
    Remaining Available forto be
    
    
    Weighted-Average
    
    
    Future Issuance UnderIssued Upon Exercise of
    
    
    Exercise Price of
    
    
    Equity CompensationOutstanding Options,
    
    
    Outstanding Options,
    
    
    Plans (excluding securitiesPlan Category
    
    Warrants and Rights
    
    
    Warrants and Rights
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)(In thousands)
    
    
    
    
    
    
    (In thousands)Equity
compensation plans
approved by
security holders
    
    
    19,748
    
    
    $3.29
    
    
    3,391Equity
compensation plans
not approved by
security holders
    
    
    8,165
    
    
    $2.29
    
    
    10,450Total
    
    
    27,913
    
    
    $2.99
    
    
    13,841
 16




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##### 



Each of the above plans provides that the number of shares with respect to which options may
be granted, and the number of shares of common stock subject to an outstanding option, shall be
proportionately adjusted in the event of a subdivision or consolidation of shares or the payment of
a stock dividend on common stock, and the purchase price per share of outstanding options shall be
proportionately revised. Options outstanding as of December 31, 2004 pursuant to compensation plans
assumed in connection with prior acquisitions, in the aggregate, total 206,060 and the weighted
average exercise price of those option shares is $20.58. The Homestore, Inc. 1999 Stock Incentive Plan, a security-holder approved plan, contains a
provision for an automatic increase in the number of shares available for issuance each January 1
(until January 1, 2009) by an amount equal to 4.5% of the total number of outstanding shares as of
the preceding December 31; provided that the aggregate number of shares that qualify as Incentive
Stock Options (as defined in the plan) must not exceed 20.0 million shares. Non-Shareholder Approved Plans Options are granted from the Homestore, Inc. 2002 Stock Incentive Plan, a new plan established
in January 2002 to attract and retain qualified personnel. No more then 40% of the available
securities granted under this plan may be awarded to our directors or executive officers. Option
grants under this plan are non-qualified stock options and generally have a four-year vesting
schedule and a ten-year life. Other non-shareholder approved plans include the following plans assumed in connection with
prior acquisitions: The 1997-1998 Stock Incentive Plan of Cendant Corporation, the Cendant
Corporation Move.com Group 1999 Stock Option Plan, as amended and restated effective as of March
21, 2000, the Move.com, Inc. 2000 Stock Incentive Plan, the HomeWrite Incorporated 2000 Equity
Incentive Plan, the ConsumerInfo.com, Inc. 1999 Stock Option Plan, the iPlace 2000 Stock Option
Plan, the eNeighborhoods, Inc. 1998 Stock Option Plan, the Qspace, Inc. 1999 Stock Option Plan, the
iPlace, Inc. 2001 Equity Incentive Plan and The Hessel Group, Inc. 2000 Stock Option Plan. Each of
these plans (i) was intended to attract, retain and motivate employees, (ii) was administered by
the Board of the Directors or by a committee of the Board of Directors of such entities, and (iii)
provided that options granted thereunder would be exercisable as determined by such Board or
committee, provided that no option would be exercisable after the expiration of 10 years after the
grant date. We did not grant options under any of these plans in 2004, and we do not plan to do so
in the future. For additional information regarding our equity compensation plans, see Note 14, Stock
Plans, to our Consolidated Financial Statements contained in Item 8 of this Form 10-K. 17




---



##### 



Item 13.Certain Relationships and Related Transactions Operating Agreement with the National Association of REALTORS® In November 1996, we entered into an operating agreement with the National Association of
REALTORS® (the NAR), which governs how our subsidiary, RealSelect, Inc., operates the
REALTOR.com® web site on behalf of the NAR. For a description of the operating agreement, please
see Item 1 of this Form 10-K. Under our operating agreement as originally entered into with the NAR, we were required to
make quarterly royalty payments of up to 15% of RealSelects operating revenue in the aggregate to
the NAR and the entities that provide us the information for our real property listings (data
content providers). In 2002, we and the NAR amended the NAR operating agreement. In accordance with the operating
agreement, as amended, we paid $1,400,000 to the NAR in 2004 and will make the following fixed
payments to the NAR:  
    For 2005, we must pay $1,500,000 in four installments of $375,000 due on the last
day of each calendar quarter of 2005.
    For 2006, we must pay $1,500,000 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. Loans to and Transactions with Executive Officers As part of an employment agreement entered into in 2002, we reimburse Mr. Long for the
business use of an airplane that is owned indirectly by him. Total reimbursement for usage in 2004
was approximately $1.4 million. 
 Item 14.Principal Accountant Fees and Services PricewaterhouseCoopers LLP (PricewaterhouseCoopers) served as the Companys principal
independent accountant to audit the Companys financial statements for the fiscal year ended
December 31, 2002. As previously disclosed, on September 29, 2003 our audit committee notified
PricewaterhouseCoopers that it would not be retained to perform the audit of the financial
statements of the Company for the fiscal year ending December 31, 2003 and engaged Ernst & Young
LLP (Ernst & Young) as independent accountants to audit the Companys financial statements for
the fiscal period ended December 31, 2003 and December 31, 2004. The fees billed in the fiscal
years ended December 31, 2003 and December 31, 2004 for PricewaterhouseCooperss services to us and
the fees billed in the fiscal period ended December 31, 2003 and December 31, 2004 for Ernst &
Youngs services to us were: PricewaterhouseCoopers LLP
    
    
    Ernst & Young LLPYear ended
    
    
    Year ended
    
    
    Year endedDecember 31, 2003
    
    
    December 31, 2003
    
    
    December 31, 2004Audit Fees (1)
    
    
    $365,000
    
    
    
    $1,090,000
    
    
    
    $2,892,000Audit-Related Fees (2)
    
    
    
    
    
    
    
    
    
    
    Tax Fees (3)
    
    
    88,000
    
    
    
    8,000
    
    
    
    94,000All Other Fees (4)
    
    
    
    
    
    
    
    
    
    
    Total Fees
    
    
    $453,000
    
    
    
    $1,098,000
    
    
    
    $2,986,000
 18




---



##### 



(1)
    Audit fees are fees billed by the independent auditors for professional services for the
audit of the consolidated financial statements included in our Form 10-K and review of
financial statements included in our Form 10-Qs, or for services that are normally provided by
the auditors in connection with statutory and regulatory filings or engagements.  (2)
    Audit-related fees are fees billed by the independent auditors for assurance and related
services that are reasonably related to the performance of the audit or review of the
financial statements, and are not reported under audit fees. Fees associated with registration
statements that were previously included in audit-related fees in the proxy statement for our
2003 annual meeting of stockholders have been reclassified under audit fees above.  (3)
    Tax fees are fees billed by the independent auditors for professional services for tax
compliance, tax advice, and tax planning.  (4)
    All other fees are fees billed by the independent auditors to the Company for any services
not included in the first three categories, and include fees for accounting services provided
to us and in connection with our response to inquires from the SEC. The audit committees policy is to approve in advance all audit and permitted non-audit
services provided by the independent accountant. In 2004, the audit committee approved in advance
any services provided by the independent auditors and the related fees. Those services only
involved accounting consultation and general corporate tax services. In addition, in December 2003,
the audit committee authorized the committees audit committee financial expert to pre-approve on
behalf of the audit committee permitted auditing and non-auditing services of $50,000 or less to be
provided by Ernst & Young or any other accounting services firms, with the audit committee
financial expert to report each pre-approval of services to the full committee at its next
scheduled meeting after such pre-approval. None of the audit and non-audit services described above were approved by the audit committee
pursuant to the waiver of pre-approval provisions set forth in applicable rules of the SEC. 19




---



##### 



PART IV 
 Item 15.Exhibits, Financial Statement Schedules (a)(3) Exhibits See Index to Exhibits beginning on page E-1, which is incorporated by reference herein. 20




---



##### 



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereto
duly authorized, on the 29th day of April, 2005. HOMESTORE, INC.By:
    /s/ LEWIS R. BELOTE, IIILewis R. Belote, IIIChief Financial Officer 21




---



##### 



INDEX Number
    
    Exhibit Title31.01
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.02
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
 22