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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q/A
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 000-26659
 
Move, Inc.
(Exact Name of Registrant as Specified in its Charter)
     
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  95-4438337
(I.R.S. Employer
Identification No.)
     
30700 Russell Ranch Road
Westlake Village, California

(Address of Principal Executive Offices)
  91362
(Zip Code)
(805) 557-2300
(Registrant’s Telephone Number, including Area Code:)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
     Indicate by check mark whether 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 þ       No o
      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer o    Accelerated filer þ    Non-accelerated filer   o
(Do not check if a smaller reporting company)
  Smaller Reporting Company o 
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o       No þ
     At July 31, 2007, the registrant had 155,339,941 shares of its common stock outstanding.
 
 


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EXPLANATORY NOTE
The Company is restating its financial statements for the three and six month periods ended June 30, 2007 by amending its 2007 Quarterly Report on Form 10-Q for the period ended June 30, 2007.
All amendments and restatements to the financial statements affected are non-cash in nature.
See Note 2 to the financial statements included elsewhere herein for a complete description of the restatement. The following is a brief summary of the impact of the restatement:
In the second quarter of 2007, the Company modified the terms for granting its restricted stock unit awards, which created a new measurement date. The modification was entered into because the 2006 grants required a three-year projection of financial performance in a highly competitive and rapidly changing market and the Management Development and Compensation Committee of the Board of Directors wanted to better reflect the current strategy of the Company while adhering to the original goals of increased and sustained performance. As a result, management should have assessed the likelihood of achieving the original targets and awarding the restricted stock as improbable. As such, SFAS 123R required that any previously recognized expense related to the restricted stock units be reversed and that the Company remeasure the fair value of the grants and defer any future compensation expense until it was probable that the awards would ultimately vest. Instead, the awards continued to be accounted for under the assumption that 100% would be vested. The reported results for the three and six months ended June 30, 2007 have been revised to reverse all previously recognized compensation expense related to the restricted stock units.
An explanation of the errors and their impact on the Company’s financial statements is contained in Note 2 to the financial statements contained in Item 1 of this report.
For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing in its entirety, as amended by, and to reflect, the restatement. The following sections of this Form 10-Q/A have been amended to reflect the restatement:
Part I — Item 1 — Condensed Consolidated Financial Statements
Part I — Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, as to matters related to the restatement
Other than as stated above, this Form 10-Q/A continues to reflect the results as of, and for the three and six month periods ended June 30, 2007, or (where applicable) as of the date of the Original Filing, and the information in this Form 10-Q/A does not modify or update any other item or disclosure in the Original Filing or reflect any other events occurring after the Original Filing.
This amended Form 10-Q/A should be read in conjunction with any current reports that have been filed on Form 8-K subsequent to the date of the Original Filing.

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INDEX
         
    Page
       
 
       
    4  
    4  
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    6  
    7  
    14  
    22  
    23  
 
       
       
 
       
    23  
    23  
    24  
    24  
    24  
    24  
    25  
 
       
    26  
 EXHIBIT 31.1
 EXHIBIT 31.2
 EXHIBIT 32.1
 EXHIBIT 32.2
     Move®, REALTOR.com®, HomeBuilder.com®, RENTNET.comTM, Top Producer®, Welcome Wagon®, and Moving.comTM are our trademarks or are exclusively licensed to us. This quarterly report on Form 10-Q/A may contain trademarks of other companies and organizations. REALTOR® is a registered collective membership mark that may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its code of ethics.

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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
MOVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    June 30,     December 31,  
    2007     2006  
    (Restated)          
    (Unaudited)          
    (In thousands)  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 37,245     $ 14,873  
Short-term investments
    150,100       142,975  
Accounts receivable, net
    15,984       18,279  
Other current assets
    16,214       34,468  
 
           
Total current assets
    219,543       210,595  
 
               
Property and equipment, net
    36,739       29,245  
Goodwill, net
    23,877       23,877  
Intangible assets, net
    16,130       16,715  
Restricted cash
    3,286       4,279  
Other assets
    1,413       1,238  
 
           
 
               
Total assets
  $ 300,988     $ 285,949  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 5,963     $ 4,904  
Accrued expenses
    28,086       26,738  
Obligation under capital leases
    1,971       1,904  
Deferred revenue
    48,659       50,075  
 
           
Total current liabilities
    84,679       83,621  
 
               
Obligation under capital leases
    1,165       2,167  
Other liabilities
    2,403       2,497  
 
           
 
               
Total liabilities
    88,247       88,285  
 
               
Commitments and contingencies (see note 11)
               
 
               
Series B convertible preferred stock
    98,685       96,212  
 
               
Stockholders’ equity:
               
Series A convertible preferred stock
           
Common stock
    155       154  
Additional paid-in capital
    2,077,208       2,069,399  
Accumulated other comprehensive income
    533       326  
Accumulated deficit
    (1,963,840 )     (1,968,427 )
 
           
 
               
Total stockholders’ equity
    114,056       101,452  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 300,988     $ 285,949  
 
           
The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

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MOVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007     2006       2007   2006  
    (Restated)           (Restated)        
    (In thousands, except per share amounts)  
    (Unaudited)  
Revenue
  $ 73,626     $ 73,891     $ 144,656     $ 142,870  
Cost of revenue
    15,299       16,447       29,997       32,853  
 
                       
 
                               
Gross profit
    58,327       57,444       114,659       110,017  
 
                       
 
                               
Operating expenses:
                               
Sales and marketing
    27,478       28,312       55,372       53,653  
Product and web site development
    9,269       8,793       18,091       17,148  
General and administrative
    17,374       19,378       38,081       40,354  
Amortization of intangible assets
    505       589       1,003       1,336  
 
                       
 
                               
Total operating expenses
    54,626       57,072       112,547       112,491  
 
                       
 
                               
Income (loss) from operations
    3,701       372       2,112       (2,474 )
 
                               
Interest income, net
    2,503       1,794       4,816       3,409  
Other income (expense), net
    (371 )     431       384       503  
 
                       
 
                               
Net income before income taxes
    5,833       2,597       7,312       1,438  
 
                               
Provision for income taxes
    169             253        
 
                       
 
                               
Net income
    5,664       2,597       7,059       1,438  
 
                               
Convertible preferred stock dividend and related accretion
    (1,241 )     (1,181 )     (2,473 )     (2,355 )
 
                       
 
                               
Net income (loss) applicable to common stockholders
  $ 4,423     $ 1,416     $ 4,586     $ (917 )
 
                       
 
                               
Unrealized loss on marketable securities
                (1 )      
Foreign currency translation
    173       53       208       51  
 
                       
 
                               
Comprehensive income (loss)
  $ 4,596     $ 1,469     $ 4,793     $ (866 )
 
                       
 
                               
Net income (loss) per common share: (see note 8)
                               
Basic net income (loss) applicable to common stockholders
  $ 0.03     $ 0.01     $ 0.03     $ (0.01 )
 
                       
Diluted net income (loss) applicable to common stockholders
  $ 0.03     $ 0.01     $ 0.03     $ (0.01 )
 
                       
 
Shares used to calculate basic and diluted net income (loss) per share applicable to common stockholders: (see note 8)
                               
Basic
    154,885       150,769       154,614       149,865  
 
                       
 
                               
Diluted
    165,499       165,127       166,657       149,865  
 
                       
The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

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MOVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Six months ended  
    June 30,  
    2007     2006  
    (Restated)          
    (In thousands)  
    (Unaudited)  
Cash flows from operating activities:
               
Net income
  $ 7,059     $ 1,438  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    5,328       5,015  
Amortization of intangible assets
    1,003       1,336  
Provision for doubtful accounts
    556       540  
Gain on sales of property and equipment
    (336 )      
Stock-based compensation and charges
    5,597       5,886  
Change in market value of embedded derivative liability
    (98 )      
Other non-cash items
    (14 )     (315 )
 
               
Changes in operating assets and liabilities:
               
Accounts receivable
    1,739       (1,842 )
Other assets
    (3,002 )     (2,380 )
Accounts payable and accrued expenses
    2,096       (16,995 )
Deferred revenue
    (1,457 )     11,941  
 
           
 
               
Net cash provided by operating activities
    18,471       4,624  
 
           
 
               
Cash flows from investing activities:
               
Purchases of property and equipment
    (12,601 )     (6,854 )
Proceeds from the surrender of life insurance policy
    5,200        
Proceeds from sales of marketable equity securities
    15,743        
Proceeds from sales of property and equipment
    336        
Purchases of intangible assets
    (418 )      
Maturities of short-term investments
    36,350       16,950  
Purchases of short-term investments
    (43,475 )     (10,050 )
Acquisitions, net
          (9,572 )
 
           
 
               
Net cash provided by (used in) investing activities
    1,135       (9,526 )
 
           
 
               
Cash flows from financing activities:
               
Proceeds from exercise of stock options and warrants
    2,708       4,816  
Restricted cash
    993       855  
Payments on capital lease obligations
    (935 )     (1,374 )
 
           
 
               
Net cash provided by financing activities
    2,766       4,297  
 
           
 
               
Change in cash and cash equivalents
    22,372       (605 )
 
               
Cash and cash equivalents, beginning of period
    14,873       13,272  
 
           
 
               
Cash and cash equivalents, end of period
  $ 37,245     $ 12,667  
 
           
The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

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MOVE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business
     Move, Inc. (the “Company”) has created an online service that enables consumers to find real estate listings and other content related to residential real estate, moving and relocation. The Company’s web sites collectively have become the leading consumer destination on the Internet for home and real estate-related information based on the number of visitors, time spent on its web sites and number of property listings. The Company generates most of its revenue from selling advertising and marketing solutions to real estate industry participants, including real estate agents, homebuilders and rental property owners, and other local and national advertisers interested in reaching the Company’s consumer audience (before, during or after a move). The Company also provides software solutions to real estate agents to assist them in managing their client interactions and architects’ home plans to consumers considering building a new home. The Company derives all of its revenue from its North American operations.
     The Company’s primary consumer web sites are Move.com® and REALTOR.com®, the official site of the National Association of REALTORS® (“NAR”), which provide new and existing homes, apartments, corporate housing, and self-storage listings and are home information resource sites with an emphasis on content related to mortgage financing, moving and storage, and home and garden activities. The Company’s web sites also include SeniorHousingNet®.com, a comprehensive resource for seniors and Moving.comTM which connects consumers with moving companies, van lines, truck rental providers and self storage facilities.
2. Restatement of Financial Statements
     The Company is restating its financial statements for the three and six month periods ended June 30, 2007 in this amended Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2007.
     In the second quarter of 2007, the Company modified the terms for granting its restricted stock unit awards, which created a new measurement date. The modification was entered into because the 2006 grants required a three-year projection of financial performance in a highly competitive and rapidly changing market and the Management Development and Compensation Committee of the Board of Directors wanted to better reflect the current strategy of the Company while adhering to the original goals of increased and sustained performance. As a result, management should have assessed the likelihood of achieving the original targets and awarding the restricted stock as improbable. As such, SFAS 123R required that any previously recognized expense related to the restricted stock units be reversed and that the Company remeasure the fair value of the grants and defer any future compensation expense until it was probable that the awards would ultimately vest. Instead, the awards continued to be accounted for under the assumption that 100% would be vested. The reported results for the three and six months ended June 30, 2007 have been revised to reverse all previously recognized compensation expense related to the restricted stock units.
     In the Balance Sheets, the effect on the adjustment on Additional paid-in capital and Accumulated deficit as of June 30, 2007 was as follows:
                         
    June 30, 2007
    (As Reported)   (Adjustment)   (As Restated)
Additional paid in capital
  $ 2,085,134     $ (7,926 )   $ 2,077,208  
Accumulated deficit
  $ (1,971,766 )   $ 7,926     $ (1,963,840 )

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     In the Statements of Operations, the effect of the adjustment on Operating expenses, Income (loss) from operations, Net income (loss) before income taxes, Net income (loss) and Net income (loss) applicable to common stockholders for the three and six months ended June 30, 2007 was as follows:
                                                 
    For the three months ended     For the six months ended  
    June 30, 2007     June 30, 2007  
    (As Reported)     (Adjustment)     (As Restated)     (As Reported)     (Adjustment)     (As Restated)  
Revenue
  $ 73,626     $     $ 73,626     $ 144,656     $     $ 144,656  
Cost of revenue
    15,299             15,299       29,997             29,997  
 
                                   
 
                                               
Gross profit
    58,327             58,327       114,659             114,659  
 
                                   
 
                                               
Operating expenses:
                                               
Sales and marketing
    27,626       (148 )     27,478       55,520       (148 )     55,372  
Product and web site development
    9,324       (55 )     9,269       18,146       (55 )     18,091  
General and administrative
    25,097       (7,723 )     17,374       45,804       (7,723 )     38,081  
Amortization of intangible assets
    505             505       1,003             1,003  
 
                                   
Total operating expenses
    62,552       (7,926 )     54,626       120,473       (7,926 )     112,547  
 
                                   
 
                                               
Income (loss) from operations
    (4,225 )     7,926       3,701       (5,814 )     7,926       2,112  
 
                                               
Interest income, net
    2,503             2,503       4,816             4,816  
Other income (expense), net
    (371 )           (371 )     384             384  
 
                                   
 
                                               
Net income (loss) before income taxes
    (2,093 )     7,926       5,833       (614 )     7,926       7,312  
 
                                               
Provision for income taxes
    169             169       253             253  
 
                                   
 
                                               
Net income (loss)
    (2,262 )     7,926       5,664       (867 )     7,926       7,059  
Convertible preferred stock dividend and related accretion
    (1,241 )           (1,241 )     (2,473 )           (2,473 )
 
                                   
 
                                               
Net income (loss) applicable to common stockholders
  $ (3,503 )   $ 7,926     $ 4,423     $ (3,340 )   $ 7,926     $ 4,586  
 
                                   
 
Unrealized loss on marketable securities
                      (1 )           (1 )
Foreign currency translation
    173             173       208             208  
 
 
                                   
Comprehensive income (loss)
  $ (3,330 )   $ 7,926     $ 4,596     $ (3,133 )   $ 7,926     $ 4,793  
 
                                   
Net income (loss) per common share:
                                               
Basic
  $ (0.02 )   $ 0.05     $ 0.03     $ (0.02 )   $ 0.05     $ 0.03  
 
                                   
Diluted
  $ (0.02 )   $ 0.05     $ 0.03     $ (0.02 )   $ 0.05     $ 0.03  
 
                                   
     In the Statement of Cash Flows, the effect of the adjustment on Net income (loss) and Stock-based compensation and charges for the six months ended June 30, 2007 was as follows:
                                         
    June 30, 2007
    (As Reported)   (Adjustment)   (As Restated)                
Net income (loss)
  $ (867 )   $ 7,926     $ 7,059                  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                                       
Stock based compensation and charges
  $ 13,523     $ (7,926 )   $ 5,597                  
There was no effect on Net cash provided by operating activities.

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3. Basis of Presentation
     The Company’s unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) including those for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements. These statements are unaudited and, in the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2006 which was filed with the SEC on March 5, 2007. The results of operations for these interim periods are not necessarily indicative of the operating results for a full year.
4. Significant Accounting Policy
     On January 1, 2007, the Company adopted the provisions of Emerging Issues Task Force (“EITF”) Issue No. 06-03 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation)” (“EITF No. 06-03”). Under EITF No. 06-03, a company must disclose its accounting policy regarding the gross or net presentation of certain taxes. If taxes included in gross revenues are significant, a company must disclose the amount of such taxes for each period for which an income statement is presented (i.e., both interim and annual periods). Taxes within the scope of EITF No. 06-03 are those that are imposed on and concurrent with a specific revenue-producing transaction. Taxes assessed on an entity’s activities over a period of time, such as gross receipts taxes, are not within the scope of EITF No. 06-03. The Company continues to report taxes collected from customers on a net presentation basis after the adoption of EITF No. 06-03.
5. Recent Accounting Development
     In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS 159 are elective; however, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements.” The Company is currently evaluating whether the adoption of this statement will have a material effect on its financial conditions, its results of operations or its liquidity.
6. Goodwill and Other Intangible Assets
     Goodwill, net, by segment, is as follows (in thousands):
                 
    June 30,     December 31,  
    2007     2006  
Real Estate Services
  $ 12,988     $ 12,988  
Consumer Media
    10,889       10,889  
 
           
Total
  $ 23,877     $ 23,877  
 
           
     The Company has both indefinite and definite lived intangibles. Indefinite-lived intangibles consist of trade names and trademarks acquired during the year ended December 31, 2006. Definite-lived intangible assets consist of certain trade names, trademarks, brand names, domain names, purchased technology, and other miscellaneous agreements entered into in connection with business combinations and are amortized over expected periods of benefits. There are no expected residual values related to these intangible assets (in thousands):

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    June 30, 2007     December 31, 2006  
    Gross     Accumulated     Gross     Accumulated  
    Amount     Amortization     Amount     Amortization  
Trade names, trademarks, brand names, and domain names
  $ 22,064     $ 8,816     $ 22,046     $ 8,184  
Purchased technology
    10,499       9,365       10,499       9,265  
NAR operating agreement
    1,578       827       1,578       751  
Customer lists and relationships
    1,041       912       1,041       865  
Other
    6,740       5,872       6,340       5,724  
 
                       
 
                               
Total
  $ 41,922     $ 25,792     $ 41,504     $ 24,789  
 
                       
     Amortization expense for intangible assets was $0.5 million and $1.0 million, respectively, for the three and six months ended June 30, 2007 and $0.6 million and $1.3 million, respectively, for the three and six months ended June 30, 2006. Amortization expense for the next five years is estimated to be as follows (in thousands):
         
Years Ended December 31,   Amount
2007 (remaining 6 months)
  $ 1,020  
2008
    2,012  
2009
    1,737  
2010
    1,669  
2011
    1,666  
7. Stock-Based Compensation and Charges
     The Company accounts for stock issued to non-employees in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 “Accounting for Stock-based Compensation” (“SFAS No. 123”) and EITF No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods and Services.”
     The Company has granted restricted stock awards to members of its Board of Directors as compensation during the past four years. These shares will vest on the third anniversary of their issuance. There were 314,950 and 292,200 unvested shares of restricted stock issued to members of the Company’s Board of Directors as of June 30, 2007 and 2006, respectively.
     The Company has granted restricted stock awards to its Chief Executive Officer in consideration for his service in 2003 and 2004. These shares have vested or will vest on the third anniversary of their issuance. There were 115,740 and 186,662 unvested shares of restricted stock issued to the Company’s Chief Executive Officer as of June 30, 2007 and 2006, respectively. The intrinsic value of these restricted stock awards was included in the results of operations in the period in which they were granted. During the three months ended June 30, 2007, the Company granted 232,018 shares of restricted stock to one of its officers as a “sign-on” bonus. These shares have a fair value of $1.0 million and vest fifty percent immediately with the balance vesting one year from the grant date subject to continued employment with the Company. The fair value of the first fifty percent vesting was recognized as stock based compensation immediately with the remaining fifty percent being amortized over one year. The total costs recognized during the three and six months ended June 30, 2007 was $547,000 which is included in the stock based compensation and charges detailed below.
     The Board of Directors awarded performance-based restricted stock units to certain of the Company’s executive officers. The following summarizes the restricted stock unit activity (in thousands):
         
    Number of
    Restricted Stock
    Units
Initial units granted
    5,145  
Units forfeited
    (505 )
 
       
Non-vested units at December 31, 2006
    4,640  
Units granted
    2,325  
Units forfeited
    (605 )
 
       
Non-vested units at June 30, 2007
    6,360  
 
       
     Based on the original terms of the awards, the officers were to earn shares of the Company’s stock, based on attaining certain performance goals relating to the Company’s revenues and operating income (as defined by the Management

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Development and Compensation Committee of the Board of Directors) for the fiscal year ending December 31, 2008. During the three months ended June 30, 2007, the Management Development and Compensation Committee of the Board of Directors approved modifications of the performance targets and vesting periods from the original awards, reducing the original restricted stock units available for vesting at the conclusion of 2008 by 50% for each of the executives, and revising the target financial performance for 2008 based on current market conditions and the Company’s expected performance. The committee also established financial performance targets for 2009, which provided the potential for executives to earn the remaining 50% of the restricted stock units previously granted by attainment of those performance goals.
     As a result of the modification, pursuant to SFAS 123R, a new measurement date was established. The modification was entered into because the 2006 grants required a three-year projection of financial performance in a highly competitive and rapidly changing market and the Management Development and Compensation Committee of the Board of Directors wanted to better reflect the current strategy of the Company while adhering to the original goals of increased and sustained performance. As a result, the likelihood of achieving the original targets was improbable and previously recognized compensation under the award has been reversed to reflect this assumption. Recognition of compensation for these units will be deferred until management determines that it is probable that it will achieve the new performance targets. As a result, $6.5 million of stock-based compensation expense previously recognized was reversed for the three and six months ended June 30, 2007. As of June 30, 2007, the fair value of the remaining restricted stock units granted was $29.0 million.
     The Company adopted the fair value recognition provisions of SFAS No. 123 (revised 2004) “Share Based Payment” (“SFAS 123R”) using the modified-prospective transition method. Under that transition method, compensation cost recognized includes: (a) compensation cost for all share-based payments granted prior to January 1, 2006, but not yet vested, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123; and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Compensation costs are recognized using a straight-line amortization method over the vesting period. Results for prior periods have not been restated.
     The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the ranges of assumptions in the following table. Our computation of expected volatility is based on a combination of historical and market-based implied volatility. Due to the unusual volatility of the Company’s stock price around the time of the restatement of its financial statements in 2002 and several historical acquisitions that changed the Company’s risk profile, historical data was more heavily weighted toward the most recent four years of stock activity. The expected term of options granted was derived by averaging the vesting term with the contractual term. The risk-free interest rates are based on U.S. Treasury zero-coupon bonds for the periods in which the options were granted.
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2007   2006   2007   2006
Risk-free interest rates
    4.51-5.16 %     4.85 – 5.18 %     4.51-5.16 %     4.35 – 5.18 %
Expected term (in years)
    6.06       6.06       6.06       6.06  
Dividend yield
    0 %     0 %     0 %     0 %
Expected volatility
    70 %     80 %     70 %     80 %
     The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007       2006     2007     2006  
    (Restated)           (Restated)        
Cost of revenue
  $ 33     $ 29     $ 77     $ 158  
Sales and marketing
    268       371       822       928  
Product and web site development
    237       340       512       839  
General and administrative
    (508 )     1,635       4,186       3,961  
 
                       
 
                               
Total
  $ 30     $ 2,375     $ 5,597     $ 5,886  
 
                       
     In addition to costs related to stock options, stock-based compensation and charges in sales and marketing includes costs related to vendor agreements and general and administrative includes costs related to the amortization of restricted stock grants.

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8. Net Income (Loss) Per Share
     The following table sets forth the computation of basic and diluted net income (loss) per share applicable to common stockholders for the periods indicated (in thousands, except per share amounts):
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007       2006     2007     2006  
    (Restated)           (Restated)        
Numerator:
                               
Net income
  $ 5,664     $ 2,597     $ 7,059     $ 1,438  
Convertible preferred stock dividend and related accretion
    (1,241 )     (1,181 )     (2,473 )     (2,355 )
 
                       
 
                               
Net income (loss) applicable to common stockholders
  $ 4,423     $ 1,416     $ 4,586     $ (917 )
 
                       
 
                               
Denominator:
                               
Basic weighted average shares outstanding
    154,885       150,769       154,614       149,865  
Add: dilutive effect of options, warrants and restricted stock
    10,614       14,358       12,043        
 
                       
Diluted weighted average shares outstanding
    165,499       165,127       166,657       149,865  
 
                       
 
                               
Net income (loss) per common share:
                               
Basic net income (loss) per share applicable to common stockholders
  $ 0.03     $ 0.01     $ 0.03     $ (0.01 )
 
                       
Diluted net income (loss) per share applicable to common stockholders
  $ 0.03     $ 0.01     $ 0.03     $ (0.01 )
 
                       
     Because their effects would be anti-dilutive for the periods presented, the above computation of diluted income (loss) per share excludes preferred stock, stock options and warrants of 31,496,142 and 27,607,510 the three and six months ended June 30, 2007, respectively, and 25,757,684 and 55,900,271 for the three and six months ended June 30, 2006, respectively.
     In the second quarter of 2006, the amounts reported as “Dividends on convertible preferred stock” in the Company’s Form 10-Q omitted the related accretion of the discount that was derived from the issuance of the convertible preferred stock. The reported results for that quarter have been revised to reflect both the accretion and the dividends in arriving at “Net income (loss) applicable to common stockholders.” As a result of the revision, additional expense of $296,000 and $592,000 for the three and six months ended June 30, 2006, respectively, is reflected in the line “Convertible preferred stock dividends and related accretion.” As a result of this change, basic and diluted loss per share attributable to common stockholders for the six months ended June 30, 2006 decreased by $0.01 from $(0.00) to $(0.01).
9. Segment Information
     Segment information is presented in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” This standard is based on a management approach, which requires segmentation based upon the Company’s internal organization and disclosure of revenue and operating expenses based upon internal accounting methods. The Company’s management evaluates performance and allocates resources based on two segments consisting of Real Estate Services for those products and services offered to industry professionals trying to reach new movers and manage their relationships with them and Consumer Media for those products and services offered to other advertisers who are trying to reach those consumers in the process of a move. This is consistent with the data that is made available to our management to assess performance and make decisions. In June 2007, the Company changed the name of its former Move-Related Services segment to Consumer Media.
     The expenses presented below for each of the business segments include an allocation of certain corporate expenses that are identifiable and benefit those segments and are allocated for internal management reporting purposes. The unallocated expenses are those corporate overhead expenses that are not directly attributable to a segment and include: corporate expenses, such as finance, legal, internal business systems, and human resources; amortization of intangible assets and stock-based charges. There is no inter-segment revenue. Assets and liabilities are not fully allocated to segments for internal reporting purposes.

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     Summarized information, by segment, as excerpted from internal management reports is as follows (in thousands):
                                                                 
    Three Months Ended  
    June 30, 2007 (Restated)     June 30, 2006  
    Real Estate     Consumer                     Real Estate     Consumer              
    Services     Media     Unallocated     Total     Services     Media     Unallocated     Total  
Revenue
  $ 54,750     $ 18,876     $     $ 73,626     $ 52,099     $ 21,792     $     $ 73,891  
Cost of revenue
    8,480       6,183       636       15,299       8,463       7,072       912       16,447  
 
                                               
 
Gross profit (loss)
    46,270       12,693       (636 )     58,327       43,636       14,720       (912 )     57,444  
 
Sales and marketing
    17,106       8,845       1,527       27,428       18,075       9,358       879       28,312  
Product and web site development
    7,149       1,884       236       9,269       6,508       1,269       1,016       8,793  
General and administrative
    5,738       3,631       8,005       17,374       7,674       3,770       7,934       19,378  
Amortization of intangible assets
                505       505                   589       589  
 
                                               
 
                                                               
Total operating expenses
    29,993       14,360       10,273       54,626       32,257       14,397       10,418       57,072  
 
                                               
 
                                                               
Income (loss) from operations
  $ 16,277     $ (1,667 )   $ (10,909 )   $ 3,701     $ 11,379     $ 323     $ (11,330 )   $ 372  
 
                                               
                                                                 
    Six Months Ended  
    June 30, 2007 (Restated)     June 30, 2006  
    Real Estate     Consumer                     Real Estate     Consumer              
    Services     Media     Unallocated     Total     Services     Media     Unallocated     Total  
Revenue
  $ 108,273     $ 36,383     $     $ 144,656     $ 101,348     $ 41,522     $     $ 142,870  
Cost of revenue
    16,739       12,059       1,199       29,997       16,129       14,824       1,900       32,853  
 
                                               
 
                                                               
Gross profit (loss)
    91,534       24,324       (1,199 )     114,659       85,219       26,698       (1,900 )     110,017  
 
                                                               
Sales and marketing
    35,227       17,614       2,531       55,372       34,400       17,870       1,383       53,653  
Product and web site development
    13,876       3,466       749       18,091       12,442       2,299       2,407       17,148  
General and administrative
    12,925       7,690       17,466       38,081       15,401       7,783       17,170       40,354  
Amortization of intangible assets
                1,003       1,003                   1,336       1,336  
 
                                               
 
                                                               
Total operating expenses
    62,028       28,770       21,749       112,547       62,243       27,952       22,296       112,491  
 
                                               
 
                                                               
Income (loss) from operations
  $ 29,506     $ (4,446 )   $ (22,948 )   $ 2,112     $ 22,976     $ (1,254 )   $ (24,196 )   $ (2,474 )
 
                                               
10. Income Taxes
     As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $40,000 and $80,000 was recorded in the three and six months ended June 30, 2007, respectively, as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to its indefinite life and an additional $129,000 and $173,000 tax provision was recorded in the three and six months ended June 30, 2007, respectively, as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the respective period.
     The Company adopted the FASB’s Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”), effective January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not to be sustained by the taxing authority. The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial position or results of operations.
     As of June 30, 2007, we do not have any accrued interest or penalties related to uncertain tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. We do not have any interest or penalties related to uncertain tax positions in income tax expense for the three and six months ended June 30, 2007 and 2006. The tax years 1993-2006 remain open to examination by the major taxing jurisdictions to which we are subject.
11. Commitments and Contingencies
     We are currently involved in certain legal proceedings, as discussed in Note 21, “Commitments and Contingencies—Legal Proceedings,” to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006. As of the date of this Form 10-Q, and except as disclosed in Note 21 in our Annual Report on Form 10-K for the year ended December 31, 2006, the Company is not a party to any other litigation or administrative

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proceedings that management believes will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows, and except as provided in the following paragraph, there have been no material developments in the litigation or administrative proceedings described in Note 21.
     On May 18, 2007, the Company entered into an agreement resolving the patent infringement claims brought against it by InternetAd Systems, LLC (“InternetAd”) in a lawsuit described in Note 21, “Commitments and Contingencies -Legal Proceedings,” to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006. Pursuant to the agreement, the Company paid cash and received a fully paid up worldwide license to the patents at issue in the case, and the claims against the Company were dismissed by InternetAd with prejudice.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
     This Form 10-Q and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact that we make in this Form 10-Q are forward-looking. In particular, the statements herein regarding industry prospects and our future consolidated results of operations or financial position are forward-looking statements. Forward-looking statements reflect our current expectations and are inherently uncertain. Our actual results may differ significantly from our expectations. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Form 10-Q, as well as those discussed in our Annual Report on Form 10-K for the year ended December 31, 2006, and in other documents we file with the Securities and Exchange Commission, or SEC. This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2006.
Our Business
     We have created an online service that enables consumers to find real estate listings and other content related to residential real estate, moving and relocation. Our web sites collectively have become the leading consumer destination on the Internet for home and real estate-related information based on the number of visitors, time spent on our web sites and number of property listings. We generate most of our revenue from selling advertising and marketing solutions to both real estate industry participants, including real estate agents, homebuilders, and rental property owners, and other local and national advertisers interested in reaching our consumer audience before, during or after a move. We also provide software solutions to real estate agents to assist them in managing their client interactions and architects’ home plans to consumers considering building a new home. We derive all of our revenues from our North American operations.
     Our primary consumer web sites are Move.comTM and REALTOR.com®, the official site of the National Association of REALTORS® (“NAR”), which provide new and existing homes, apartments, corporate housing, and self-storage listings and are home information resource sites with an emphasis on content related to mortgage financing, moving and storage, and home and garden activities. Our web sites also include SeniorHousingNetTM.com, a comprehensive resource for seniors and Moving.comTM which connects consumers with moving companies, van lines, truck rental providers and self storage facilities.
Basis of Presentation
     Our unaudited Condensed Consolidated Financial Statements reflect the historical results of Move, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Business Trends and Conditions
     In recent years, our business has been, and we expect will continue to be, influenced by a number of macroeconomic, industry-wide and product-specific trends and conditions:
    Market and economic conditions. In recent years, the U.S. economy has experienced low interest rates, and volatility in the equities markets. Through 2005, housing starts remained strong, while the supply of apartment housing generally exceeded demand. For a number of years prior to 2006, owning a home became much more attainable for the average consumer due to the availability of flexible mortgage options, which required minimal down payments and provided low interest rates. During this period, home builders spent less on advertising, given the strong demand for new houses and homeowners who were looking to sell a home, only had to list it at a reasonable price in most areas of the U.S. to sell in 60 days or less. Conversely, demand for rental units declined and apartment owners did not spend as much money on advertising, as they have sought to achieve cost savings during the difficult market for rentals. These trends had an impact on our ability to grow our business.

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      Beginning in the second half of 2005, the market dynamics seemed to reverse. Interest rates rose and mortgage options began to decline. The housing market became saturated with new home inventory in many large metropolitan markets and the available inventory of resale homes began to climb as demand softened. The impact of the rise in interest rates caused demand for homes to decline into 2006 and the rental market improved. The change in economic factors created uncertainty on job creation and made it difficult to gauge whether these trends would continue. While interest rates appeared to stabilize as we entered 2007, housing starts and sales of existing homes slowed considerably in 2006 and have continued to slow into 2007.
 
      During the difficult period for rentals prior to 2006, we saw many rental owners reduce their overall advertising spending and shift their dollars from conventional offline channels, such as newspapers and real estate guides, to the Internet. Because of this trend, we believe a slowdown in the sale of new and existing homes could lead to increased spending on the Internet by home builders, real estate agents and brokers. This trend was confirmed in the first half of 2006. We saw many brokers move their spending online and many home builders increased their marketing spend to move existing inventory, even as they slowed their production and our business grew as a result. However, as the slow market continues into 2007, it is possible that a continued slowdown could cause our rate of growth to decline. While the advertising spend by many of the large home builders, agents and brokers appears strong, some of the medium and smaller businesses may have to reduce expenses to remain in business and this could cause our growth rate to decline.
    Investment Strategy: We have made substantial investments in our business in recent years in order to improve our ability to bring consumers and advertisers together. As a result of our greater understanding of both consumer and customer needs, we have concluded that we need to demonstrate strong capabilities in four core areas: size and quality of consumer audience; depth and breadth of content; enduring industry relationships; and scaleable business models. We recently announced significant changes to our branding, product and pricing strategies to better align our solutions with these core competencies and we plan to focus on performance and execution in the future.
Critical Accounting Policies
     Our discussion and analysis of our financial condition and results of operations is based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, uncollectible receivables, intangible and other long-lived assets and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There were no significant changes to our critical accounting policies during the six months ended June 30, 2007, as compared to those policies disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
     In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), which became effective for us beginning January 1, 2007. FIN 48 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The impact of our reassessment of our tax positions in accordance with FIN 48 did not have a material impact on our results of operations, financial condition or liquidity. For additional information regarding the adoption of FIN 48, see Note 9 of Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
Recent Accounting Developments
     In February 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115” (“SFAS 159”). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS 159 are elective; however, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and

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(c) is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements.” The Company is currently evaluating whether the adoption of this statement will have a material effect on its financial conditions, its results of operations or its liquidity.
Legal Contingencies
     We are currently involved in certain legal proceedings, as discussed in Note 21, “Commitments and Contingencies—Legal Proceedings,” to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006. Because of the uncertainties related to both the amount and range of loss in connection with legal proceedings, on the remaining pending litigation, we are unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess the potential liability related to our pending litigation and determine whether reasonable estimates of the liability can be made. Unfavorable outcomes or significant estimates of our potential liability could materially impact our results of operations and financial position.
Results of Operations
     Three Months Ended June 30, 2007 and 2006
     Revenue
     Revenue decreased approximately $0.3 million, or less than 1%, to $73.6 million for the three months ended June 30, 2007 from $73.9 million for the three months ended June 30, 2006. The decrease in revenue was due to a decline of $2.9 million in the Consumer Media segment partially offset by an increase of $2.6 million in the Real Estate Services segment. These changes by segment are explained in the segment information below.
     Cost of Revenue
     Cost of revenue decreased approximately $1.1 million, or 7%, to $15.3 million for the three months ended June 30, 2007 from $16.4 million for the three months ended June 30, 2006. The decrease was primarily due to decreases in material and shipping costs of $1.1 million related to the elimination of magazines in our New Homes business and lower distribution in our Welcome Wagon business.
     Gross margin percentage increased to 79% for the three months ended June 30, 2007 compared to 78% for the three months ended June 30, 2006. The increase is primarily due to an increase in margins in the Real Estate Services segment resulting from increased revenues in the segment.
     Operating Expenses
     Sales and marketing. Sales and marketing expenses decreased approximately $0.8 million, or 3%, to $27.5 million for the three months ended June 30, 2007 from $28.3 million for the three months ended June 30, 2006. The decrease was primarily due to a decrease in personnel related costs of $1.0 million, partially offset by other cost increases of $0.2 million.
     Product and web site development. Product and web site development expenses increased approximately $0.5 million, or 6%, to $9.3 million for the three months ended June 30, 2007 from $8.8 million for the three months ended June 30, 2006 primarily due to increased efforts to improve our product offerings in our REALTOR.com®, Top Producer®, and Welcome Wagon® businesses.
     General and administrative. General and administrative expenses decreased approximately $2.0 million, or 10%, to $17.4 million for the three months ended June 30, 2007 from $19.4 million for the three months ended June 30, 2006. The decrease was primarily due to a $2.5 million decrease in non-cash stock-based compensation due to a $6.5 million reversal of previously recognized expense associated with restricted stock units, partially offset by one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants. There was a reduction in consulting expenses of $1.6 million, $0.8 million of which resulted from the completion of the relocation of our data center in fiscal 2006, partially offset by an increase in insurance costs as a result of a one-time refund of $1.2 million received in the three months ending June 30, 2006, and an increase in personnel related costs of $0.9 million.
     Amortization of intangible assets. Amortization of intangible assets was $0.5 million for the three months ended June 30, 2007 and $0.6 million for the three months ended June 30, 2006. The decrease in amortization was primarily due to certain intangible assets becoming fully amortized.

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     Stock-based compensation and charges. The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):
                 
    Three Months Ended  
    June 30,  
    2007     2006  
    (Restated)        
Cost of revenue
  $ 33     $ 29  
Sales and marketing
    268       371  
Product and web site development
    237       340  
General and administrative
    (508 )     1,635  
 
           
 
               
 
  $ 30     $ 2,375  
 
           
     Stock-based compensation and charges decreased for the three months ended June 30, 2007 compared to the three months ended June 30, 2006 primarily due to the reversal of previously recognized expense associated with restricted stock units, partially offset by one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants.
     Interest Income, Net
     Interest income, net, increased $0.7 million to $2.5 million for the three months ended June 30, 2007 compared to $1.8 million for the three months ended June 30, 2006, primarily due to increases in short-term investment balances and higher interest yields on those balances.
     Other Income, Net
     Other income, net, decreased $800,000 for the three months ended June 30, 2007 compared to the three months ended June 30, 2006, primarily due to $375,000 in expense resulting from the revaluation of an embedded derivative liability resulting from the sale of convertible preferred stock in December 2005. The remaining decrease was due to other income recognized in the three months ended June 30, 2006 from the receipt of shares of the Company’s common stock from an escrow related to the original iPlace acquisition.
     Income Taxes
     As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $40,000 was recorded in the three months ended June 30, 2007 as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to the indefinite life and an additional $129,000 tax provision was recorded as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the period.
     As of December 31, 2006, we had $942.0 million of net operating loss carryforwards for federal and foreign income tax purposes, which begin to expire in 2008. We have provided a full valuation allowance on our deferred tax assets, consisting primarily of net operating loss carryforwards, due to the likelihood that we may not generate sufficient taxable income during the carry-forward period to utilize the net operating loss carryforwards. A deferred tax liability has been established for the difference between tax amortization for financial statement purposes and for tax purposes.
     Segment Information
     Segment information is presented in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” This standard is based on a management approach, which requires segmentation based upon the Company’s internal organization and disclosure of revenue and operating expenses based upon internal accounting methods. The Company’s management evaluates performance and allocates resources based on two segments consisting of Real Estate Services for those products and services offered to industry professionals trying to reach new movers and manage their relationships with them and Consumer Media for those products and services offered to other advertisers who are trying to reach those consumers in the process of a move. This is consistent with the data that is made available to our management to assess performance and make decisions. In June 2007, we changed the name of our former Move-Related Services segment to Consumer Media.
     The expenses presented below for each of the business segments include an allocation of certain corporate expenses that are identifiable and benefit those segments and are allocated for internal management reporting purposes. The unallocated

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expenses are those corporate overhead expenses that are not directly attributable to a segment and include: corporate expenses, such as finance, legal, internal business systems, and human resources; amortization of intangible assets and stock-based charges. There is no inter-segment revenue. Assets and liabilities are not fully allocated to segments for internal reporting purposes.
     Summarized information by segment, as excerpted from internal management reports, is as follows (in thousands):
                                                                 
    Three Months Ended  
    June 30, 2007 (Restated)     June 30, 2006  
    Real Estate     Consumer                     Real Estate     Consumer              
    Services     Media     Unallocated     Total     Services     Media     Unallocated     Total  
Revenue
  $ 54,750     $ 18,876     $     $ 73,626     $ 52,099     $ 21,792     $     $ 73,891  
Cost of revenue
    8,480       6,183       636       15,299       8,463       7,072       912       16,447  
 
                                               
 
                                                               
Gross profit (loss)
    46,270       12,693       (636 )     58,327       43,636       14,720       (912 )     57,444  
 
Sales and marketing
    17,106       8,845       1,527       27,478       18,075       9,358       879       28,312  
Product and web site development
    7,149       1,884       236       9,269       6,508       1,269       1,016       8,793  
General and administrative
    5,738       3,631       8,005       17,374       7,674       3,770       7,934       19,378  
Amortization of intangible assets
                505       505                   589       589  
 
                                               
 
                                                               
Total operating expenses
    29,993       14,360       10,273       54,626       32,257       14,397       10,418       57,072  
 
                                               
 
                                                               
Income (loss) from operations
  $ 16,277     $ (1,667 )   $ (10,909 )   $ 3,701     $ 11,379     $ 323     $ (11,330 )   $ 372  
 
                                               
       Real Estate Services
     Real Estate Services consists of products and services that promote and connect real estate professionals to consumers through our REALTOR.com®, New Homes and Rentals on Move.comTM and SeniorHousingNetTM.com web sites, in addition to our customer relationship management applications for REALTORS® offered through our Top Producer® business. During the second quarter of 2006, we launched Move.comTM as a real estate listing and move-related search site. Shortly after its launch, Move.comTM replaced HomeBuilder.com® and RENTNET®.com and we began promoting those under the MoveTM brand. Our revenue is derived from a variety of advertising and software services, including enhanced listings, company and property display advertising, customer relationship management applications and web site sales which we sell to those businesses interested in reaching our targeted audience or those professionals interested in being more effective in managing their contact with consumers.
     Real Estate Services revenue increased $2.6 million, or 5%, to $54.7 million for the three months ended June 30, 2007, compared to $52.1 million for the three months ended June 30, 2006. The revenue increase was primarily generated by an increase in our REALTOR.com® business driven by increased customer count and higher average spending per customer on our Enhanced Listing Product. Additionally, there was an increase in our Top Producer® product offerings as we launched the Top Website product as well as continued growth in our subscriber base for our online software. These increases were partially offset by decreased revenue from our Rentals business. Real Estate Services revenue represented approximately 74% of total revenue for the three months ended June 30, 2007 compared to 71% of total revenue for the three months ended June 30, 2006.
     Real Estate Services expenses decreased $2.2 million, or 5%, to $38.5 million for the three months ended June 30, 2007, compared to $40.7 million for the three months ended June 30, 2006. The decrease was primarily due to a $2.2 million decrease in personnel related costs, a $1.5 million decrease in non-cash stock-based compensation due to a $1.9 million reversal of previously recognized expense associated with restricted stock units partially offset by additional stock option grants. These decreases were partially offset by a $1.4 million increase in consulting costs resulting from increased product development efforts and other cost increases of $0.1 million.
     Real Estate Services generated operating income of $16.3 million for the three months ended June 30, 2007, compared to operating income of $11.4 million for the three months ended June 30, 2006, primarily due to the increased revenue discussed above. We will continue to seek increased revenue through new product offerings and new market opportunities.
       Consumer Media
     Consumer Media, formerly Move-Related Services, consists of advertising products and lead generation tools including display, test-link and rich advertising positions, directory products, price quote tools and content sponsorships on Move.comTM, Moving.comTM, and other related sites which we sell to those businesses interested in reaching our targeted audience. In addition, it includes our Welcome Wagon® new-mover direct mail advertising products and the sale of new home plans and related magazines through our Homeplans business.

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     Consumer Media revenue decreased $2.9 million, or 13%, to $18.9 million for the three months ended June 30, 2007, compared to $21.8 million for the three months ended June 30, 2006. The decrease was primarily generated by a decline in revenues from our Homeplans business, a decrease in the Welcome Wagon® business primarily due to lower book distribution, and a decline in our online advertising revenue. Consumer Media revenue represented 26% of total revenue for the three months ended June 30, 2007 compared to 29% of total revenue for the three months ended June 30, 2006.
     Consumer Media expenses decreased $1.0 million, or 5%, to $20.5 million for the three months ended June 30, 2007, compared to $21.5 million for the three months ended June 30, 2006. The decrease was primarily due to a $1.0 million decrease in material and shipping costs.
     Consumer Media generated an operating loss of $1.7 million for the three months ended June 30, 2007, compared to operating income of $0.3 million for the three months ended June 30, 2006 primarily due to factors outlined above. We have announced plans for continued investments in our Welcome Wagon® business that could negatively impact our operating results in this segment for the remainder of 2007.
       Unallocated
     Unallocated expenses decreased $0.4 million, or 4%, to $10.9 million for the three months ended June 30, 2007, compared to $11.3 million for the three months ended June 30, 2006. The decrease was primarily due to a $1.6 million decrease in consulting costs, $0.8 million of which resulted from the completion of the relocation of our data center in fiscal 2006. There was an additional decrease due to a $0.8 million reduction in non-cash stock-based compensation due to a $4.1 million reversal of previously recognized expense associated with restricted stock units, partially offset by an increase due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants. These decreases were partially offset by an increase in insurance costs as a result of a one-time refund of $1.2 million in the six months ending June 30, 2006, increases in personnel related costs of $0.4 million and other cost increases of $0.4 million.
       Six Months Ended June 30, 2007 and 2006
      Revenue
     Revenue increased approximately $1.8 million, or 1%, to $144.7 million for the six months ended June 30, 2007 from $142.9 million for the six months ended June 30, 2006. The increase in revenue was due to increases of $6.9 million in the Real Estate Services segment partially offset by a $5.1 million decline in the Consumer Media segment. These changes by segment are explained in the segment information below.
       Cost of Revenue
     Cost of revenue decreased approximately $2.8 million, or 9%, to $30.0 million for the six months ended June 30, 2007 from $32.8 million for the six months ended June 30, 2006. The decrease was primarily due to decreases in material and shipping costs of $2.7 million related to the elimination of magazines in our New Homes business and lower distribution in our Welcome Wagon business and other cost decreases of $0.1 million.
     Gross margin percentage increased to 79% for the six months ended June 30, 2007 compared to 77% for the six months ended June 30, 2006. The increase is primarily due to an increase in margin resulting from increased revenues and the reduced costs noted above.
       Operating Expenses
       Sales and marketing. Sales and marketing expenses increased approximately $1.7 million, or 3%, to $55.4 million for the six months ended June 30, 2007 from $53.7 million for the six months ended June 30, 2006. The increase was primarily due to an increase in distribution and online marketing costs of $0.7 million, increased consulting costs of $0.4 million and other increases of $0.6 million.
       Product and web site development. Product and web site development expenses increased approximately $1.0 million, or 6%, to $18.1 million for the six months ended June 30, 2007 from $17.1 million for the six months ended June 30, 2006 primarily due to an increase of $1.5 million in consulting costs to improve our product offerings in our REALTOR.com®, Top Producer®, and Welcome Wagon® businesses and other increases of $0.2 million, partially offset by a $0.7 million decrease in personnel related costs.
       General and administrative. General and administrative expenses decreased approximately $2.3 million, or 6%, to $38.1 million for the six months ended June 30, 2007 from $40.4 million for the six months ended June 30, 2006. The

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decrease was primarily due to a $3.4 million reduction in consulting costs, $1.6 million of which resulted from the completion of the relocation of our data center in fiscal 2006. There was also a $0.1 million decrease in non-cash stock-based compensation during the six months ended June 30, 2007 primarily due to a $4.0 million reversal of previously recognized expense associated with restricted stock units partially offset by one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants. These decreases were partially offset by an increase in insurance costs as a result of a one-time refund of $1.2 million received in the three months ending June 30, 2006.
     Amortization of intangible assets. Amortization of intangible assets decreased approximately $0.3 million to $1.0 million for the six months ended June 30, 2007 from $1.3 million for the six months ended June 30, 2006. The decrease in amortization was primarily due to certain intangible assets becoming fully amortized.
     Stock-based compensation and charges. The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):
                 
    Six Months Ended  
    June 30,  
    2007     2006  
    (Restated)        
Cost of revenue
  $ 77     $ 158  
Sales and marketing
    822       928  
Product and web site development
    512       839  
General and administrative
    4,186       3,961  
 
           
 
               
 
  $ 5,597     $ 5,886  
 
           
     Stock-based compensation and charges decreased for the six months ended June 30, 2007, compared to the six months ended June 30, 2006 primarily due to the reversal of previously recognized expense associated with restricted stock units partially offset by one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants.
       Interest Income, Net
     Interest income, net, increased $1.4 million to $4.8 million for the six months ended June 30, 2007, compared to $3.4 million for the six months ended June 30, 2006, primarily due to increases in short-term investment balances and higher interest yields on those balances.
       Other Income, Net
     Other income, net, decreased $0.1 million for the six months ended June 30, 2007, compared to the six months ended June 30, 2006, primarily due to gains on sales of property and equipment in the six months ended June 30, 2007 and other income from the receipt of shares of the Company’s common stock from an escrow related to the original iPlace acquisition in the six months ended June 30, 2006.
       Income Taxes
     As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $80,000 was recorded in the six months ended June 30, 2007 as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to the indefinite life and an additional $173,000 tax provision was recorded as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the period.
     As of December 31, 2006, we had $942.0 million of net operating loss carryforwards for federal and foreign income tax purposes, which begin to expire in 2008. We have provided a full valuation allowance on our deferred tax assets, consisting primarily of net operating loss carryforwards, due to the likelihood that we may not generate sufficient taxable income during the carry-forward period to utilize the net operating loss carryforwards. A deferred tax liability has been established for the difference between tax amortization for financial statement purposes and for tax purposes.

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       Segment Information
     Summarized information by segment, as excerpted from internal management reports, is as follows (in thousands):
                                                                 
    Six Months Ended  
    June 30, 2007 (Restated)     June 30, 2006  
    Real Estate     Consumer                     Real Estate     Consumer              
    Services     Media     Unallocated     Total     Services     Media     Unallocated     Total  
Revenue
  $ 108,273     $ 36,383     $     $ 144,656     $ 101,348     $ 41,522     $     $ 142,870  
Cost of revenue
    16,739       12,059       1,199       29,997       16,129       14,824       1,900       32,853  
 
                                               
 
                                                               
Gross profit (loss)
    91,534       24,324       (1,199 )     114,659       85,219       26,698       (1,900 )     110,017  
 
                                                               
Sales and marketing
    35,227       17,614       2,531       55,372       34,400       17,870       1,383       53,653  
Product and web site development
    13,876       3,466       749       18,091       12,442       2,299       2,407       17,148  
General and administrative
    12,925       7,690       17,466       38,081       15,401       7,783       17,170       40,354  
Amortization of intangible assets
                1,003       1,003                   1,336       1,336  
 
                                               
 
                                                               
Total operating expenses
    62,028       28,770       21,749       112,547       62,243       27,952       22,296       112,491  
 
                                               
 
                                                               
Income (loss) from operations
  $ 29,506     $ (4,446 )   $ (22,948 )   $ 2,112     $ 22,976     $ (1,254 )   $ (24,196 )   $ (2,474 )
 
                                               
       Real Estate Services
     Real Estate Services revenue increased $6.9 million, or 7%, to $108.2 million for the six months ended June 30, 2007, compared to $101.3 million for the six months ended June 30, 2006. The revenue increase was primarily generated by an increase in our REALTOR.com® business driven by increased customer count and higher average spending per customer on our Enhanced Listing Product, increased featured CMA revenue and increased Featured Home revenue. Additionally, there was an increase in our Top Producer® product offerings as we launched the Top Website product as well as continued growth in our subscriber base for our online software. These increases were partially offset by decreases in our New Homes and Rentals businesses. Real Estate Services revenue represented approximately 75% of total revenue for the six months ended June 30, 2007 compared to 71% for the six months ended June 30, 2006.
     Real Estate Services expenses increased $0.4 million, or 1%, to $78.8 million for the six months ended June 30, 2007, compared to $78.4 million for the six months ended June 30, 2006. The increase was due to a $2.3 million increase in consulting costs related primarily to increased product development efforts and other cost increases of $0.5 million, partially offset by decreased personnel related costs of $1.7 million and a $0.7 million decrease in non-cash stock-based compensation primarily due to a $1.3 million reversal of previously recognized expense associated with restricted stock units partially offset by additional stock option grants.
     Real Estate Services generated operating income of $29.5 million for the six months ended June 30, 2007, compared to operating income of $23.0 million for the six months ended June 30, 2006, primarily due to the increased revenue discussed above. We will continue to seek increased revenue through new product offerings and new market opportunities.
       Consumer Media
     Consumer Media revenue decreased $5.1 million, or 12%, to $36.4 million for the six months ended June 30, 2007, compared to $41.5 million for the six months ended June 30, 2006. The decrease was partially generated by a decrease in the Welcome Wagon® business primarily due to lower book distribution, a decline in revenues from our Homeplans business, and a decline in our online advertising revenue. Consumer Media revenue represented approximately 25% of total revenue for the six months ended June 30, 2007 compared to 29% for the six months ended June 30, 2006.
     Consumer Media expenses decreased $2.0 million, or 5%, to $40.8 million for the six months ended June 30, 2007, compared to $42.8 million for the six months ended June 30, 2006. The decrease was primarily due to a $2.4 million decrease in material and shipping costs and other cost decreases of $0.8 million, partially offset by a $1.2 million increase in product development costs.
     Consumer Media generated an operating loss of $4.4 million for the six months ended June 30, 2007 compared to operating loss of $1.3 million for the six months ended June 30, 2006 primarily due to factors outlined above. We have announced plans for continued investments in our Welcome Wagon® business that could negatively impact our operating results in this segment for the remainder of 2007.

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       Unallocated
     Unallocated expenses decreased $1.3 million, or 5%, to $22.9 million for the six months ended June 30, 2007, compared to $24.2 million for the six months ended June 30, 2006. The decrease was primarily due to a $4.3 million reduction in consulting costs, $1.6 million of which resulted from the completion of the relocation of our data center in fiscal 2006. This decrease was partially offset by an increase in insurance costs as a result of a one-time refund of $1.2 million in the three months ending June 30, 2006, along with a $1.3 million increase in personnel related expenses and other cost increases of $0.2 million. There was also a $0.3 million increase in expense for non-cash stock-based compensation during the six months ended June 30, 2007 due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested as well as additional stock option grants partially offset by a $2.5 million reversal of previously recognized expense associated with restricted stock units.
       Liquidity and Capital Resources
     Net cash provided by operating activities of $18.5 million for the six months ended June 30, 2007 was attributable to the net income from operations of $7.1 million, plus non-cash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, gains on sales of fixed assets, stock-based compensation and charges, change in market value of embedded derivative liability and other non-cash items, aggregating to $12.0 million offset by changes in operating assets and liabilities of $0.6 million.
     Net cash provided by operating activities of $4.6 million for the six months ended June 30, 2006 was attributable to the net income from operations of $1.4 million, plus non-cash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, stock-based compensation and charges and other non-cash items, aggregating to $12.5 million offset by changes in operating assets and liabilities of $9.3 million. This was negatively impacted in the six month period ended June 30, 2006 by the $9.4 million in payments for the settlement of litigation and former officers’ legal expenses.
     Net cash provided by investing activities of $1.1 million for the six months ended June 30, 2007 was primarily attributable to proceeds from the sale of marketable equity securities of $15.7 million, proceeds from the surrender of a life insurance policy of $5.2 million, proceed from sales of property and equipment of $0.3 million, partially offset by $7.1 million in net purchases of short-term investments, capital expenditures of $12.6 million and purchases of intangible assets of $0.4 million. Net cash used in investing activities of $9.5 million for the six months ended June 30, 2006 was primarily attributable to $6.9 million in net maturities of short-term investments, offset by the acquisition of Moving.com of $9.6 million and capital expenditures of $6.8 million.
     Net cash provided by financing activities of $2.8 million for the six months ended June 30, 2007 was attributable to proceeds from the exercise of stock options of $2.7 million and reductions in restricted cash of $1.0 million offset by payments on capital lease obligations of $0.9 million. Net cash provided by financing activities of $4.3 million for the six months ended June 30, 2006 was attributable to proceeds from the exercise of stock options of $4.8 million and reductions in restricted cash of $0.9 million offset by payments on capital lease obligations of $1.4 million.
     We have generated positive operating cash flows in each of the last two years. We have stated our intention to invest in our products, our infrastructure, and in branding Move.comTM although we have not determined the actual amount of those future expenditures. We have no material financial commitments other than those under capital and operating lease agreements and distribution and marketing agreements and our operating agreement with the NAR. Our existing cash and short-term investments, and any cash generated from operations will be sufficient to fund our working capital requirements, capital expenditures and other obligations for the foreseeable future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
     Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We have not used derivative financial instruments in our investment portfolio. We invest our excess cash in money-market funds, auction rate securities, debt instruments of high quality corporate issuers and debt instruments of the U.S. Government and its agencies, and, by policy, this limits the amount of credit exposure to any one issuer.
     Investments in both fixed rate and floating rate interest earning instruments carries a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

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Item 4. Controls and Procedures
     As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
     There were no changes in our internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
     We are currently involved in certain legal proceedings, as discussed in Note 21, “Commitments and Contingencies- Legal Proceedings”, to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006 (“Annual Report”). As of the date of this Form 10-Q and except as disclosed in Note 21 in our Annual Report, the Company is not a party to any other litigation or administrative proceedings that management believes will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows, and except as provided in Note 11, “Commitments and Contingencies,” to the Unaudited Condensed Consolidated Financial Statements contained in Item 1 of Part I of this Form 10-Q, there have been no material developments in the litigation or administrative proceedings described in Note 21 to the Consolidated Financial Statements contained in our Annual Report.
Item 1A. Risk Factors
     You should consider carefully the risk factors below, and those presented in our Annual Report on Form 10-K for the year ended December 31, 2006, and other information included or incorporated by reference in this Form 10-Q. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we deem to be currently immaterial also may impair our business operations. If any of the stated risks actually occur, our business, financial condition and operating results could be materially adversely affected.
Risks Related to our Business
     The emergence of competitors for our services may adversely impact our business
     Our existing and potential competitors include web sites offering real estate related content and services as well as general purpose online services, and traditional media such as newspapers, magazines and television that may compete for advertising dollars. The real estate search services market in which our Real Estate Services division operates is becoming increasingly competitive. A number of competitors have emerged, including RealEstate.com (a division of InterActive Corp), HouseValues.com, AgentConnect.com (a division of Next Phase Media, Inc.), HomeGain (a division of Classified Ventures, LLC), ApartmentGuide.com, Rent.com, ForRent.com, Apartments.com, NewHomeGuide.com, NewHomeSource.com and more recently Google, Zillow, Trulia and Propsmart as well as general interest consumer web sites that offer home, moving and finance content, including ServiceMagic, Inc. (a division of InterActive Corp) and Gigamoves (a division of eBay).
     The barriers to entry for web-based services and businesses are low. In addition, parties with whom we have listing and marketing agreements could choose to develop their own Internet strategies or competing real estate sites. Many of our existing and potential competitors have longer operating histories in the Internet market, greater name recognition, larger consumer bases and significantly greater financial, technical and marketing resources than we do. The rapid pace of technological change constantly creates new opportunities for existing and new competitors and it can quickly render our existing technologies less valuable. Developments in the real estate search services market may also encourage additional competitors to enter that market. See “We may not be able to continue to obtain more listings from Multiple Listing Services and real estate brokers than other web site operators” below.
     We cannot predict how, if at all, our competitors may respond to our initiatives. We also cannot provide assurance that our new offerings will be able to compete successfully against these competitors or new competitors that enter our markets.

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We may not be able to continue to obtain more listings from Multiple Listing Services and real estate brokers than other web site operators.
     We believe that the success of REALTOR.com® depends in large part on displaying a larger and more current listing of existing homes for sale than other web sites. We obtain these listings through agreements with MLSs that have fixed terms, typically 12 to 36 months. At the end of the term of each agreement, the MLS could choose not to renew their agreement with us. There are no assurances the MLSs will continue to renew their agreements to provide listing data to us. If they choose not to renew their relationship with us, then REALTOR.com® could become less attractive to consumers and thus, less attractive to our advertising customers. Internet Data Exchange (“IDX”) technology makes it possible for other real estate web site operators to display MLS or cooperating broker’s listings on their web sites. NAR has adopted guidelines for MLSs that allow a broker to prevent MLSs from providing such broker’s listing data to other brokers’ web sites. These guidelines do not apply to REALTOR.com®. In a civil antitrust lawsuit brought against NAR in 2005, the United States Department of Justice (“DOJ”) challenged this policy by alleging that it is in violation of federal antitrust laws. It is possible that the ultimate resolution of this antitrust case, or independent initiatives by large brokers or others, could make it easier for other web sites to aggregate listing data for display over the Internet in a manner comparable to REALTOR.com®. This could impact how consumers and customers value our content and product offerings on the REALTOR.com® web site.
     In the first quarter of 2007, Realogy Corporation, the owner of the largest brokerage in the country, NRT Incorporated, and franchisor of Coldwell BankerTM, Century 21TM, ERATM and Sotheby’s InternationalTM announced marketing agreements to have all of their real estate listings uploaded to Google and Trulia search engines. In addition, a small number of MLSs have also agreed to put their listings on Google and other prominent websites. We would expect this trend will continue and that more of our competitors will be able to obtain real estate listings that were previously only available to us. This trend could make our web sites less attractive and less unique than they have been in the past.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
     None.
Item 3. Defaults Upon Senior Securities
     None.
Item 4. Submission of Matters to a Vote of Security Holders
     The 2007 Annual Meeting of Stockholders of the Company was convened on June 14, 2007 at 9:30 a.m. The proposal to elect three Class II directors to hold office for a term through the annual meeting in 2008 and until each of their successors has been duly elected and qualified received the following votes:
             
Geraldine B. Laybourne
  — votes for     149,771,247  
 
  — votes withheld     10,200,661  
William E. Kelvie
  — votes for     82,842,908  
 
  — votes withheld     77,128,999  
Kenneth K. Klein
  — votes for     144,468,847  
 
  — votes withheld     15,503,061  
     As previously reported, (i) following the resignation of Alan Yassky, Thomas M. Stevens was elected by NAR on June 14, 2007 as a Class I director in accordance with NAR’s right, by virtue of its ownership of the Company’s sole outstanding share of Series A Preferred Stock, to elect one of the Company’s directors and to fill any vacancy in the office of such director, and (ii) Fred D. Anderson was re-elected by Elevation Partners, L.P. and Elevation Employee Side Fund, LLC (together, “Elevation”) on June 14, 2007 as a Class II director in accordance with Elevation’s right, by virtue of its ownership of the Company’s outstanding shares of Series B Convertible Participating Preferred Stock to elect two of the Company’s directors. In addition to the directors elected on June 14, 2007, our Board of Directors consists of Roger B. McNamee, V. Paul Unruh and Bruce G. Willison, our Class I directors whose terms expire in 2008, and Joe F. Hanauer, L. John Doerr, and W. Michael Long, our Class III directors whose terms expire in 2008.
Item 5. Other Information
     On April 26, 2007, the Company and Lorna Borenstein, President, entered into an Executive Retention and Severance Agreement as previously described in a Current Report on Form 8-K filed by the Company on May 2, 2007.

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Item 6. Exhibits
     Exhibits
     
10.1
  W. Michael Long 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.2
  Jack Dennison 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.3
  Lewis R. Belote, III 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.4
  Lorna Borenstein 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.5
  Offer letter to Lorna Borenstein dated April 26, 2007 with form of Executive Retention and Severance Agreement attached as exhibit (Incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K filed May 2, 2007)
 
   
10.6
  Letter between Move, Inc. and Allan Dalton dated April 30, 2007 (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed May 3, 2007)
 
   
10.7
  Letter Agreement with Jack Dennison dated June 26, 2007 with form of Services Agreement as Attachment A (Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed July 2, 2007)
 
   
31.1
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
   
31.2
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
   
32.1
  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.(1)
 
   
32.2
  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.(1)
 
(1)   Filed herewith

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
 

MOVE, 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   
 
Date: February 28, 2008

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EXHIBIT INDEX
     
Exhibit    
Number   Description
 
   
10.1
  W. Michael Long 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.2
  Jack Dennison 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.3
  Lewis R. Belote, III 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.4
  Lorna Borenstein 2007 Executive Bonus Plan (Incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the quarter ended June 30, 2007 filed August 3, 2007)
 
   
10.5
  Offer letter to Lorna Borenstein dated April 26, 2007 with form of Executive Retention and Severance Agreement attached as exhibit (Incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K filed May 2, 2007)
 
   
10.6
  Letter between Move, Inc. and Allan Dalton dated April 30, 2007 (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed May 3, 2007)
 
   
10.7
  Letter Agreement with Jack Dennison dated June 26, 2007 with form of Services Agreement as Attachment A (Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed July 2, 2007)
 
   
31.1
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
   
31.2
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
   
32.1
  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.(1)
 
   
32.2
  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.(1)
 
(1)   Filed herewith

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