0001104659-12-074487.txt : 20121106 0001104659-12-074487.hdr.sgml : 20121106 20121106090605 ACCESSION NUMBER: 0001104659-12-074487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121106 DATE AS OF CHANGE: 20121106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOVE INC CENTRAL INDEX KEY: 0001085770 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 954438337 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26659 FILM NUMBER: 121181847 BUSINESS ADDRESS: STREET 1: 30700 RUSSELL RANCH RD CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91362 BUSINESS PHONE: 805-557-2300 MAIL ADDRESS: STREET 1: 30700 RUSSELL RANCH RD CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91362 FORMER COMPANY: FORMER CONFORMED NAME: HOMESTORE INC DATE OF NAME CHANGE: 20021113 FORMER COMPANY: FORMER CONFORMED NAME: HOMESTORE COM INC DATE OF NAME CHANGE: 19990505 10-Q 1 a12-20746_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

Form 10-Q

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2012

 

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

 

95-4438337

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

910 East Hamilton Avenue

Campbell, California

(Address of principal executive offices)

 

 

95008

(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 x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  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 x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

 

At October 31, 2012, the registrant had 39,324,744 shares of its common stock outstanding.

 

 

 



Table of Contents

 

INDEX

 

 

 

Page

 

 

 

PART I — FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements

 

 

Condensed Consolidated Balance Sheets at September 30, 2012 (unaudited) and December 31, 2011

3

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2012 and 2011 (unaudited)

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2012 and 2011 (unaudited)

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3.

Defaults Upon Senior Securities

23

Item 4.

Mine Safety Disclosures

24

Item 5.

Other Information

24

Item 6.

Exhibits

24

 

 

 

SIGNATURES

25

 

Move®, REALTOR.com®, Top Producer®, ListHubTM, TigerLead® and Moving.comTM are our trademarks or are exclusively licensed to Move, Inc.  This quarterly report on Form 10-Q contains 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.

 

2



Table of Contents

 

PART I.                          FINANCIAL INFORMATION

 

Item 1.                                 Condensed Consolidated Financial Statements

 

MOVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

September 30,
2012

 

December 31,
2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

30,876

 

$

87,579

 

Accounts receivable, net

 

12,382

 

11,719

 

Other current assets

 

6,950

 

7,086

 

Total current assets

 

50,208

 

106,384

 

 

 

 

 

 

 

Property and equipment, net

 

20,023

 

20,487

 

Investment in unconsolidated joint venture

 

5,442

 

5,711

 

Goodwill, net

 

33,551

 

24,450

 

Intangible assets, net

 

18,825

 

7,319

 

Other assets

 

851

 

570

 

Total assets

 

$

128,900

 

$

164,921

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

4,748

 

$

5,851

 

Accrued expenses

 

18,321

 

14,782

 

Deferred revenue

 

8,672

 

9,809

 

Total current liabilities

 

31,741

 

30,442

 

 

 

 

 

 

 

Other noncurrent liabilities

 

3,107

 

3,264

 

Total liabilities

 

34,848

 

33,706

 

 

 

 

 

 

 

Commitments and contingencies (see note 16)

 

 

 

 

 

 

 

 

 

 

 

Series B convertible preferred stock

 

 

48,555

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Series A convertible preferred stock

 

 

 

Common stock

 

39

 

39

 

Additional paid-in capital

 

2,129,801

 

2,121,483

 

Accumulated other comprehensive income

 

237

 

258

 

Accumulated deficit

 

(2,036,025

)

(2,039,120

)

Total stockholders’ equity

 

94,052

 

82,660

 

Total liabilities and stockholders’ equity

 

$

128,900

 

$

164,921

 

 

The accompanying notes are an integral part of these unaudited

Condensed Consolidated Financial Statements.

 

3



Table of Contents

 

MOVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

49,446

 

$

46,466

 

$

146,496

 

$

144,456

 

Cost of revenue

 

10,236

 

9,959

 

29,509

 

31,203

 

Gross profit

 

39,210

 

36,507

 

116,987

 

113,253

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

17,235

 

16,281

 

53,005

 

52,524

 

Product and web site development

 

9,412

 

8,437

 

27,603

 

26,899

 

General and administrative

 

10,464

 

10,823

 

31,514

 

30,352

 

Amortization of intangible assets

 

500

 

397

 

1,294

 

1,108

 

Total operating expenses

 

37,611

 

35,938

 

113,416

 

110,883

 

Operating income

 

1,599

 

569

 

3,571

 

2,370

 

Interest (expense) income, net

 

(1

)

(2

)

 

33

 

Earnings of unconsolidated joint venture

 

290

 

367

 

710

 

718

 

Other (expense) income, net

 

 

(99

)

(69

)

278

 

Income from operations before income taxes

 

1,888

 

835

 

4,212

 

3,399

 

Income tax expense

 

103

 

31

 

175

 

123

 

 

 

 

 

 

 

 

 

 

 

Net income

 

1,785

 

804

 

4,037

 

3,276

 

Convertible preferred stock dividend and related accretion

 

 

(562

)

(942

)

(3,506

)

Net income (loss) applicable to common stockholders

 

$

1,785

 

$

242

 

$

3,095

 

$

(230

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share applicable to common stockholders

 

$

0.05

 

$

0.01

 

$

0.08

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share applicable to common stockholders

 

$

0.04

 

$

0.01

 

$

0.08

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

Shares used to calculate basic and diluted income (loss) per share applicable to common stockholders:

 

 

 

 

 

 

 

 

 

Basic

 

38,798

 

39,279

 

38,661

 

39,430

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

39,895

 

39,977

 

39,660

 

39,430

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

Net income

 

$

1,785

 

$

804

 

$

4,037

 

$

3,276

 

Foreign currency translation gain (loss)

 

11

 

(62

)

(21

)

(98

)

Comprehensive income

 

$

1,796

 

$

742

 

$

4,016

 

$

3,178

 

 

The accompanying notes are an integral part of these unaudited

 Condensed Consolidated Financial Statements.

 

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Table of Contents

 

MOVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2012

 

2011

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

4,037

 

$

3,276

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

7,195

 

6,979

 

Amortization of intangible assets

 

1,294

 

1,108

 

Provision for doubtful accounts

 

486

 

99

 

Loss on sales and disposals of assets

 

38

 

126

 

Stock-based compensation and charges

 

5,856

 

4,441

 

Earnings of unconsolidated joint venture

 

(710

)

(718

)

Return on investment in unconsolidated joint venture

 

255

 

280

 

Other noncash items

 

(78

)

(52

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(1,100

)

(1,649

)

Other assets

 

(144

)

88

 

Accounts payable and accrued expenses

 

2,816

 

(3,189

)

Deferred revenue

 

(1,163

)

(2,649

)

Net cash provided by operating activities

 

18,782

 

8,140

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(6,672

)

(5,075

)

Proceeds from sale of assets

 

9

 

 

Acquisitions, net of cash acquired

 

(22,000

)

(500

)

Proceeds from dissolution of joint venture

 

 

499

 

Return of investment in unconsolidated joint venture

 

724

 

660

 

Net cash used in investing activities

 

(27,939

)

(4,416

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Principal payments on loan payable

 

(82

)

(77

)

Redemption of convertible preferred stock

 

(49,044

)

(70,000

)

Payment of dividends on convertible preferred stock

 

(882

)

(1,579

)

Proceeds from exercise of stock options

 

3,060

 

608

 

Tax payment related to net share settlements of restricted stock awards

 

(529

)

(312

)

Repurchases of common stock

 

(69

)

(9,617

)

Net cash used in financing activities

 

(47,546

)

(80,977

)

 

 

 

 

 

 

Change in cash and cash equivalents

 

(56,703

)

(77,253

)

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

87,579

 

158,517

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

30,876

 

$

81,264

 

 

The accompanying notes are an integral part of these unaudited

Condensed Consolidated Financial Statements.

 

5



Table of Contents

 

MOVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.   Business

 

Move, Inc. and its subsidiaries (the “Company” or “Move”) operate an online network of web sites for real estate search, finance, moving and home enthusiasts and provide a comprehensive resource for consumers seeking online information and connections needed regarding real estate. The Company’s flagship consumer web sites are REALTOR.com®, Move.com and Moving.comTM. Through its ListHubTM business, the Company is also an online real estate listing syndicator and provider of advanced performance reporting solutions for the purpose of helping to drive an effective online advertising program for brokers, real estate franchises, and individual agents.  The Company also supplies lead management software for real estate agents and brokers through its Top Producer® and newly acquired TigerLead® businesses.

 

2.   Principles of Consolidation and Basis of Presentation

 

The accompanying financial statements are consolidated and include the financial statements of Move, Inc. and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.  The Company has evaluated all subsequent events through the date the financial statements were issued.

 

Investments in private entities where the Company holds a 50% or less ownership interest and does not exercise control are accounted for using the equity method of accounting.  The investment balance is included in “Investment in unconsolidated joint venture” within the Condensed Consolidated Balance Sheets and the Company’s share of the investees’ results of operations is included in “Earnings of unconsolidated joint venture” within the Condensed Consolidated Statements of Operations.

 

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 United States 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 Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”), which was filed with the SEC on February 17, 2012.  The results of operations for the three and nine months ended September 30, 2012, are not necessarily indicative of the operating results expected for the full year ending December 31, 2012.

 

Adjustments to Statements of Cash Flows

 

Certain adjustments have been made to the prior year Condensed Consolidated Statements of Cash Flows to conform to the current year presentation.  These adjustments have the effect of increasing cash flows from operating activities (i.e., returns on investment) and decreasing cash flows from investing activities (i.e., returns of investment).

 

During the three months ended June 30, 2012, the Company identified immaterial errors in the Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010, and the interim periods of 2011, related to the classification of cash distributions that represented returns on its investment in an unconsolidated joint venture as cash flows from investing activities. The Company has analyzed and apportioned the total cash distributions received associated with its investment in unconsolidated joint venture utilizing the “cumulative earnings” approach to properly apportion the cash distributions received between returns on investment and returns of investment for purposes of classification in its Consolidated Statements of Cash Flows.  All cash distributions received were deemed to be returns on the Company’s investment in the unconsolidated joint venture and classified as operating cash flows, unless the cumulative cash distributions exceeded the Company’s cumulative equity in earnings from its investment in the joint venture, in which case the excess cash distributions were deemed to be returns of the investment and classified as investing cash flows.  Based on a quantitative and qualitative analysis of the errors in prior financial statements as required by authoritative guidance, the Company concluded that such errors had, and such apportionment adjustments would have, no material impact on any of the Company’s previously issued financial statements and had no effect on the trend of financial results. Accordingly, the Company has elected to present revised information pertaining to cash flows from operating and investing activities for the years ended December 31, 2011 and 2010, and the nine-month period ended September 30, 2011, as described below.  These revised amounts are reflected in the Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2012 and 2011, and will also be reflected in future filings, as applicable.

 

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Table of Contents

 

For the year ended December 31, 2011, cash distributions representing a return on investment were $1.2 million.  Adjustment of such amount has the effect of increasing previously reported cash provided by operating activities to $17.6 million and increasing previously reported cash used in investing activities to $7.3 million for 2011.  For the year ended December 31, 2010, cash distributions representing a return on investment were $1.0 million.  Adjustment of such amount has the effect of increasing previously reported cash provided by operating activities to $23.7 million and reducing previously reported cash provided by investing activities to $87.3 million for 2010.  For the nine months ended September 30, 2011, cash distributions representing a return on investment were $0.3 million.  Adjustment of such amounts has the effect of increasing previously reported cash provided by operating activities to $8.1 million, and increasing previously reported cash used in investing activities to $4.4 million for the nine months ended September 30, 2011.

 

3.   New Accounting Standards

 

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update, which amends current comprehensive income guidance.  This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity.  Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  This accounting standards update was effective for public companies during interim and annual periods beginning after December 15, 2011, with early adoption permitted. The Company has elected to report comprehensive income in a single continuous statement of comprehensive income.  The adoption of this accounting standards update did not have a material impact on the Company’s consolidated financial statements.

 

In September 2011, the FASB issued an accounting standards update which allows entities to use a qualitative approach to test goodwill for impairment.  This update permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.  If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test.  Otherwise, the two-step goodwill impairment test is not required.  This update was effective for public companies during interim and annual periods beginning after December 15, 2011, with early adoption permitted.  The adoption of this accounting standards update did not have a material impact on the Company’s consolidated financial statements.

 

In July 2012, the FASB issued an accounting standards update which allows entities to use a qualitative approach to test indefinite-lived intangible assets for impairment.  This update permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value.  If it is concluded that this is the case, it is necessary to calculate the fair value of the indefinite-lived intangible asset.  Otherwise, it is not necessary to calculate the fair value of the asset in that year.  This update will be effective for public companies for interim and annual impairment tests performed during fiscal years beginning after September 15, 2012, with early adoption permitted.  The adoption of this accounting standards update will not have a material impact on the Company’s consolidated financial statements as it only requires a change in the possible approach taken to test indefinite-lived intangible assets for impairment.

 

A variety of proposed or otherwise potential accounting standards are currently under evaluation by the various standard setting organizations and regulatory agencies.  Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would have a material impact to the Company’s consolidated financial statements.

 

4.   Acquisitions

 

On September 1, 2012, the Company entered into an agreement with Tiger Lead Solutions, LLC (“Tiger Lead Solutions”) whereby the Company acquired substantially all of the operating assets of the Tiger Lead Solutions business for a purchase price of $22.0 million in cash, $3.0 million of which was paid into escrow for a one-to-two year period to secure certain obligations of Tiger Lead Solutions.  In addition, the Company entered into employment agreements with members of Tiger Lead Solution’s senior management whereby the Company granted 273,420 restricted stock units with a grant date fair value of $2.2 million.  These time-based restricted stock units will vest one year from the date of grant and would be forfeited in the event of termination by the Company for cause or voluntary resignation.  The TigerLead® business provides an integrated set of internet marketing services and software-as-a-service (“SaaS”) Customer Relationship Management (“CRM”) tools to residential realtors and brokers to generate, cultivate, and manage leads.

 

The acquisition has been accounted for as a business combination with the total purchase price being allocated to the assets acquired based on their respective fair values.  The $22.0 million purchase price was preliminarily allocated $11.9 million to definite-lived intangible assets, $0.9 million to indefinite-lived intangible assets, $0.1 million to net tangible assets with the remaining $9.1 million to goodwill, pending the finalization of the purchase price allocation.  The identifiable intangible assets are being amortized over estimated lives ranging from six to nine years, with the exception of $0.9 million in indefinite-lived trade name and trademarks.  The financial results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of acquisition.  Pro forma information for this acquisition has not been presented because the effects were not material to the Company’s historical consolidated financial statements.

 

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Table of Contents

 

5.   Investment in Unconsolidated Joint Ventures

 

The Company accounts for its investment in unconsolidated joint ventures under the equity method of accounting.  Under this method, the Company records its proportionate share of the joint venture’s net income or loss based on the joint venture’s monthly financial statements, which is recorded one month in arrears.

 

As of September 30, 2012 and December 31, 2011, the Company’s interest in its unconsolidated joint venture, Builders Digital Experience, LLC (“BDX”), amounted to $5.4 million and $5.7 million, respectively, which was recorded in “Investment in unconsolidated joint venture” within the Condensed Consolidated Balance Sheets.

 

The Company’s proportionate share of earnings resulting from its investment in unconsolidated joint venture was $0.3 million and $0.4 million for the three-month periods ended September 30, 2012 and 2011, respectively, and $0.7 million for the nine-month periods ended September 30, 2012 and 2011, and was included in “Earnings of unconsolidated joint venture” within the Condensed Consolidated Statements of Operations.

 

The Company received cash distributions of $1.0 million and $0.9 million from BDX during the nine-month periods ended September 30, 2012 and 2011, respectively. The Company applies the “cumulative earnings” approach to apportion the cash distributions received from BDX between returns on investment and returns of investment for purposes of classification in its Condensed Consolidated Statements of Cash Flows.  All cash distributions received are deemed to be returns on the Company’s investment in BDX and classified as operating cash flows, unless the cumulative cash distributions exceed the Company’s cumulative equity in earnings from its investment in BDX, in which case the excess cash distributions are deemed to be returns of the investment and are classified as investing cash flows.

 

6.   Fair Value Measurements

 

As of September 30, 2012 and December 31, 2011, all of the Company’s cash balances were held in unrestricted demand deposit accounts.  The Company had no cash equivalents at either of those dates.  Accordingly, no adjustments to fair value were necessary.

 

Certain assets and liabilities are measured at fair value on a nonrecurring basis.  That is, such assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (e.g. when there are indicators of impairment).  The Company had no significant nonfinancial assets or liabilities that required adjustment to fair value subsequent to initial recognition at either September 30, 2012 or December 31, 2011.

 

7.   Revolving Line of Credit 

 

The Company is party to a revolving line of credit agreement with a major financial institution, providing for borrowings of up to $20.0 million, available until August 31, 2013.  At September 30, 2012 and December 31, 2011, the Company had no borrowings outstanding under the revolving line of credit.  The revolving line of credit requires interest payments based on the BBA LIBOR Rate plus 2.5%. There is an unused commitment fee of 0.2% on any unused portion of the line of credit, payable quarterly.  Additionally, there is a 0.5% annual fee payable if the Company’s average aggregate monthly deposit and investment balances with the financial institution fall below $35.0 million.  The revolving line of credit agreement contains various customary affirmative, negative and financial covenants.  Those covenants include, but are not limited to, requirements to:  maintain tangible net worth of $50.0 million; maintain minimum unrestricted, unencumbered marketable securities, cash and cash equivalents (defined as “Liquidity”) of the greater of $20.0 million or 125% of the outstanding principal balance of the line of credit; and maintain adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $17.0 million on a twelve-month rolling basis.  The revolving line of credit is collateralized by the Company’s cash deposits, accounts receivable, investments, inventory, property and equipment and general intangibles it now or subsequently owns.  In addition, the Company has pledged the capital stock in its current and future subsidiaries as further collateral for the revolving line of credit.

 

The Company was in compliance with the covenants, then in effect, as of September 30, 2012 and December 31, 2011, respectively.

 

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8.   Goodwill and Intangible Assets

 

Goodwill increased $9.1 million to $33.6 million as of September 30, 2012, from $24.5 million as of December 31, 2011, due to the acquisition of the TigerLead® business as described in Note 4, “Acquisitions.”  The Company also had both indefinite-lived and definite-lived intangible assets at those dates.  Indefinite-lived intangible assets consist of trade names and trademarks used to market products for the foreseeable future and do not have any known useful life limitations due to legal, contractual, regulatory, economic or other factors. Definite-lived intangible assets consisted of certain trade names, trademarks, brand names, content syndication agreements, purchased technology, customer contracts and related customer relationships, noncontractual customer relationships, and other miscellaneous agreements.  The definite-lived intangible assets are amortized over the expected period of benefit.  There are no expected residual values related to these intangible assets.

 

Intangible assets by category were as follows (in thousands):

 

 

 

September 30, 2012

 

December 31, 2011

 

 

 

Gross

 

Accumulated

 

Gross

 

Accumulated

 

 

 

Amount

 

Amortization

 

Amount

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

Trade names, trademarks, brand names, and domain names

 

$

530

 

$

521

 

$

530

 

$

520

 

Content syndication agreements

 

3,800

 

1,541

 

3,800

 

971

 

Purchased technology

 

8,400

 

1,615

 

1,900

 

1,250

 

Customer Relationships

 

6,630

 

549

 

1,230

 

314

 

National Association of Realtors® operating agreement

 

1,578

 

1,578

 

1,578

 

1,503

 

Other

 

625

 

364

 

1,450

 

1,141

 

Total definite-lived intangible assets

 

21,563

 

6,168

 

10,488

 

5,699

 

Trade names and trademarks

 

3,430

 

 

2,530

 

 

Total indefinite-lived intangible assets

 

3,430

 

 

2,530

 

 

Total intangible assets

 

$

24,993

 

$

6,168

 

$

13,018

 

$

5,699

 

 

Amortization expense for intangible assets was $0.5 million and $0.4 million for the three-month periods ended September 30, 2012 and 2011, respectively, and $1.3 million and $1.1 million for the nine-month periods ended September 30, 2012 and 2011, respectively.  Amortization expense for the next five years is estimated to be as follows (in thousands):

 

Years Ended December 31,

 

Expense

 

2012 (remaining 3 months)

 

$

780

 

2013

 

2,955

 

2014

 

2,838

 

2015

 

2,464

 

2016

 

1,701

 

 

9.   Stock-Based Compensation and Charges

 

The following chart summarizes the stock-based compensation and charges that were included in the following financial statement line items for each of the periods presented (in thousands):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Cost of revenue

 

$

71

 

$

52

 

$

193

 

$

170

 

Sales and marketing

 

361

 

307

 

1,554

 

1,066

 

Product and web site development

 

527

 

238

 

1,412

 

915

 

General and administrative

 

1,037

 

560

 

2,697

 

2,290

 

Total stock-based compensation and charges

 

$

1,996

 

$

1,157

 

$

5,856

 

$

4,441

 

 

Stock-based compensation and charges for the three- and nine-month periods ended September 30, 2012 and 2011 include expenses associated with stock option awards, restricted stock awards and both time-vested and performance-based restricted stock units.  As a result of the departure of certain sales management during the second quarter, the Company recognized $0.5 million in incremental stock-based compensation during the nine months ended September 30, 2012, associated with the acceleration of vesting for outstanding stock option and restricted stock awards.

 

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Stock Option Awards

 

The fair value of stock option awards was estimated on the date of grant using a Black-Scholes option valuation model that used the ranges of assumptions in the following table. The risk-free interest rates are based upon U.S. Treasury zero-coupon bonds for the periods during which the options were granted. The expected term of stock options granted represents the weighted-average period that the stock options are expected to remain outstanding. The Company has not declared and does not expect to declare dividends on its common stock; accordingly, the dividend yield for valuation purposes is assumed to be zero. The Company bases its computation of expected volatility upon a combination of historical and market-based implied volatility.

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Risk-free interest rates

 

0.59%—0.67%

 

0.89%—1.35%

 

0.59%—1.04%

 

0.89%—2.30%

 

Expected term (in years)

 

5.85

 

5.85

 

5.85

 

5.85

 

Dividend yield

 

0%

 

0%

 

0%

 

0%

 

Expected volatility

 

75%

 

75%

 

75%

 

75%—80%

 

 

The total cost recognized related to stock option awards was $1.3 million and $1.2 million for the three months ended September 30, 2012 and 2011, respectively.  For the nine months ended September 30, 2012 and 2011, the total cost recognized related to stock option awards was $4.0 million and $3.5 million, respectively.

 

Restricted Stock Awards

 

The Company grants restricted stock awards to the nonemployee members of its Board of Directors as remuneration for serving on its Board (except for any director who is entitled to a seat on the Board of Directors on a contractual basis or has waived remuneration as a director).  During the nine months ended September 30, 2012, the Company granted 52,265 shares of restricted stock to the nonemployee members of its Board of Directors, which vest over three years.  During the nine months ended September 30, 2011, the Company granted 32,729 shares of restricted stock to the nonemployee members of its Board of Directors, with the exception of one such director who had waived remuneration.  These shares, subject to certain terms and restrictions, will cliff vest on the third anniversary of their issuance.  Additionally, during the nine-month period ended September 30, 2011, the Company granted 7,500 shares of restricted stock to the Chairman of the Board of Directors, which were immediately vested.  The total cost recognized for these awards was $0.1 million for the three months ended September 30, 2012 and 2011, and $0.2 million and $0.3 million for the nine months ended September 30, 2012 and 2011, respectively.

 

The Company also grants restricted stock awards to certain executives and key employees.  Generally, these shares, subject to certain terms and restrictions, vest in four equal annual installments over the four-year period following the applicable grant date.  During the nine months ended September 30, 2012, the Company granted 100,000 shares of restricted stock with an aggregate grant date fair value of $0.7 million that is being amortized over the vesting period.  During the nine months ended September 30, 2011, the Company granted 338,350 shares of restricted stock with an aggregate grant date fair value of $2.6 million that is being amortized over the vesting period. The total cost recognized associated with restricted stock awards was $0.2 million for the three months ended September 30, 2012, and $0.8 million and $0.2 million for the nine months ended September 30, 2012 and 2011, respectively.

 

As of September 30, 2012, there were 508,811 shares of nonvested restricted stock awards outstanding with a grant date fair value of $3.9 million.

 

Time-Vested Restricted Stock Units

 

The Company also grants time-vested restricted stock units.  Generally, these restricted stock units, subject to certain terms and restrictions, vest in four equal annual installments over the four-year period following the grant dates, resulting in the issuance, on a one-for-one basis, of shares of our common stock after the vesting date.  During the nine months ended September 30, 2012, the Company granted 915,485 restricted stock units with a grant date fair value of $7.6 million, which is being amortized over the four-year vesting period.  In addition, there were 273,420 restricted stock units with a grant date fair value of $2.2 million provided to members of Tiger Lead Solution’s senior management pursuant to employment agreements as described in Note 4, “Acquisitions,” which will be amortized over a one-year vesting period.  As of September 30, 2012, there were 1,082,480 nonvested restricted stock units outstanding with an aggregate grant date fair value of $9.0 million.  The total cost recognized for time-vested restricted stock units was $0.4 million and $0.8 million for the three and nine months ended September 30, 2012, respectively.

 

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Performance-Based Restricted Stock Units

 

The Company previously granted performance-based restricted stock units to certain executive and key employees.  These awards could have been earned on the attainment of certain performance goals defined by the Management Development and Compensation Committee of the Board of Directors.  The Company did not award any performance-based restricted stock units during the nine months ended September 30, 2012, or during the year ended December 31, 2011.  As of September 30, 2012, there were no nonvested shares of performance-based restricted stock units and there were no costs associated with performance-based restricted stock units recognized during the three and nine months ended September 30, 2012.  During the three months ended September 30, 2011, shares associated with unvested performance-based restricted stock units were forfeited due to resignations of certain executives, resulting in a $0.1 million reversal of stock-based compensation expense that had been previously recognized.  For the nine months ended September 30, 2011, the Company recognized $0.5 million in total costs related to performance-based restricted stock units.

 

10. Redemption of Series B Convertible Preferred Stock

 

In February 2011, the Company reached an agreement with both Elevation Partners, L.P. and Elevation Side Fund, LLC (together, “Elevation”) to redeem 70,000 shares of the Company’s Series B convertible preferred stock, at a total redemption price of $70.4 million, including approximately $0.4 million in associated cash dividends accrued through the date immediately prior to the redemption.  The Company consummated the redemption on February 22, 2011.  Immediately after the completion of the redemption, Elevation continued to be the sole holder of the Company’s outstanding Series B convertible preferred stock and held approximately 49,044 shares of such stock, which stock was held under the same terms as applied to the original purchase of Series B convertible preferred stock.

 

In March 2012, the Company elected to redeem all of the outstanding shares of the Company’s Series B convertible preferred stock, approximately 49,044 shares, for a total redemption price of $49.5 million, including approximately $0.5 million in associated cash dividends accrued through the date immediately prior to the redemption.  In March 2012, the Company and Elevation agreed on certain timing and procedural matters to facilitate the redemption.  As a result of the agreed-upon redemption, the Company recognized the remaining unamortized issuance costs associated with the Series B convertible preferred stock of $0.4 million, which is included in “Convertible preferred stock dividend and related accretion” within the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2012.  The redemption was effective, and the redemption price was paid to Elevation on April 6, 2012.  As a result of the redemption, Elevation was no longer entitled to representation on the Company’s Board of Directors.  Accordingly, Fred D. Anderson resigned as a director of the Company effective April 6, 2012.  Additionally, Roger B. McNamee, a Managing Partner of Elevation, did not stand for re-election to the Board at the 2012 Annual Meeting of Stockholders held on June 13, 2012, and ceased to be a director of the Company on that date.

 

11. Common Stock Repurchases

 

In accordance with its Board of Directors-authorized share repurchase program, the Company repurchased 9,958 shares of its outstanding common stock in the open market for approximately $0.1 million during the nine-month period ended September 30, 2012.

 

See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” in this Form 10-Q for additional information.

 

12. Reverse Stock Split

 

At the close of business on November 18, 2011, the Company effected a 1-for-4 reverse split of its common stock, which was previously authorized by its stockholders.  All common stock and per share information in this report has been retroactively adjusted to reflect the reverse stock split for all periods presented, except for par value, which was not affected by the reverse stock split.

 

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13. 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

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income

 

$

1,785

 

$

804

 

$

4,037

 

$

3,276

 

Convertible preferred stock dividend and related accretion

 

 

(562

)

(942

)

(3,506

)

Net income (loss) applicable to common stockholders

 

$

1,785

 

$

242

 

$

3,095

 

$

(230

)

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

38,798

 

39,279

 

38,661

 

39,430

 

Add: dilutive effect of options and restricted stock

 

1,097

 

698

 

999

 

 

Fully diluted weighted-average shares outstanding

 

39,895

 

39,977

 

39,660

 

39,430

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share applicable to common stockholders

 

$

0.05

 

$

0.01

 

$

0.08

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share applicable to common stockholders

 

$

0.04

 

$

0.01

 

$

0.08

 

$

(0.01

)

 

Because their effect would be anti-dilutive, the denominator in the above computation of diluted income per share excludes “out-of-the-money” stock options of 3,803,142 and 3,815,642 for the three and nine months ended September 30, 2012.  For the three months ended September 30, 2011, the denominator in the above computation of diluted income per share excludes convertible preferred stock and “out-of-the-money” stock options totaling 8,158,436, as their effect would be antidilutive.  For the nine months ended September 30, 2011, the denominator in the above computation of diluted loss per share excludes convertible preferred stock, stock options, restricted stock units and nonvested restricted stock awards totaling 12,292,886, as their effect would be antidilutive as a result of the Company’s net loss applicable to common stockholders.

 

14. Related-Party Transactions

 

The Company makes payments to the National Association of Realtors (“NAR”) required under its operating agreement with the NAR and under certain other advertising agreements.  Total amounts paid under these agreements were $0.5 million for the three months ended September 30, 2012 and 2011, and $1.5 million for the nine months ended September 30, 2012 and 2011.  The Company also provided product development services to the NAR and recognized $0.3 million and $0.7 million in revenues for the three and nine months ended September 30, 2011, respectively.  The Company did not provide similar product development services in 2012.  As of September 30, 2012 and December 31, 2011, the Company had balances due to the NAR of $0.4 million and $0.5 million, respectively, which are included in “Accounts payable” within the Condensed Consolidated Balance Sheets.

 

15.   Income Taxes

 

As a result of historical net operating losses, the Company currently provides a full valuation allowance against its net deferred tax assets.  For the three and nine months ended September 30, 2012 and 2011, income tax expense included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets.

 

During the three and nine months ended September 30, 2012 and 2011, income tax expense differed from the income tax benefit expected at the statutory rate primarily due to the valuation allowance recorded against the deferred tax benefits generated from net operating losses incurred, certain nondeductible items and state income taxes.

 

As of September 30, 2012, the Company does 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.  The Company does not have any interest or penalties related to uncertain tax positions in income tax expense for the three and nine months ended September 30, 2012 and 2011.  The tax years 1993—2011 remain open to examination by the major taxing jurisdictions to which the Company is subject.

 

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16.  Commitments and Contingencies

 

Operating Lease Commitments

 

On February 13, 2012, the Company entered into an amendment to its existing Scottsdale, Arizona facility lease which extends the lease expiration to March 2019.  The amendment increases the total operating lease obligation reported in the Annual Report, by $5.5 million over the newly extended lease term.  On August 24, 2012, the Company entered into a new operating lease agreement for office space in San Jose, California.  The new San Jose lease replaces the existing Campbell, California lease, which expires in February 2013.  The new San Jose lease further increases the total operating lease obligation reported in the Annual Report by an additional $5.9 million over the six-year lease term.

 

Future minimum lease payments under operating leases as of September 30, 2012, are as follows (in thousands):

 

 

 

Operating

 

Years Ended December 31,

 

Leases

 

2012 (remaining 3 months)

 

$

1,381

 

2013

 

5,202

 

2014

 

5,229

 

2015

 

4,235

 

2016

 

3,705

 

Thereafter

 

4,669

 

Total

 

$

24,421

 

 

Legal Proceedings

 

The Company is currently involved in certain legal proceedings, as discussed within the section “Legal Proceedings” in Note 22, “Commitments and Contingencies,” within our Consolidated Financial Statements contained in Item 8 in the Annual Report, and below in this Note 16.  From time to time, the Company is party to various other litigation and administrative proceedings relating to claims arising from its operations in the ordinary course of business.  However, as of the date of this Form 10-Q, and except as disclosed below, there have been no material developments in the legal proceedings disclosed in the Annual Report, and 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.

 

On February 28, 2007, in a patent infringement action against a real estate agent, Diane Sarkisian, pending in the U.S. District Court for the Eastern District of Pennsylvania (the “Sarkisian case”), Real Estate Alliance, Limited (“REAL”), moved to certify two classes of defendants: subscribers and members of the multiple listing service of which Sarkisian was a member, and customers of the Company who had purchased enhanced listings from the Company.  The U.S. District Court in the Sarkisian case denied REAL’s motion to certify the classes on September 24, 2007.  On March 25, 2008, the U.S. District Court in the Sarkisian case stayed that case, and denied without prejudice all pending motions, pending the U.S. District Court of California’s determination in the Move California Action (see below) of whether the Company’s web sites infringe the REAL patents.

 

On April 3, 2007, in response to REAL’s attempt to certify our customers as a class of defendants in the Sarkisian case, the Company filed a complaint in the U.S. District Court for the Central District of California (the “District Court”) against REAL and its licensing agent (the “Move California Action”) seeking a declaratory judgment that the Company does not infringe U.S. Patent Nos. 4,870,576 and 5,032,989 (the “REAL patents”), that the REAL patents are invalid and/or unenforceable, and alleging several business torts and unfair competition.  On August 8, 2007, REAL denied the Company’s allegations, and asserted counterclaims against the Company for infringement of the REAL patents seeking compensatory damages, punitive damages, treble damages, costs, expenses, reasonable attorneys’ fees and pre- and post-judgment interest.  On February 28, 2008, REAL filed a motion for leave to amend its counter-claims, and to include NAR and the National Association of Home Builders (“NAHB”) as individual defendants, as well as various brokers including RE/Max International (“RE/Max”), agents, Multiple Listing Services (“MLS”), new home builders, rental property owners, and technology providers and indicated that it intended to seek to certify certain defendant classes.  On March 11, 2008, REAL filed a separate suit in the District Court (the “REAL California Action”) alleging infringement of the REAL patents against the same defendants it sought to include in its proposed amended counter-claims in the Move California Action, and also indicated that it intended to seek to certify the same defendant classes.  The Company is not named as a defendant in the REAL California Action; however, the Company is defending NAR, NAHB and RE/Max in the REAL California Action.  On July 29, 2008, the Move California Action was transferred to the same judge in the REAL California Action and in September 2008, the District Court coordinated both cases and issued an order dividing the issues into two phases.  Phase 1 addresses issues of patent validity and enforceability, whether Move web sites infringe, possible damages, and liability of Move, NAR and NAHB.  Phase 2 will address REAL’s infringement claims related to the web sites owned or operated by the remaining defendants and whether those defendants infringe the REAL patents by using the Move web sites.  The District Court has stayed Phase 2 pending resolution of the issues in Phase 1.

 

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On November 25, 2009, the court entered its claim construction order in the Move California Action.  On January 27, 2010, upon joint request of the parties, the District Court entered judgment of non-infringement.  In July 2010, REAL filed its brief appealing the District Court’s claim construction with the Federal Circuit Court of Appeals (the “Circuit Court”), and in October 2010, the Company filed its opposition.  On March 22, 2011, the Circuit Court concluded that the District Court erred in certain of its claim construction and vacated and remanded the case for further proceedings.

 

On October 18, 2011, the parties filed a Joint Brief on Summary Judgment Motions, each side putting forth its arguments requesting the District Court to enter summary judgment in its favor.  On January 26, 2012, the District Court entered an order granting the Company’s motion for summary judgment of non-infringement of the patent.  On March 27, 2012, REAL filed a notice of appeal of the District Court’s summary judgment order, and on June 22, 2012, REAL filed its appeal brief.  On August 1, 2012, the Company filed its response brief.  On September 5, 2012, REAL filed a letter with the Circuit Court requesting that the court vacate the District Court’s ruling in light of the Circuit Court’s August 31, 2012 ruling in Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2010-12911.  On September 7, 2012, the Company filed a letter with the Circuit Court objecting to REAL’s request on the grounds that REAL did not preserve its right to appeal based on the Akamai decision.  The Circuit Court has not responded to the parties’ letters nor set a date for oral argument.  The Company intends to vigorously defend all claims.  At this time, however, the Company is unable to express an opinion on the outcome of these cases.

 

Contingencies

 

From time to time, the Company is subject to a variety of threats or claims, other than formal litigation or legal proceedings, that arise in the ordinary course of business and relate to commercial, intellectual property, employment and other matters.  However, as of the date of this Form 10-Q, and except as disclosed herein, or in the Annual Report, the Company does not believe such threats or claims will have a material adverse effect upon its business, results of operations, financial condition or cash flows, although the Company can offer no assurance as to the ultimate outcome of any such matters.

 

17.  Supplemental Cash Flow Information

 

During the nine-month period ended September 30, 2012:

 

·                  The Company issued 100,000 shares of restricted stock to a new executive officer.  The grant date fair value associated with these shares of $0.7 million is being recognized as stock-based compensation over the vesting period.

 

·                  The Company issued 52,265 shares of restricted stock to the nonemployee members of its Board of Directors.  The grant date fair value associated with these shares was $0.5 million and is being recognized as stock-based charges over the vesting period.

 

·                  The Company granted 1,188,905 shares of time-vested restricted stock units.  The grant date fair value associated with these restricted stock units of $9.8 million is being recognized as stock-based compensation over the vesting period.

 

During the nine-month period ended September 30, 2011:

 

·                The Company issued 24,219 shares of common stock to two of its executive officers pursuant to the terms of their performance-based restricted stock unit agreements.  The charge associated with these shares of $0.2 million was recognized as stock-based compensation during the year ended December 31, 2010.

 

·                  The Company issued 32,729 shares of restricted stock to the nonemployee members of its Board of Directors.  The grant date fair value associated with these shares was $0.3 million and is being recognized as stock-based charges over the vesting period.

 

·                  The Company issued 7,500 shares of restricted stock to the Chairman of the Board of Directors.  The grant date fair value associated with these shares of $0.1 million was recognized as stock-based charges during the nine months ended September 30, 2011.

 

·                  The Company issued 338,350 shares of restricted stock to certain executives and key employees.  The grant date fair value associated with these shares was $2.6 million and is being recognized as stock-based compensation over the vesting period.

 

·                The Company declared and accrued $0.4 million in cash dividends on its Series B Convertible Preferred Stock as of September 30, 2011.

 

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18.  Subsequent Event

 

On October 10, 2012, the Company acquired certain assets and assumed certain liabilities of Relocation.com, LLC which operates an online marketplace that connects homebuyers and renters with moving and storage professionals.  The purchase price was $11.5 million in cash, $9.5 million of which was paid upon closing, with the remainder to be paid in two equal installments on the first and second anniversaries of the acquisition date.  The financial results of the acquisition will be included in the Company’s Consolidated Financial Statements from the date of acquisition.  Pro forma information for this acquisition has not and will not be presented because the effects were not material to the Company’s historical consolidated financial statements.

 

Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is intended to assist the reader in understanding the Company’s business and is provided as a supplement to, and should be read in conjunction with, the Company’s condensed consolidated financial statements and accompanying notes.  The Company’s results of operations discussed below are presented in conformity with GAAP.

 

This Quarterly Report on Form 10-Q and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may contain “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 the Company makes in this Form 10-Q are forward looking.  Generally, you can identify these statements by use of forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “might,” “will,” “should,” or the negative of these terms and other comparable terminology, although not all forward-looking statements are so identified.  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, which are inherently uncertain. 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 the Annual Report, and in other documents we file with the SEC. This Form 10-Q should be read in conjunction with the Annual Report, including the factors described under the caption Part 1, Item 1A, “Risk Factors” within the Annual Report.

 

Our Business

 

Move, Inc. and its subsidiaries (“Move,” “we,” “our” or “us” ) operate an online network of web sites for real estate search, finance, moving and home enthusiasts and provide a comprehensive resource for consumers seeking the online information and connections they need regarding real estate. Our consumer web sites are REALTOR.com®, Move.com and Moving.comTM. Through our ListHubTM business, we are also an online real estate listing syndicator and provider of advanced performance reporting solutions for the purpose of helping to drive an effective online advertising program for brokers, real estate franchises, and individual agents.  We also provide lead management software for real estate agents and brokers through our Top Producer® and newly acquired TigerLead® SaaS products.

 

With REALTOR.com® as our flagship web site and brand, we are the leading real estate information marketplace connecting consumers with the information and the expertise they need to make informed home buying, selling, financing and renting decisions.  Move’s purpose is to empower people to love where they live.  By connecting consumers and real estate professionals in order to facilitate transactions, we aim to realize our purpose and win the hearts and minds of our consumers, customers and business partners in the process.

 

Through the collection of assets we have developed over 15 years in this business, Move is positioned to address the needs and wants of both consumers and real estate professionals throughout the process of home ownership.  Although the real estate marketplace has been unquestionably changed by the Internet, and likely will continue to evolve through the growth of mobile devices and social networking, our business continues to be about empowering consumers with timely and reliable information and connecting them to the real estate professionals who have the expertise to help them better understand and succeed in that marketplace.

 

We provide consumers with a powerful combination of breadth, depth and accuracy of information about homes for sale, new construction, homes for rent, multi-family rental properties, senior living communities, home financing, home improvement and moving resources.  Through REALTOR.com®, consumers have access to over 94 million properties across the United States (“U.S.”) as well as properties for sale from another 32 countries worldwide.  Our for-sale listing content, comprising over 4 million properties as of September 30, 2012, and accessible in 11 different languages, represents the most comprehensive, accurate and up-to-date collection of its kind, online or offline.  Through REALTOR.com® and our mobile applications, we display approximately 98% of all for-sale properties listed in the U.S.  We source this content directly from our relationships with more than 800 Multiple Listing Services (“MLS”) across the country, which represents nearly all MLSs, with approximately 88% of the listings updated every 15 minutes and the remaining listings updated daily.

 

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REALTOR.com®’s substantial content advantage has earned us trust with both consumers and real estate professionals.  We attract a highly engaged consumer audience and have developed an exceptionally large number of relationships with real estate professionals across the country.  More than 20 million users, viewing an average of over 385 million pages and spending an average of over 325 million minutes on the REALTOR.com® web site each month over the last twelve-month period, interact with over 400,000 real estate professionals on REALTOR.com® and our mobile applications.  We delivered approximately 70% more connections between our consumers and real estate professionals during the nine-month period ending September 30, 2012, as compared to the same period in the prior year.  This illustrates the success of our continued commitment to not only deliver valuable information to consumers, but more importantly, to connect them with real estate professionals who can provide the local expertise consumers want when making home-related decisions.

 

In addition to providing an industry-leading content mix, Move facilitates connections and transactions between consumers and real estate professionals.  Although attracting and engaging a large consumer audience is an important part of our business, to succeed we must also focus on winning the hearts and minds of real estate professionals, who are both customers of our business and suppliers of much of our property content.  We believe this starts with our commitment to respecting the listing and content rights of the real estate agents, brokers, MLSs and others who work hard to help generate these important data resources. Through REALTOR.com® and our ListHubTM business, we aggregate, syndicate and display real estate listings across the web, accounting for an estimated 60% of all for-sale listing detail page views online or on mobile applications through third-party property listing businesses in the U.S.  Part of the reason we have become the leading source for real estate listing content is that we work closely with, and respect the rights of, real estate professionals while still maintaining a balance that allows consumers to obtain the information and expertise they expect and need.

 

At the same time, we are committed to delivering valuable connections, advertising systems and productivity and lead management tools to real estate professionals, with the goal of helping to make them more successful.  By combining REALTOR.com® advertising systems with the productivity and lead management tools offered through our Top Producer® and newly acquired TigerLead® SaaS CRM products, we are able to help grow and enrich connections between our customers and consumers, and to help our customers better manage those connections in an effort to facilitate transactions and grow their business.

 

Our dual focus on both the consumer and the real estate professional has helped us create and maintain REALTOR.com® as a distinct advantage in the online real estate space.  For over 15 years, we have provided consumers with access to a highly accurate and comprehensive set of real estate listing data and, as a result, have built relationships within the real estate industry that are both broad and deep.  We expect this industry to continue to progress as new technologies are embraced and as consumers’ needs and wants evolve.  We also expect that real estate professionals, to stay relevant, will likewise need to evolve along with technology, consumers and the market.  We aim to keep REALTOR.com® positioned to lead this transformation with consumers and real estate professionals at the forefront, and expect to leverage our collection of advertising systems, productivity tools and other assets to do so.

 

Products and Services

 

Through our REALTOR.com® web site, mobile applications and business operations, we offer a number of services to real estate franchises, brokers and agents, as well as non-real estate related advertisers, in an effort to connect those advertisers with our consumer audience.  We categorize the products and services available through the REALTOR.com® business as listing advertisements, non-listing advertisements or ListHubTM syndication and reporting.  In addition, through the newly acquired TigerLead® business, we are able to provide expertise in real estate search engine marketing through sophisticated key word buying and a platform and model that grades each lead source and lead in order to deliver high quality intelligent leads to the agent or broker.  These marketing services are included in our REALTOR.com® revenue total.  The collection of services offered through the REALTOR.com® business represented approximately 75% and 76% of our overall revenues for the three and nine months ended September 30, 2012, respectively, and approximately 73% of our overall revenues for the three and nine months ended September 30, 2011.

 

Top Producer® and TigerLead® are our SaaS businesses providing productivity and lead management tools tailored to real estate agents.  These businesses complement REALTOR.com® and our mission of connecting consumers and real estate professionals to facilitate transactions by empowering real estate professionals’ ability to connect with, cultivate and ultimately convert their relationships with home buyers and sellers into transactions.  Our Top Producer® product offerings include a web- and mobile-based CRM solution, our Market Snapshot® product and a series of template web site products.  In addition to the internet marketing services offered by our newly acquired TigerLead® business described above, the TigerLead® SaaS CRM product provides real estate agents and brokers with a sophisticated IDX web site platform to capture and manage leads that are delivered with unique insights such as how many times a user has returned to the site to search particular listings and price ranges.  The SaaS CRM product revenues of TigerLead® are included with our Top Producer® product suite and represent our SaaS businesses.  The SaaS products represented approximately 15% and 14% of our overall revenues for the three and nine months ended September 30, 2012, respectively, and approximately 16% of our overall revenues for the three and nine months ended September 30, 2011.

 

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We separately operate several other web sites providing multi-family rental, senior housing and moving-related content and services for our consumer audience.  Through our Move Rentals and Senior Housing businesses, we aggregate and display rental listings nationwide.  We offer a variety of listing-related advertisements that allow rental property owners and managers to promote their listings and connect with consumers through our web sites.  Pricing models include monthly subscriptions and cost-per-click.  Through our Moving.comTM business we provide consumers with quotes from moving companies and truck rental companies.  The majority of revenue from Moving.comTM is derived from cost-per-lead pricing models.  Our Move Rentals, Senior Housing and Moving.comTM product lines (“Move Vertical Businesses”) collectively represented approximately 10% of our overall revenues for the three and nine months ended September 30, 2012, and approximately 11% of our overall revenues for the three and nine months ended September 30, 2011.

 

Market and Economic Conditions

 

In recent years, our business has been, and we expect may continue to be, influenced by a number of macroeconomic, industry-wide and product-specific trends and conditions.  For a number of years prior to 2006, the U.S. residential real estate market experienced a period of hyper-sales rates and home price appreciation, fueled by the availability of low interest rates and flexible mortgage options for many consumers.  During the latter half of 2006 and through 2008 lending standards were tightened, equity markets declined substantially, liquidity in general was impacted, unemployment rates rose and consumer spending declined.  The combination of these factors materially impacted the U.S. housing market in the form of fewer home sales, lower home prices and accelerating delinquencies and foreclosures, all of which created a cycle that further exacerbated the housing market downturn.

 

The effects on the housing market have persisted for several years but key market indicators suggest that large parts of the housing market have bottomed out and have entered a recovery mode.  In Q3 2012, the nation saw a 13.89% reduction in the median age of inventory, as well as a year-over-year reduction in inventory of 8.51%.  National median list prices also increased slightly at 2.54% year-over-year during the third quarter.  Lower inventories, combined with somewhat higher median list prices, suggest that as we end 2012, the housing market is in better shape than it was a year ago.

 

According to the Federal Housing Administration’s first quarter 2012 report on Fannie Mae and Freddie Mac, the 12-month delinquency rate has returned to 2002 levels, meaning the percentage of people who’ve fallen behind on mortgages owned by those government-sponsored enterprises has declined considerably.  Banks, however, continue to have tighter credit standards for mortgage loans, which has made home purchases more difficult.  Therefore, we believe that market conditions will continue to impact spending by real estate professionals in the near term.

 

Over the past three years, this environment has had a direct impact on our primary customers:  real estate professionals.  Fewer home sales and lower home prices impact commission income, which causes real estate professionals to either reduce their marketing spend or exit the market altogether.  The prolonged housing market downturn was a significant cause of the decline in revenue over the past three years and may continue to be a challenge to revenue until both the housing and lending markets have fully recovered.

 

Acquisitions

 

On September 1, 2012, we entered into an agreement with Tiger Lead Solutions whereby we acquired substantially all of its operating assets for a purchase price of $22.0 million in cash, $3.0 million of which was paid into escrow for a one-to-two year period to secure certain obligations of Tiger Lead Solutions.  In addition, we entered into employment agreements with members of Tiger Lead Solution’s senior management whereby we granted 273,420 restricted stock units with a grant date fair value of $2.2 million.  These time-based restricted stock units will vest one year from the date of grant and would be forfeited in the event of termination by Move for cause or voluntary resignation.  The TigerLead® business provides an integrated set of internet marketing services and SaaS CRM tools to residential realtors and brokers to generate, cultivate, and manage leads.

 

The acquisition has been accounted for as a business combination with the total purchase price being allocated to the assets acquired based on their respective fair values.  The $22.0 million purchase price was preliminarily allocated $11.9 million to definite-lived intangible assets, $0.9 million to indefinite-lived intangible assets, $0.1 million to net tangible assets with the remaining $9.1 million to goodwill, pending the finalization of the purchase price allocation.  The identifiable intangible assets are being amortized over estimated lives ranging from six to nine years, with the exception of $0.9 million in indefinite-lived trade name and trademarks.  The financial results of the acquisition are included in our Consolidated Financial Statements from the date of acquisition.  Pro forma information for this acquisition has not been presented because the effects were not material to our historical consolidated financial statements.

 

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Investment in Unconsolidated Joint Ventures

 

In August 2010, we entered into a joint venture agreement with a national mortgage banker d/b/a Mortgage Match and contributed an initial investment of $0.5 million in exchange for a 49.9% ownership in the joint venture.  We recorded our initial investment in the joint venture at $0.5 million, reflecting such cash payment.  The Mortgage Match business was operated by our joint venture partner or one of its affiliates under an Interim Services Agreement also entered into in August 2010, under which we operated the MortgageMatch.com website, performed various supporting services and received a fixed monthly fee.

 

During the three months ended September 30, 2011, we and our joint venture partner decided to dissolve the joint venture.  As a result of that dissolution, we received a distribution of $0.5 million that represented the refund of our initial investment.  In addition, we incurred $0.6 million in costs related to the dissolution of the joint venture which are included in “General and administrative” within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2011.

 

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 GAAP. 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, valuation of investments, intangible and other long-lived assets, stock-based compensation and contingencies. Our estimates are based upon 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 nine months ended September 30, 2012, as compared to those policies disclosed in the Annual Report.

 

Legal Contingencies

 

We are currently involved in certain legal proceedings, as discussed within the section “Legal Proceedings” in Note 22, “Commitments and Contingencies,” within our Consolidated Financial Statements contained in Item 8 in the Annual Report, and in Note 16, “Commitments and Contingencies,” to our unaudited Condensed Consolidated Financial Statements contained within Part I, Item 1 of this Quarterly Report on Form 10-Q.  Because of the uncertainties related to both the amount and range of potential liability in connection with legal proceedings, we are unable to make a reasonable estimate of the liability that could result from unfavorable outcomes in our remaining pending litigation.  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 September 30, 2012 and 2011

 

Revenue

 

Revenue increased $3.0 million, or 6%, to $49.4 million for the three months ended September 30, 2012, compared to $46.5 million for the three months ended September 30, 2011.  The increase in revenue was primarily due to increases in the listing advertisements in our REALTOR.com® business during the three months ended September 30, 2012, due to the introduction of our new Co-BrokeTM product, our PreQualplus product and new internet marketing services revenue from our TigerLead® acquisition, partially offset by revenue decreases from our featured products (i.e. Featured Homes, Featured Area Community and Buyer Assist).  The increase in REALTOR.com® product revenue was partially offset by a decline in our Top Producer® product suite.  Our Move Vertical Businesses were relatively flat for the three months ended September 30, 2012, compared to the three months ended September 30, 2011.

 

Cost of Revenue

 

Cost of revenue increased $0.3 million, or 3%, to $10.2 million for the three months ended September 30, 2012, compared to $10.0 million for the three months ended September 30, 2011.  The increase was primarily due to a $0.3 million increase in lead acquisition costs.

 

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Gross margin percentage remained constant at 79% for the three months ended September 30, 2012, compared to the three months ended September 30, 2011.

 

Operating Expenses

 

Sales and marketing. Sales and marketing expenses increased $1.0 million, or 6%, to $17.2 million for the three months ended September 30, 2012, compared to $16.3 million for the three months ended September 30, 2011.  This increase was mainly due to increases in online distribution costs of $0.4 million, personnel-related costs of $0.3 million, consulting costs of $0.2 million and other cost increases of $0.1 million.

 

Product and web site development. Product and web site development expenses increased $1.0 million, or 12%, to $9.4 million for the three months ended September 30, 2012, compared to $8.4 million for the three months ended September 30, 2011.  The increase was primarily due to increases in personnel-related costs as we continue to invest in new product initiatives.

 

General and administrative. General and administrative expenses decreased $0.4 million, or 3%, to $10.5 million for the three months ended September 30, 2012, compared to $10.8 million for the three months ended September 30, 2011.  The decrease was primarily due to a decrease in outside legal fees of $0.7 million, one-time joint venture dissolution costs of $0.6 million incurred in 2011 and other cost reductions of $0.2 million.  These cost reductions were partially offset by an increase of $1.1 million in personnel-related costs, including a $0.5 million increase in stock-based compensation.

 

Amortization of intangible assets. Amortization of intangible assets increased $0.1 million to $0.5 million for the three months ended September 30, 2012, compared to $0.4 million for the three months ended September 30, 2011.  This increase was due to the amortization of intangible assets that were newly acquired in the third quarter of 2012.

 

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

 

 

 

September 30,

 

 

 

2012

 

2011

 

Cost of revenue

 

$

71

 

$

52

 

Sales and marketing

 

361

 

307

 

Product and web site development

 

527

 

238

 

General and administrative

 

1,037

 

560

 

Total stock-based compensation and charges

 

$

1,996

 

$

1,157

 

 

Stock-based compensation and charges increased $0.8 million for the three months ended September 30, 2012, compared to the three months ended September 30, 2011, primarily due to new grants of time-based restricted stock units and stock option awards.

 

Interest Expense, Net

 

Interest expense, net remained relatively constant for the three months ended September 30, 2012 and 2011.

 

Other Expense, Net

 

Other expense, net remained relatively constant for the three months ended September 30, 2012 and 2011.

 

Income Taxes

 

As a result of our historical net operating losses, we have generally not recorded a provision for income taxes.  However, we recorded certain indefinite-lived intangible assets as part of the purchase accounting for acquisitions, which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes.  For the three months ended September 30, 2012 and 2011, income tax expense included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets.

 

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Nine Months Ended September 30, 2012 and 2011

 

Revenue

 

Revenue increased $2.0 million, or 1%, to $146.5 million for the nine months ended September 30, 2012, compared to $144.5 million for the nine months ended September 30, 2011.  The increase in revenue was primarily due to increases in the listing advertisements in our REALTOR.com® business and to the introduction of our new Co-BrokeTM product, our PreQualplus product and new internet marketing services revenue from our TigerLead® acquisition, partially offset by revenue decreases from our featured products (i.e. Featured Homes, Featured Area Community and Buyer Assist).  The increase in REALTOR.com® product revenue was partially offset by a decline in our Top Producer® product suite along with declines in our Move Vertical Businesses.

 

Cost of Revenue

 

Cost of revenue decreased $1.7 million, or 5%, to $29.5 million for the nine months ended September 30, 2012, compared to $31.2 million for the nine months ended September 30, 2011.  The decrease was primarily due to a $1.3 million reduction in personnel-related costs, a $0.4 million reduction in credit card processing fees and a $0.3 million reduction in production and fulfillment costs, partially offset by a $0.3 million increase in consulting costs.

 

Gross margin percentage increased to 80% for the nine months ended September 30, 2012, compared to 78% for the nine months ended September 30, 2011, mainly due to the increased revenue and cost reductions described above.

 

Operating Expenses

 

Sales and marketing. Sales and marketing expenses increased $0.5 million, or 1%, to $53.0 million for the nine months ended September 30, 2012, compared to $52.5 million for the nine months ended September 30, 2011.  As a result of the departure of certain sales management during the nine months ended September 30, 2012, we recognized $0.5 million in incremental stock-based compensation associated with the acceleration of vesting for outstanding stock option and restricted stock awards, and $0.7 million in severance costs.  Additionally, there was a $0.5 million increase in online distribution costs and a $0.5 million increase in software licensing fees.  These increases were partially offset by decreases in personnel-related costs of $1.0 million and marketing costs of $0.7 million.

 

Product and web site development. Product and web site development expenses increased $0.7 million, or 3%, to $27.6 million for the nine months ended September 30, 2012, compared to $26.9 million for the nine months ended September 30, 2011.  The increase was primarily due to a $0.5 million increase in personnel-related costs and a $0.3 million increase in consulting costs, partially offset by other costs decreases of $0.1 million.

 

General and administrative. General and administrative expenses increased $1.2 million, or 4%, to $31.5 million for the nine months ended September 30, 2012, compared to $30.4 million for the nine months ended September 30, 2011.  The increase was primarily due an increase in personnel-related costs of $1.3 million, including a $0.5 million increase in stock-based compensation, increased bad debt expense of $0.4 million and a $0.3 million increase in common area maintenance charges related to our leased facilities.  These increases were partially offset by a decrease in outside legal fees of $0.2 million and one-time joint venture dissolution costs of $0.6 million incurred in 2011.

 

Amortization of intangible assets. Amortization of intangible assets increased $0.2 million to $1.3 million for the nine months ended September 30, 2012, compared to $1.1 million for the nine months ended September 30, 2011.  This increase was due to the amortization of intangible assets that were newly acquired in the third quarter of 2012.

 

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):

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2012

 

2011

 

Cost of revenue

 

$

193

 

$

170

 

Sales and marketing

 

1,554

 

1,066

 

Product and web site development

 

1,412

 

915

 

General and administrative

 

2,697

 

2,290

 

Total stock-based compensation and charges

 

$

5,856

 

$

4,441

 

 

Stock-based compensation and charges increased $1.4 million for the nine months ended September 30, 2012, compared to the nine months ended September 30, 2011, primarily due to the acceleration of vesting of certain outstanding stock option and restricted stock awards and new grants of restricted stock units and stock option awards.

 

Interest Income, Net

 

Interest income, net remained relatively constant for the nine months ended September 30, 2012 and 2011.

 

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Other Income (Expense), Net

 

Net other expense of $0.1 million for the nine months ended September 30, 2012, was primarily attributable to fluctuations in foreign exchange rates and losses on the sales of fixed assets, partially offset by other income from the sale of certain investments.  Net other income of $0.3 million for the nine months ended September 30, 2011, primarily consisted of a gain on sale of certain investments, partially offset by losses attributable to fluctuations in foreign exchange rates and losses on the sales of fixed assets.

 

Income Taxes

 

As a result of historical net operating losses, we have generally not recorded a provision for income taxes.  However, we recorded certain indefinite-lived intangible assets as part of the purchase accounting for acquisitions, which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes.  During the nine months ended September 30, 2012 and 2011, income tax expense included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets.

 

Liquidity and Capital Resources

 

Net cash provided by operating activities of $18.8 million for the nine months ended September 30, 2012, was attributable to net income of $4.0 million, plus noncash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, stock-based compensation and charges, earnings of unconsolidated joint venture and other noncash items aggregating to $14.1 million, a $0.3 million cash distribution representing a return on our investment in an unconsolidated joint venture and a $0.4 million change in operating assets and liabilities.

 

Net cash provided by operating activities of $8.1 million for the nine months ended September 30, 2011, was attributable to net income of $3.3 million, plus noncash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, stock-based compensation and charges, earnings of unconsolidated joint venture and other noncash items aggregating $11.9 million, and a $0.3 million cash distribution representing a return on our investment in an unconsolidated joint venture, partially offset by a $7.4 million change in operating assets and liabilities.

 

Net cash used in investing activities of $27.9 million for the nine months ended September 30, 2012, was primarily attributable to the acquisition, net of cash acquired, of $22.0 million and capital expenditures of $6.7 million, partially offset by a cash distribution representing a return of our invested capital in an unconsolidated joint venture of $0.7 million.

 

Net cash used in investing activities of $4.4 million for the nine months ended September 30, 2011, was primarily attributable to capital expenditures of $5.1 million and acquisitions, net of cash acquired, of $0.5 million, partially offset by a cash distribution representing a return of our invested capital in an unconsolidated joint venture of $0.7 million and proceeds from the dissolution of our mortgage joint venture of $0.5 million.

 

Net cash used in financing activities of $47.5 million for the nine months ended September 30, 2012, was primarily attributable to the redemption of the balance of the Series B convertible preferred stock for $49.0 million, payments of dividends on our Series B convertible preferred stock of $0.9 million, tax withholdings related to net share settlements of restricted stock awards of $0.5 million and repurchases of common stock and principal payments on loan payable totaling $0.1 million, partially offset by proceeds from the exercise of stock options of $3.1 million.

 

Net cash used in financing activities of $81.0 million for the nine months ended September 30, 2011, was primarily attributable to the redemption of a portion of the Series B convertible preferred stock for $70.0 million, repurchases of the Company’s common stock of $9.6 million, payments of dividends on our Series B convertible preferred stock of $1.6 million, tax withholdings related to net share settlements of restricted stock awards of $0.3 million and principal payments on loan payable of $0.1 million, partially offset by cash proceeds from the exercise of stock options of $0.6 million.

 

We have generated positive operating cash flows in each of the last three fiscal years.  Our material financial commitments consist of those under operating lease agreements, our operating agreement with the NAR and various web services and content agreements.

 

In February 2011, our Board of Directors authorized a stock repurchase program.  The program authorizes, in one or more transactions taking place during a two-year period, the repurchase of our outstanding common stock utilizing surplus cash in an amount of up to $25.0 million.  Under the program, we may repurchase shares of common stock in the open market or in privately negotiated transactions.  The timing and amount of any repurchase transactions under this program will depend upon market conditions, corporate considerations and regulatory requirements.  Shares repurchased under the program shall be retired to constitute authorized but unissued shares of our common stock.  We repurchased 9,958 shares of our outstanding common stock in the open market for approximately $0.1 million during the nine-month period ended September 30, 2012.  From the inception of the program in February 2011 through September 30, 2012, we repurchased 1,493,127 shares of our common stock in the open market for an aggregate purchase price of $9.7 million.  This authorization expires in February 2013.

 

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On September 20, 2011, we entered into a revolving line of credit with a major financial institution, providing for borrowings of up to $20.0 million, available until August 31, 2013, which was subsequently amended on November 16, 2011, March 6, 2012, and again on August 31, 2012.  At September 30, 2012 and December 31, 2011, we had no borrowings outstanding under the revolving line of credit.  The revolving line of credit requires interest payments based on the BBA LIBOR Rate plus 2.5%.  There is an unused commitment fee of 0.2% on any unused portion of the line of credit, payable quarterly.  Additionally, there is a 0.5% annual fee payable if our average aggregate monthly deposit and investment balances with the financial institution fall below $35.0 million.  The credit agreement contains various customary affirmative, negative and financial covenants.  Those covenants include, but are not limited to, requirements to:  maintain tangible net worth of $50.0 million; maintain minimum unrestricted, unencumbered marketable securities, cash and cash equivalents (defined as “Liquidity”) of the greater of $20.0 million or 125% of the outstanding principal balance of the line of credit; and maintain adjusted EBITDA of $17.0 million on a twelve-month rolling basis.  We were in compliance with the covenants, then in effect, as of September 30, 2012 and December 31, 2011.  The revolving line of credit is collateralized by our cash deposits, accounts receivable, investments, inventory, property and equipment and general intangibles we now or subsequently own.  In addition, we have pledged the capital stock in our current and future subsidiaries as further collateral for the line of credit.

 

On February 13, 2012, we entered into an amendment to our existing Scottsdale, Arizona facility lease which extends the lease expiration to March 2019.  The amendment increases the total operating lease obligation reported in the Annual Report, by $5.5 million over the newly extended lease term.  On August 24, 2012, we entered into a new operating lease agreement for office space in San Jose, California.  The new San Jose lease replaces the existing Campbell, California lease, which expires in February 2013.  The new San Jose lease further increases the total operating lease obligation reported in the Annual Report by an additional $5.9 million over the six-year lease term.

 

Pursuant to our election to do so, and an agreement entered into between Move and Elevation as to related timing and procedural matters, we redeemed all of the outstanding shares of our Series B convertible preferred stock (approximately 49,044 shares) from Elevation, for an aggregate redemption price of $49.5 million, including approximately $0.5 million in associated cash dividends accrued through the date immediately prior to the redemption.  The redemption was effective, and the redemption price was paid to Elevation, on April 6, 2012.

 

On September 1, 2012, we entered into an agreement with Tiger Lead Solutions whereby we purchased substantially all of its operating assets for a purchase price of $22.0 million, $3.0 million of which was paid into escrow for a one-to-two year period to secure certain obligations of Tiger Lead Solutions. The TigerLead® business provides an integrated set of internet marketing services and SaaS CRM tools to residential realtors and brokers to generate, cultivate, and manage leads.

 

On October 10, 2012, we acquired certain assets and assumed certain liabilities of Relocation.com, LLC, which operates an online marketplace that connects homebuyers and renters with moving and storage professionals.  The purchase price was $11.5 million in cash, $9.5 million of which was paid upon closing, with the remainder to be paid in two equal installments on the first and second anniversaries of the acquisition date.

 

We believe that even after considering the events discussed above, our existing cash, availability under our revolving line of credit 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

 

Market and Interest Rate Risk

 

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse changes in financial and commodity market prices and rates. We do not have any material foreign currency or other derivative financial instruments. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to increase the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk; we do this primarily by investing our cash only in government treasury bills.

 

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 (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

22



Table of Contents

 

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 within the section “Legal Proceedings” in Note 22, “Commitments and Contingencies,” within our Consolidated Financial Statements contained in Item 8 in the Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”) and in Note 16, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.  As of the date of this Form 10-Q, and except as disclosed in Note 22 to the Consolidated Financial Statements in the Annual Report and in Note 16, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements in this Form 10-Q, we are not a party to any other litigation or administrative proceedings that management believes will have a material adverse effect on our business, results of operations, financial condition or cash flows, and there have been no material developments in the litigation or administrative proceedings described in those notes.

 

Item 1A.               Risk Factors

 

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated.  A detailed discussion of our risk factors was included in Part I, Item 1A, “Risk Factors” of the Annual Report as filed with the United States Securities and Exchange Commission (“SEC”) on February 17, 2012, and has been made available at www.sec.gov and at www.move.com.  These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this Form 10-Q.  Any of the risks described in the Annual Report could materially affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made.  The risk factors described in the Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that are currently deemed to be immaterial, could also materially adversely affect our business, financial condition and/or future results.  There were no material changes to the risk factors during the nine months ended September 30, 2012, compared to the risk factors set forth in the Annual Report other than with respect to the risk factor pertaining to our Series B convertible preferred stock that has been redeemed, and thus is no longer applicable, and with respect to the risk factor described below.

 

Marketing our subscription products and services to real estate professionals is an important part of our business; we must dedicate significant resources to this endeavor, and interruptions could be harmful.

 

Real estate agents are generally independent contractors of brokerages rather than employees.  As a result, it is often necessary for us to communicate with real estate agents on an individual basis when marketing our services, which results in relatively high fixed costs associated with our inside and field-based sales activities.  In addition, since we offer services to both real estate brokerages and agents, we are often required to contact brokerages and agents separately when marketing our products and services.  Furthermore, if for any reason our marketing to real estate professionals was interrupted, such as by interruptions of web site availability or disruptions to email, telephone or other marketing communication media, whether due to technological reasons, industry changes, third-party conduct or other reasons, this could have a material negative impact on our business.

 

Item 2.                        Unregistered Sales of Equity Securities and Use of Proceeds

 

In February 2011, our Board of Directors authorized a stock repurchase program.  The program authorizes, in one or more transactions taking place during a two-year period, the repurchase of our outstanding common stock utilizing surplus cash in an amount of up to $25.0 million.  Under the program, we may repurchase shares of common stock in the open market or in privately negotiated transactions.  The timing and amount of any repurchase transaction under this program will depend upon market conditions, corporate considerations and regulatory requirements.  Shares repurchased under the program shall be retired to constitute authorized but unissued shares of our common stock.  We did not repurchase any shares of our outstanding common stock in the open market during the three-month period ended September 30, 2012.  From the inception of the program through September 30, 2012, we repurchased 1,493,127 shares of our common stock in the open market for an aggregate purchase price of $9.7 million.  This authorization expires in February 2013.

 

Item 3.                        Defaults Upon Senior Securities

 

None.

 

23



Table of Contents

 

Item 4.                        Mine Safety Disclosures

 

None.

 

Item 5.                        Other Information

 

None.

 

Item 6.                        Exhibits

 

Exhibit No.

 

Description

 

 

 

3.01.1

 

Restated Certificate of Incorporation of Move, Inc., dated June 23, 2005, as amended by the Certificate of Amendment dated June 22, 2006. (Incorporated by reference to Exhibit 3.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2006 filed August 7, 2006.)

3.01.2

 

Certificate of Elimination of Series B Convertible Participating Preferred Stock of Move, Inc., effective May 31, 2012 (nullifying and eliminating Certificate of Designation previously filed as Exhibit 3.01.2 of our Form 10-K for the year ended December 31, 2005 filed March 13, 2006). (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 5, 2012.)

3.02

 

Bylaws of Move, Inc. (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 28, 2006.), as amended by the Amendment effective June 15, 2011. (Incorporated by reference to Exhibit 3.02 of our Form 10-K for the year ended December 31, 2011, filed February 17, 2012.)

3.03.1

 

RealSelect, Inc.’s Certificate of Incorporation dated October 25, 1996. (Incorporated by reference to Exhibit 3.05.1 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)

3.03.2

 

RealSelect, Inc.’s Certificate of Amendment to Certificate of Incorporation dated November 25, 1996. (Incorporated by reference to Exhibit 3.05.2 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)

4.01

 

Form of Specimen Certificate for common stock. (Incorporated by reference to Exhibit 4.01 of our Form 10-K for the year ended December 31, 2006 filed March 5, 2007.)

10.102

 

Asset Purchase Agreement entered into on September 1, 2012, by and among Tiger Lead Solutions, LLC, Move Sales, Inc. and Move, Inc. (Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on September 4, 2012.)

10.103

 

Third Amendment to Loan Agreement entered into on August 31, 2012, by and between Move, Inc. and Bank of America, N.A. (filed herewith)

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

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. (furnished herewith)

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. (furnished herewith)

101 .INS*

 

XBRL Instance Document (furnished herewith)

101.SCH*

 

XBRL Taxonomy Extension Schema Document (furnished herewith)

101.CAL*

 

XBRL Taxonomy Calculation Linkbase Document (furnished herewith)

101.LAB*

 

XBRL Taxonomy Label Linkbase Document (furnished herewith)

101.PRE*

 

XBRL Taxonomy Presentation Linkbase Document (furnished herewith)

101.DEF*

 

XBRL Taxonomy Extension Definition Document (furnished herewith)

 


*Furnished herewith and not deemed “filed” for purposes of Section 11 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934, as amended.

 

24



Table of Contents

 

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/ STEVEN H. BERKOWITZ

 

 

Steven H. Berkowitz

 

 

Chief Executive Officer

 

 

 

 

 

By:

/s/ RACHEL C. GLASER

 

 

Rachel C. Glaser

 

 

Chief Financial Officer

 

 

Date:  November 6, 2012

 

25



Table of Contents

 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

3.01.1

 

Restated Certificate of Incorporation of Move, Inc., dated June 23, 2005, as amended by the Certificate of Amendment dated June 22, 2006. (Incorporated by reference to Exhibit 3.1 to our quarterly report on Form 10-Q for the quarter ended June 30, 2006 filed August 7, 2006.)

3.01.2

 

Certificate of Elimination of Series B Convertible Participating Preferred Stock of Move, Inc., effective May 31, 2012 (nullifying and eliminating Certificate of Designation previously filed as Exhibit 3.01.2 of our Form 10-K for the year ended December 31, 2005 filed March 13, 2006). (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 5, 2012.)

3.02

 

Bylaws of Move, Inc. (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 28, 2006.), as amended by the Amendment effective June 15, 2011. (Incorporated by reference to Exhibit 3.02 of our Form 10-K for the year ended December 31, 2011, filed February 17, 2012.)

3.03.1

 

RealSelect, Inc.’s Certificate of Incorporation dated October 25, 1996. (Incorporated by reference to Exhibit 3.05.1 to our registration statement on Form S-1 (File No. 333-79689) filed May 28, 1999.)

3.03.2

 

RealSelect, Inc.’s Certificate of Amendment to Certificate of Incorporation dated November 25, 1996. (Incorporated by reference to Exhibit 3.05.2 to our registration statement on Form S-1/A (File No. 333-79689) filed June 17, 1999.)

4.01

 

Form of Specimen Certificate for common stock. (Incorporated by reference to Exhibit 4.01 of our Form 10-K for the year ended December 31, 2006 filed March 5, 2007.)

10.102

 

Asset Purchase Agreement entered into on September 1, 2012, by and among Tiger Lead Solutions, LLC, Move Sales, Inc. and Move, Inc. (Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on September 4, 2012.)

10.103

 

Third Amendment to Loan Agreement entered into on August 31, 2012, by and between Move, Inc. and Bank of America, N.A. (filed herewith)

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

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. (furnished herewith)

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. (furnished herewith)

101.INS*

 

XBRL Instance Document (furnished herewith)

101.SCH*

 

XBRL Taxonomy Extension Schema Document (furnished herewith)

101.CAL*

 

XBRL Taxonomy Calculation Linkbase Document (furnished herewith)

101.LAB*

 

XBRL Taxonomy Label Linkbase Document (furnished herewith)

101.PRE*

 

XBRL Taxonomy Presentation Linkbase Document (furnished herewith)

101.DEF*

 

XBRL Taxonomy Extension Definition Document (furnished herewith)

 


*Furnished herewith and not deemed “filed” for purposes of Section 11 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934, as amended.

 

26


EX-10.103 2 a12-20746_1ex10d103.htm EX-10.103

Exhibit 10.103

 

THIRD AMENDMENT AND WAIVER TO LOAN AGREEMENT

 

This Third Amendment and Waiver to Loan Agreement (the “Amendment”) is made as of August 31, 2012, between Bank of America, N. A. (“Bank”) and Move, Inc., a Delaware corporation (“Borrower”).

 

RECITALS

 

A.                                    Borrower and Bank entered into that certain Loan Agreement dated as of September 20, 2011, as previously amended (the “Agreement”) pursuant to which Bank has extended certain credit facilities to Borrower.

 

B.                                    Borrower and Bank desire to amend and modify the provisions of the Agreement, as herein provided.

 

AGREEMENT

 

1.                                      Definitions.  Capitalized terms used but not defined in this Amendment shall have the meaning given to them in the Agreement.

 

2.                                      Amendments.  The Agreement is hereby amended as follows:

 

2.1                               Section 8.4 of the Agreement is amended in its entirety to read as follows:

 

“8.4  Liquidity.  To maintain on a consolidated basis minimum Unencumbered Liquid Assets (“Liquidity”) having an aggregate market value of not less than the greater of (i) Twenty Million Dollars ($20,000,000) or (ii) one hundred twenty-five hundred percent (125%) of the outstanding principal balance of the line of credit provided under this Agreement. For the purposes of determining compliance with this covenant, Liquidity shall exclude any marketable securities, cash and cash equivalents which have been pledged to the Bank and the Bank has perfected its lien thereon by possession or control as prescribed under the California Commercial Code.

 

“Unencumbered Liquid Assets” means the following assets (excluding assets of any retirement plan) which (i) are not subject to any lien, pledge, security interest or other arrangement with any creditor to have his claim satisfied out of the asset (or proceeds thereof) prior to the general creditors of the owner of the asset, (ii) are held solely in the name of one or more credit parties subject to this covenant (with no other persons or entities having ownership rights therein); (iii) may be converted to cash within five (5) days, (iv) are otherwise acceptable to the Bank in its reasonable discretion, and (v) are not being counted or included to satisfy any other liquidity requirement under any other obligation, whether with the Bank or any other lender, unless otherwise expressly agreed by the Bank in writing:

 

1



 

(a)                                 Cash or cash equivalents held in the United States and denominated in United States Dollars;

 

(b)                                 United States Treasury or governmental agency obligations which constitute full faith and credit of the United States of America;

 

(c)                                  Commercial paper rated P-1 or A1 by Moody’s or S&P, respectively;

 

(d)                                 Medium and long-term securities rated investment grade by one of the rating agencies described in (c) above;

 

(e)                                  Eligible Stocks; and

 

(f)                                   Mutual funds quoted in The Wall Street Journal which invest primarily in the assets described in (a)-(e) above.

 

“Eligible Stocks” includes any common or preferred stock which (i) is not controlled or restricted stock under Rule 144 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, or subject to any other regulatory or contractual restrictions on sales, (ii) is traded on a U.S. national stock exchange, including NASDAQ, with a liquidity on such exchange for such stock acceptable to the Bank, and (iii) has, as of the close of trading on the applicable exchange (excluding after hours trading), a per share price of at least Fifteen Dollars ($15.00).  The Borrower will provide the Bank a Form U-1 Purpose Statement, confirming none of the proceeds of the loan will be used to purchase or carry any margin stock.”

 

2.2                               Section 8.16(b) of the Agreement is amended in its entirety to read as follows:

 

“(b)                           Acquire or purchase a business or its assets for a consideration, including assumption of direct or contingent debt, in excess of Fifteen Million Dollars ($15,000,000) for any individual transaction and in excess of the greater of (i) Thirty-Six Million Dollars ($36,000,000) in the aggregate or (ii) 100% of Adjusted EBITDA calculated at the end of the most recent reporting period for which the Bank requires financial statements, using the results of the twelve-month period ending with that reporting period.  Before making such acquisition, each of the following conditions must be satisfied: (i) no Event of Default exists or would exist as a result of such acquisition; (ii) Borrower shall provide evidence to the Bank of pro forma compliance with all covenants (excluding the Liquidity covenant) before and after giving effect to such acquisition; (iii) Liquidity is at least $5,000,000 higher than required under Section 8.4 on a pro forma basis after giving effect to such acquisition; and (iv) Borrower must obtain the prior effective written consent or approval of the board of directors or equivalent body of the business being acquired.”

 

2



 

3.                                      Waiver.  The Bank hereby waives the per acquisition limitation set forth in Section 8.16(b) for the sole purpose of permitting the Borrower to acquire TigerLead for a purchase price not exceeding $22,000,000.  The waiver granted herein is limited expressly as herein provided and shall not be deemed a waiver of such covenant for any other acquisition or a waiver of any other condition, term or provision now existing or hereinafter arising under the Agreement.

 

4.                                      Representations and Warranties.  Borrower hereby represents and warrants to Bank that: (i) no default specified in the Agreement and no event which with notice or lapse of time or both would become such a default has occurred and is continuing and has not been previously waived, (ii) the representations and warranties of Borrower pursuant to the Agreement are true on and as of the date hereof as if made on and as of said date, (iii) the making and performance by Borrower of this Amendment has been duly authorized by all necessary action, and (iv) no consent, approval, authorization, permit or license is required in connection with the making or performance of the Agreement as amended hereby.

 

5.                                      Conditions.  This Amendment will be effective when the Bank receives the following items, in form and content acceptable to the Bank.

 

5.1                               This Amendment duly executed by all parties hereto.

 

5.2                               Payment of all out-of-pocket expenses, including attorneys’ fees, incurred by the Bank in connection with the preparation of this Amendment.

 

6.                                      Effect of Amendment.  Except as provided in this Amendment, the Agreement shall remain in full force and effect and shall be performed by the parties hereto according to its terms and provisions.

 

IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date first above written.

 

 

BANK:

 

 

 

 

BORROWER:

BANK OF AMERICA, N.A.

 

 

 

 

MOVE, INC.,

 

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Tasneem A. Ebrahim

 

By:

/s/ Patricia Wehr

Name:

Tasneem A. Ebrahim

 

Name:

Patricia Wehr

Title:

Senior Vice President

 

Title:

CAO

 

3


EX-31.1 3 a12-20746_1ex31d1.htm EX-31.1

Exhibit 31.1

 

CERTIFICATION

 

I, Steven H. Berkowitz, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Move, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

/s/ STEVEN H. BERKOWITZ

 

Steven H. Berkowitz

 

Chief Executive Officer

 

Date: November 6, 2012

 


EX-31.2 4 a12-20746_1ex31d2.htm EX-31.2

Exhibit 31.2

 

CERTIFICATION

 

I, Rachel C. Glaser, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Move, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

/s/ RACHEL C. GLASER

 

Rachel C. Glaser

 

Chief Financial Officer

 

Date: November 6, 2012

 


EX-32.1 5 a12-20746_1ex32d1.htm EX-32.1

Exhibit 32.1

 

STATEMENT OF CHIEF EXECUTIVE OFFICER

OF MOVE, INC.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

§ 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the report of Move, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Steven H. Berkowitz, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

/s/ STEVEN H. BERKOWITZ

 

Steven H. Berkowitz

Date: November 6, 2012

Chief Executive Officer

 

A signed original of this written statement required by § 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by § 906, has been provided to Move, Inc. and will be retained by Move, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


EX-32.2 6 a12-20746_1ex32d2.htm EX-32.2

Exhibit 32.2

 

STATEMENT OF CHIEF FINANCIAL OFFICER

OF MOVE, INC.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

§ 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the report of Move, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Rachel C. Glaser, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

/s/ RACHEL C. GLASER

 

Rachel C. Glaser

Date:  November 6, 2012

Chief Financial Officer

 

A signed original of this written statement required by § 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by § 906, has been provided to Move, Inc. and will be retained by Move, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


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style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 45%; PADDING-TOP: 0in" valign="bottom" width="45%"> <p style="MARGIN: 0in 0in 0pt 20pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Total intangible assets</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 2.5%; PADDING-TOP: 0in" valign="bottom" width="2%"> <p style="MARGIN: 0in 0in 0pt">&#160;</p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 1.3%; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 2.25pt double" valign="bottom" width="1%"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">$</font></p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: windowtext 1pt solid; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; 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