Homestore.com, Inc. (Nasdaq: HOMS) today announced that it has provided additional information to NASDAQ. Trading in Homestore shares was halted on Dec. 21, 2001, after Homestore voluntarily informed NASDAQ and the Securities and Exchange Commission that the company's audit committee was conducting an internal inquiry into certain of the company's accounting practices. Since that time, the company has been working diligently to satisfy NASDAQ's request for additional information in order to permit trading to resume.

In January 2, 2002, the company announced that, based on the preliminary results of the inquiry, the company had determined that it overstated its on-line advertising revenues in the first three quarters of 2001 by between $54 million and $95 million in connection with certain advertising transactions that should have been accounted for as barter transactions because they were related to purchases by the company of goods and services from third parties. The audit committee's internal inquiry is not yet complete, could result in additional restatements, and could cover periods before 2001.

Before today, the company had placed three employees on administrative leave in connection with the audit committee inquiry and the company may take additional disciplinary measures because of the inquiry. The employees placed on leave were members of the finance department and business development department. The audit committee is firmly committed to completing a thorough and expeditious review in an independent and objective manner and has retained outside legal counsel and accounting experts to assist in the review.

The company also announced by separate news release today that it has appointed a new chairman, a new chief executive officer, a chief operating officer and a new chief financial officer.

W. Michael Long joins the company as chief executive officer and a member of the board of directors. Jack D. Dennison joins as chief operating officer and Lewis R. Belote III joins as chief financial officer. The company also announced that long-standing board member Joe F. Hanauer, has been named chairman of the company's board of directors.

Long, 49, brings to Homestore more than 20 years experience leading public companies including having served as president and chief executive officer of The Continuum Company, Inc.; chief executive officer of Healtheon Corp.; and chairman of WebMD, Inc., after its merger with Healtheon.

Dennison, 45, brings many years of senior management experience including, former executive vice president, general counsel and secretary of Healtheon and its successor, WebMD, Inc.; vice president and general counsel of The Continuum Company, Inc.; and deputy general counsel of Computer Sciences Corporation. Belote, 46, has more than 20 years of accounting and senior financial management experience, including serving as senior vice president of finance for Healtheon and WebMD, Inc.; chief financial officer of ActaMed Corp., the first company acquired by Healtheon; and 12 years with the accounting firm, Ernst & Young.

Hanauer is a widely respected veteran of the real estate industry who has served as a director of Homestore since November 1996. He is former chairman of Grubb & Ellis Company and former chairman of Coldwell Banker Residential Group, Inc.

Stuart Wolff, a co-founder of the company, has resigned as chairman, chief executive officer and an employee of the company to pursue a new technology venture.

Published: January 7, 2002

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