InfoSpace Reports First Quarter 2001 Financial Results

InfoSpace reports first quarter revenues of $46.6 million; Registered wireless

subscribers grow to more than two million; Transactions processed increase to

more than $500 million in the first quarter



Apr 25, 2001, 01:00 ET from InfoSpace, Inc.

    BELLEVUE, Wash., April 25 /PRNewswire/ -- InfoSpace, Inc. (Nasdaq:   INSP),
 a leading global provider of merchant and consumer infrastructure services on
 wireless, broadband, and narrowband platforms, today announced that first
 quarter revenues were $46.6 million. InfoSpace reported a pro forma net loss
 of $5.5 million, or ($0.02) per share, exceeding the Company's guidance for
 the quarter by $0.02 per share.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000420/INFOLOGO )
 
     Key financial and operating metrics:
     -- InfoSpace ended the first quarter with more than two million registered
 wireless subscribers.
     -- Wireless revenues increased to approximately 20 percent of total
 revenues.
     -- More than $500 million was processed through InfoSpace's commerce
 products resulting in more than 50 percent of total merchant revenues.
     -- Balance sheet remains strong and healthy with cash, cash equivalents
 and investments of more than $450 million and no debt.
 
     "With the rapid adoption of our wireless services, new customer wins and
 significant growth in the amount of transactions processed, InfoSpace
 continues to demonstrate its strength and ability to generate new business and
 pursue favorable market opportunities," said Naveen Jain, chairman and CEO,
 InfoSpace, Inc.  "With the expected roll out of next generation networks this
 year and the launch of innovative new applications, there are many exciting
 and positive things happening for InfoSpace that we believe will provide
 catalysts for new growth in the future."
 
     Wireless
     InfoSpace's wireless business continues to gain traction as more than two
 million wireless subscribers have registered for services powered by
 InfoSpace's platform and applications demonstrating the strong demand for
 wireless data services across leading wireless carriers including Verizon,
 Cingular and AT&T Wireless.
     Wireless represented approximately 20 percent of total revenues for the
 first quarter fueled by new subscriber growth, customer wins, and upselling
 new features and functionality to current partners.
     InfoSpace continues to expand its footprint internationally by signing new
 agreements and extending current ones with partners outside of the U.S.
 During the quarter, InfoSpace announced the launch of its platform with
 Brazil's Algar Telecom Leste (ATL).  In less than two years, ATL has captured
 nearly 40 percent of the wireless services market in the states of Rio de
 Janeiro and Espirito Santo.
     InfoSpace also demonstrated its commitment to distributing its
 Spanish-language platform throughout Central and South America, the Caribbean
 and among Spanish speakers in the U.S.  During the quarter, InfoSpace
 announced that Cingular Wireless was the first company to adopt this new
 platform.
     During the past 12 months, wireless carriers worldwide have been investing
 in and preparing for the roll out of next generation networks.  InfoSpace has
 been working to develop the applications and services wireless carriers need
 to quickly monetize their large investments in new infrastructure
 technologies.  Some of these services, including mobile commerce and games,
 were demonstrated with Nortel and Lucent at CTIA in March.
    With the faster connections and increased functionality of next generation
 networks, InfoSpace will enable its wireless carrier partners to offer
 additional services to their subscribers that leverage those benefits. For
 example, faster connections offered by 2.5G and 3G networks will enable the
 delivery of more robust and graphic-intensive sources of information as well
 as more intuitive user interfaces that make it easier than ever for
 subscribers to shop online, find local merchants, receive promotions and
 discounts, find local merchants, play games, communicate with others, receive
 up-to-the-minute information and access driving directions real-time.
     In addition, the always-on feature of advanced networks that maintains a
 constant connection to the Internet will enable InfoSpace's instant messaging
 application let a user know whether or not their buddy-list members have their
 cell phones turned on and are available to receive messages, provide
 subscribers with instant notification of new e-mail, and to offer access to
 real-time information at a glance.
     InfoSpace looks forward to the roll out of next generation networks and
 launching new applications, such as games and multimedia, to help wireless
 carries plan their long-term product roadmap and functionality as network
 capacity grows.
 
     Merchant
     InfoSpace's merchant business continues to report solid growth. For the
 first quarter, approximately 20 percent of total revenues came from the
 merchant business. Coming off a seasonally high fourth quarter, InfoSpace
 processed more than $500 million in the first quarter.  Transaction revenue
 represented approximately 50 percent of total merchant revenues.
     Momentum continues for InfoSpace's payment processing platform,
 Authorize.Net, as it was announced that more than 100,000 merchants are now
 signed up for the service making it a leader in the payment processing market.
 InfoSpace also announced the launch of mobile payment processing, helping to
 turn mobile devices into point-of-sale devices by enabling credit cards to be
 authorized, charged or credited without using a traditional card swipe
 terminal or PC with a fixed line connection.  Merchants will have the freedom
 and flexibility to instantly process transactions on the spot with a handheld
 device, particularly useful for sales forces, taxis and other mobile vendors.
 
     Broadband
     InfoSpace continues to make inroads in establishing its footprint in the
 emerging broadband and interactive TV (iTV) market.  During the quarter, the
 Company forged an array of building block relationships with partners to
 support emerging platforms and protocols to help InfoSpace build the most
 compelling solution to take advantage of this opportunity.
     During the first quarter, InfoSpace announced partnerships with major
 broadband/iTV providers such as Microsoft TV, Liberate, OpenTV and ICTV.
 InfoSpace also announced it is working to build its first iTV application for
 Bloomberg Television.
     InfoSpace will develop and deliver a customized iTV application that
 enhances the Bloomberg Television viewing experience through interactive
 access to a personalized stock portfolio, news and other compelling functions.
     2001 is a strategic year for the development and growth of InfoSpace's
 broadband services as the Company continues to pursue new opportunities to
 help build its foundation to take advantage of this opportunity.
 
    Note:  InfoSpace has scheduled a conference call for 2 p.m. PDT to discuss
 first quarter 2001 financial results.  Interested parties may access the
 conference call over the Internet through the Company's Web site at
 www.infospace.com in the Investor Relations section.
 
     A replay will be available approximately one hour after the call until
 Wednesday, May 2 at 6 p.m. PST on the website or by dialing 888-203-1112 using
 the passcode 638997.
 
     CONTACT:  Joni Hanson, Senior Vice President of Investor Relations and
 Communications, 425-201-6100, or jhanson@infospace.com; or Nicole Knowles,
 Investor Relations Director, 425-201-6100, or nicole.knowles@infospace.com, or
 media, Steve Stratz, Public Relations Manager, 425-709-8617,
 steve.stratz@infospace.com, all of InfoSpace, Inc.
 
     About InfoSpace, Inc.
     InfoSpace is a leading global provider of merchant and consumer
 infrastructure services on wireless, broadband, and narrowband platforms. The
 Company provides commerce, information, and communication infrastructure
 services to wireless devices, merchants, and Web sites.  InfoSpace's partners
 encompass a global network of wireless, PC, and non-PC devices, including
 cellular phones, pagers, screen telephones, television set-top boxes, online
 kiosks and personal digital assistants. InfoSpace has relationships with
 Verizon Wireless, AT&T Wireless, Cingular Wireless, Intel, Virgin Mobile,
 Hasbro, National Discount Brokers, and Bloomberg, among others.  InfoSpace's
 affiliate network also consists of more than 3,200 Web sites that include AOL,
 Microsoft, NBCi, Lycos, and ABC LocalNet.  InfoSpace is also positioned to tap
 the market for broadband wired (DSL and cable) and broadband wireless (2.5G
 and 3G) services, such as interactive gaming, television and other
 entertainment services. In addition, the Company recently added back-end
 payment processing to InfoSpace's existing commerce services, allowing
 InfoSpace to offer everything a merchant needs to conduct the entire lifecycle
 of a transaction, one of the key drivers of mobile commerce adoption.
     This release contains forward-looking statements relating to the
 development of the company's products and services and future operating
 results that are subject to certain risks and uncertainties that could cause
 actual results to differ materially from those projected.  The words
 "believe," "expect," "intend," "anticipate," variations of such words, and
 similar expressions identify forward-looking statements, but their absence
 does not mean that the statement is not forward-looking.  These statements are
 not guarantees of future performance and are subject to certain risks,
 uncertainties and assumptions that are difficult to predict.  Factors that
 could affect the Company's actual results include the progress and costs of
 the development of our products and services, the timing of market acceptance
 of those products and services, the performance of our systems, the
 effectiveness of the development and implementation of our strategy, the
 ability to retain key personnel, and general economic conditions.  A more
 detailed description of certain factors that could affect actual results
 include, but are not limited to, those discussed in InfoSpace's Annual Report
 on Form 10-K, in the section entitled "Factors Affecting InfoSpace's Operating
 Results, Business Prospects and Market Price of Stock."  Readers are cautioned
 not to place undue reliance on these forward-looking statements, which speak
 only as of the date of this release.  InfoSpace undertakes no obligation to
 update publicly any forward-looking statements to reflect new information,
 events or circumstances after the date of this release or to reflect the
 occurrence of unanticipated events.
 
                                  InfoSpace, Inc.
               Pro Forma Consolidated Statements of Operations (A)
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                  Three months ended March 31,
                                                      2001              2000
 
     Revenues                                       $46,565           $38,778
 
     Cost of revenues                                11,720             6,088
 
         Gross profit                                34,845            32,690
 
     Operating expenses:
 
       Product development                           11,784             6,032
       Sales, general and administrative             34,437            19,363
 
         Total operating expenses                    46,221            25,395
 
         Income (loss) from operations              (11,376)            7,295
 
       Other income, net                              5,958             7,584
       Income tax expense                               (50)              (18)
 
     Pro forma income (loss)                        $(5,468)          $14,861
 
     Pro forma basic earnings (loss) per
      share                                          $(0.02)            $0.05
     Pro forma diluted earnings (loss) per
      share                                          $(0.02)            $0.04
     Shares used in computing pro forma
      basic earnings (loss) per share               323,136           289,461
     Shares used in computing pro forma
      diluted earnings (loss) per share             323,136           334,237
 
     (A)  Pro forma results exclude non-cash charges, non-recurring charges
      and items unrelated to the Company's core operations.  This financial
      statement excludes amortization of intangibles, acquisition-related
      expenses, restructuring and other non-recurring charges, losses on
      investments and cumulative effect of change in accounting principle,
      which are summarized in the following table. This financial statement
      also excludes employer payroll taxes assessed on stock option gains
      realized by employees from non-qualified stock option exercises which are
      recorded in cost of revenue, product development and sales, general and
      administrative expenses.  They do not purport to be financial statements
      prepared in accordance with accounting principles generally accepted in
      the United States (GAAP).  The following table reconciles the pro forma
      net income (loss) in accordance with GAAP for the periods presented.
 
                                  InfoSpace, Inc.
                   Reconciliation of Pro Forma Net Income (Loss)
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                  Three months ended March 31,
                                                      2001              2000
 
     Pro forma net income (loss)                    $(5,468)          $14,861
 
       Employer payroll taxes on stock
        option exercises                               (284)           (4,585)
       Amortization of intangibles                  (61,402)          (28,010)
       Acquisition & other related charges             (889)          (86,397)
       Restructuring charges                         (1,462)               --
       Other non-recurring charges                     (842)           (2,888)
       Gain (loss) on investments in
        Venture Capital Fund, net of
         minority interest                          (19,401)           13,755
       Loss and impairment on investments           (28,190)               --
       Cumulative effect of change in
        accounting principle                         (3,171)           (2,055)
 
     Net loss                                     $(121,109)         $(95,319)
 
 
                                  InfoSpace, Inc.
                       Consolidated Statements of Operations
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                 Three months ended March 31,
                                                    2001               2000
 
     Revenues                                     $46,565           $38,778
 
    Cost of revenues                               11,721             6,134
 
     Gross Profit                                  34,844            32,644
 
     Operating expenses:
 
       Product development                         11,787             6,951
       Sales, general and administrative           34,717            22,983
       Amortization of intangibles                 61,402            28,010
       Acquisition & other related charges            889            86,397
       Other non-recurring charges                    842             2,888
       Restructuring charges                        1,462                --
 
     Total operating expenses                     111,099           147,229
 
     Loss from operations                         (76,255)         (114,585)
 
       Gain (loss) on investments in
        Venture Capital Fund, net of
         minority interest                        (19,401)           13,755
       Loss and impairment on investments         (28,190)               --
       Other income, net                            5,958             7,584
 
     Loss before income tax expense and
      cumulative effect of change in
      accounting principle                       (117,888)          (93,246)
 
       Income tax expense                              50                18
 
     Loss before cumulative effect of
      change in accounting principle             (117,938)          (93,264)
 
       Cumulative effect of change in
        accounting principle                       (3,171)           (2,055)
 
       Net loss                                 $(121,109)         $(95,319)
 
     Basic loss per share                          $(0.37)           $(0.33)
 
     Shares used in computing basic net
      loss per share                              323,136           289,461
 
 
                       Condensed Consolidated Balance Sheets
                                    (in 000's)
 
                                                  March 31,       December 31,
                                                    2001              2000
                                                 (unaudited)
     ASSETS
 
     Current assets:
      Cash and cash equivalents                    $180,363          $153,913
      Short-term investments                        101,797           216,235
      Accounts receivable, net                       23,253            33,881
      Payroll tax receivable                         13,214               620
      Notes and other receivables, net               22,506            21,701
      Prepaid expenses and other current assets       8,987            14,491
 
         Total current assets                       350,120           440,841
 
       Property and equipment, net                   54,118            51,137
       Long-term investments                         82,322            32,451
       Other investments                             84,967           121,574
       Intangibles, net                             697,791           621,032
       Other long-term assets                         4,007             5,075
 
     Total assets                                $1,273,325        $1,272,110
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable                              $4,756            $4,537
       Accrued expenses and other current
        liabilities                                  40,533            37,999
       Deferred revenue                              26,161            31,430
 
         Total current liabilities                   71,450            73,966
 
     Long-term liabilities and minority interest:
       Long-term deferred revenue                     5,026             7,974
       Minority interest                                 --            21,599
 
       Total liabilities                             76,476           103,539
 
     Stockholders' equity:
      Common stock                                       32                31
      Additional paid-in capital                  1,737,348         1,596,214
      Accumulated deficit                          (529,756)         (408,647)
      Deferred expense - warrants                    (1,292)           (1,495)
      Accumulated other comprehensive loss           (6,197)          (16,032)
      Unearned compensation - stock options          (3,286)           (1,500)
 
         Total stockholders' equity               1,196,849         1,168,571
 
     Total liabilities and stockholders'
      equity                                     $1,273,325        $1,272,110
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE InfoSpace, Inc.
    BELLEVUE, Wash., April 25 /PRNewswire/ -- InfoSpace, Inc. (Nasdaq:   INSP),
 a leading global provider of merchant and consumer infrastructure services on
 wireless, broadband, and narrowband platforms, today announced that first
 quarter revenues were $46.6 million. InfoSpace reported a pro forma net loss
 of $5.5 million, or ($0.02) per share, exceeding the Company's guidance for
 the quarter by $0.02 per share.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000420/INFOLOGO )
 
     Key financial and operating metrics:
     -- InfoSpace ended the first quarter with more than two million registered
 wireless subscribers.
     -- Wireless revenues increased to approximately 20 percent of total
 revenues.
     -- More than $500 million was processed through InfoSpace's commerce
 products resulting in more than 50 percent of total merchant revenues.
     -- Balance sheet remains strong and healthy with cash, cash equivalents
 and investments of more than $450 million and no debt.
 
     "With the rapid adoption of our wireless services, new customer wins and
 significant growth in the amount of transactions processed, InfoSpace
 continues to demonstrate its strength and ability to generate new business and
 pursue favorable market opportunities," said Naveen Jain, chairman and CEO,
 InfoSpace, Inc.  "With the expected roll out of next generation networks this
 year and the launch of innovative new applications, there are many exciting
 and positive things happening for InfoSpace that we believe will provide
 catalysts for new growth in the future."
 
     Wireless
     InfoSpace's wireless business continues to gain traction as more than two
 million wireless subscribers have registered for services powered by
 InfoSpace's platform and applications demonstrating the strong demand for
 wireless data services across leading wireless carriers including Verizon,
 Cingular and AT&T Wireless.
     Wireless represented approximately 20 percent of total revenues for the
 first quarter fueled by new subscriber growth, customer wins, and upselling
 new features and functionality to current partners.
     InfoSpace continues to expand its footprint internationally by signing new
 agreements and extending current ones with partners outside of the U.S.
 During the quarter, InfoSpace announced the launch of its platform with
 Brazil's Algar Telecom Leste (ATL).  In less than two years, ATL has captured
 nearly 40 percent of the wireless services market in the states of Rio de
 Janeiro and Espirito Santo.
     InfoSpace also demonstrated its commitment to distributing its
 Spanish-language platform throughout Central and South America, the Caribbean
 and among Spanish speakers in the U.S.  During the quarter, InfoSpace
 announced that Cingular Wireless was the first company to adopt this new
 platform.
     During the past 12 months, wireless carriers worldwide have been investing
 in and preparing for the roll out of next generation networks.  InfoSpace has
 been working to develop the applications and services wireless carriers need
 to quickly monetize their large investments in new infrastructure
 technologies.  Some of these services, including mobile commerce and games,
 were demonstrated with Nortel and Lucent at CTIA in March.
    With the faster connections and increased functionality of next generation
 networks, InfoSpace will enable its wireless carrier partners to offer
 additional services to their subscribers that leverage those benefits. For
 example, faster connections offered by 2.5G and 3G networks will enable the
 delivery of more robust and graphic-intensive sources of information as well
 as more intuitive user interfaces that make it easier than ever for
 subscribers to shop online, find local merchants, receive promotions and
 discounts, find local merchants, play games, communicate with others, receive
 up-to-the-minute information and access driving directions real-time.
     In addition, the always-on feature of advanced networks that maintains a
 constant connection to the Internet will enable InfoSpace's instant messaging
 application let a user know whether or not their buddy-list members have their
 cell phones turned on and are available to receive messages, provide
 subscribers with instant notification of new e-mail, and to offer access to
 real-time information at a glance.
     InfoSpace looks forward to the roll out of next generation networks and
 launching new applications, such as games and multimedia, to help wireless
 carries plan their long-term product roadmap and functionality as network
 capacity grows.
 
     Merchant
     InfoSpace's merchant business continues to report solid growth. For the
 first quarter, approximately 20 percent of total revenues came from the
 merchant business. Coming off a seasonally high fourth quarter, InfoSpace
 processed more than $500 million in the first quarter.  Transaction revenue
 represented approximately 50 percent of total merchant revenues.
     Momentum continues for InfoSpace's payment processing platform,
 Authorize.Net, as it was announced that more than 100,000 merchants are now
 signed up for the service making it a leader in the payment processing market.
 InfoSpace also announced the launch of mobile payment processing, helping to
 turn mobile devices into point-of-sale devices by enabling credit cards to be
 authorized, charged or credited without using a traditional card swipe
 terminal or PC with a fixed line connection.  Merchants will have the freedom
 and flexibility to instantly process transactions on the spot with a handheld
 device, particularly useful for sales forces, taxis and other mobile vendors.
 
     Broadband
     InfoSpace continues to make inroads in establishing its footprint in the
 emerging broadband and interactive TV (iTV) market.  During the quarter, the
 Company forged an array of building block relationships with partners to
 support emerging platforms and protocols to help InfoSpace build the most
 compelling solution to take advantage of this opportunity.
     During the first quarter, InfoSpace announced partnerships with major
 broadband/iTV providers such as Microsoft TV, Liberate, OpenTV and ICTV.
 InfoSpace also announced it is working to build its first iTV application for
 Bloomberg Television.
     InfoSpace will develop and deliver a customized iTV application that
 enhances the Bloomberg Television viewing experience through interactive
 access to a personalized stock portfolio, news and other compelling functions.
     2001 is a strategic year for the development and growth of InfoSpace's
 broadband services as the Company continues to pursue new opportunities to
 help build its foundation to take advantage of this opportunity.
 
    Note:  InfoSpace has scheduled a conference call for 2 p.m. PDT to discuss
 first quarter 2001 financial results.  Interested parties may access the
 conference call over the Internet through the Company's Web site at
 www.infospace.com in the Investor Relations section.
 
     A replay will be available approximately one hour after the call until
 Wednesday, May 2 at 6 p.m. PST on the website or by dialing 888-203-1112 using
 the passcode 638997.
 
     CONTACT:  Joni Hanson, Senior Vice President of Investor Relations and
 Communications, 425-201-6100, or jhanson@infospace.com; or Nicole Knowles,
 Investor Relations Director, 425-201-6100, or nicole.knowles@infospace.com, or
 media, Steve Stratz, Public Relations Manager, 425-709-8617,
 steve.stratz@infospace.com, all of InfoSpace, Inc.
 
     About InfoSpace, Inc.
     InfoSpace is a leading global provider of merchant and consumer
 infrastructure services on wireless, broadband, and narrowband platforms. The
 Company provides commerce, information, and communication infrastructure
 services to wireless devices, merchants, and Web sites.  InfoSpace's partners
 encompass a global network of wireless, PC, and non-PC devices, including
 cellular phones, pagers, screen telephones, television set-top boxes, online
 kiosks and personal digital assistants. InfoSpace has relationships with
 Verizon Wireless, AT&T Wireless, Cingular Wireless, Intel, Virgin Mobile,
 Hasbro, National Discount Brokers, and Bloomberg, among others.  InfoSpace's
 affiliate network also consists of more than 3,200 Web sites that include AOL,
 Microsoft, NBCi, Lycos, and ABC LocalNet.  InfoSpace is also positioned to tap
 the market for broadband wired (DSL and cable) and broadband wireless (2.5G
 and 3G) services, such as interactive gaming, television and other
 entertainment services. In addition, the Company recently added back-end
 payment processing to InfoSpace's existing commerce services, allowing
 InfoSpace to offer everything a merchant needs to conduct the entire lifecycle
 of a transaction, one of the key drivers of mobile commerce adoption.
     This release contains forward-looking statements relating to the
 development of the company's products and services and future operating
 results that are subject to certain risks and uncertainties that could cause
 actual results to differ materially from those projected.  The words
 "believe," "expect," "intend," "anticipate," variations of such words, and
 similar expressions identify forward-looking statements, but their absence
 does not mean that the statement is not forward-looking.  These statements are
 not guarantees of future performance and are subject to certain risks,
 uncertainties and assumptions that are difficult to predict.  Factors that
 could affect the Company's actual results include the progress and costs of
 the development of our products and services, the timing of market acceptance
 of those products and services, the performance of our systems, the
 effectiveness of the development and implementation of our strategy, the
 ability to retain key personnel, and general economic conditions.  A more
 detailed description of certain factors that could affect actual results
 include, but are not limited to, those discussed in InfoSpace's Annual Report
 on Form 10-K, in the section entitled "Factors Affecting InfoSpace's Operating
 Results, Business Prospects and Market Price of Stock."  Readers are cautioned
 not to place undue reliance on these forward-looking statements, which speak
 only as of the date of this release.  InfoSpace undertakes no obligation to
 update publicly any forward-looking statements to reflect new information,
 events or circumstances after the date of this release or to reflect the
 occurrence of unanticipated events.
 
                                  InfoSpace, Inc.
               Pro Forma Consolidated Statements of Operations (A)
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                  Three months ended March 31,
                                                      2001              2000
 
     Revenues                                       $46,565           $38,778
 
     Cost of revenues                                11,720             6,088
 
         Gross profit                                34,845            32,690
 
     Operating expenses:
 
       Product development                           11,784             6,032
       Sales, general and administrative             34,437            19,363
 
         Total operating expenses                    46,221            25,395
 
         Income (loss) from operations              (11,376)            7,295
 
       Other income, net                              5,958             7,584
       Income tax expense                               (50)              (18)
 
     Pro forma income (loss)                        $(5,468)          $14,861
 
     Pro forma basic earnings (loss) per
      share                                          $(0.02)            $0.05
     Pro forma diluted earnings (loss) per
      share                                          $(0.02)            $0.04
     Shares used in computing pro forma
      basic earnings (loss) per share               323,136           289,461
     Shares used in computing pro forma
      diluted earnings (loss) per share             323,136           334,237
 
     (A)  Pro forma results exclude non-cash charges, non-recurring charges
      and items unrelated to the Company's core operations.  This financial
      statement excludes amortization of intangibles, acquisition-related
      expenses, restructuring and other non-recurring charges, losses on
      investments and cumulative effect of change in accounting principle,
      which are summarized in the following table. This financial statement
      also excludes employer payroll taxes assessed on stock option gains
      realized by employees from non-qualified stock option exercises which are
      recorded in cost of revenue, product development and sales, general and
      administrative expenses.  They do not purport to be financial statements
      prepared in accordance with accounting principles generally accepted in
      the United States (GAAP).  The following table reconciles the pro forma
      net income (loss) in accordance with GAAP for the periods presented.
 
                                  InfoSpace, Inc.
                   Reconciliation of Pro Forma Net Income (Loss)
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                  Three months ended March 31,
                                                      2001              2000
 
     Pro forma net income (loss)                    $(5,468)          $14,861
 
       Employer payroll taxes on stock
        option exercises                               (284)           (4,585)
       Amortization of intangibles                  (61,402)          (28,010)
       Acquisition & other related charges             (889)          (86,397)
       Restructuring charges                         (1,462)               --
       Other non-recurring charges                     (842)           (2,888)
       Gain (loss) on investments in
        Venture Capital Fund, net of
         minority interest                          (19,401)           13,755
       Loss and impairment on investments           (28,190)               --
       Cumulative effect of change in
        accounting principle                         (3,171)           (2,055)
 
     Net loss                                     $(121,109)         $(95,319)
 
 
                                  InfoSpace, Inc.
                       Consolidated Statements of Operations
                                    (unaudited)
                         (in 000's, except per share data)
 
                                                 Three months ended March 31,
                                                    2001               2000
 
     Revenues                                     $46,565           $38,778
 
    Cost of revenues                               11,721             6,134
 
     Gross Profit                                  34,844            32,644
 
     Operating expenses:
 
       Product development                         11,787             6,951
       Sales, general and administrative           34,717            22,983
       Amortization of intangibles                 61,402            28,010
       Acquisition & other related charges            889            86,397
       Other non-recurring charges                    842             2,888
       Restructuring charges                        1,462                --
 
     Total operating expenses                     111,099           147,229
 
     Loss from operations                         (76,255)         (114,585)
 
       Gain (loss) on investments in
        Venture Capital Fund, net of
         minority interest                        (19,401)           13,755
       Loss and impairment on investments         (28,190)               --
       Other income, net                            5,958             7,584
 
     Loss before income tax expense and
      cumulative effect of change in
      accounting principle                       (117,888)          (93,246)
 
       Income tax expense                              50                18
 
     Loss before cumulative effect of
      change in accounting principle             (117,938)          (93,264)
 
       Cumulative effect of change in
        accounting principle                       (3,171)           (2,055)
 
       Net loss                                 $(121,109)         $(95,319)
 
     Basic loss per share                          $(0.37)           $(0.33)
 
     Shares used in computing basic net
      loss per share                              323,136           289,461
 
 
                       Condensed Consolidated Balance Sheets
                                    (in 000's)
 
                                                  March 31,       December 31,
                                                    2001              2000
                                                 (unaudited)
     ASSETS
 
     Current assets:
      Cash and cash equivalents                    $180,363          $153,913
      Short-term investments                        101,797           216,235
      Accounts receivable, net                       23,253            33,881
      Payroll tax receivable                         13,214               620
      Notes and other receivables, net               22,506            21,701
      Prepaid expenses and other current assets       8,987            14,491
 
         Total current assets                       350,120           440,841
 
       Property and equipment, net                   54,118            51,137
       Long-term investments                         82,322            32,451
       Other investments                             84,967           121,574
       Intangibles, net                             697,791           621,032
       Other long-term assets                         4,007             5,075
 
     Total assets                                $1,273,325        $1,272,110
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable                              $4,756            $4,537
       Accrued expenses and other current
        liabilities                                  40,533            37,999
       Deferred revenue                              26,161            31,430
 
         Total current liabilities                   71,450            73,966
 
     Long-term liabilities and minority interest:
       Long-term deferred revenue                     5,026             7,974
       Minority interest                                 --            21,599
 
       Total liabilities                             76,476           103,539
 
     Stockholders' equity:
      Common stock                                       32                31
      Additional paid-in capital                  1,737,348         1,596,214
      Accumulated deficit                          (529,756)         (408,647)
      Deferred expense - warrants                    (1,292)           (1,495)
      Accumulated other comprehensive loss           (6,197)          (16,032)
      Unearned compensation - stock options          (3,286)           (1,500)
 
         Total stockholders' equity               1,196,849         1,168,571
 
     Total liabilities and stockholders'
      equity                                     $1,273,325        $1,272,110
 
 
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