Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2001, 2000 and 1999
Note 1: Summary of Significant Accounting Policies
Description of business:
InfoSpace, Inc. (the Company or InfoSpace) is a provider of wireless and Internet software and application
services. The Company delivers a wireless and Internet platform of software and application services that enable companies to offer network
based services under their own brands. The Company provides its services across multiple platforms simultaneously. The Company develops
and delivers its products and application services to a broad range of customers that span each of its business areas of wireline and broadband,
merchant and wireless.
Principles of consolidation:
The consolidated financial statements include the accounts of the Company and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
Basis of Presentation:
The InfoSpace Venture Fund 2000, LLC (the Venture Fund) was in existence from January 1, 2000 through
March 31, 2001. The Venture Fund's financial statements are consolidated in the Company's financial statements, as the Company held the
majority interest in the Venture Fund. In accordance with accounting for investment companies, the Venture Fund accounted for its
investments at fair value, which is carried forward in consolidation pursuant to Emerging Issues Task Force (EITF) Issue No. 85 12,
of Specialized Accounting for Investments in Consolidation.
Business combinations accounted for under the purchase method of accounting include the results of operations
of the acquired business from the date of acquisition. Net assets of the company acquired are recorded at their fair value at the date of
acquisition. Amounts allocated to in process research and development are expensed in the period of acquisition. The valuation of the shares
issued is based on a seven day stock price average using the measurement date and three days prior to and after this date. If the company issued
a public announcement of the acquisition, the measurement date is the date of such announcement. If the purchase consideration is based on a
formula, the measurement date is based on the requirements in EITF Issue No. 99 12. If no public announcement was made and a formula is
not used in determining the purchase consideration, then the measurement date is the date of purchase.
Prior to June 30, 2001, business combinations accounted for under the pooling of interests method of accounting include the financial
position and results of operations as if the acquired company had been a wholly owned subsidiary since inception. In such cases, the assets,
liabilities and stockholders' equity of the acquired entity was combined with the Company's respective amounts at their recorded values. The
equity of the acquired entity is reflected on an as if converted basis to InfoSpace equity at the time of issuance. Prior period financial
statements have been recast to give effect to the pooling of interests mergers with Go2Net, Prio and INEX. Certain reclassifications have been
made to the financial statements of the pooled entities to conform to the Company's presentation.
Cash and cash equivalents:
The Company considers all highly liquid debt instruments with an original maturity of 90 days or less to be
cash equivalents. Cash and cash equivalents are carried at cost, which approximates market. Included in cash and cash equivalents at December
31, 2001 is $1.8 million of cash restricted for use in clearing merchant transactions.
Short term and long term investments:
The Company principally invests its available cash in investment grade debt instruments of
corporate issuers and in debt instruments of the U.S. Government and its agencies. All debt instruments with original maturities greater than
three months up to one year from the balance sheet date are considered short term investments. Investments maturing after twelve months from
the balance sheet date are considered long term. The Company accounts for investments in accordance with Statement of Financial