Ask Jeeves (ASKJ) 8-K/A Index to Consolidated Financial Statements

Exhibit 99.2

INDEX TO PRO FORMA FINANCIAL INFORMATION

Ask Jeeves, Inc.

Unaudited Pro Forma Condensed Combined Financial Information:
Pro Forma Consolidated Balance Sheets as of March 31, 2004	3
Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 2003	4
Pro Forma Consolidated Statements of Operations for the for the Three Months Ended March 31, 2004	5
Notes to Unaudited Pro Forma Condensed Combined Financial Information	6

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ASK JEEVES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On May 6, 2004, Ask Jeeves, Inc. completed its acquisition of Interactive Search Holdings, Inc., an online search and media company. The following unaudited pro forma condensed combined financial information for Ask Jeeves, Inc. gives effect to the acquisition of Interactive Search Holdings, Inc. The unaudited pro forma condensed combined financial data were prepared from (1) Ask Jeeves’ audited historical consolidated financial statements included in Ask Jeeves’ Form 10-K for the year ended December 31, 2003 (2) Ask Jeeves’ unaudited historical condensed consolidated financial statements included in Ask Jeeves’ Form 10-Q for the three months ended March 31, 2004 (3) Interactive Search Holdings’ audited historical consolidated financial statements as of and for the year ended December 31, 2003, included elsewhere in this Form 8-K/A (4) Interactive Search Holdings’ unaudited historical consolidated financial statements as of and for the three months ended March 31, 2004, filed elsewhere in this Form 8-K/A, and should be read in conjunction with those financial statements.

The unaudited pro forma condensed combined balance sheet at March 31, 2004 assumes the Interactive Search Holdings, Inc. acquisition took place as of March 31, 2004. The total purchase cost of $391.1 million has been allocated to the assets and liabilities based on management’s preliminary estimates of the respective fair values with the excess consideration over the net assets acquired allocated to goodwill. These estimates are subject to adjustment based on the final allocation of purchase cost.

The unaudited pro forma condensed combined statements of operations combine the historical statements of operations for Ask Jeeves, Inc. and Interactive Search Holdings, Inc. for the year ended December 31, 2003 and the three months ended March 31, 2004, and give effect to the acquisition, including the amortization of acquired identified intangible assets, as if it had occurred on January 1, 2003.

The unaudited pro forma condensed combined information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transactions had been consummated at the dates indicated, nor is it necessarily indicative of future operating results or financial position of the combined companies.

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ASK JEEVES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2004
(In thousands, except share data)

	Historical						Pro Forma
				Interactive
	Ask Jeeves, Inc.			Search Holdings, Inc.			Adjustments					Combined
ASSETS
Current assets:
Cash and cash equivalents	$	67,699		$	20,694		$	(17,993	)	(1	)	$	70,400
Marketable securities		125,991			—			(125,991	)	(1	)		—
Total cash, cash equivalents and marketable securities		193,690			20,694			(143,984	)				70,400
Accounts receivable, net		14,286			27,500		$	(176	)	(2	)		41,610
Prepaid expenses and other current assets		4,499			1,695			—					6,194
Total current assets		212,475			49,889			(144,160	)				118,204
Property and equipment, net		14,387			3,404			—					17,791
Goodwill		—			—			263,278		(3	)		263,278
Intangible assets, net		550			6,053			(6,053	)	(5	)		101,527
								100,977		(4	)
Other long-term assets, net		5,226			1,705			—					6,931
Total assets	$	232,638		$	61,051		$	214,042				$	507,731
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	16,066		$	28,391		$	(176	)	(2	)	$	55,168
								10,887		(1	)
Accrued compensation and related expenses		5,066			—			—					5,066
Accrued restructuring costs		979			—			—					979
Deferred revenue		4,147			896			(896	)	(8	)		4,565
								418		(8	)
Note Payable		—			2,107			—					2,107
Current portion of capital lease obligation		—			1,119			—					1,119
Total current liabilities		26,258			32,513			10,233					69,004
Convertible subordinated notes		115,000			—			—					115,000
Capital lease obligations, less current portion		—			817			—					817
Other liabilities		326			—			—					326
Total liabilities		141,584			33,330			10,233					185,147
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock		—			37			(37	)	(6	)		—
Common stock		744,572			21,336			(21,336	)	(6	)		980,816
								236,244		(1	)
Subscription receivable		—			(14	)		14		(6	)		—
Deferred stock compensation		—			(2,645	)		2,645		(6	)		(4,714	)
								(4,714	)	(7	)
Accumulated deficit		(657,307	)		9,007			(9,007	)	(6	)		(657,307	)
Accumulated other comprehensive income		3,789			—			—					3,789
Total stockholders’ equity		91,054			27,721			203,809					322,584
Total liabilities and stockholders’ equity	$	232,638		$	61,051		$	214,042				$	507,731

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ASK JEEVES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(in thousands, except share and per share data)

	Historical					Pro Forma
			Interactive
	Ask Jeeves, Inc.		Search Holdings, Inc.			Adjustments					Combined
Revenues	$	107,292	$	85,306		$	(438	)	(A	)	$	192,160
Cost of revenues		21,917		39,133			(438	)	(A	)		72,077
							11,465		(B	)		—
Gross profit		85,375		46,173			(11,465	)				120,083
Operating expenses:
Product development		14,768		3,312			—					18,080
Sales and marketing		31,902		24,673			—					56,575
General and administrative		19,025		5,598			(1,038	)	(C	)		23,585
Amortization of intangible assets		—		—			13,317		(B	)		13,317
Impairment of long-lived assets		702		—			—					702
Total operating expenses		66,397		33,583			12,279					112,259
Operating income		18,978		12,590			(23,744	)				7,824
Gain on dissolution of joint venture		6,356		—			—					6,356
Interest and other income (expense), net		1,342		(366	)		—					976
Income before income tax provision		26,676		12,224			(23,744	)				15,156
Income tax provision		1,891		420			—					2,311
Income from continuing operations	$	24,785	$	11,804		$	(23,744	)			$	12,845
Earnings per Share-Basic:
Income from continuing operations	$	0.56									$	0.25
Weighted average shares outstanding used in computing basic net income per share		44,233,461										52,164,926
Earnings per Share-Diluted:
Income from continuing operations	$	0.45									$	0.20
Weighted average shares outstanding used in computing diluted net income per share		54,773,229										64,073,057

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ASK JEEVES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(in thousands, except share and per share data)

	Historical					Pro Forma
			Interactive
	Ask Jeeves, Inc.		Search Holdings, Inc.			Adjustments					Combined
Revenues	$	39,229	$	39,199		$	(143	)	(A	)	$	78,285
Cost of revenues		6,070		17,058			(143	)	(A	)		25,851
							2,866		(B	)		—
Gross profit		33,159		22,141			(2,866	)				52,434
Operating expenses:
Product development		4,753		1,218			—					5,971
Sales and marketing		9,164		9,788			—					18,952
General and administrative		5,344		2,332			(372	)	(C	)		7,304
Amortization of intangible assets		—		—			3,329		(B	)		3,329
Other charges		—		12,536			(10,482	)	(D	)		2,054
Total operating expenses		19,261		25,874			(7,525	)				37,610
Operating income (loss)		13,898		(3,733	)		4,659					14,824
Interest and other income (expense), net		581		(69	)		—					512
Income (loss) before income tax provision		14,479		(3,802	)		4,659					15,336
Income tax provision		1,100		256			—					1,356
Income (loss) from continuing operations	$	13,379	$	(4,058	)	$	4,659				$	13,980
Earnings per Share-Basic:
Income from continuing operations	$	0.29									$	0.26
Weighted average shares outstanding used in computing basic net income per share		46,885,863										54,817,328
Earnings per Share-Diluted:
Income from continuing operations	$	0.23									$	0.20
Weighted average shares outstanding used in computing diluted net income per share		59,370,727										68,670,555

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ASK JEEVES, INC.
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION

1. ALLOCATION OF PURCHASE COST AS OF THE ACQUISITION DATE (MAY 6, 2004)

The unaudited pro forma condensed combined financial statements reflect the total purchase cost for Interactive Search Holdings, Inc. of approximately $391.1 million which consists of the following (in thousands):

Common stock (9,093,590 shares at $25.73 per share)	$	233,978
Stock options (206,238 options, at fair value)		2,266
Cash		143,984
Transaction costs		10,887
	$	391,115

The total purchase cost of the acquisition of Interactive Search Holdings, Inc. as of the acquisition date (May 6, 2004) has been allocated to assets and liabilities based on management’s preliminary estimate of its fair value. The excess of the purchase consideration over the fair value of the net assets acquired has been allocated to goodwill. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents	$	27,530
Other tangible assets		27,359
Amortizable intangible assets:
Developed/core technology		3,785
User Base		30,608
Advertiser and distribution partner relationships		61,479
Trade names		5,105
Goodwill		253,657
Total assets acquired		409,523
Liabilities assumed		(23,122	)
Deferred stock-based compensation (stockholders’ equity)		4,714
Total	$	391,115

2. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

The adjustments to the unaudited pro forma condensed combined balance sheet as of March 31, 2004 have been calculated as if the acquisition occurred on that date and are as follows:

(1)	To reflect the acquisition of Interactive Search Holdings, Inc. for the total purchase cost of $391.1 million as described in Note 1.
(2)	To reflect the elimination of intercompany accounts receivable and payable.
(3)	Recognition of goodwill in the amount of $262.0 million which represents the excess of the purchase consideration over the fair value of the net assets acquired and identified intangible assets. The amount recorded in the condensed combined balance sheet at March 31, 2004 differs from the amount determined as of the May 6, 2004 acquisition date (Note 1) due to changes in the assets and liabilities of Interactive Search Holdings, Inc. between those dates.

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ASK JEEVES, INC.
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION

(4) To recognize the estimated fair value of identified intangible assets as follows:

			Estimated Lives of
(in thousands, except for estimated lives)	Fair Value		Intangible Assets		Annual Amortization
Developed/core technology	$	3,785		3	$	1,262
User Base		30,608		3		10,203
Advertiser and distribution partner relationships		61,479		5		12,296
Trade names		5,105		5		1,021
Total	$	100,977			$	24,782

(5)	To eliminate the historical intangible assets of Interactive Search Holdings, Inc.
(6)	To eliminate the historical stockholders’ equity accounts of Interactive Search Holdings, Inc.
(7)	To record deferred stock compensation on unvested stock options assumed.
(8)	To adjust the historical deferred revenue of Interactive Search Holdings, Inc. to the estimated fair value of the related obligation.

Net deferred tax assets related to the acquisition of Interactive Search Holdings had been fully offset by a valuation allowance and, accordingly, no such amounts are included in the accompanying condensed combined balance sheet.

3. ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 AND THREE MONTHS ENDED MARCH 31, 2004

The adjustments to the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2003 and three months ended March 31, 2004 have been calculated assuming that the acquisition occurred as of January 1, 2003, and January 1, 2004, respectively, and are as follows:

(A)     To reflect the elimination of intercompany transactions.

(B)     To reflect the amortization of identified intangible assets resulting from the Interactive Search Holdings, Inc. acquisition. The amortization of the intangible assets is as described in Note 2.

(C)     To eliminate the historical amortization of the intangible assets of Interactive Search Holdings, Inc.

(D)     To eliminate the expenses incurred by Interactive Search Holdings, Inc. in connection with the acquisition.

4. ADJUSTMENTS TO PRO FORMA BASIC AND DILUTED EARNINGS PER SHARE

Pro forma basic income from continuing operations per share reflects the issuance of 7,931,465 shares of Ask Jeeves, Inc.’s common stock related to the Interactive Search Holdings, Inc. acquisition as if the shares had been outstanding for the entire periods presented. Pro forma diluted income from continuing operations per share also reflects 929,818 shares related to the acquisition held in a general escrow account, 232,307 shares related to the acquisition held in a special escrow account and 206,238 shares related to unvested common stock options assumed in the acquisition computed using the treasury stock method. The shares in the general escrow will be released to the prior stockholders of Interactive Search Holdings on August 6, 2005. Until such time, the shares in the general escrow will be available to Ask Jeeves to reimburse it for any indemnifiable losses it suffers under the merger agreement, but only if such losses exceed $1.0 million in the aggregate. The shares in the special escrow will remain in escrow

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ASK JEEVES, INC.
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION

until final resolution of certain tax claims against Interactive Search Holdings, and shall be released to Ask Jeeves to fund any liability it incurs with respect to such claims and, to the extent remaining, to the prior stockholders of Interactive Search Holdings.

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