<PAGE>

================================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ----------

                                   FORM 10-Q

(Mark One)

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

     For the quarterly period ended June 30, 2001

                                       OR

[_]  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 333-88799

                          INFONET SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                     95-4148675
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                 2160 East Grand Avenue, El Segundo, California
                    (Address of principal executive offices)

                                   90245-1022
                                   (Zip Code)

                                 (310) 335-2600
              (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 the 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  [_]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

  Indicate by check mark whether the registrant has filed all documents and
reports required to be filed under Sections 12, 13 or 15(d) of the Securities
Exchange of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes  [_]  No  [_]

APPLICABLE ONLY TO CORPORATE ISSUERS:

  Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

  As of August 7, 2001, the registrant had the following number of shares
outstanding:


Class A common stock:  161,403,358
Class B common stock:  309,664,689

================================================================================
<PAGE>

                                    PART I

ITEM 1. FINANCIAL STATEMENTS

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                   (In Thousands, Except per Share Amounts)
<TABLE>
<CAPTION>
                                                              March 31,         June 30,
                                                                2001              2001
                                                           -------------    --------------
<S>                                                         <C>              <C>
                                                                              (Unaudited)
                        ASSETS
                        ------
CURRENT ASSETS:
 Cash and cash equivalents                                 $     137,599    $      177,088
 Short-term investments                                          464,035           387,526
 Accounts receivable, net                                        177,420           164,245
 Deferred income taxes                                             6,792             6,418
 Prepaid expenses                                                 14,335            16,932
 Other current assets                                             10,048            10,460
                                                           -------------    --------------
     Total current assets                                        810,229           762,669
                                                           -------------    --------------
PROPERTY, EQUIPMENT AND COMMUNICATION LINES, Net                 464,172           470,630
INTANGIBLE AND OTHER ASSETS, Net                                  71,530            75,839
                                                           -------------    --------------
TOTAL ASSETS                                               $   1,345,931    $    1,309,138
                                                           =============    ==============

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------
CURRENT LIABILITIES:
 Current portion of long-term obligations                  $       5,076    $        6,201
 Current portion of capital lease obligations                      3,169             3,111
 Accounts payable                                                 76,851            84,331
 Network communications                                           92,301            44,730
 Accrued salaries and related benefits                            15,859            12,452
 Income taxes payable                                             13,727            11,590
 Advance billings                                                 26,799            26,992
 Deferred installation revenues                                    9,861             9,917
 Other accrued expenses                                           18,823            19,849
                                                           -------------    --------------
     Total current liabilities                                   262,466           219,173
                                                           -------------    --------------
DEFERRED INCOME AND COMPENSATION                                  37,215            39,809
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION                    8,954             8,245
LONG-TERM OBLIGATIONS, LESS CURRENT PORTION                      108,880           107,330
MINORITY INTEREST                                                    663             1,041
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
 Class A common stock, $0.01 par value per share:
  400,000 shares authorized, 364,160 shares issued
  as of March 31, 2001 and June 30, 2001,
  respectively, and 161,403 shares outstanding
  as of March 31, 2001 and June 30, 2001,
  respectively; 202,757 shares held in treasury                   66,078            66,078
 Class B common stock, $0.01 par value per share:
  600,000 shares authorized, 309,309 and 309,604 shares
  issued and outstanding as of March 31, 2001 and
  June 30, 2001, respectively                                    985,889           991,029
 Treasury stock, at cost, 202,757 shares                        (121,184)         (121,184)
 Notes receivable from issuance of common stock                   (8,465)           (8,509)
 Retained earnings                                                 7,492            10,022
 Accumulated other comprehensive loss                             (2,057)           (3,896)
                                                           -------------    --------------
    Total stockholders' equity                                   927,753           933,540
                                                           -------------    --------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $   1,345,931    $    1,309,138
                                                           =============    ==============
</TABLE>

         See accompanying notes to consolidated financial statements.
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                   (In Thousands, Except per Share Amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                            June 30,
                                                                   -------------------------
                                                                      2000           2001
                                                                   ----------     ----------
<S>                                                                <C>             <C>
REVENUES, Net                                                      $  154,165     $  171,854
                                                                   ----------     ----------
EXPENSES:
  Country representative compensation                                  53,706         61,439
  Bandwidth and related costs                                          31,485         29,460
  Network operations                                                   16,256         25,623
  Selling, general and administrative                                  47,482         55,215
                                                                   ----------     ----------
       Total expenses                                                 148,929        171,737
                                                                   ----------     ----------
OPERATING INCOME                                                        5,236            117
                                                                   ----------     ----------
OTHER INCOME (EXPENSE):
  Interest income                                                      12,730          8,404
  Interest expense                                                     (2,489)        (2,990)
  Other, net                                                            1,357           (288)
                                                                   ----------     ----------
     Total other income, net                                           11,598          5,126
                                                                   ----------     ----------

INCOME BEFORE PROVISION FOR INCOME
 TAXES, MINORITY INTEREST AND EXTRAORDINARY ITEM                       16,834          5,243
PROVISION FOR INCOME TAXES                                              8,561          2,390
                                                                   ----------     ----------
INCOME BEFORE MINORITY INTEREST AND
  EXTRAORDINARY ITEM                                                    8,273          2,853
MINORITY INTEREST                                                          70            323
                                                                   ----------     ----------
INCOME BEFORE EXTRAORDINARY ITEM                                        8,203          2,530
EXTRAORDINARY ITEM, NET OF INCOME TAXES OF $363                           502             --
                                                                   ----------     ----------
NET INCOME                                                              7,701          2,530

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustments, net of tax                 (1,342)          (811)
  Unrealized losses on securities, net of tax                             (80)          (640)
  Cumulative effect of accounting change, net of tax                       --           (544)
  Unrealized gains on derivative instruments, net of tax                   --            156
                                                                   ----------     ----------
    Total other comprehensive loss, net                                (1,422)        (1,839)
                                                                   ----------     ----------
COMPREHENSIVE INCOME                                               $    6,279     $      691
                                                                   ==========     ==========
BASIC AND DILUTED EARNINGS
  PER COMMON SHARE                                                 $     0.02     $     0.01
                                                                   ==========     ==========
BASIC WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                                  470,231        470,762
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                                  470,789        472,207
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                              June 30,
                                                                                       ----------------------
                                                                                          2000        2001
                                                                                       ----------  ----------
<S>                                                                                    <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                           $    7,701  $    2,530
  Adjustments to reconcile net income to net cash provided by
   (used in) operating activities:
     Depreciation and amortization                                                          8,527      17,527
     Amortization of debt acquisition costs                                                    --         182
     Loss on sale of subsidiary                                                               480          --
     Extraordinary item                                                                       502          --
     Stock based compensation (credit) charge                                              (1,389)      4,200
     Loss (gain) on sale of property, equipment and communication lines                        38          (3)
     Discount amortization on marketable securities                                            --        (563)
     Realized gains on marketable securities                                                   --        (363)
     Deferred income taxes                                                                  2,759         786
     Minority interest                                                                         70         323
  Changes in assets and liabilities, net of businesses acquired/sold:
     Accounts receivable, net                                                             (26,495)     12,567
     Prepaid expenses                                                                        (778)     (2,319)
     Other current assets                                                                      (9)       (716)
     Accounts payable                                                                      16,611       8,833
     Network communications                                                               (34,327)      2,832
     Accrued salaries and related benefits                                                 (1,460)     (3,347)
     Income taxes payable                                                                   4,599      (2,219)
     Advance billings                                                                       1,455         193
     Deferred installation revenues                                                            --          56
     Other accrued expenses                                                                 2,513         304
     Deferred income and compensation                                                       1,281       1,108
     Purchases of trading securities                                                       (3,325)     (4,561)
     Proceeds from sales of trading securities                                              2,230       4,386
     Other operating activities                                                               235          --
                                                                                       ----------  ----------
       Net cash provided by (used in) operating activities                                (18,782)     41,736
                                                                                       ----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, equipment and communication lines                                (17,434)    (75,389)
  Proceeds from sale of property, equipment and communication lines                            90         102
  Proceeds from sale of subsidiary                                                            716          --
  Purchases of securities available-for-sale                                             (287,764)    (61,543)
  Proceeds from sales of securities available-for-sale                                     44,685      77,730
  Maturity of securities available-for-sale                                                    --      60,608
  Acquisition of business, net of cash acquired                                                --         204
  Other investing activities                                                                 (120)     (3,243)
                                                                                       ----------  ----------
       Net cash used in investing activities                                             (259,827)     (1,531)
                                                                                       ----------  ----------
</TABLE>

                                             (Table continued on following page)

                                       4
<PAGE>

                INFONET SERVICES CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
                                (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                        June 30,
                                                                                -----------------------
                                                                                   2000         2001
                                                                                ----------    ---------
<S>                                                                              <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of long-term obligations                                    27,000           --
 Payments of long-term obligations                                                 (49,908)        (425)
 Payments of capital lease obligations                                                (659)        (767)
 Payments of long-term bandwidth obligations                                       (27,000)          --
 Net proceeds from issuance of common stock                                             55          939
 Repayments of notes receivable from issuance of common stock                           29           55
                                                                                ----------    ---------
  Net cash used in financing activities                                            (50,483)        (198)
                                                                                ----------    ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               (456)        (518)
                                                                                ----------    ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              (329,548)      39,489
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                     727,681      137,599
                                                                                ----------    ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $  398,133    $ 177,088
                                                                                ==========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid during the year for:
 Income taxes                                                                   $      970    $   3,483
 Interest                                                                       $    2,460    $   3,153
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
 Acquisitions of communication lines accrued but not yet paid                   $    8,723    $   8,245
</TABLE>

  During April 2000, the Company amended its 1998 Stock Appreciation Rights Plan
("SARs") resulting in a new measurement date. The Company consequently reduced
the SARs liability and credited stock-related compensation by approximately
$5.3 million to reflect the stock price at the new measurement date. The amended
SARs Plan provides that the SAR may be settled with stock or cash at the sole
discretion of the Company. In accordance with Financial Accounting Standards
Board Interpretation No.28 "Accounting for Stock Appreciation Rights and Other
Variable Stock Options or Award Plans" and Financial Accounting Standards Board
Interpretation No.44 "Accounting for Certain Transactions Involving Stock
Compensation," the Company is accounting for the tandem awards as equity
instruments and the plan, as amended, as a fixed plan under the provisions of
APB Opinion No.25 "Accounting for Stock Issued to Employees." Consequently, the
Company reclassified the approximately $7.7 million of remaining SARs liability
to class B common stock.

         See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


Note 1.  Basis of Presentation

  In the opinion of management, the accompanying unaudited financial statements
of Infonet Services Corporation and subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-X
promulgated under the Securities Exchange Act of 1934. Correspondingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. All normal, recurring
adjustments considered necessary for a fair presentation have been included.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. Actual results may differ from these estimates. The financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on June 28, 2001. Certain items have been
reclassed to conform to current period presentation. The results of operations
for the three months ended June 30, 2001 are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 2002.

  The Company's fiscal year is the 52- or 53-week period ending on the Friday
nearest to March 31. For simplicity of presentation, the Company has described
the 52-week period ended March 30, 2001 as the year ended March 31, 2001, and
the 13-week periods ended June 30, 2000 and June 29, 2001 as the three months
ended June 30, 2000 and 2001, respectively.


Note 2.  Accounting Change - Derivative Financial Instruments

  Effective April 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended.  SFAS No. 133, as amended, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities.  Under SFAS
No. 133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative.  SFAS No. 133 requires that all derivatives
be recorded on the balance sheet at their fair value.  Changes in the fair value
of derivatives are recorded each period in current earnings or other
comprehensive income ("OCI"), depending on whether a derivative is designated as
part of a hedge transaction and, if it is, the type of hedge transaction.

  Under the terms of the Senior Secured Credit Facility, the Company is required
to enter into hedge agreements to provide that at least 50% of the outstanding
term loans are subject to fixed interest rates.  The Company has entered into
interest swap agreements to fix the interest rates and mitigate interest rate
risk.  The Company designated the swaps as cash flow hedges.

  In connection with the mortgage agreement related to the purchase of the
Company's headquarters facility, the Company entered into an interest rate swap
to fix the interest rate over the remaining life of the mortgage agreement and
mitigate interest rate risk.  The Company designated the swap as a cash flow
hedge.

  Under SFAS No. 133, the effective portion of changes in the fair value of cash
flow hedges is recorded in OCI and is subsequently reclassified to earnings as
each hedged interest payment affects earnings. The adoption of SFAS No. 133 on
April 1, 2001 resulted in a cumulative pre-tax reduction to OCI of approximately
$894,000 (approximately $544,000, net of tax) attributable to losses on cash
flow hedges. For the three months ended June 30, 2001, the change in fair market
value of derivative instruments resulted in a pre-tax increase to OCI of
approximately $255,000 (approximately $156,000, net of tax). No amounts were
reclassified to earnings resulting from the ineffectiveness or discontinuance of
cash flow hedges. As of June 30, 2001, the amount to be reclassified from OCI
into earnings during the next twelve months is expected to be immaterial. The
actual amounts that will be reclassified into earnings will vary as a result of
changes in market conditions.

                                       6
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)



Note 3.  New Accounting Pronouncements

   In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations", which requires that all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method and prohibits the use of the pooling-of-interests method. The Company
does not believe that the adoption of SFAS No. 141 will have any effect on its
financial position and result of operations.

  In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which becomes effective for the Company beginning fiscal year 2003.
This statement changes the method of accounting for goodwill to a test for
impairment and requires among other things, the discontinuance of goodwill
amortization. The Company is currently assessing the impact of the adoption of
this statement on its financial position and result of operations.


Note 4.  Consolidated Balance Sheet Components

  Certain balance sheet components are as follows  (in thousands):

                                                          March 31,   June  30,
                                                            2001        2001
                                                          --------    --------
Property, equipment and communication lines:
  Communication, computer and related equipment.........  $225,987    $237,093
  Communication lines...................................   326,733     337,247
  Land, buildings and leasehold improvements............    50,804      50,762
  Furniture and other equipment.........................    16,714      17,433
                                                          --------    --------
                                                           620,238     642,535
  Less accumulated depreciation and amortization........   156,066     171,905
                                                          --------    --------
  Total.................................................  $464,172    $470,630
                                                          ========    ========
Intangible and other assets, net:
  SERP minimum pension liability........................  $  1,911    $  1,911
  SERP assets...........................................        11          11
  IDIP assets...........................................    19,595      21,256
  Deferred income taxes.................................    16,520      16,520
  Unamortized debt acquisition costs....................     2,850       2,668
  Unconsolidated investments in affiliates..............     3,988       4,046
  Deferred installation costs...........................    13,089      13,042
  Intangible assets, net................................     7,384       7,026
  Employees loan receivable and interest................     2,421       1,919
  Other.................................................     3,761       7,440
                                                          --------    --------
  Total.................................................  $ 71,530    $ 75,839
                                                          ========    ========

                                       7
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)


Note 5.  Earnings Per Share

  Basic earnings per common share is computed by dividing net income by the
weighted average of number of shares outstanding during the periods presented.
Diluted earnings per common share is computed based on the weighted average
share plus the dilutive effect of potential common stock.

  At June 30, 2000 the only type of potential common stock was stock options. At
June 30, 2001 the types of potential common stock were stock options and
purchase rights. The inclusion of potential common stock as of June 30, 2000 and
2001 had no effect on the reported diluted earnings per share. Consequently,
reported basic and diluted earnings per share are the same amount for the three
month periods ended June 30, 2000 and 2001, respectively. Options to purchase
approximately 17.5 million shares of common stock were outstanding at June 30,
2001, but were not included in the computation of diluted earnings per share
because to do so would have been antidilutive.


Note 6.  Income Taxes

  The provision for income taxes for the three months ended June 30, 2000 and
three months ended June 30, 2001 is higher than normal due to an inability to
deduct incentive stock option charges and, with respect to the period ended
June 30, 2000 only, the provision of a valuation allowance against deferred tax
assets.

     The provision for income taxes is summarized as follows (in thousands).



                                      Three Months Ended   Three Months Ended
                                         June 30, 2000,       June 30, 2001,
                                      ------------------   ------------------
Income before provision for income
  taxes, minority interest and
  extraordinary item.................    $  16,834            $   5,243
                                         ---------            ---------
Provision for income taxes at 35%....    $   5,892            $   1,835
Incentive stock option charges.......        1,034                  672
Valuation allowance..................        1,028                   --
Other, net...........................          607                 (117)
                                         ---------            ---------
Reported provision for income taxes..    $   8,561            $   2,390
                                         =========            =========

   During the year ended March 31, 2001, the Company filed a request for
determination from the Internal Revenue Service ("IRS") regarding the propriety
of the establishment of an intangible asset, for tax purposes only, arising in
connection with the September 1999 transaction in which the Company obtained
access to the customers of AUCS Communication Services N.V.  A favorable
determination from the IRS could result in establishment of a deferred tax asset
that could be material. As there is no assurance that the IRS will determine in
the Company's favor, no deferred tax asset (nor its consequent increase to
stockholders' equity) has been recorded in the Company's financial statements.

                                       8
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)

Note 7.  Segment Information

  The Company conducts business in two operating segments: country
representatives or Direct Sales Channels ("Direct") and Alternate Sales Channels
("Alternate"). Both these segments generate revenues by providing customers with
a complete global networking solution.

  The Company has organized its operating segments around differences in the
distribution channels used to deliver its services to customers. These segments
are managed and evaluated separately because each segment possesses different
economic characteristics requiring different marketing strategies.

  The accounting policies adopted for each segment are the same as those
described in the summary of significant accounting policies in the Company's
Annual Report on Form 10-K. The Company's management evaluates performance based
on operating contribution, where segment revenues are reduced by those costs
that are allocable to the segments. Costs relating to operating the Company's
core network, and non-allocable general, administrative, marketing and overhead
costs, including income tax expense, are not charged to the segments.
Accordingly, neither assets related to the core network, nor their associated
depreciation expense are allocated to the segments.

  The Company accounts for intersegment transactions on the same terms and
conditions as if the transactions were with third parties.

  Summarized financial information concerning the Company's reportable segments
is shown in the following table (in thousands).

                                       Three Months Ended   Three Months Ended
                                          June  30, 2000      June  30, 2001
                                       ------------------   ------------------
Reportable segments:
-------------------
Revenues:
   Direct.............................     $  100,068           $   99,246
   Alternate..........................         54,097               72,608
                                           ----------           ----------
     Totals...........................     $  154,165           $  171,854
                                           ==========           ==========
Operating contribution:
   Direct.............................     $   38,231           $   41,918
   Alternate..........................         19,334               23,493
                                           ----------           ----------
     Totals...........................     $   57,565           $   65,411
                                           ==========           ==========

                                                     As of June  30,
                                               -----------------------------
                                                  2000               2001
                                               ----------         ----------
Total assets:
   Direct.............................         $   93,366         $   95,614
   Alternate..........................             72,652             81,658
                                               ----------         ----------
     Totals...........................         $  166,018         $  177,272
                                               ==========         ==========

                                       9
<PAGE>

                 INFONET SERVICES CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                  (Unaudited)

                                     Three Months Ended    Three Months Ended
                                       June  30, 2000        June  30, 2001
                                     ------------------    ------------------
Reconciliations:
---------------
Operating contribution from
  reportable segments...............    $   57,565            $   65,411

Core network, overhead and other
  non-allocable costs...............       (40,731)              (60,168)
                                        ----------            ----------
Income before provision for
  income  taxes, minority
  interest, and extraordinary item..    $   16,834            $    5,243
                                        ==========            ==========


                                                           As of June 30,
                                                      -----------------------
                                                         2000         2001
                                                      ----------   ----------
Total assets of reportable segments.................  $  166,018   $  177,272
Core network, corporate and other non-allocable
  assets............................................   1,007,379    1,131,866
                                                      ----------   ----------
    Total assets....................................  $1,173,397   $1,309,138
                                                      ==========   ==========

Note 8.  Contingencies

   During 2001, the Company acquired bandwidth for approximately $9.0 million
from a network service provider, which, subsequent to March 31, 2001 filed
voluntary petitions for Chapter 11 protection with the United States Bankruptcy
Court and made analogous filings in the United Kingdom. Information available to
the Company currently indicates that it is more likely than not that the network
services will continue to be provided under the original terms of the
agreements. The Company is of the opinion that the carrying value of the related
asset is not impaired. The Company will continue to monitor the situation and
will record an impairment charge if events or changes in circumstances indicate
that the carrying value of the asset is no longer recoverable.

Note 9.  Stock Options

   During April 2001, the Company modified stock options held by certain
executives to provide for acceleration of vesting upon death or disability.
Additionally, the modifications allow for the stock options to continue to be
exercisable for their original term upon death or disability or upon certain
separation events, as defined. The occurrence of any of these events will cause
the Company to recognize additional compensation expense.

                                       10
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

     In the following Management's Discussion and Analysis, the revenues and
expenses described as resulting from outsourcing services refer to the
Outsourcing Agreement with three of our stockholders, AUCS, and its distributors
described in our Annual Report on Form 10-K for the fiscal year ended March 31,
2001.

     You should read this discussion together with our consolidated financial
statements and the related notes to those statements appearing elsewhere in this
report.

     Certain reclassifications have been made to the prior year to conform to
the current year presentation.

Results of Operations

     The following tables summarize revenues by service, by distribution
channel, and by region and are provided in support of the accompanying
management's discussion and analysis for the three month periods ended June 30,
2000 and 2001 (dollars in thousands).

Revenues by Service


<TABLE>
<CAPTION>
                                                                        Three Months Ended June 30,
                                                             ---------------------------------------------
                                                                    2000                       2001
                                                             -------------------       -------------------
<S>                                                          <C>             <C>       <C>             <C>
Network Services......................................       $ 65,530         43%      $ 77,659         45%
Consulting, Integration and Provisioning Services.....         40,695         26%        47,655         28%
Applications Services.................................          3,539          2%         1,953          1%
Other Communications Services.........................         44,401         29%        44,587         26%
                                                             --------                  --------
Total revenues........................................       $154,165        100%      $171,854        100%
                                                             ========                  ========
</TABLE>

Revenues by Distribution Channel


<TABLE>
<CAPTION>
                                                                        Three Months Ended June 30,
                                                                          2000               2001
                                                                        --------           -------
<S>                                                                     <C>                <C>
Country representatives:
  Number of representatives..........................................         55                55
  Number of clients..................................................      1,445             1,503
  Country representatives revenues...................................   $100,068           $99,246
  Percent of total revenues..........................................         65%               58%
Alternate sales channels:
  Number of sales channel partners...................................         21                27
  Number of sales channel partners' clients..........................      1,013             1,014
  Alternate sales channel revenues...................................   $ 54,097           $72,608
  Percent of total revenues..........................................         35%               42%
</TABLE>

Revenues by Region

<TABLE>
<CAPTION>
                                                                     Three Months Ended June 30,
                                                            ---------------------------------------------
                                                                    2000                      2001
                                                            -------------------       -------------------
<S>                                                         <C>            <C>        <C>             <C>
Americas..............................................      $ 36,499         24%      $ 39,746         23%
Europe, Middle East and Africa (EMEA).................       105,283         68%       115,906         68%
Asia Pacific..........................................        12,383          8%        16,202          9%
                                                            --------                  --------
Total revenues........................................      $154,165        100%      $171,854        100%
                                                            ========                  ========
</TABLE>

                                       11
<PAGE>

 Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

     Revenues by Service--Revenues increased $17.7 million, or 11%, from
$154.2 million in the three months ended June 30, 2000 to $171.9 million in the
three months ended June 30, 2001. Excluding revenues resulting from a
significant outsourcing agreement, revenues increased $11.3 million, or 10%,
over the prior period from $113.0 million to $124.4 million. Outsourcing
revenues increased $6.4 million, or 15%, from $41.1 million in the three months
ended June 30, 2000 to $47.5 million in the three months ended June 30, 2001.
The overall increase in revenues was due to increases of $12.1 million, or 19%,
in Network Services and $7.0 million, or 17%, in Consulting, Integration and
Provisioning Services. The majority of the Network Services growth came from
increased sales of intranet and remote access services. Other Communications
Services and Consulting, Integration and Provisioning Services increases
included approximately $4 million and $2 million, respectively, in revenues from
outsourcing services. Excluding revenues from outsourcing services, Consulting,
Integration and Provisioning Services, comprised primarily of our Global Connect
services, increased $4.3 million, or 14%, from $31.4 million to $35.7 million
over the period. Excluding revenues from outsourcing services, Other
Communications Services declined $3.5 million, or 28%, from $12.5 million to
$9.0 million. This decrease is largely due to an expected decline in our mature
messaging product line and our X.25 transport services, as our clients are
migrating to more advanced messaging applications and non-X.25 based transport
services.

     Revenues by Distribution Channel--Country representatives revenues
decreased $822,000, from $100.1 million in the three months ended June 30, 2000
to $99.2 million in the three months ended June 30, 2001. Excluding outsourcing
services, revenues from country representatives increased $893,000 from $93.8
million to $94.7 million over the year. While the number of our country
representatives remained at 55 over the period, revenue increases were derived
through the growth of existing country representatives. The number of our
country representative clients increased 4%, from 1,445 clients as of June 30,
2000 to 1,503 clients as of June 30, 2001. Alternate sales channel revenues grew
$18.5 million, or 34%, from $54.1 million to $72.6 million over the period.
Approximately $8 million of the increase resulted from outsourcing services. The
balance of the increase is primarily attributed to growth through existing sales
channel partners. In total, our alternate sales channel partners' clients
remained essentially flat, from 1,013 clients as of June 30, 2000 to 1,014
clients as of June 30, 2001.

     Revenues by Region--The majority of our growth in revenues, billed on a
regional basis, was in the EMEA region, which increased $10.6 million, or 10%,
from $105.3 million in the three months ended June 30, 2000 to $115.9 million in
the three months ended June 30, 2001. Approximately $6 million of this revenue
growth was in Europe resulting from outsourcing services. The balance of the
increase is due to the addition of new clients and increases in sales of
services to existing clients. Revenues billed in Asia Pacific increased by
$3.8 million, or 31%, from $12.4 million in the three months ended June 30, 2000
to $16.2 million in the three months ended June 30, 2001, due to increased sales
efforts in a growing market. Revenues billed in the Americas grew $3.2 million,
or 9%, from $36.5 million to $39.7 million over the period.

     Country Representative Compensation increased $7.7 million, or 14%, from
$53.7 million in the three months ended June 30, 2000 to $61.4 million in the
three months ended June 30, 2001. Approximately $6 million of this increase is
related to outsourcing services revenues. The balance of this expense grew in
line with the related revenue.

     Bandwidth and Related Costs decreased $2.0 million, or 6%, from $31.5
million in the three months ended June 30, 2000 to $29.5 million in the three
months ended June 30, 2001. Lease expense, the largest component of bandwidth
and related costs, decreased $6.5 million, or 25%, from $26.3 million in the
three months ended June 30, 2000 to $19.7 million in the three months ended June
30, 2001. Amortization of purchased capacity increased $5.1 million, from $2.2
million to $7.3 million over the period. Both the decrease in lease expense and
the increase in amortization were a result of owning a larger portion of our
bandwidth capacity in the backbone of our network.

     Network Operations increased $9.4 million, or 58%, from $16.3 million in
the three months ended June 30, 2000 to $25.6 million in the three months ended
June 30, 2001. Stock-related compensation charges increased $1.8 million, from a
$1.1 million credit in the three months ended June 30, 2000 to $672,000 in the
three months ended June 30, 2001. A one-time stock-related compensation credit
in the prior period resulted from an amendment to one of the Company's stock-
based compensation plans. Depreciation expense related to network equipment
increased $2.6 million, or 63%, from $4.2 million in the three months ended June
30, 2000 to $6.8 million in the three months ended June 30, 2001. The remainder
of the increase was related to the increased costs associated with our network
management, operations and support activities, personnel costs and other network
operations expenses.

     Selling, General and Administrative increased $7.7 million, or 16%, from
$47.5 million in the three months ended June 30, 2000 to $55.2 million in the
three months ended June 30, 2001. Stock-related compensation charges increased
$3.8 million, from a $252,000 credit in the three months ended June 30, 2000 to
$3.5 million in the three months ended June 30, 2001. A one-time stock-related
compensation credit in the prior period resulted from an amendment to one of the
Company's stock-based compensation plans. Our sales support expenses for
multinational activities increased $4.0 million from $16.7 million in the three
months ended June 30, 2000 to $20.8 million in the three months ended June 30,
2001 which was directly related to revenue

                                       12
<PAGE>

growth. Sales and Marketing personnel-related expenses increased $3.0 million
from $16.8 million in the three months ended June 30, 2000 to $19.8 million in
the three months ended June 30, 2001 due to increased sales and marketing
efforts to increase our revenues. Advertising expense decreased $1.0 million
from $2.4 million in the three months ended June 30, 2000 to $1.4 million in the
three months ended June 30, 2001. Administrative expenses, excluding stock-
related compensation expense, decreased by $641,000 from $6.8 million in the
three months ended June 30, 2000 to $6.2 million in the three months ended June
30, 2001.

     Operating Income  decreased by $5.1 million, from $5.2 million in the three
months ended June 30, 2000 to $117,000 in the three months ended June 30, 2001
due to the factors described above.

     Other Income (Expense) decreased $6.5 million, from $11.6 million in the
three months ended June 30, 2000 to $5.1 million in the three months ended June
30, 2001. This decrease reflects lower interest income of $4.3 million, from
$12.7 million to $8.4 million, due to lower interest rates and lower cash
balances as funds were used for capital expenditures during fiscal year 2001.
The increased interest expense of $501,000 from $2.5 million to $3.0 million
over the period, resulted from additional borrowings under the Senior Secured
Credit Facility.

     Provision for Income Taxes decreased from $8.6 million in the three months
ended June 30, 2000 to $2.4 million in the three months ended June 30, 2001
because of decreased income and a lower effective tax rate. The lower effective
tax rate for the three months ended June 30, 2001 is due to the inability in the
prior period to record tax benefit resulting from certain subsidiary losses.

     Extraordinary Item, Net of Tax for the three months ended June 30, 2000
represents the write-off of unamortized debt issuance costs associated with the
$49.6 million of long-term debt which was repaid prior to its due date according
to the debt agreement.

     Net Income decreased from $7.7 million in the three months ended June 30,
2000 to $2.5 million in the three months ended June 30, 2001 due to the factors
described above.


Liquidity and Capital Resources

Net cash provided by operating activities during the three months ended June 30,
2001 was $41.7 million compared to net cash used in operating activities of
$18.8 million during the three months ended June 30, 2000. This fluctuation was
primarily a result of changes in accounts receivable and network communications
payable which combined provided cash of $15.4 million in the current period
compared to a combined use of cash of $60.8 million in the prior period.
Additionally, depreciation and amortization increased by $9.0 million due to the
expansion of our World Network and newly introduced ATM capability. These
changes were partially offset by a decrease in the growth of accounts payable of
$7.8 million and a decrease in net income of $5.2 million. Net cash used in
investing activities for the three months ended June 30, 2001 was $1.5 million
compared to $259.8 million during the three months ended June 30, 2000. This
decrease was primarily due to purchases of securities available-for-sale during
the prior year and an increase in purchases of property, equipment and
communication lines of $58.0 million. Cash used in financing activities for the
three months ended June 30, 2001 was $198,000 compared to $50.5 million for the
three months ended June 30, 2000. This decrease was the result of payments of
long-term obligations of $49.9 million during the three months ended June 30,
2000.

     As of June 30, 2001, the company had cash and cash equivalents of $177.1
million, short-term investments of $387.5 million, working capital of $543.5
million and total assets of $1.3 billion. Indebtedness under the Senior Secured
Credit Facility totaled $90.0 million as of June 30, 2001 with additional
borrowings available under this facility of $100.0 million.  Building mortgage
indebtedness as of June 30, 2001 totaled $23.5 million.

     Based on current plans and business conditions, we believe that our
existing cash and cash equivalents, short-term investments, and cash generated
from operations will be sufficient to satisfy anticipated cash requirements for
at least the next twelve months.

                                       13
<PAGE>

Foreign Exchange Risk

     We invoice substantially all sales of our services to our country
representatives and sales channel partners, except outsourcing services and
assignment agreements with AUCS, in U.S. dollars. However, many of our country
representatives derive their revenues and incur costs in currencies other than
U.S. dollars. To the extent that the local currency used by the country
representative fluctuates against the U.S. dollar, the obligations of the
country representative may increase or decrease significantly and lead to
foreign exchange losses or gains. We assume the exchange rate risk for our
consolidated country representatives, although our non-consolidated country
representatives assume the exchange rate risk under our country representative
structure.

     Our exposure to exchange rate fluctuations primarily arises from
outsourcing services and assignment agreements with AUCS, which are denominated
in euros as well as operating costs associated with such agreements.
Approximately 30% of the Company's revenues for the three months ended June 30,
2001 were generated from the euro-denominated AUCS agreements. The revenues and
the related costs result in a net euro exposure of the gross profit, which is
equal to approximately 20% of revenues. The euro-denominated gross profit offset
by other euro-denominated operating costs generally results in a natural hedge.
However, timing of settlement of euro-denominated accounts receivables and
payables subjects the company to exchange rate risk on settlement of the
receivables and payables. Euro-denominated cash, accounts receivable and
accounts payable related to the AUCS agreements were a net asset of $37.3
million as of June 30, 2001.

     We monitor our exposure to exchange rate fluctuations through our regular
operating activities and have not historically used derivatives to hedge foreign
exchange risk.


Euro Conversion

     On January 1, 1999, 11 of the 15 member countries of the European Union
introduced a new currency, the "euro". The conversion rates between the euro and
the participating nations' existing legacy currencies were fixed irrevocably as
of December 31, 1998. Prior to full implementation of the new currency on
January 1, 2002, there will be a transition period during which parties may, at
their discretion, use either the legacy currencies or the euro for financial
transactions.

  We are not aware of any material operational issues or costs associated with
preparing internal systems for the euro. While it is not possible to accurately
predict the impact the euro will have on the Company's business or on the
economy in general, management does not anticipate that the euro conversion will
have a material adverse impact on the Company's market risk with respect to
foreign exchange, its results of operations, or its financial condition.


Pre-Filing Determination Request

   During the year ended March 31, 2001, the Company filed a request for
determination from the Internal Revenue Service ("IRS") regarding the propriety
of the establishment of an intangible asset, for tax purposes only, arising in
connection with the September 1999 transaction in which the Company obtained
access to the customers of AUCS Communication Services N.V.  A favorable
determination from the IRS could result in establishment of a deferred tax asset
that could be material. As there is no assurance that the IRS will determine in
the Company's favor, no deferred tax asset (nor its consequent increase to
stockholders' equity) has been recorded in the Company's financial statements.


New Accounting Pronouncements

   Effective April 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended.  SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
The adoption of SFAS No. 133 on April 1, 2001 resulted in a cumulative pre-tax
reduction to other comprehensive income ("OCI") of approximately $894,000
(approximately $544,000, net of tax) attributable to losses on cash flow hedges.
For the three months ended June 30, 2001, the change in fair market value of
derivative instruments resulted in a pretax increase to OCI of approximately
$255,000, (approximately $156,000, net of tax). No amounts were reclassified to
earnings resulting from the ineffectiveness or discontinuance of cash flow
hedges. As of June 30, 2001, the amount to be reclassified from OCI into
earnings during the next twelve months is expected to be immaterial. The actual
amounts that will be reclassified into earnings will vary as a result of changes
in market conditions.

                                       14
<PAGE>

   In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations", which requires that all business combinations
initiated after June 30, 2001 be accounted for under the purchase method and
prohibits the use of the pooling-of-interests method. The Company does not
believe that the adoption of SFAS No. 141 will have any effect on its financial
position and result of operations.

   In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which becomes effective for the Company beginning fiscal year 2003.
This statement changes the method of accounting for goodwill to a test for
impairment and requires among other things, the discontinuance of goodwill
amortization. The Company is currently assessing the impact of the adoption of
this statement on its financial position and result of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2001.

     As of June 30, 2001, we were primarily exposed to the following currencies:
the euro, the British pound, and the Spanish peseta. Based upon a hypothetical
ten-percent strengthening of the U.S. dollar across all currencies, the
potential losses in future earnings due to foreign currency exposures would have
been approximately $1.2 million as of that date.

                                       15
<PAGE>

                                   PART II:

ITEM 1.   Legal Proceedings

     Not applicable.


ITEM 2.   Changes in Securities and Use of Proceeds

     On December 15, 1999, the Company's Form S-1 registration statement (File
No. 333-88799) was declared effective by the Securities and Exchange Commission.
The registration statement, as amended, covered the offering of 51,282,300
shares of our Class B common stock. The offering commenced on December 16, 1999
and the sale to the public of 51,282,300 shares of common stock at $21.00 per
share was completed on December 21, 1999 for an aggregate price of approximately
$1.076 billion. The registration statement covered an additional 7,692,342
shares of common stock that the underwriters had the option to purchase solely
to cover over-allotments. These additional shares were purchased on January 13,
2000. The managing underwriters were Merrill Lynch & Co., Warburg Dillon Read
LLC, ABN AMRO Rothschild, Goldman, Sachs & Co., Lehman Brothers and Salomon
Smith Barney. Expenses incurred in connection with the issuance and distribution
of common stock in the offering included underwriting discounts, commissions and
allowances of approximately $38.5 million and other expenses of approximately
$2.4 million. Total offering expenses of approximately $40.9 million resulted in
net offering proceeds to the Company of approximately $766.8 million. Specified
10% owners of Class B common stock of the Company sold in the offering and
received, net of expenses paid by those owners, an aggregate of $256.4 million.
We have used and continue to use aggregate net proceeds to us of approximately
$766.8 million from our initial public offering as follows:

     . the repayment of long-term debt under our credit facility;

     . the purchase of assets that were under operating leases of approximately
       $13 million;

     . expansion of our network infrastructure, including acquisition of
       transmission capacity and continued deployment of our ATM-enabled
       backbone;

     . to fund operating expenses; and

     . for general corporate purposes.

     Our management, subject to supervision by our board of directors, has
significant flexibility in applying the net proceeds of the offering. Pending
any use as described above, we have invested the net proceeds in interest-
bearing investment grade securities.

Item 3.   Defaults Upon Senior Securities

     Not applicable.

ITEM 4.   Submission of Matters to a Vote of Security Holders

     Not applicable.

ITEM 5.   Other Information

     Not applicable.
                                       16
<PAGE>

ITEM 6.   Exhibits and Reports on Form 8-K

  A. Exhibits:

Exhibit
Number                         Description
------                         -----------
3.1          Restated Certificate of Incorporation #

3.2          Amended and Restated Bylaws #

9.1          Form of Amended and Restated Stockholders Agreement #

10.1         1998 Stock Option Plan #

10.1(a)      Amended and Restated Infonet Services Corporation 1998 Stock Option
             Plan filed as Exhibit 10.1(a) with the Company's Form 10-Q for the
             period ended December 31, 2000

10.2         1998 Stock Purchase Plan #

10.3         1999 Stock Option Plan #

10.4         Infonet Deferred Income Plan #

10.5         1998 Stock Appreciation Rights Plan #

10.6         Supplemental Executive Retirement Plan #

10.7         Senior Secured Credit Agreement, dated as of August 17, 1999#,
             as amended by Amendment No. 1 filed as Exhibit 10.1 with the
             Company's Form 10-Q for the period ended June 30, 2000 and
             Amendment No. 2 filed as Exhibit 10.7(a) with the Company's Form
             10-Q for the period ended September 30, 2000

10.8         Executive Employment Agreement of Jose A. Collazo, dated April
             24, 2001

10.10        Standard Infonet Services Agreement #

10.11        Capacity Right of Use Agreement with FLAG Limited, dated as of
             June 25, 1999 #

10.12        AUCS Services Agreement, dated as of September 30, 1999 #

10.13        AUCS Call Option Deed, dated as of September 30, 1999 #

10.14        AUCS Management Agreement, dated as of September 30, 1999 #, as
             amended by the Deed of Amendment filed with the Company's Form
             10-K for the period ended March 31, 2001

10.15        AUCS Assignment Agreement, dated as of September 30, 1999 #

10.16        Lease for Grand Avenue Corporate Center at 2160 Grand Avenue, El
             Segundo, California #

10.17        Executive Employment Agreement of Akbar H. Firdosy, dated April
             24, 2001

10.18        Infonet Services Corporation 2000 Omnibus Stock Plan*, as
             amended by the Amendment No.1 filed as Exhibit 10.18(a) with the
             Company's Form 10-Q for the period ended December 31, 2000

10.19        Infonet Services Corporation 2000 Employee Stock Purchase Plan
             (Amended and Restated Effective as of July 1, 2001)

                                       17
<PAGE>

Exhibit
Number                              Description
------                              -----------
10.20           Executive Employment Agreement of Paul A. Galleberg, dated
                April 24, 2001

10.21           Consulting Agreement of Ernest U. Gambaro, filed with the
                Company's Form 10-Q for the period ended December 31, 2000

10.23           Secured Demand Promissory Note between Thomas E. Whidden Ttee
                & Linda L. Whidden Ttee, U/A dtd 11/7/97 by Whidden Trust, a
                trust, and Infonet Services Corporation, filed with the
                Company's Form 10-K for the period ended March 31, 2001

     B. No reports on Form 8-K were filed by registrant during the quarter for
which this report is filed.

---------------
#  Incorporated by reference to the corresponding exhibit number from the
   Registrant's Registration Statement on Form S-1 filed with the Commission on
   December 15, 1999.

*  Incorporated by reference to Appendices A and B, respectively, of Infonet
   Services Corporation's definitive proxy statement filed with the Commission
   on July 27, 2000.

                                       18
<PAGE>

                                   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.


                                INFONET SERVICES CORPORATION



Date: August 10, 2001

                                         By:        /s/ AKBAR H. FIRDOSY
                                             -----------------------------------
                                                       Akbar H. Firdosy
                                                   Chief Financial Officer
                                                  (Chief Accounting Officer)

                                       19