<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                 FORM 10-K/A-2

                               ----------------

               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  For the Fiscal Year Ended December 31, 2000

                         Commission File No. 000-22697

                               ----------------

                              AT HOME CORPORATION
          (Exact name of the Registrant as specified in its charter)

<TABLE>
   <S>                                       <C>
                   Delaware                                 77-0408542
       (State or other jurisdiction of                   (I.R.S. Employer
        incorporation or organization)                Identification Number)
</TABLE>

              450 Broadway Street, Redwood City, California 94063
              (Address of principal executive offices) (Zip Code)

                                (650) 556-5000
           (The Registrant's telephone number, including area code)

          Securities Registered Pursuant to Section 12(b) of the Act:

                                     None

          Securities Registered Pursuant to Section 12(g) of the Act:

               Series A Common Stock, $0.01 par value per share

   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 [_]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K/A or any
amendment to this Form 10-K/A. [_]

<TABLE>
<CAPTION>
                                                                       As of
                                                                   July 31, 2001
                                                                   -------------
<S>                                                                <C>
Aggregate market value of the voting stock held by non-affiliates
 of the Registrant based on the closing bid price per share as
 reported on the Nasdaq Stock Market on such date(/1/) ..........  $296,520,305
Number of shares of Series A Common Stock outstanding............   324,076,027
Number of shares of Series B Common Stock outstanding............    86,595,578
</TABLE>
--------
(/1/Shares)of common stock held by each executive officer and director and by
    each person or entity that owns 10% or more of the outstanding common
    stock have been excluded in that such persons or entities may be deemed to
    be affiliates. This determination of affiliate status is not necessarily
    conclusive for other purposes.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                     None

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<PAGE>

                              AT HOME CORPORATION

                      2000 ANNUAL REPORT ON FORM 10-K/A-2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----

                                    PART II

 <C>      <S>                                                             <C>
 Item 8.  Financial Statements and Supplementary Data...................    3

                                    PART IV

 Item 14. Exhibits, Financial Statements, Financial Statement Schedule
           and Reports on Form 8-K......................................   45
</TABLE>

                                EXPLANATORY NOTE

   This 10-K/A-2 is being filed for the sole purpose of adding "Ability to
Continue Operations" and "Subsequent Events" information to the notes to the
financial statements and to revise the Report of Independent Auditors to
reflect the addition of an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern.

                                       2
<PAGE>

                                    PART II

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Supplementary Data

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Consolidated Financial Statements as of December 31, 2000 and 1999 and
 for the Three Years Ended December 31, 2000, 1999 and 1998:
  Report of Ernst & Young LLP, Independent Auditors......................    4
  Consolidated Balance Sheets............................................    5
  Consolidated Statements of Operations..................................    6
  Consolidated Statements of Stockholders' Equity........................    7
  Consolidated Statements of Cash Flows..................................    8
  Notes to Consolidated Financial Statements.............................    9

Quarterly Financial Information for the Two Years Ended December 31, 2000
 (Unaudited).............................................................   44
</TABLE>

                                       3
<PAGE>

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
At Home Corporation

   We have audited the accompanying consolidated balance sheets of At Home
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. Our audits also included the
financial statement schedule presented at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of At Home
Corporation at December 31, 2000 and 1999, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.

   The accompanying financial statements have been prepared assuming that At
Home Corporation will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses and negative cash
flows and has a substantial need for additional funding to support its
operations. Furthermore, the Company's $100 million convertible notes require
the Company to maintain the listing of its Series A common stock on either the
New York Stock Exchange, the Nasdaq National Market or the American Stock
Exchange. The Company currently does not meet Nasdaq's continued listing
requirements. If the Company's Series A common stock is delisted, the terms of
the convertible notes provide for their acceleration of repayment in cash at
that time. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of these uncertainties.

                                                           /s/ ERNST & YOUNG LLP

Palo Alto, California
January 24, 2001,
Except for the second and third paragraphs
of Note 1, as to which the date is
August 14, 2001

                                       4
<PAGE>

                              AT HOME CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                           December 31,
                                                      ------------------------
                                                         2000         1999
                                                      -----------  -----------
                                     ASSETS
<S>                                                   <C>          <C>
Current assets:
 Cash and cash equivalents (including restricted cash
  of $34,139 in 2000 and $988 in 1999)............... $    98,647  $   224,548
 Short-term investments..............................     102,115      300,675
                                                      -----------  -----------
   Total cash, cash equivalents and short-term
    investments......................................     200,762      525,223
 Accounts receivable, net of allowance of $10,000 in
  2000 and $3,454 in 1999............................      65,899       52,253
 Accounts receivable -- related parties..............      54,126       18,279
 Other current assets................................      42,626       35,151
                                                      -----------  -----------
   Total current assets..............................     363,413      630,906
Property, equipment and improvements, net............     366,127      176,077
Investments in affiliated companies..................      35,032       19,015
Other investments....................................      73,628      273,005
Distribution agreements, net.........................     239,357      313,772
Goodwill and other acquired intangible assets, net...     908,788    7,614,847
Other assets.........................................     120,355       76,657
                                                      -----------  -----------
   Total assets...................................... $ 2,106,700  $ 9,104,279
                                                      ===========  ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable.................................... $    65,060  $    44,781
 Accounts payable -- related parties.................      10,892       22,916
 Accrued compensation and related expenses...........      21,940       15,632
 Deferred revenue....................................      40,381       56,844
 Other accrued liabilities...........................     101,826       63,044
 Current portion of capital lease and other
  obligations........................................      70,258       38,666
                                                      -----------  -----------
   Total current liabilities.........................     310,357      241,883
Convertible notes and debentures.....................     743,525      736,294
Capital lease and other obligations, less current
 portion.............................................      85,904       52,552
Other liabilities....................................      10,397        6,533
Commitments and contingencies (Note 8)
Stockholders' equity:
 Convertible preferred stock, $0.01 par value:
  Authorized shares -- 9,650,000
  Issued and outstanding shares -- 7,621 in 2000 and
   10,134 in 1999....................................     286,208      397,019
 Common stock, $0.01 par value:
  Authorized shares -- 1,110,000,000
  Issued and outstanding shares -- 405,362,314 in
   2000 and 384,754,355 in 1999......................   9,809,893    9,312,700
 Deferred compensation...............................     (34,070)     (50,493)
 Accumulated other comprehensive income..............      19,085       92,594
 Accumulated deficit.................................  (9,124,599)  (1,684,803)
                                                      -----------  -----------
   Total stockholders' equity........................     956,517    8,067,017
                                                      -----------  -----------
   Total liabilities and stockholders' equity........ $ 2,106,700  $ 9,104,279
                                                      ===========  ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                       5
<PAGE>

                              AT HOME CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                           -----------------------------------
                                              2000         1999        1998
                                           -----------  -----------  ---------
<S>                                        <C>          <C>          <C>
Revenues(/1/):
 Consumer access.........................  $   218,116  $    91,128  $  22,292
 Commercial services.....................       61,118       35,487     18,739
 Media/advertising.......................      308,006      197,067      5,444
 International...........................       29,135       13,273      1,570
                                           -----------  -----------  ---------
Total revenues:..........................      616,375      336,955     48,045
Operating costs(/2/):
 Cost of services and products...........      290,550      143,056     46,965
 Product development and engineering.....       95,615       54,805     17,009
 Sales and marketing.....................      290,017      130,725     18,091
 General and administrative..............       65,886       30,276     12,429
 Cost and amortization of distribution
  agreements.............................      171,102      291,967    101,385
 Costs and amortization of goodwill,
  intangible assets, deferred
  compensation and other acquisition-
  related amounts........................    2,341,644    1,157,009      2,758
 Write-down of goodwill, other intangible
  assets and other assets................    4,635,687           --         --
                                           -----------  -----------  ---------
Total operating costs....................    7,890,501    1,807,838    198,637
                                           -----------  -----------  ---------
Loss from operations.....................   (7,274,126)  (1,470,883)  (150,592)
Interest and other income, net...........        9,872       10,253      6,413
Write-down of other investments .........     (129,482)          --         --
Realized gain on investment held.........           --       12,566         --
Equity share of losses of affiliated
 companies...............................      (46,060)      (9,574)        --
                                           -----------  -----------  ---------
Net loss.................................  $(7,439,796) $(1,457,638) $(144,179)
                                           ===========  ===========  =========
Net loss per share -- basic and diluted..  $    (18.73) $     (4.61) $   (0.63)
                                           ===========  ===========  =========
Shares used in per share computation --
 basic and diluted.......................      397,235      316,441    228,479
                                           ===========  ===========  =========
-------------
(/1/) Revenue from related parties.......  $    45,318  $    28,821  $  10,458
                                           ===========  ===========  =========
(/2/) Depreciation and amortization
      included in operating costs,
      excluding amortization of
      distribution agreements and
      acquisition-related amounts........  $   103,965  $    49,467  $  15,029
                                           ===========  ===========  =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                       6
<PAGE>

                              AT HOME CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                  Notes               Accum.
                            Convertible                         Receivable            Other                    Total
                          Preferred Stock      Common Stock        From    Deferred  Compre-                   Stock-
                          ----------------  ------------------    Stock-   Compen-   hensive   Accumulated   holders'
                          Shares  Amount    Shares    Amount     Holders    sation    Income     Deficit      Equity
                          ------ ---------  ------- ----------  ---------- --------  --------  -----------  -----------
<S>                       <C>    <C>        <C>     <C>         <C>        <C>       <C>       <C>          <C>
Balances at December 31,
 1997...................    --   $      --  237,206 $  370,111    $(319)   $ (4,399) $     --  $   (82,986) $   282,407
Net issuance of Series A
 common stock in
 secondary offering.....    --          --    5,750    125,725       --          --        --           --      125,725
Series A common stock
 issued and stock
 options assumed in
 acquisitions...........    --          --    2,488     94,953       --          --        --           --       94,953
Series A common stock
 issued upon exercise of
 warrants...............    --          --      192         --       --          --        --           --           --
Series A common stock
 issued under stock
 option and employee
 stock purchase plans,
 net of repurchases.....    --          --      910      5,099       16          --        --           --        5,115
Repayment of notes
 receivable.............    --          --       --         --      303          --        --           --          303
Warrants to purchase
 Series A common stock
 under distribution
 agreements.............    --          --       --    124,287       --          --        --           --      124,287
Amortization of deferred
 compensation, net of
 cancelled stock
 options................    --          --       --       (499)      --       1,519        --           --        1,020
Net loss................    --          --       --         --       --          --        --     (144,179)    (144,179)
Net unrealized gain on
 available-for-sale
 investments............    --          --       --         --       --          --     4,235           --        4,235
                                                                                                            -----------
Comprehensive loss......    --          --       --         --       --          --        --           --     (139,944)
                           ---   ---------  ------- ----------    -----    --------  --------  -----------  -----------
Balances at December 31,
 1998...................    --          --  246,546    719,676       --      (2,880)    4,235     (227,165)     493,866
Common and preferred
 stock issued and stock
 options and warrants
 assumed in
 acquisitions...........    11     418,175  126,808  8,083,468       --          --        --           --    8,501,643
Series A common stock
 issued upon exercise of
 warrants...............    --          --    5,417     10,507       --          --        --           --       10,507
Series A common stock
 issued under stock
 option and employee
 stock purchase plans,
 net of repurchases.....    --          --    5,443     57,934       --          --        --           --       57,934
Warrants to purchase
 Series A common stock
 under distribution
 agreements.............    --          --       --    417,847       --          --        --           --      417,847
Conversion of Series A
 preferred stock to
 Series A common stock..    (1)    (21,156)     540     21,156       --          --        --           --           --
Warrants to purchase
 Series A common stock
 contributed to joint
 venture................    --          --       --      2,112       --          --        --           --        2,112
Deferred compensation
 from stock options and
 restricted stock
 assumed in
 acquisitions...........    --          --       --         --       --     (51,061)       --           --      (51,061)
Amortization of deferred
 compensation...........    --          --       --         --       --       3,448        --           --        3,448
Net loss................    --          --       --         --       --          --        --   (1,457,638)  (1,457,638)
Net unrealized gain on
 available-for-sale
 investments............    --          --       --         --       --          --    88,456           --       88,456
Foreign currency
 translation
 adjustment.............    --          --       --         --       --          --       (97)          --          (97)
                                                                                                            -----------
Comprehensive loss......    --          --       --         --       --          --        --           --   (1,369,279)
                           ---   ---------  ------- ----------    -----    --------  --------  -----------  -----------
Balances at December 31,
 1999...................    10     397,019  384,754  9,312,700       --     (50,493)   92,594   (1,684,803)   8,067,017
                           ---   ---------  ------- ----------    -----    --------  --------  -----------  -----------
Common and preferred
 stock issued and stock
 options and warrants
 assumed in
 acquisitions...........     3      76,258    6,689    137,631       --          --        --           --      213,889
Series A common stock
 issued upon exercise of
 warrants...............    --          --    1,873      6,406       --          --        --           --        6,406
Series A common stock
 issued under stock
 option and employee
 stock purchase plans,
 net of repurchases.....    --          --    7,249     71,281       --          --        --           --       71,281
Warrants to purchase
 Series A common stock
 under distribution
 agreements.............    --          --       --     93,445       --          --        --           --       93,445
Conversion of Series A
 preferred stock to
 Series A common stock..    (5)   (187,069)   4,797    187,069       --          --        --           --           --
Warrants to purchase
 Series A common stock
 contributed to joint
 venture................    --          --       --      1,361       --          --        --           --        1,361
Deferred compensation
 from stock options and
 restricted stock
 assumed in
 acquisitions...........    --          --       --         --       --      (5,364)       --           --       (5,364)
Amortization of deferred
 compensation...........    --          --       --         --       --      21,787        --           --       21,787
Net loss................    --          --       --         --       --          --        --   (7,439,796)  (7,439,796)
Net unrealized loss on
 available-for-sale
 investments............    --          --       --         --       --          --   (73,668)          --      (73,668)
Foreign currency
 translation
 adjustment.............    --          --       --         --       --          --       159           --          159
                                                                                                            -----------
Comprehensive loss......    --          --       --         --       --          --        --           --   (7,513,305)
                           ---   ---------  ------- ----------    -----    --------  --------  -----------  -----------
Balances at December 31,
 2000...................     8   $ 286,208  405,362 $9,809,893    $  --    $(34,070) $ 19,085  $(9,124,599) $   956,517
                           ===   =========  ======= ==========    =====    ========  ========  ===========  ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                       7
<PAGE>

                              AT HOME CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                               Years Ended December 31,
                                           -----------------------------------
                                              2000         1999        1998
                                           -----------  -----------  ---------
<S>                                        <C>          <C>          <C>
CASH PROVIDED BY (USED IN) OPERATING
 ACTIVITIES
Net loss.................................  $(7,439,796) $(1,457,638) $(144,179)
Adjustments to reconcile net loss to cash
 used in operating activities:
 Depreciation and amortization...........      102,945       48,447     14,009
 Amortization of distribution
  agreements.............................       95,551       78,843     51,591
 Cost of distribution agreements.........       75,551      213,124     49,794
 Amortization of deferred and other
  stock-based compensation...............       21,787       11,179      1,020
 Amortization of goodwill and other
  intangible assets......................    2,310,273    1,103,005         --
 Impairment write-down of goodwill and
  acquired intangible assets.............    4,609,086           --         --
 Impairment write-down of other
  investments............................      129,482           --         --
 Accretion of discount on convertible
  debentures.............................        9,715        6,950         --
 Recognition of non-cash gain on
  investment.............................           --      (12,556)        --
 Charge for purchased in-process research
  and development........................           --       36,715      2,758
 Equity share of losses of affiliated
  companies..............................       46,060        9,574         --
 Changes in assets and liabilities:
 Accounts receivable.....................      (47,179)      (8,972)    (8,099)
 Other assets............................       (8,580)      (6,691)    (9,143)
 Accounts payable........................          (50)      39,198      5,822
 Accrued liabilities.....................       44,401        7,983      4,825
 Deferred revenues.......................      (27,907)      43,157      3,126
 Other long-term liabilities.............        2,778           85     (1,736)
                                           -----------  -----------  ---------
Cash provided by (used in) operating
 activities..............................      (75,883)     112,403    (30,212)

CASH USED IN INVESTING ACTIVITIES
Purchases of short-term investments......     (110,786)    (340,050)  (135,342)
Sales and maturities of short-term
 investments.............................      309,346      178,386     92,922
Purchases of other investments...........      (38,470)    (104,732)        --
Sales of other investments...............       46,191           --      4,291
Net purchases of property, equipment and
 improvements............................     (129,080)     (57,358)   (16,793)
Capitalized software development costs...      (19,712)      (3,451)        --
Payments under backbone agreement........      (48,199)     (57,052)        --
Investment in joint ventures.............      (66,045)      (7,561)        --
Business combinations, net of cash
 received................................       (6,397)    (316,383)       144
                                           -----------  -----------  ---------
Cash used in investing activities........      (63,152)    (708,201)   (54,778)
CASH PROVIDED BY FINANCING ACTIVITIES
Proceeds from issuance of convertible
 debt....................................           --      485,750    222,466
Proceeds from issuance of common stock,
 net of repurchases......................       77,687       68,441    130,828
Payments on capital lease obligations....      (64,553)     (34,547)   (12,118)
Repayment of notes receivable from
 stockholders............................           --           --        303
                                           -----------  -----------  ---------
Cash provided by financing activities....       13,134      519,644    341,479
                                           -----------  -----------  ---------
Net increase (decrease) in cash and cash
 equivalents.............................     (125,901)     (76,154)   256,489
Cash and cash equivalents, beginning of
 period..................................      224,548      300,702     44,213
                                           -----------  -----------  ---------
Cash and cash equivalents, end of period
 (including restricted cash of $34,139 in
 2000, $988 in 1999 and $ -- in 1998)....  $    98,647  $   224,548  $ 300,702
                                           ===========  ===========  =========
SUPPLEMENTAL DISCLOSURES
 Interest paid...........................  $    36,722  $     7,236  $   2,148
                                           ===========  ===========  =========
 Acquisition of equipment under capital
  leases.................................  $   129,497  $    54,322  $  12,872
                                           ===========  ===========  =========
 Warrants to purchase Series A common
  stock earned by cable partners and
  capitalized as distribution
  agreements.............................  $    17,894  $   204,723  $  74,493
                                           ===========  ===========  =========
 Conversion of preferred stock to common
  stock..................................  $   187,069  $    21,156  $      --
                                           ===========  ===========  =========
 Mergers and acquisitions:
 Common and preferred stock issued and
  options and warrants exercisable for
  common stock assumed...................  $   213,889  $ 8,501,643  $  94,953
                                           ===========  ===========  =========
 Liabilities assumed.....................  $     2,590  $   114,697  $   2,589
                                           ===========  ===========  =========
</TABLE>





  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                       8
<PAGE>

                              AT HOME CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and Summary of Significant Accounting Policies

The Company

   At Home Corporation, or Excite@Home, which was incorporated in the state of
Delaware on March 28, 1995, is a global provider of broadband network services.
Through its ownership of our common stock, AT&T has majority voting control of
our company. Our primary offerings are the @Home service, which is a broadband
Internet service delivered, with the assistance of our cable partners, to
consumers via the hybrid fiber-coaxial cable infrastructure, and the Excite
Network, an Internet portal providing users a broad array of information in
categories such as news, finance and entertainment, as well as services such as
search, e-mail, chat, voice mail and address books.

Ability to Continue Operations

   We have had operating losses and negative cash flow since our inception. In
2001, the expansion and enhancement of our broadband network has required
significant ongoing capital outlay, and the weakened demand for Internet
advertising has resulted in decreasing revenue and negative cash flow for our
media operations. Although we raised $185 million in June 2001 through a
convertible note arrangement with third party investors and a separate
financing arrangement with AT&T involving our backbone capacity agreement, we
announced in July 2001 that we would need to raise additional funding prior to
December 31, 2001 to support our operations. Some of the factors contributing
to this forecast include our belief that there will not be a near-term recovery
in the demand for our online advertising and marketing services and also
include our inability to secure financing terms from some of our equipment
vendors, to obtain standard payment terms from several critical suppliers, or
to recover previously expected amounts in connection with real estate lease
commitments. In addition, we have not yet completed the possible sale or
restructuring of our media operations not directly supporting our broadband
strategy as contemplated in our April 17, 2001 announcement, or other financing
transactions. Additionally, our $100 million of convertible notes require that
we maintain the listing of our Series A common stock on either the New York
Stock Exchange, the Nasdaq National Market or the American Stock Exchange. We
do not currently meet the Nasdaq's continued listing requirement because our
net tangible assets and stockholders' equity are below the minimum thresholds
and the bid price of our Series A common stock is currently less than the
minimum $3.00 bid price required when such thresholds are not met. If we do not
meet the continued listing requirements of one of these stock markets at any
time after receiving a redemption notice from a note holder, if our Series A
common stock were delisted, or if we fail to meet other specified conditions in
our agreements with the note holders, the notes provide for acceleration of
repayment in cash at that time. Our stockholders have approved a reverse stock
split which would, if our board of directors elects to implement it, increase
the trading price of our Series A common stock above $3.00, but we cannot
assure you that this would result in a sustained increase above the minimum bid
price requirements. Therefore, our existing cash and other liquid assets may
not be sufficient to fund operations through the end of 2001. These conditions
raise substantial doubt about our ability to continue as a going concern. We
cannot guarantee that we will be able to obtain additional funding on
acceptable terms, if at all.

   In order to conserve cash reserves, we have implemented targeted expense
reductions throughout our company. In August 2001, we commenced an operational
and strategic realignment of our entire business that has resulted in the
elimination of approximately 200 positions and we have eliminated an additional
90 positions at our MatchLogic subsidiary in order to align expenses with
projected revenues. We may undertake further restructuring efforts for the
remainder of 2001. In addition, we are continuing to pursue the possible sale
of our media operations and other strategic plans, including financing
transactions.

Dependence on Cable System Operators

   We have strategic partnerships with cable system operators that provide,
through their cable systems, the principal distribution network for our
services to subscribers. Our cable partners have granted us the exclusive

                                       9
<PAGE>

right to offer high-speed residential consumer Internet services over their
cable systems, subject to specified exceptions. However, these cable partners
are under no obligation to carry our services. In addition, the cable partners'
exclusivity obligations to us begin expiring in June 2002, and may be
terminated prior to that date under certain circumstances. In March 2000, we
executed letter agreements with our principal cable partners, AT&T, Cox and
Comcast, to extend our distribution agreements on a non-exclusive basis through
June 4, 2006 with Cox and Comcast and June 4, 2008 with AT&T. This letter
agreement granted Cox and Comcast the right to terminate their exclusivity
obligations with us by delivering written notice to us, on or after June 4,
2001. This letter agreement also granted Cox and Comcast the right to provide a
portion of our broadband network services to subscribers themselves, or to
terminate entirely our distribution agreements with these cable partners.

   Transmission of data over cable is dependent on the availability of high-
speed two-way hybrid fiber-coaxial cable infrastructure. Currently, a
significant portion of the cable infrastructure in the United States has not
been upgraded and is not capable of two-way data transmission. Cable system
operators have made major infrastructure investments in order to deploy data-
over-cable services, but there are no assurances as to the timing and rate of
such infrastructure improvements in the future.

   Because we do not offer the @Home service directly to customers, the rate at
which we are able to obtain new subscribers depends on the level and
effectiveness of the efforts of our cable partners to promote our broadband
services in particular regions. We cannot predict the rate at which our cable
partners will add new subscribers to our services. If our cable partners do not
actively and effectively promote our services, we will not be able to reach the
level of subscribers necessary to achieve a profitable business model.

   Certain parties, including other Internet service providers, have petitioned
federal, state and local authorities to require cable operators to provide
Internet and online service providers with unbundled access to their cable
systems. The rates that our cable partners charge for this third-party access,
or for the @Home services, could also be subject to rate regulation or
tariffing requirements. Our financial position and results of operations would
likely be materially adversely affected if our cable partners or we are
classified as common carriers, or if government authorities require third-party
access to cable networks or unaffiliated Internet service providers. In
addition, several of our cable partners have initiated trials involving
multiple Internet service providers and have announced that they intend to
allow customers in their broadband cable systems to choose their Internet
service provider upon expiration of our exclusivity agreements with them. The
terms and conditions of broadband cable delivery agreements that will be
executed by Excite@Home, our cable partners and other Internet service
providers after expiration of our exclusivity agreements are uncertain.

Dependence on Key Technology Suppliers

   We currently depend on a limited number of suppliers for certain key
technologies, including cable modems, which are needed to build, manage and
operate our services. Although we believe that there are alternative suppliers
for each of these technologies, the loss of any of our relationships with our
current suppliers could have a material adverse effect on our financial
condition and results of operations.

Significant Accounting Policies

Basis of Presentation

   The consolidated financial statements include the accounts of Excite@Home
and its consolidated subsidiaries, all of which are wholly owned. All
significant intercompany transactions and balances have been eliminated in
consolidation. Investments, including joint ventures, in entities owned 20% or
more but less than majority owned and not otherwise controlled by us are
accounted for under the equity method and presented in the consolidated balance
sheets as investments in affiliated companies.

                                       10
<PAGE>

Reclassifications

   Certain reclassifications have been made to previously reported amounts in
the consolidated financial statements in order to conform to the current
presentation.

Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported results of operations during the reporting period.
Actual results could differ from those estimates.

Revenue Recognition

   Our revenues are recorded in accordance with the Securities and Exchange
Commission's (SEC) Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition". We recognize revenues when persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, fees are fixed
and determinable, and collectibility is reasonably assured. For contracts with
multiple elements, we allocate the contract value to each element based on its
fair value and we recognize revenue as each element is delivered.

   Monthly customer subscription revenue for the @Home and @Work services is
recognized in the period in which subscription services are provided. We also
earn revenue from cable system operators for providing certain support
services, such as customer support, local area content development and pre-
commercial deployment fees, and this revenue is recognized as the services are
performed. We have also entered into agreements with cable system operators and
other third parties for the development, deployment and marketing of additional
services. Revenue for these development agreements is recognized on the
percentage of completion basis.

   Our revenues also include online advertising revenue derived from short-term
advertising contracts in which we guarantee a minimum number of impressions (a
view of an advertisement by a consumer) for a fixed fee. We also enter into a
number of longer-term advertising and sponsorship agreements. Under these
agreements, which range from 3 month to 3 years, we earn fees for generating
impressions which in some instances are guaranteed. We generally recognize
advertising revenue over the term of the agreements, provided that we do not
have any significant remaining obligations such as impression guarantees and
collection of the resulting receivable is probable. To the extent that
impression deliveries do not meet the guarantees, we defer recognition of the
corresponding revenue until impressions are delivered.

   Revenue from barter transactions involving the exchange of advertising on
our Excite Network for online, print and television advertising, was $19.6
million and $19 million for the years ended December 31, 2000 and 1999,
respectively; there was no such revenue during the year ended December 31,
1998. Revenue from these exchanges is recorded at the lower of the fair value
of the advertising delivered or the advertising received. In accordance with
Emerging Issues Task Force (EITF) Issue No. 99-17, "Accounting for Advertising
Barter Transactions", effective January 20, 2000, the fair value of advertising
delivered is based on similar advertising transactions for which we received
cash during the six months prior to the advertising barter transactions.
Advertising barter transactions generally result in the recognition of
equivalent amounts of revenue and expense.

   Revenue recognized from other barter transactions involving primarily the
exchange of MatchLogic data-marketing services for software and property and
equipment for internal use, was $16.7 million and $3.7 million for the years
ended December 31, 2000 and 1999, respectively; there was no such revenue
during the year ended December 31, 1998. Revenue from these exchanges is
generally recorded at the fair value of the services provided unless the fair
value of the services or products received is more readily determinable.

                                       11
<PAGE>

Cash and Cash Equivalents

   Cash equivalents are highly liquid investments with insignificant interest
rate risk and maturities of 90 days or less and are stated at amounts that
approximate fair value, based on quoted market prices. Cash equivalents consist
principally of investments in interest-bearing demand deposit accounts with
financial institutions and highly liquid debt securities of corporations and
the U.S. Government. We include in cash and cash equivalents all short-term,
highly liquid investments that mature within 90 days of their purchase date.

Other Investments

   Other investments primarily consist of strategic investments of less than
20% equity interest in publicly held and private companies. We do not have the
ability to exercise significant influence over any of these companies and
therefore account for investments in publicly held companies as available-for-
sale securities under Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
Investments in publicly held companies are recorded at fair value as measured
by quoted market prices and investments in privately held companies, which are
recorded at cost, are accounted for under the cost method of accounting.
Changes in fair value are included in comprehensive loss and unrealized gains
and losses are included in accumulated other comprehensive income or loss.
Realized gains and losses are recorded in net interest and other income when
the related investments are sold.

   We perform periodic reviews of our investments for impairment. Our
investments in publicly held companies are generally considered impaired when a
decline in the fair value of an investment as measured by quoted market prices
is less than its carrying value and such decline is not considered temporary.
In general, a decline in fair value below carrying value for a continuous
period of six months or more is not considered temporary. Impaired publicly
held companies are written down to fair value in our consolidated balance
sheets by recording as realized losses (included in impairment write-downs in
our consolidated statements of operations) the amount of unrealized losses
related to impaired investments that were previously included in accumulated
other comprehensive income. Our investments in privately held companies are
considered impaired when a review of operations and other indicators of
impairment indicate that the carrying value of the investment is not likely to
be recoverable. Such indicators include limited liquidity and limited prospects
of receiving additional financing. Impaired investments in privately held
companies are written down to estimated fair value, which is the amount we
believe is recoverable from our investment, by a reduction of other investments
and a corresponding amount recorded as impairment write-downs in our
consolidated statements of operations. Impairment write-downs create a new
carrying value for both publicly and privately held investments and we do not
record subsequent increases in fair value in excess of the new carrying value.
We recorded write-downs of $129.5 million during the quarter ended December 31,
2000 related to impairments of our publicly and privately held investments.

Property, Equipment and Improvements

   Property, equipment and improvements are stated at cost. Depreciation and
amortization are computed using the straight-line method over the shorter of
the estimated useful life of the asset or the lease term.

Intangible Assets

   Intangible assets consist of purchased technology, acquired workforce,
acquired brand name and content, and goodwill related to the acquisitions of
Narrative Communications Corp., Full Force Systems, Inc., Excite, Inc., iMALL,
Inc., Hartford House, Ltd. and its wholly-owned subsidiary Bluemountain.com,
Webshots Corporation, certain assets of Perspecta, Inc., Excite Espana, Rucker
Design Group, Kendara, Inc., Worldprints.com International, Inc., DataInsight
and Join Systems. These acquisitions were accounted for as purchases and are
further described in Note 3. Amortization of goodwill and intangible assets is
provided on the straight-line basis over the estimated useful lives of the
assets, which range from three to four years. Acquired in-process research and
development without alternative future use is charged to operations at the date
of acquisition.

                                       12
<PAGE>

   We record impairment losses or write-downs on intangible assets when events
and circumstances indicate that an impairment assessment should be performed
and that assessment indicates that there is an impairment. Events and
circumstances that would trigger an impairment assessment include a significant
decrease in the market value of an asset, a significant change in the manner or
extent that an asset is used including a decision to abandon acquired products,
services or technologies, a significant adverse change in operations or
business climate affecting the asset, and historical operating or cash flow
losses expected to continue for the foreseeable future associated with the
asset. An asset is considered impaired when the undiscounted cash flows
projected to be generated from the asset over its remaining useful life is less
than the recorded amount of that asset. Impairment losses are measured based on
the difference between the asset's fair value and carrying amount and are
recorded as impairment write-downs in the consolidated statements of operations
in the period that an indicator of impairment arises. Measurement of fair value
is based on estimated expected future cash flows, including terminal value cash
flows expected to result from the disposition of the asset at the end of its
useful life, discounted at our weighted average cost of capital. Weighted
average cost of capital is based on historical risk premiums required by
investors for companies of our size, industry and capital structure and
includes risk factors specific to us. In some instances, the measurement of
fair value includes a factor, if appropriate, for market comparables,
representing our estimate of the value that a buyer is willing to pay for
similar assets in terms of products and services, customer base, risks and
earnings capabilities. During the fourth quarter of 2000, we recorded
impairment write-downs related to intangible assets of $4.6 billion. Previous
to this, no impairments of our intangible assets had occurred.

Stock-Based Compensation

   We account for stock-based awards to employees in accordance with Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees", and have adopted the disclosure-only alternative of SFAS No. 123,
"Accounting for Stock-Based Compensation".

Advertising Costs

   All advertising costs are expensed as incurred. Advertising costs, which are
included in sales and marketing expenses, were $34.3 million, $18.3 million and
$1.8 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

Software Development Costs

   Costs of software developed internally by us for use in our operations are
accounted for under the American Institute of Certified Public Accountants'
Statement of Position (SOP) No. 98-1, "Internal Use Software", which we adopted
on January 1, 1999. In May 2000, the Emerging Issues Task Force (EITF) reached
a consensus on Issue 00-2, "Accounting for Web Site Development Costs" and we
adopted this consensus on July 1, 2000. This consensus requires that entities
treat most web site development as internal use software under SOP No. 98-1.
Under these accounting pronouncements, we expense costs of research, including
pre-development efforts related to determining technological or product
alternatives, and costs incurred for training and maintenance. Software and web
site development costs, which include direct costs such as labor and
contractors, are capitalized when it is probable that the project will be
completed and the software or web sites will be used as intended. Costs
incurred for upgrades and enhancements to our software or web sites are
capitalized when we believe such efforts result in additional functionality.
Capitalized software and web site costs are amortized to expense over the
estimated useful life of the software or web sites, which range from one to
three years. Costs capitalized under SOP No. 98-1 were $19.7 million and $3.5
million during the years ended December 31, 2000 and 1999, respectively.
Amortization of capitalized costs was not significant during the years ended
December 31, 2000 and 1999.

Income Taxes

   Income taxes are computed using the asset and liability method, under which
deferred income tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets

                                       13
<PAGE>

and liabilities and are measured using the currently enacted tax rates and
laws. A valuation allowance is provided for the amount of deferred tax assets
that, based on available evidence, are not expected to be realized.

Effect of New Accounting Standards

   In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
Statement requires that entities recognize all derivatives in the balance sheet
at fair value and record gains and losses resulting from changes in fair value
according to the purpose of the derivative and whether it qualifies as a hedge.
We adopted SFAS No. 133 on January 1, 2001 and its adoption did not have a
material impact on our financial position or results of operations, as we hold
no derivative financial instruments and we do not currently engage in hedging
activities.

   In December 1999, the SEC issued SAB No. 101, "Revenue Recognition," which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements. SAB No. 101 outlines the basic criteria that must be met
in order to recognize revenue and provides guidance for disclosures related to
revenue recognition policies. In October 2000, the SEC issued additional
written guidance to further supplement SAB 101. The adoption of SAB No. 101 in
2000 did not have a material impact on our financial position and results of
operations.

   In March 2000, the FASB issued Interpretation (FIN) No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." FIN 44 clarifies the
application of Accounting Principles Board Opinion No. 25 for certain issues
relating to stock compensation such as criteria for determining when a plan is
non-compensatory, the accounting consequences of modifications to the terms of
a fixed award, and the accounting for stock compensation related to business
combinations, among others, and is effective July 1, 2000. The adoption of FIN
44 did not have a material impact on our financial position or results of
operations.

   On February 14, 2001, the FASB issued a limited revision of its September 7,
1999 Exposure Draft, "Business Combinations and Intangible Assets", that
proposes to significantly change the accounting for goodwill acquired in a
purchase business combination. Under the revised proposal, goodwill would not
be amortized but would be reviewed for impairment, using a complex methodology
different from the original proposal, when an event occurs indicating the
potential for impairment. Goodwill impairment charges would be presented as a
separate line item within the operating section of the income statement. The
nonamortization approach would apply to previously recorded goodwill as well as
goodwill arising from acquisitions completed after the application of the new
standard. Amortization of the remaining book value of goodwill would cease and
the new impairment-only approach would apply. The FASB expects to release the
final statement in June 2001. The provisions of the proposed statement are to
be applied at the beginning of the first fiscal quarter following its issuance.

Components of Impairment Write-Down of Goodwill, Other Intangible Assets and
Other Assets

   The components of the write-down of goodwill, other intangible assets and
other assets for the year ended December 31, 2000 were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                     Amount
                                                                   ----------
     <S>                                                           <C>
     Goodwill and acquired identifiable intangible assets (Note
      3).......................................................... $4,609,086
     Other assets.................................................     26,601
                                                                   ----------
                                                                   $4,635,687
                                                                   ==========
</TABLE>

   The write-down of other assets primarily included costs that would have been
capitalized upon the formation of the Excite Chello joint venture and the
acquisition of Pogo.com, Inc. On December 4, 2000, we announced the termination
of the agreement to combine our international operations under a joint venture
to be named Excite Chello in partnership with UPC and its parent company,
UnitedGlobalCom. On January 8, 2001, we announced that we had terminated our
agreement to acquire Pogo.com in accordance with the terms of the agreement.

                                       14
<PAGE>

Balance Sheet Components

<TABLE>
<CAPTION>
                                                            As of December 31,
                                                            -------------------
                                                              2000      1999
                                                            -------- ----------
                                                               (in thousands)
   <S>                                                      <C>      <C>
   Other current assets:
    Current prepaid assets................................. $ 39,745 $   14,079
    Other..................................................    2,881     21,072
                                                            -------- ----------
                                                            $ 42,626 $   35,151
                                                            ======== ==========
   Goodwill and other intangible assets, net:
    Goodwill, net.......................................... $707,920 $7,306,280
    Acquired identifiable intangible assets, net...........  200,868    308,567
                                                            -------- ----------
                                                            $908,788 $7,614,847
                                                            ======== ==========
   Other accrued liabilities:
    Accrued network and connection costs................... $ 26,960 $    9,186
    Accrued sales and marketing related costs..............   17,652      6,892
    Other accrued operations costs.........................   18,215      6,119
    Other..................................................   38,999     40,847
                                                            -------- ----------
                                                            $101,826 $   63,044
                                                            ======== ==========
</TABLE>

2. Calculation of Net Loss Per Share

   Basic and diluted net loss per share is computed using the weighted average
number of common shares outstanding during the period. Since we have a net
loss for all periods presented, net loss per share on a diluted basis is
equivalent to basic net loss per share because the effect of converting
outstanding stock options, warrants, common stock subject to repurchase,
convertible debt, preferred stock and other common stock equivalents would be
anti-dilutive. See Note 10 for amounts and descriptions of instruments
convertible into common stock.

   The computation of basic and diluted net loss per share is as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                          -----------------------------------
                                             2000         1999        1998
                                          -----------  -----------  ---------
   <S>                                    <C>          <C>          <C>
   Net loss.............................. $(7,439,796) $(1,457,638) $(144,179)
                                          ===========  ===========  =========
   Weighted average shares of common
    stock outstanding....................     399,541      322,456    240,108
   Less: weighted average shares of
    common stock subject to repurchase...      (2,306)      (6,015)   (11,629)
                                          -----------  -----------  ---------
   Shares used in per share
    calculations.........................     397,235      316,441    228,479
                                          ===========  ===========  =========
   Net loss per share--basic and
    diluted.............................. $    (18.73) $     (4.61) $   (0.63)
                                          ===========  ===========  =========
</TABLE>

                                      15
<PAGE>

3. Business Combinations

   The following is a summary of acquisitions made during the years ended
December 31, 2000, 1999 and 1998, all of which were accounted for as purchases:

<TABLE>
<CAPTION>
                                Primary Service or Product     Acquisition Date
                                --------------------------     ----------------
<S>                         <C>                                <C>
Full Force Systems, Inc...  Set-top applications for           November 30,
                             interactive television            1998
Narrative Communications    Rich media Internet advertising    December 30,
 Corp.....................   solutions                         1998
Excite, Inc...............  Internet portal and targeted       May 28, 1999
                             marketing
iMALL, Inc................  Integrated e-commerce solutions    October 25, 1999
Perspecta, Inc............  Online database development        October 25, 1999
Webshots Corporation......  Online digital photos and viewing  October 27, 1999
                             software
Excite Espana, SL.........  International Excite-branded       November 30,
                             portal                            1999
Hartford House, Ltd.        Free online greeting cards         December 13,
 (Bluemountain.com).......                                     1999
Rucker Design Group.......  Graphics design                    January 21, 2000
Kendara, Inc..............  Browser-based marketing services   February 10,
                                                               2000
Worldprints.com             Online digital photos and          April 4, 2000
 International, Inc.......   screensavers
DataInsight, Inc..........  Online and offline database        July 14, 2000
                             marketing systems
Join Systems, Inc.........  Internet protocol engineering      July 14, 2000
</TABLE>

   Our consolidated financial statements include the results of operations of
acquired companies commencing on the date of acquisition. The total purchase
consideration for each of the above acquisitions was allocated to the assets
acquired and liabilities assumed based on their estimated fair values as of the
date of the acquisition. Purchase consideration includes the fair value of our
Series A common stock and preferred stock (which is convertible into Series A
common stock) based generally on the trading price of our Series A common stock
at the earlier of the date that an acquisition is announced or the date that an
acquisition is consummated. For assumed employee stock options, purchase
consideration includes the fair value of vested stock options on the date of
consummation as determined by the Black-Scholes valuation method. In accordance
with the FASB's FIN 44, effective July 1, 2000, purchase consideration includes
the fair value of both vested and unvested stock options. The intrinsic value
of assumed unvested stock options is allocated to deferred compensation and
amortized to expense on a straight-line basis over the vesting period of such
options. For stock-based awards to nonemployees (all of which to date have been
fully vested on the date of consummation), purchase consideration is determined
based on fair value as calculated using the Black-Scholes valuation method. We
generally assume all outstanding employee stock options, warrants and other
stock-based awards of acquired companies and convert them to options, warrants
and awards to acquire our Series A common stock. Converted stock-based awards
are subject to the terms and conditions, including exercisability and vesting
schedules, of the original awards.

   Goodwill represents the excess of purchase consideration over the fair value
of assets, including identifiable intangible assets, net of the fair value of
liabilities assumed. Goodwill and intangible assets related to our acquisitions
are amortized to expense on a straight-line basis generally over three to four
years.

                                       16
<PAGE>

Allocation of Purchase Consideration

   Purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<CAPTION>
                          Acquisitions in
                                1998                       Acquisitions in 1999
                          ----------------  -------------------------------------------------------
                                     Full                                      Blue
                          Narrative Force     Excite     IMALL    Webshots   Mountain   Others(/1/)
                          --------- ------  ----------  --------  --------  ----------  -----------
<S>                       <C>       <C>     <C>         <C>       <C>       <C>         <C>
Cash....................   $    77  $   69  $   34,341  $  8,974  $    73   $      611    $   432
Accounts receivable and
 other assets...........       584      60     233,338       884       --        1,204      2,716
Property and equipment..       520       5      48,376     3,368       68        3,577         78
Purchased technology....    22,900     215      94,500    13,200    2,200          800         --
Other identified
 intangible assets......     1,050     101     162,700    35,600   22,800       27,000         --
Goodwill................    68,404   1,318   6,723,796   577,567   33,110      938,585     11,088
Purchased in-process
 research and
 development............     2,700      58      34,400     1,890      425           --         --
Deferred compensation...        --      --          --        --   25,000       30,922         --
Liabilities assumed.....    (2,435)   (154)   (105,743)   (3,282)    (378)      (1,986)    (3,308)
                           -------  ------  ----------  --------  -------   ----------    -------
  Total purchase
   consideration........   $93,800  $1,672  $7,225,708  $638,201  $83,298   $1,000,713    $11,006
                           =======  ======  ==========  ========  =======   ==========    =======
</TABLE>

<TABLE>
<CAPTION>
                                             Acquisitions in 2000
                                 ---------------------------------------------
                                 Kendara   Worldprints DataInsight Others(/1/)
                                 --------  ----------- ----------- -----------
<S>                              <C>       <C>         <C>         <C>
Cash............................ $  3,908    $ 1,351     $   131     $   70
Accounts receivable and other
 assets.........................       73         17         465        122
Property and equipment..........      944        143          26         67
Purchased technology............       --         --          --         --
Other identified intangible
 assets.........................    5,600         --       5,100         --
Goodwill........................   99,534     66,920       9,662      7,235
Purchased in-process research
 and development................       --         --          --         --
Deferred compensation...........       --         --         529         --
Liabilities assumed.............     (440)    (1,115)       (780)      (255)
                                 --------    -------     -------     ------
  Total purchase consideration.. $109,619    $67,316     $15,133     $7,239
                                 ========    =======     =======     ======
</TABLE>
--------
(/1/) Includes the 1999 acquisitions of Perspecta and Excite Espana and the
      2000 acquisitions of Rucker and Join.

Description of Significant Business Combinations

   The total purchase consideration for Narrative of $93.8 million was based on
the issuance of 2.4 million shares of our Series A common stock with a fair
value of $84.2 million; converted stock options to acquire 0.3 million shares
of Series A common stock of $9.2 million; and $0.4 million of direct
acquisition costs.

   The total purchase consideration for Excite of $7,225.7 million was based on
the issuance of 115.4 million shares of our Series A common stock with a fair
value of $6,051 million; converted stock options to acquire 25.7 million shares
of Series A common stock of $1,105 million; converted warrants and convertible
debt instruments to acquire 0.2 million shares of Series A common stock with a
fair value of approximately $10 million; and direct merger costs of $59.7
million consisting primarily of investment banking fees, severance and stock
compensation to certain employees and other professional fees.

   The total purchase consideration for iMALL of $638.2 million was based on
the issuance of 9.3 million shares of our Series A common stock with a fair
value of $481.2 million; converted stock options to acquire 1.5 million shares
of our Series A common stock of $61.5 million; iMALL warrants assumed and
converted

                                       17
<PAGE>

into warrants to acquire 2.5 million shares of our Series A common stock with a
fair value of $90.2 million; and direct merger costs of $5.3 million consisting
primarily of investment banking fees.

   The total purchase consideration for Webshots of $83.3 million was comprised
of the issuance of 2 million shares of our Series A common stock with an
aggregate fair value of $82.5 million and $0.8 million of direct acquisition
costs. The resale of 30% of the Series A common stock issued in this
acquisition is subject to vesting during the employment of their holders over
the 24 months following the acquisition. The $25 million aggregate fair value
of such restricted stock was allocated to deferred compensation in the purchase
price allocation. The deferred compensation is being amortized on a straight-
line basis over 24 months.

   The total purchase consideration for Bluemountain.com of $1,000.7 million
was based on a cash payment of $350 million; the issuance of 10,674 shares of
our Series A non-voting preferred stock with a fair value of $418.2 million;
3.5 million shares of Series A common stock, earned as performance-based
consideration during December 1999, with a fair value of $149.4 million;
converted stock options to acquire 3.6 million shares of our Series A common
stock of $76.1 million (including options to acquire 0.5 million shares earned
as performance-based consideration during December 1999); and $7 million of
direct acquisition costs consisting primarily of investment banking and legal
fees. Each share of Series A preferred stock issued in the acquisition is
convertible into 1,000 shares of Series A common stock, at an aggregate rate of
500,000 shares of common stock per month, during the twelve months following
the acquisition, and the remaining shares will become fully convertible after
two years. Unvested stock options assumed in the acquisition were recorded as
deferred compensation of $30.9 million based on their intrinsic value, because
Bluemountain.com issued such options in connection with the acquisition.
Deferred compensation is amortized as the related stock options vest and become
exercisable. We recorded the remainder of stock options assumed in the
acquisition at fair value, representing fully vested options and options held
by third parties.

   The total purchase consideration for Kendara of $109.6 million was based on
the issuance of 1.5 million shares of our Series A common stock with a fair
value of $52.3 million; the issuance of 202 shares of our Series B non-voting
preferred stock and 1,279 shares of our Series C non-voting preferred stock
with a fair value of $52.5 million; converted stock options to acquire 0.2
million shares of Series A common stock of $4.2 million; and $0.6 million of
direct acquisition costs. The Series B preferred stock is being held in escrow
for one year and will automatically convert into approximately 0.2 million
shares of our Series A common stock upon the expiration of the one year escrow
period. The Series C preferred stock is convertible into approximately 1.3
million shares of Series A common stock, subject to a vesting schedule and one
year escrow period.

   The total purchase consideration for Worldprints of $67.3 million was based
on the issuance of 0.8 million shares of our Series A common stock with a fair
value of $23.8 million and 804 shares of our Series B non-voting preferred
stock with a fair value of approximately $23.8 million; converted stock options
to acquire 0.3 million shares of Series A common of $4.2 million; converted
warrants to acquire 0.2 million shares of Series A common stock with a fair
value of $5.8 million; payment of outstanding debt plus interest prior to the
completion of the acquisition and the assumption of loans that we previously
made to Worldprints, net of other cash transactions, for an aggregate of $8.8
million; and $0.9 million of direct acquisition costs. The Series B preferred
stock will convert into approximately 0.8 million shares of Series A common
stock subject to a vesting schedule and one year escrow period.

   The total purchase consideration for DataInsight of $15.1 million was based
on the issuance of 0.7 million shares of our Series A common stock with a fair
value of approximately $14.2 million; converted stock options to acquire 0.3
million shares of Series A common stock of $0.8 million; and direct acquisition
costs of $0.1 million. Deferred compensation of $0.5 million was recorded based
on the intrinsic value of unvested employee stock options and is being
amortized to expense over the vesting period of such options. Under
performance-based terms of the purchase agreement, we will issue up to 0.7
million additional shares of our Series A common stock as well as additional
employee stock options if DataInsight achieves certain revenue and profit
performance targets by July 31, 2001.

                                       18
<PAGE>

Pro Forma Results of Operations

   The following unaudited pro forma summary represents the consolidated
results of operations as if our acquisitions had occurred at the beginning of
each of the years presented and includes the amortization of goodwill and other
intangible assets. Pro forma shares include a factor for the number of shares
of Series A common stock issued or issuable, excluding employee stock options,
as if such shares were converted and outstanding at the beginning of each of
the years presented. The pro forma summary excludes the results of operations
of Perspecta and Excite Espana for 1999 prior to their acquisition because they
are not material to the consolidated pro forma disclosures (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      ------------------------
                                                         2000         1999
                                                      -----------  -----------
   <S>                                                <C>          <C>
   Pro forma revenues...............................  $   629,181  $   430,849
                                                      ===========  ===========
   Pro forma net loss...............................  $(7,510,592) $(2,772,808)
                                                      ===========  ===========
   Pro forma net loss per share -- basic and
    diluted.........................................  $    (18.60) $     (6.98)
                                                      ===========  ===========
   Pro forma shares used in per share calculation --
     basic and diluted..............................      403,860      397,008
                                                      ===========  ===========
</TABLE>

   The pro forma results of operations are not necessarily indicative of the
results that would have occurred if our business combinations had occurred at
the beginning of each year presented and are not intended to be indicative of
future results of operations.

Acquisition-Related Costs

   Acquisition-related costs were as follows for the periods indicated (in
thousands):

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                   ----------------------------
                                                      2000       1999     1998
                                                   ---------- ---------- ------
   <S>                                             <C>        <C>        <C>
   Amortization of goodwill and other acquired
    intangible assets............................. $2,310,273 $1,103,005 $   --
   Amortization of acquisition-related deferred
    compensation..................................     20,767      2,428     --
   Write-off of purchased in-process research and
    development...................................         --     36,715  2,758
   Compensation expense from acquisition-related
    acceleration of stock option vesting..........         --      7,900     --
   Other acquisition-related costs................     10,604      6,961     --
                                                   ---------- ---------- ------
     Total acquisition-related costs and
      expenses.................................... $2,341,644 $1,157,009 $2,758
                                                   ========== ========== ======
</TABLE>

Amortization of goodwill and other acquired intangible assets

   Through December 31, 2000, we had recorded goodwill of $8,537.2 million and
other acquisition-related intangible assets of $393.8 million. These assets are
being amortized to expense generally over three to four years. Amortization of
goodwill and acquisition-related intangibles was $2,310.3 million and $1,103
million for the years ended December 31, 2000 and 1999, respectively.
Accumulated amortization of goodwill and acquisition-related intangibles was
$158.2 million and $1,103.6 million as December 31, 2000 and 1999,
respectively. As a result of the impairment write-down to a new cost basis of
the goodwill and acquired intangible asset balances discussed below,
accumulated amortization as of December 31, 2000 of $152.8 million was reduced
from $3,413.3 million prior to the write-down. Future amortization related to
goodwill and other acquired intangible assets recorded as of December 31, 2000
will be based on new carrying values as adjusted by the impairment write-down.

                                       19
<PAGE>

Amortization of acquisition-related deferred compensation

   Amortization of deferred compensation related to acquisitions was $20.8 and
$2.4 for the years ended December 31, 2000 and 1999; there was no amortization
of deferred compensation for the year ended December 31, 1998. Acquisition-
related deferred compensation resulted from certain outstanding employee stock
options and restricted stock that we assumed in the acquisitions of Webshots
and Bluemountain.com in 1999 and DataInsight in 2000. Deferred compensation is
measured as the difference between the exercise price of an unvested award and
the fair market value of our Series A common stock at the date of the
acquisition and is amortized over the vesting term of the award.

   Amortization of deferred compensation related to the issuance of restricted
stock and stock options to employees under our own stock purchase agreements
was $1 million during each of the three years ended December 31, 2000, 1999 and
1998. This amortization, which is not acquisition-related, is included in the
category of operating costs in which the related employee salaries were
recorded.

Write-off of purchased in-process research and development

   The fair value assigned to purchased in-process research and development in
the allocation of purchase consideration includes research and development
projects for which technological feasibility had not been achieved at the date
of acquisition and which had no alternative future use. This allocation of fair
value is charged to operations at the date of acquisition. There were no such
charges in 2000. However, during 1999, we recorded charges related to purchased
in-process research and development of $34.4 million for our acquisition of
Excite, $1.9 million for iMALL, and $0.4 million for Webshots, and during 1998,
we recorded a charge of $2.8 million related primarily to our acquisition of
Narrative.

   In order to determine the fair value of purchased in-process research and
development, we estimated the date of completion of the research and
development effort, assessed the state of such effort at the acquisition date,
and calculated the estimated net present value of cash flows expected to result
from the successful deployment of the new technology or product resulting from
the in-process research and development effort. The state of completion was
determined by estimating the costs and time incurred to date relative to the
costs and time to be incurred to develop the in-process technology into a
commercially viable technology or product. The estimated net present value of
cash flows was based on incremental future cash flows from revenues expected to
be generated by the technology or products being developed, taking into account
the characteristics and applications of the technology or product, the size and
growth rate of existing and future markets and an evaluation of past and
anticipated technology and product life cycles. Estimated net future cash flows
also included allocations of operating costs, sales and marketing, general and
administrative expenses, fixed charges, the portion of product development
costs related to maintenance and the net impact of income taxes. Estimated net
future cash flows were discounted to arrive at a net present value and were
allocated to in-process research and development based on the percentage of
completion at the date of acquisition. The discount rate included a factor that
took into account the uncertainty surrounding the successful development of in-
process technology projects.

   For each of our acquisitions that resulted in an allocation to purchased in-
process research and development, the actual completion date and the actual
cost to complete in-process projects were consistent with the estimates used in
determining the fair values assigned to purchased in-process research and
development.

Compensation expense from acquisition-related acceleration of stock option
vesting

   The vesting of certain stock options issued to employees was accelerated as
a result of our acquisition of Excite in May 1999 and the $7.9 million
intrinsic value of these options was charged to operations during the year
ended December 31, 1999. There have been no other acquisition-related
accelerations of stock option vesting.

                                       20
<PAGE>

Other acquisition-related costs

   Costs directly associated with our acquisitions that were not capitalized as
part of the purchase consideration were $10.6 million and $7 million for the
years ended December 31, 2000 and 1999, respectively. These costs were incurred
primarily as a result of personnel, systems and technology integration efforts
related to Excite, iMALL, Bluemountain.com, Kendara and Worldprints, and
included $4 million in 2000 for a pre-acquisition contingency related to Excite
that required an adjustment more than 12 months after the date of the
acquisition.

Impairment Write-down of Goodwill and Other Acquired Intangible Assets

   During the fourth quarter of 2000, our management identified indicators of
possible impairment of our long-lived assets, principally goodwill and other
acquired intangible assets. Such indicators included deterioration in the
business climate for Internet advertising and other web-related companies,
reduced levels of venture capital funding activity for Internet-based consumer
businesses, significant declines in the market values of our competitors in the
Internet advertising industry, recent changes in our 2001 operating and cash
flow forecasts, and changes in our strategic plans for certain of our acquired
businesses.

   With the assistance of independent valuation experts, we performed asset
impairment tests by business unit, the lowest level for which there are
identifiable cash flows. The tests were performed by comparing the expected
undiscounted cash flows for a five-year period, plus a terminal value for
future cash flows, to each business unit's carrying amount of the goodwill and
other intangible assets resulting from purchase business combinations in which
the acquired operations have continued to be managed as separate business
units. We determined that the carrying amount of property and equipment and
other tangible assets was not significant for the business units tested for
impairment. Based on the results of these tests, we determined that business-
unit goodwill and other intangible assets initially recorded in connection with
the acquisitions of Narrative, Excite, iMALL, Perspecta, Webshots,
Bluemountain.com, Kendara and Worldprints were impaired.

   With the assistance of independent valuation experts, we determined the fair
value of the impaired long-lived assets for the respective business units. Fair
value was determined using the discounted cash flow method and the market
comparison method. A write-down of goodwill and intangible assets totaling
$4,609.1 million was recorded during the fourth quarter of 2000, reflecting the
amount by which the carrying amount of the assets exceed their respective fair
values. The write-down consisted of $4,604 million for goodwill and
$5.1 million for other acquired intangible assets. These assets were related
primarily to the Media/Advertising segment. No write-downs of goodwill or other
acquired intangible assets were recorded during 1999 and 1998.

4. Cash and Cash Equivalents and Short-Term Investments

   Our short-term investments as of December 31, 2000 consist primarily of
highly liquid debt instruments with original maturities at the date of purchase
of between three and twelve months as well as other highly liquid investments
which generally mature in one year or less. Highly liquid short-term
investments maturing in 90 days or less at the date of purchase are included in
cash and cash equivalents. We have classified all short-term investments as
available-for-sale. Available-for-sale securities are carried at amounts that
approximate fair market value based on quoted market prices. Realized gains and
losses and declines in fair market value judged to be other-than-temporary are
included in interest income and were not material during the years ended
December 31, 2000, 1999, and 1998. The cost of securities sold is based on the
specific identification method. Interest on securities classified as available-
for-sale is included in interest income.

                                       21
<PAGE>

   Short-term investments included the following securities as of the dates
indicated (in thousands):

<TABLE>
<CAPTION>
                                                                December 31,
                                                              -----------------
                                                                2000     1999
                                                              -------- --------
     <S>                                                      <C>      <C>
     Corporate bonds and notes............................... $ 72,739 $330,759
     Market auction preferred stock..........................       --    1,000
     U.S. government obligations.............................   29,376   67,534
     Money market instruments................................   45,605  100,142
     Certificates of deposit.................................   34,356   19,626
                                                              -------- --------
       Total short-term available-for-sale securities........  182,076  519,061
     Less amounts included in cash and cash equivalents......   79,961  218,386
                                                              -------- --------
       Short-term investments................................ $102,115 $300,675
                                                              ======== ========
</TABLE>

   Unrealized gains and losses on short-term investments for the years ended
December 31, 2000, and 1999 were not material. Accordingly, we have not made a
provision for such amounts in our consolidated balance sheets.

   Cash and cash equivalents and short-term investments restricted or reserved
for designated use were $34.1 million and $1 million as of December 31, 2000
and 1999, respectively. These balances were restricted or reserved for
leasehold improvements on new facilities and for facilities leases, including
secured standby letters of credit.

5. Investments in Affiliated Companies

   Our investments in affiliated companies represent equity investments in
certain companies in which we do not have majority voting control, and which
are organized as corporate joint ventures. Although our ownership interests in
the Excite Japan and Excite UK joint ventures exceed 50%, our majority voting
interest is restricted in certain respects by approval, veto, or participatory
rights granted to the minority shareholders, and therefore these joint ventures
have not been consolidated in our financial statements. Our international joint
ventures were generally formed for the purpose of expanding the distribution of
our @Home broadband and Excite content services internationally. In general, we
license technology to our joint ventures that deliver the @Home or Excite
service outside the United States and some of these joint ventures make royalty
payments to us. In addition, we have service agreements with joint ventures
under which we have agreed to provide consulting services on a cost-plus basis
(see Note 13).

   Investments in affiliated companies are accounted for under the equity
method. We record our share of the losses of our joint ventures in our
consolidated statements of operations up to the amount of our investment,
including future commitments to make contributions. Our joint venture
agreements generally authorize the boards of directors of the joint ventures to
determine the timing and amount of cash contributions to be made by the joint
venture partners to fund operations. Cash contributions are generally made in
proportion to each partner's ownership interest in the joint venture. Unless
otherwise noted below, we do not have future commitments to make contributions
to fund the operations of our joint ventures, although our ownership interest
in a joint venture may be diluted if we choose not to participate in a cash
contribution requested by its board of directors.

   Condensed financial information of our equity-method investments is not
presented, as the financial condition and results of operations of these
companies was not material to our consolidated financial statements as of
December 31, 2000 and 1999 and for the years then ended.

                                       22
<PAGE>

   The following is a list of our investments accounted for under the equity
method as of December 31, 2000:

<TABLE>
<CAPTION>
                    Date of     Excite@Home                               Countries of
       Name         Formation   Ownership %   Joint Venture Partners       Operations
       ----         ---------   -----------   ----------------------      ------------
<S>                 <C>         <C>         <C>                        <C>
At Home Benelux     May 1999         15%    Intel Corporation; EDON    Belgium,
                                            Beheer B.V.; Essent        Netherlands
                                            Kabelcom

Excite@Home         June 1999        50%    Optus Vision Pty Limited   Australia
 Australia, Pty.
 Ltd.

At Home Japan       August 1999      43%    Jupiter Telecommunications Japan
 Limited                                    Co., Ltd.; Sumitomo
                                            Corporation

Excite Japan Co.,   July 1997      66.6%    Itochu Corporation; Itochu Japan
 Ltd.                                       Techno-Science
                                            Corporation; Dai Nippon
                                            Printing

Excite UK Limited   May 1997         58%    BT Holdings Limited        United Kingdom

Excite Italia B.V.  March 1999       50%    Telecom Italia S.p.A.      Italy

Excite Canada       March 1999       50%    Rogers Media Limited       Canada

At Home Solutions   May 1999         46%    General Instrument         United States
                                            Corporation; Cisco
                                            Systems; Motorola

Work.com            March 2000       50%    Dow Jones & Co.            United States
</TABLE>

   We invested $66 million in our affiliated companies during the year ended
December 31, 2000, including $15 million to form Work.com and $51 million in
cash funding of Excite@Home Australia, At Home Japan, Excite Japan and Excite
UK based on operational funding requirements and for other purposes. Our
investments of $7.6 million during 1999 were related to the formation of At
Home Australia and At Home Japan.

Excite@Home Australia

   In March 2000, At Home Australia acquired Excite Asia Pacific Pty Ltd and
the combined entity was renamed Excite@Home Australia Pty Limited. We retained
our 50% interest in the combined joint venture (previously, we owned 50% of
each joint venture) and remain subject to the contribution requirements under
the At Home Australia joint venture agreement. Under that agreement, each joint
venture partner is required to contribute to the joint venture up to 32 million
Australian Dollars, or approximately $18 million. Through December 31, 2000, we
have met this contribution requirement and have no future commitments to make
additional contributions.

At Home Japan

   The joint venture partners of At Home Japan have agreed to contribute to the
joint venture up to 7.8 billion Yen, or approximately $68.2 million, based on
amounts and timing determined by At Home Japan's board of directors. Our share
of this funding obligation is 3.4 billion Yen, or approximately $30 million,
and we have contributed approximately $17 million through December 31, 2000.
Under specified circumstances, we may sell up to 50% of our interest in At Home
Japan. Additionally, in 1999 we issued performance-based warrants to our
Japanese cable partners under which up to 0.9 million shares of our Series A
common stock may be issuable (see Note 10). Through December 31, 2000, 0.2
million of these warrants have become exercisable and their fair value of $3.4
million was recorded as investments in affiliated companies.

                                       23
<PAGE>

At Home Solutions

   At Home Solutions offers production, packaging, marketing, distribution and
support of the @Home service for delivery by small and medium-sized cable
operators to residential and small office customers in the United States. We
have an option for a three-year period commencing on April 1, 2002 to purchase
the interest owned by each of the other partners in the At Home Solutions joint
venture at fair market value. If we do not exercise the purchase option, each
joint venture partner will have the right to sell its interest in At Home
Solutions to the other partners, and the partners collectively will have the
right to require At Home Solutions to register the sale of their interests to
the public or collectively to purchase our interest in At Home Solutions for a
nominal price.

6. Other Investments

   Our other investments, consisting of minority investments in the equity of
privately and publicly held companies not accounted for under the equity method
of accounting, were $73.6 million and $273 million as of December 31, 2000 and
1999, respectively. As of December 31, 2000 and 1999, net unrealized gains
related to other investments of $19.1 million and $92.6 million, respectively,
were included in accumulated other comprehensive income.

   In February 1999, we recorded a $12.6 million realized gain on our
investment in a privately held company due to its acquisition in a common stock
exchange with a publicly traded company.

   In December 2000, we recorded impairment write-downs related to our other
investments of $129.5 million, including write-downs related to publicly held
investments of $107.1 million recorded against unrealized losses included in
accumulated other comprehensive income and write-downs related to privately
held investments of $22.4 million recorded directly against other investments.
The impairment write-downs related to publicly held investments resulted from
our management's conclusion that declines in the market value of certain
investments below their carrying value were not temporary (generally, the
market value was below the carrying value for a continuous period of six months
or more.) The impairment write-downs related to privately held investments
resulted from our management's conclusion that the carrying value of certain
investments was not recoverable, based on indicators such as limited liquidity
and poor prospects for additional financing.

   In conjunction with many of our investments, we have strategic arrangements
to provide services to our investees consisting of the delivery of advertising
impressions, e-commerce sponsorships and revenue share arrangements on our web
sites. Revenue under these arrangements is recognized based on the fair value
of the services provided and was $68.6 million, $26.1 million and $0.8 million
for the years ended December 31, 2000, 1999 and 1998, respectively. Investments
under these arrangements are recorded at their fair values. The fair values of
investments in privately held companies are determined based on the price per
share paid by an independent third party in the same round of financing in
which we participate.

7. Property, Equipment and Improvements

   The components of property, equipment and improvements, as of the dates
indicated, were as follows (in thousands):

<TABLE>
<CAPTION>
                                            December 31,
                                          -----------------  Estimated Useful
                                            2000     1999         Lives
                                          -------- -------- ------------------
   <S>                                    <C>      <C>      <C>
   Computer equipment and software....... $442,151 $206,865    3 to 4 years
   Furniture and fixtures................   33,718   27,086      5 years
   Leasehold improvements................   70,923   36,474 7 years/Lease term
   Land..................................    5,239    5,239        n/a
                                          -------- --------
     Total property, equipment and
      improvements.......................  552,031  275,664
   Less accumulated depreciation and
    amortization.........................  185,904   99,587
                                          -------- --------
     Net property, equipment and
      improvements....................... $366,127 $176,077
                                          ======== ========
</TABLE>

                                       24
<PAGE>

   Equipment and improvements include amounts for assets acquired under capital
leases, principally computer equipment and software and furniture and fixtures,
of approximately $224.3 million and $133.5 million as of December 31, 2000 and
1999, respectively. Accumulated amortization of these assets was approximately
$102.2 and $64.4 million as of December 31, 2000 and 1999, respectively.

8. Commitments and Contingencies

Facility and Equipment Leases

   We lease certain office facilities under non-cancelable operating leases
that expire at various dates through 2014, and which require us to pay
operating costs, including property taxes, insurance and maintenance. These
facility leases generally contain renewal options and provisions adjusting the
lease payments based upon changes in the consumer price index and increases in
real estate taxes and operating expenses or in fixed increments. Rent expense
is recorded on a straight-line basis over the terms of the leases. We also have
obligations under a number of capital equipment leases generally with terms of
36 months. Additionally, as a result of our acquisition of Excite, we assumed
obligations related to non-lease equipment financing arrangements secured by
specific computer equipment, purchased software and office furniture.

   Future minimum lease payments under non-cancelable operating and capital
leases having original terms in excess of one year were as follows as of
December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                 Operating Capital  Equipment
   Year Ending December 31,                       Leases    Leases  Financings
   ------------------------                      --------- -------- ----------
   <S>                                           <C>       <C>      <C>
    2001........................................ $ 23,874  $ 77,496   $4,301
    2002........................................   30,157    66,952       --
    2003........................................   30,594    31,983       --
    2004........................................   31,266        --       --
    2005........................................   31,246        --       --
    Thereafter..................................  224,137        --       --
                                                 --------  --------   ------
     Total minimum lease payments............... $371,274   176,431    4,301
                                                 ========
   Less amounts representing interest...........             24,467      103
                                                           --------   ------
   Present value of minimum capital lease and
    other obligations...........................            151,964    4,198
   Less current portion.........................             66,060    4,198
                                                           --------   ------
   Noncurrent portion...........................           $ 85,904   $   --
                                                           ========   ======
</TABLE>

   We paid expenditures for tenant improvements, primarily related to our
headquarters facilities, of approximately $35 million and $26.2 million during
the years ended December 31, 2000 and 1999, respectively. In addition, we had
commitments for leasehold improvements related to additional facilities under
construction of $19.5 million as of December 31, 2000.

   Facility rent expense amounted to approximately $18 million, $10.2 million,
and $3.6 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

Litigation

   Sheldon Pittleman and Ralph Zonies each filed purported derivative lawsuits
on behalf of Excite@Home against, among others, AT&T and Messrs. Armstrong,
Petrillo, Roberts, Woodrow, Doerr, Hearst, Bell, Malone, Shaw and Jermoluk, all
of whom were our directors when the lawsuits were initiated on October 15,
1999, in the Court of Chancery of the State of Delaware. We are named as a
nominal defendant in each complaint. Each complaint alleges breaches of
fiduciary duty to Excite@Home and its public stockholders. Each of Messrs.
Pittleman and Zonies sought an injunction requiring us to alter our corporate
governance, including appointing new, unaffiliated directors, as well as
payment of monetary damages, costs and attorneys'

                                       25
<PAGE>

fees. On August 2, 2000, Pittleman filed an amended complaint alleging that the
reorganization of Excite@Home contemplated by our March 28, 2000 letter
agreement would impair protection of Excite@Home and its public stockholders
from "complete domination by the conflicted majority shareholder, AT&T." On
December 6, 2000, AT&T and Excite@Home moved to dismiss the Pittleman action
for failure to adequately allege that a demand on the board of directors would
be futile. We believe these actions are without merit and intend to defend
against them vigorously. If we do not prevail in these actions, we may be
required to alter our corporate governance and pay substantial damages, which
could seriously harm our business.

   Fred and Roberta Lipschutz, Arthur Simon and John Galley, III, as named
plaintiffs, filed a purported class action suit against us, AT&T, Service Co
L.L.C. and entities affiliated with eight other cable companies in the United
States District Court for the Central District of California on November 10,
1999. The complaint alleges violations of the federal antitrust laws. The
plaintiffs seek an injunction prohibiting the alleged acts, damages (including
treble damages), costs and attorneys' fees. We filed an answer to the complaint
in this matter on January 21, 2000, denying the allegations of unlawful conduct
in the complaint. The trial court has issued an order denying plaintiffs'
motion to certify the plaintiff class, and plaintiffs are appealing that order.
We believe this action is without merit and intend to defend against this
action vigorously. If we do not prevail in this action, we may be required to
pay substantial damages, or we may be forced to alter the way in which we do
business. Either of these results could seriously harm our business and could
encourage others to initiate litigation on similar legal theories in the
future.

   On May 26, 2000, a purported class action suit was initiated in the San
Mateo County Superior Court by an alleged Excite@Home stockholder against
Excite@Home, AT&T Corp., Comcast Corporation and Cox Communications, Inc., as
well as each member of our board of directors. The complaint alleges that the
defendants breached fiduciary duties to Excite@Home stockholders by approving
or entering into, as applicable, the letter agreement among Excite@Home, AT&T,
Comcast and Cox on March 28, 2000, and by agreeing to consummate the
transactions contemplated by this agreement. In the complaint, the plaintiffs
seek a court order nullifying the letter agreement, monetary damages, and a
court order establishing a stockholders' committee comprised of unidentified
class members to provide input regarding the transactions contemplated by the
letter agreement. This action has now been stayed in favor of the action filed
by Messrs. Pittleman and Zonies in the Court of Chancery of the State of
Delaware. We believe this action is without merit and intend to defend against
this action vigorously. If we do not prevail in this action, we may be required
to alter our corporate governance and pay substantial damages, which could
seriously harm our business.

   Between November 14, 2000 and December 20, 2000, four purported class action
suits were filed against Excite@Home and its MatchLogic subsidiary for alleged
violations of federal and state privacy laws arising out of MatchLogic's online
preference marketing services and practices. The actions have been consolidated
and are currently pending in United States District Court for the District of
Colorado. Each action seeks an order requiring MatchLogic to change its
business practices regarding online preference marketing services, disgorgement
of profits derived from current and past marketing practices, monetary damages,
and statutory and punitive damages. We believe this action is without merit and
intend to defend against this action vigorously. If we do not prevail in this
action, we may be required to alter our business practices and pay substantial
damages, which could seriously harm our business.

   On March 19, 2001, Pogo.com, Inc., filed suit against Excite@Home in San
Mateo County Superior Court for alleged breach of a merger agreement under
which we were to acquire Pogo.com in exchange for shares of our Series A common
stock. On January 5, 2001, Excite@Home notified Pogo.com that it had terminated
the merger agreement in accordance with the provisions of the agreement. The
complaint seeks damages for breach of contract and breach of the implied
covenant of good faith and fair dealing. We believe this action is without
merit and intend to defend against this action vigorously. If we do not prevail
in this action, we may be required to pay substantial damages, which could
seriously harm our business.

                                       26
<PAGE>

   In addition to the above, we are currently party to various other legal
proceedings. While management, including internal counsel, currently believes
that the ultimate outcome of these other proceedings, individually and in the
aggregate, will not have a material adverse effect on our financial position or
overall trends in results of operations, litigation is subject to inherent
uncertainties. We cannot give assurance that we will prevail in any litigation.
Regardless of the outcome, any litigation may require that we incur significant
litigation expenses and may result in significant diversion of management. An
unfavorable outcome in any of these matters may have a material adverse effect
on our financial position or results of operations for the period in which the
ruling occurs.

9. Convertible Debt and Other Liabilities

Convertible Debt

   On December 28, 1998, we issued $437 million principal amount of convertible
subordinated debentures in a private offering within the United States to
qualified institutional investors. The issue price was 52.464% of the $437
million principal amount due at maturity and issuance costs were $6.9 million,
resulting in net proceeds to us of $222.4 million. The carrying amount,
including accretion of original issue discount, of these convertible debentures
was $243.5 million and $236.3 million as of December 31, 2000 and 1999,
respectively. The debentures mature on December 28, 2018, and interest on the
debentures at the rate of 0.5246% per annum on the $437 million principal
amount due at maturity is payable semi-annually commencing on June 28, 1999.
The effective annual interest rate on the debentures, including accretion of
original issuance discount and amortization of issuance costs, is approximately
4%. Each $1,000 debenture is convertible at the option of the holder at any
time prior to maturity, unless redeemed or otherwise purchased, into 13.1
shares of our Series A common stock. No conversions of these debentures have
occurred through December 31, 2000. At our option, we may redeem the debentures
beginning in December 2003 for cash equal to the issue price plus accrued
original issue discount and accrued interest.

   On December 15, 1999, we issued $500 million principal amount of convertible
subordinated notes in a private offering within the United States to qualified
institutional investors. The net proceeds from this issuance were $485.7 after
deduction of issuance costs of $14.3 million. The notes mature on December 15,
2006 and bear interest at an annual rate of 4.75%. Each $1,000 note is
convertible into our Series A common stock at a conversion price of $56.52 per
share. No conversions of these notes have occurred through December 31, 2000.
We may redeem these notes beginning in December 2002 for cash equal to a
redemption price that decreases ratably from 102.7% of the principal balance in
December 2003 to 100% of the principal balance in December 2006, plus accrued
interest.

   Issuance costs related to our convertible debt were recorded as other assets
and are being amortized by charges to interest expense ratably over the term of
the debt.

Promissory Note

   Through our acquisition of Excite, we assumed a convertible promissory note
issued by Excite to Itochu Corporation and certain affiliated entities for the
principal amount of $5 million, which is included in other liabilities in our
consolidated balance sheet as of December 31, 2000 and 1999. The note matures
on October 27, 2002 and bears interest at the London Interbank Offer Rate plus
1%, resulting in an interest rate of approximately 7.21% as of December 31,
2000. The unpaid principal amount at the date of maturity is convertible, at
the option of the note holder, into shares of Series A common stock at a
conversion price equal to the average closing price of the stock for the 30 day
trading period preceding the conversion. In addition, we may elect to prepay
this note at any time by converting it to Series A common stock using the same
exchange ratio.

Term Loan Agreement

   We have available a $15 million term loan agreement with Silicon Valley Bank
to finance the acquisition of property, equipment and improvements, and to
collateralize letters of credit. At our option, borrowings under this term loan
bear interest either at the bank's prime rate or at LIBOR plus 2.5%. Under the
terms of the term

                                       27
<PAGE>

loan, we are required to meet certain financial covenants as long as there are
unsecured borrowings under the term loan. There were no unsecured borrowings
under the term loan as of December 31, 2000, although there were fully secured
letters of credit in the amount of $13.9 million related to facilities leases.
The term loan expires in October 19, 2002.

10. Stockholders' Equity

Common Stock

   Common stock consisted of the following as of the dates indicated:

<TABLE>
<CAPTION>
                                                            Shares Issued and
                                   Shares Authorized      Outstanding December
                                     December 31,                  31,
                               ------------------------- -----------------------
   Series                          2000         1999        2000        1999
   ------                      ------------- ----------- ----------- -----------
   <S>                         <C>           <C>         <C>         <C>
   A.......................... 1,000,000,000 683,700,000 318,766,736 351,954,355
   B..........................   110,000,000  30,800,000  86,595,578  30,800,000
   K..........................            --   5,219,414          --   2,000,000
                               ------------- ----------- ----------- -----------
                               1,110,000,000 719,719,414 405,362,314 384,754,355
                               ============= =========== =========== ===========
</TABLE>

   In June 2000, our board of directors authorized and our stockholders
approved an increase in the authorized number of shares of Series A common
stock from 683.7 million shares to 1 billion shares, an increase in the
authorized number of shares of Series B common stock from 30.8 million shares
to 110 million shares and the elimination of authorized shares of Series K
common stock. In addition, our board of directors authorized and our
stockholders approved the issuance to AT&T, our controlling stockholder, of
approximately 55.8 million shares of Series B common stock in exchange for the
equivalent number of shares of Series A common stock held by AT&T.

   The Series A common stock entitles its holders to one vote per share and the
Series B common stock entitle AT&T, who currently holds all outstanding shares
of Series B common stock, to ten votes per share. As of December 31, 2000, AT&T
controlled approximately 74% of our voting power. As a result of amendments in
our corporate governance, authorized by our board of directors and approved by
our stockholders in June 2000, the following rights related to our common stock
have changed during the year ended December 31, 2000:

  . the designation of Series B directors was eliminated and holders of
    Series B common stock no longer have special approval and veto rights;

  . Comcast and Cox have waived most of their rights under the stockholders'
    agreement including the right to each designate a Series B director;

  . all supermajority, unanimous and special board voting requirements have
    been eliminated;

  . the holders of Series B common stock, voting together as a separate
    series, are entitled to elect a majority of the board of directors, the
    holders of Series A common stock, voting together as a separate series,
    are entitled to elect two outside directors who are not affiliates or
    associates of Excite@Home, and all holders of outstanding voting stock,
    voting together as a single class, are entitled to elect any additional
    directors, as long as there are 10,000,000 shares of Series B common
    stock outstanding;

  . the maximum number of directors is 17; so long as there are 10,000,000
    shares of Series B common stock outstanding, the minimum number of
    directors on the board is seven, otherwise the minimum number of
    directors is three; and

  . all board actions are approved by a majority vote of the board of
    directors or relevant committee of the board.

                                       28
<PAGE>

   Each share of Series B common stock is convertible into one share of Series
A common stock at the option of the holders. During the years ended December
31, 2000, 1999 and 1998, 2 million shares, 3.2 million shares and 24.5 million
shares, respectively, were converted by holders of Series K common stock into
Series A common stock.

Preferred Stock

   Our board of directors is authorized, subject to any limitation prescribed
by Delaware law, to issue up to 9,650,000 shares of preferred stock, with such
designation, preferences, special rights, qualifications, limitations or
restrictions as expressed in a board resolution, without any further vote or
action by the voting stockholders. The board may authorize the issuance of such
preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of common stock. Thus, the
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control of our company.

   In December 1999, we issued 10,674 shares of Series A non-voting preferred
stock in connection with the acquisition and merger of Hartford House, Ltd. and
Bluemountain.com. Each share of Series A preferred stock is convertible into
1,000 shares of Series A common stock at a rate of 500 shares of Series A
preferred stock per month during the first 12 months following the acquisition,
with the remainder convertible 24 months after such date. Preferred stock
converted during the first 12 months may be accelerated under certain
circumstances, including the charitable contribution of such shares. During the
years ended December 31, 2000 and 1999, 4,567 shares and 540 shares,
respectively, of Series A preferred stock were converted into 4.6 million
shares and 0.5 million shares, respectively, of Series A common stock. As of
December 31, 2000, 5,567 shares of Series A preferred stock were outstanding.

   In February 2000, we issued 202 shares of Series B non-voting preferred
stock and 1,279 shares of Series C non-voting preferred stock in connection
with the acquisition of Kendara, Inc. Each share of Series B preferred stock
will automatically convert into 1,000 shares of Series A common stock upon the
expiration of a one year escrow period in February 2001. Each share of Series C
preferred stock is convertible into 1,000 shares of Series A common stock
subject to a vesting schedule and a one year escrow period. During the year
ended December 31, 2000, 230 shares of Series C preferred stock were converted
into 0.2 million shares Series A common stock. As of December 31, 2000, 1,049
shares of Series C preferred stock were outstanding.

   In April 2000, we issued 804 shares of Series B non-voting preferred stock
in connection with the acquisition of Worldprints.com International, Inc. Each
share of Series B preferred stock is convertible into 1,000 shares of Series A
common stock subject to a vesting schedule and a one year escrow period. As of
December 31, 2000, no conversions had occurred and all 804 shares of Series B
preferred stock were outstanding.

   The above series of preferred stock do not have special liquidation
privileges and are not entitled to dividends.

Warrants

Lessor Warrants

   In October 1996, we issued a warrant to our facilities lessor that gives the
lessor the right to purchase 0.4 million shares of Series A common stock for
$7.50 per share. The warrant is exercisable for a five-year period beginning in
October 1997. We deemed the warrant to have insignificant fair value at the
time of issuance. The lessor exercised the substantial portion of these
warrants prior to 2000 and an insignificant number of shares remained available
for issuance as of December 31, 2000.

                                       29
<PAGE>

Warrants to Initial Investors

   In April 1997, we issued warrants for 4 million shares of Series A common
stock with an exercise price of $5.00 per share to Rogers and Shaw, our primary
cable partners in Canada that were Series C preferred stock investors prior to
our initial public offering. The warrants are exercisable beginning June 2004
or earlier subject to certain performance standards being met by the cable
system operators as specified in the agreement. We deemed the warrants to have
insignificant fair value at the time of issuance. Through December 31, 2000,
warrants for 2.4 million shares were exercised on a net basis, resulting in the
issuance of 2.2 million shares of Series A common stock. Of the 1.6 million
shares remaining outstanding under these warrants at the end of 2000, 0.8
million were vested and exercisable.

Intel Warrants

   In July 1997, we issued a warrant to Intel Corporation in connection with a
development agreement that gives Intel Corporation the right to purchase 0.2
million shares of Series A common stock for $5.00 per share. The shares
exercisable under this warrant vest 25% on the six-month anniversary of the
agreement and the remainder vests monthly for two years thereafter. In
September 1997, we issued a second warrant that gives Intel the right to
purchase an additional 0.2 million shares of Series A common stock for $10.50
per share. The second warrant is exercisable beginning in September 2004 or
earlier subject to certain performance standards being met by Intel as
specified in the amended development agreement. We deemed the warrants to have
insignificant fair value at the time of issuance. During the year ended
December 31, 2000, warrants for 0.2 million shares were exercised on a net
basis and we issued less than 0.1 million shares of Series A common stock. Of
the 0.2 million shares remaining outstanding under these warrants at the end of
2000, 0.1 million were vested and exercisable.

Warrants Subject to Distribution Agreements

  Cablevision

   In October 1997, we entered into a contract with Cablevision Systems
Corporation and certain affiliates in connection with a master distribution
agreement with Cablevision for the exclusive distribution of our @Home service
on substantially the same terms and conditions as our principal cable partners.
This agreement provided for the issuance to Cablevision of a warrant to
purchase 15.8 million shares of our Series A Common Stock at an exercise price
of $0.25 per share. The warrant was immediately exercisable. During the year
ended December 31, 1997, we recorded $172.6 million as distribution agreements
in our consolidated balance sheet representing the fair value of the warrant,
and we are amortizing the amount ratably over 56 months, the remaining term of
the exclusivity obligations at the time the warrant became exercisable.

   The agreement with Cablevision provided for the issuance of an additional
warrant to Cablevision to purchase up to 6.1 million shares of our Series A
common stock at an exercise price of $0.25 per share under certain conditions.
This contingent warrant was not immediately exercisable and becomes exercisable
as and to the extent certain cable television systems are transferred from TCI
(now AT&T Broadband) and its controlled affiliates to Cablevision. During the
year ended December 31, 1998, the contingent warrant became exercisable for 4.7
million shares of Series A common stock or $74.5 million at fair value. No
further shares became exercisable under the contingent warrant through December
31, 2000. We capitalized the fair value of the contingent warrant as
distribution agreements in our consolidated balance sheet and we are amortizing
the amount ratably over 51 months, the remaining term of the exclusivity
obligations at the time the contingent warrant became exercisable.

   For the years ended December 31, 2000, 1999 and 1998, amortization of
intangible assets under the exclusive provisions of this distribution agreement
was $54.6 million, $54.5 million and $51.6 million, respectively. As of
December 31, 2000 and 1999, accumulated amortization of the cost of the
distribution agreement totaled $169.9 million and $115.3 million, respectively.
No shares have been issued under exercises of either the warrant or contingent
warrant through December 31, 2000.

                                       30
<PAGE>

  Other cable system operators

   At various dates during the years ended December 31, 1999 and 1998, we
issued performance-based warrants to other cable system operators as part of
the execution of exclusive distribution agreements related to the cable systems
of these operators. Warrants to purchase up to 2.6 million and 10.5 million
shares of Series A common stock were issued during 1999 and 1998, respectively,
at an exercise price of $5.25 per share. We also issued additional warrants to
a cable operator in March 1999 to purchase up to 3.6 million shares of Series A
common stock at an exercise price of $23.13 per share under a similar
arrangement. As a result of changes in ownership during 1999 of certain cable
systems covered by warrants with a $5.25 exercise price, warrants to purchase
0.4 million shares of Series A common stock were canceled. During the years
ended December 31, 2000 and 1999, warrants to purchase 1.4 million shares and
4.4 million shares, respectively, became exercisable as a result of the cable
system operators meeting certain system upgrade and subscriber performance
milestones. As the warrants became exercisable, we recorded, net of
cancellations, $17.6 million and $204.7 million during the years ended December
31, 2000 and 1999, respectively, as distribution agreements in our consolidated
balances sheets. The amounts recorded as distribution agreements represented
the fair value of exercisable warrants at the date they were earned, and we are
amortizing these amounts ratably over the remaining terms of the exclusive
distribution agreements, which expire at various dates through 2004.
Amortization under these distribution agreements during the year ended December
31, 2000 and 1999 was $41.1 million and $22.9 million, respectively and the
related accumulated amortization as of December 31, 2000 and 1999 was $62
million and $22.9 million, respectively. Exercises of warrants for 0.5 million
shares resulted in the net issuance of 0.4 million shares of Series A common
stock during the year ended December 31, 1999; there were no issuances in other
years. Of the 15.8 million shares remaining outstanding under these warrants as
of December 31, 2000, 5.3 million were vested and exercisable.

  Extension of distribution agreements with AT&T, Comcast and Cox

   On March 28, 2000, we entered into letter agreements with AT&T, Comcast and
Cox under which we extended our distribution agreements with these partners on
a non-exclusive basis through June 4, 2006 with respect to Cox and Comcast and
through June 4, 2008 with respect to AT&T. Under these letter agreements, which
became effective in August 2000, we issued to AT&T one warrant for Series A
common stock and one warrant for Series B common stock for each home passed by
AT&T's cable systems as adjusted for planned acquisitions and dispositions,
resulting in the issuance of warrants to purchase 27.9 million shares each of
Series A common stock and Series B common stock (a total of 55.8 million
shares). We issued to Cox and Comcast two warrants for Series A common stock
for each home passed by each respective cable partner's systems as adjusted for
planned acquisitions and dispositions, resulting in the issuance of warrants
for 44.7 million shares to these cable partners. Warrants issued to these cable
partners each have an exercise price of $29.54 per share.

   The warrants issued to AT&T will vest and become fully exercisable as to all
shares on June 4, 2002 and are subject to upward or downward adjustment if the
number of cable systems that are in compliance with the terms of the letter
agreements increases or decreases during the period from and including June 4,
2002 through June 4, 2008. In addition, shares acquired through exercises of
these warrants have volume restrictions that lapse at each anniversary date as
to 16.67% of the shares exercisable starting June 4, 2002. We will record the
fair value of these warrants in our consolidated balance sheets as distribution
agreements at the time and to the degree that conditions related to any
downward adjustment in the number of warrants earned by AT&T lapse. We have not
recorded any amounts to date related to these warrants. The distribution
agreement will be amortized to expense over its term of six years starting June
4, 2002.

   The warrants issued to Cox and Comcast vest as to 16.67% on June 4, 2001 and
an additional 8.33% each December 4 and June 4 thereafter, as long as the
current and new distribution agreements are in place. These warrants are
subject to upward or downward adjustment if the number of cable systems that
are in compliance with the terms of the letter agreements increases or
decreases during the period from and including June 4, 2002 through June 4,
2006. In addition, the shares issuable to a cable partner under these warrants
are subject

                                       31
<PAGE>

to forfeiture, at a rate proportionate with the remaining term of the new
distribution agreement if, and at the time, that a cable partner terminates the
new distribution agreement prior to June 4, 2006. As a result, we did not
record these warrants as distribution agreements as of December 31, 2000. We
will record the fair value of the warrants as distribution agreements in our
consolidated balance sheet as the forfeiture provisions lapse and we will make
future adjustments as appropriate to reflect any changes in the number of
shares subject to these warrants. The distribution agreements will be amortized
to expense over their term of four years starting June 4, 2002.

Cable System Operator Performance Warrants

   In February 1998, we issued performance-based warrants to Rogers and Shaw to
purchase up to 10 million shares of Series A common stock, respectively, at an
exercise price of $5.25 per share. Warrants to purchase 2.7 million shares, 5.5
million shares and 1.8 million shares became exercisable when Rogers and Shaw
met certain subscriber performance milestones during the years ended December
31, 2000, 1999 and 1998, respectively. We recorded non-cash charges to
operations for the fair value of these warrants of $75.6 million, $213.1
million and $49.8 million during the years ended December 31, 2000, 1999 and
1998, respectively. Exercises of warrants for 4.6 million shares resulted in
the net issuance of 4.4 million shares of Series A common stock through
December 31, 2000. All of the 5.4 million shares remaining outstanding under
these warrants as of December 31, 2000 were vested and exercisable.

Warrants Issued to Joint Venture Partners

   In April 1999, we issued performance-based warrants to cable partners in our
At Home Japan joint venture to purchase up to 0.9 million shares of Series A
common stock at an exercise price of $32.50. These warrants become exercisable
based on the achievement of certain system upgrade, subscriber and other
performance milestones by the cable partners. Warrants to purchase 0.1 million
shares became exercisable during each of the years ended December 31, 2000 and
1999, at the time that our cable partners met certain of these performance
milestones. We recorded $1.3 million and $2.1 million during the years ended
December 31, 2000 and 1999 as an additional non-cash investment in the joint
venture based on the fair value of the warrants when they were earned. None of
these warrants have been exercised through December 31, 2000.

Warrants Assumed in Acquisitions

   As a result of our merger with Excite in May 1999, we assumed warrants that
Excite had issued to Netscape to purchase, on a converted basis, 0.2 million
shares of Series A common stock at an exercise price of $66.28 per share. These
warrants are exercisable until April 30, 2001 and were fully vested at the date
of the acquisition of Excite. The purchase consideration for Excite included
the fair value of these warrants at the date of acquisition (see Note 3). None
of these warrants have been exercised as of December 31, 2000.

   In our acquisition of iMALL in October 1999, we issued warrants to First
Data Corporation to purchase 2.3 million shares of Series A common stock at an
exercise price of $36.96 per share, with a fair value of $82.8 million. In
addition, we also assumed warrants to purchase 0.1 million shares, on a
converted basis, of Series A common stock at an exercise price of $6.96, with a
fair value of $7.4 million. All warrants issued and assumed in the iMALL
acquisition were exercisable at the date of acquisition and their fair values
were included in the purchase consideration (see Note 3). Through December 31,
2000, we have issued 0.1 million shares of Series A common stock in connection
with exercises of these warrants. As of December 31, 2000, warrants for
2.3 million shares remained outstanding.

   In our acquisition of Worldprints in April 2000, we assumed fully-vested
warrants to purchase 0.2 million shares of Series A common stock with an
average exercise price of $4.95. The purchase consideration for Worldprints
included the fair value of these warrants at the date of acquisition (see Note
3). We issued 0.2 million shares of Series A common stock in connection with
exercises of these warrants during the year ended December 31, 2000.

                                       32
<PAGE>

Stock Options

   Our stock option plans provide for incentive stock options, nonqualified
stock options and restricted stock awards and bonuses to our employees,
directors and consultants. We adopt stock option plans at the discretion of
management and the board of directors and upon approval by stockholders, if
required. We have also assumed the stock option plans of several acquired
entities.

Stock Option Plans We Have Adopted

   In January 1996, our board of directors adopted, and our stockholders
approved, the 1996 Incentive Stock Option Plan, and in July 1996, we adopted
the 1996 Incentive Stock Option Plan No. 2. These plans authorize incentive
stock options, as defined by the Internal Revenue Code, to be granted to
employees at an exercise price not less than 100% of the fair value at the
grant date as determined by the board of directors. The 1996 plans also
authorize nonqualified stock options to be issued to nonemployee officers,
directors and consultants at an exercise price of not less than 85% of the fair
value at the grant date. The options granted under the 1996 plans were
exercisable immediately upon issuance and generally have a term of ten years.
Upon termination of employment, unvested shares may be repurchased by us at the
original purchase price. The repurchase right for vested shares expired upon
the completion of our initial public offering. Stock options generally vest at
the rate of 25% after one year and ratably on a monthly basis for three years
thereafter and are exercisable at the earlier of 90 days after termination or
10 years from the date of grant.

   Our 1997 Equity Incentive Plan was adopted by the board of directors in May
1997 and approved by the stockholders in July 1997 as the successor to the 1996
plans. The 1997 plan provides for the grant of incentive stock options,
nonqualified stock options, restricted stock awards and stock bonuses to our
employees, directors and consultants. Options granted to new employees under
the 1997 plan generally vest at the rate of 25% after one year and ratably on a
monthly basis for three years thereafter; subsequent option grants generally
vest ratably on a monthly basis over 48 months. All options granted under the
1997 plan are exercisable at the earlier of 90 days after termination or 10
years from the date of grant.

   Our 2000 Equity Incentive Plan was adopted by the board of directors in
January 2000 as a supplemental plan to the 1997 plan designed to meet the
"broadly based plans" exemption from the stockholder approval requirements for
stock option plans under the Nasdaq National Market listing requirements. The
2000 plan provides for the grant of up to 2 million nonqualified stock options,
restricted stock awards and stock bonuses to employees, directors and
consultants.

   Our board of directors authorized, and in June 2000, our stockholders
approved an amendment and increase in the total number of shares of Series A
common stock reserved for issuance under the 1997 Equity Incentive Plan. As of
December 31, 2000, the total number of shares reserved for issuance under the
1997 plan was 106.9 million less the total number of shares issued or issuable
to employees, officers, directors and consultants under restricted stock
purchase agreements and the 1996 plans. Previous to this amendment, shares
reserved for issuance under the 1997 plan were reduced by shares reserved for
issuance under the 1997 Employee Stock Purchase Plan, discussed below.

                                       33
<PAGE>

Stock Option Plans Assumed Through Mergers and Acquisitions

   Shares issuable under stock option plans assumed in acquisitions are
converted to stock options to purchase shares of our Series A common stock
based on the respective share exchange ratio in the merger or acquisition. The
following summarizes stock options to purchase shares of Series A common stock
which were assumed in acquisitions (see Note 3):

<TABLE>
   <S>                                                                <C>
   Assumed during the year ended December 31, 1998:
    Narrative Plans(/1/).............................................  1,177,070
   Assumed during the year ended December 31, 1999:
    Excite Plans..................................................... 25,713,702
    iMALL Plans......................................................  1,497,165
    Hartford House Ltd. Plan (Bluemountain.com)(/2/).................  3,552,875
   Assumed during the year ended December 31, 2000:
    DataInsight Plan.................................................    336,451
    Kendara Plan.....................................................    194,573
    Worldpints Plan..................................................    278,198
</TABLE>
  --------
  (/1/) Includes options to purchase 894,600 shares issued to existing
        Narrative employees on December 30, 1998, the date of Narrative's
        acquisition.

  (/2/) As a result of meeting certain performance criteria during the month
        of December 1999, the number of shares issuable under stock options
        assumed in the acquisition of Bluemountain.com was increased from
        3,011,348 to 3,552,875 during the first quarter of 2000.

   Stock options available for grant under assumed stock option plans are
eliminated at the date of acquisition and outstanding options are subject to
existing vesting and exercise terms, which are generally similar to options
issued under the 1997 plan. However, the vesting schedules of stock options
under several of the assumed plans vary. The most significant variations
include iMALL stock options that vest at a rate of 33% per year and Hartford
House stock options that vest subject to a number of different schedules, the
most common of which is 12.5% vesting after six months with the remainder
vesting ratably over 42 months. Outstanding stock options under plans assumed
in acquisitions are included as options granted in the following table
summarizing activity under our stock option plans.

Stock Option Plan Activity

   The following summarizes the activity related to our stock options for the
periods indicated:

<TABLE>
<CAPTION>
                                               Year ended December 31,
                             ---------------------------------------------------------------
                                     2000                 1999                 1998
                             --------------------- -------------------- --------------------
                                          Weighted             Weighted             Weighted
                                          Average              Average              Average
                              Number Of   Exercise Number Of   Exercise Number Of   Exercise
                               Shares      Price     Shares     Price     Shares     Price
                             -----------  -------- ----------  -------- ----------  --------
   <S>                       <C>          <C>      <C>         <C>      <C>         <C>
   Outstanding at beginning
    of year................   59,610,284   $27.23  20,026,590   $16.72   6,116,270   $ 5.13
   Options granted.........   55,047,958   $16.88  50,176,276   $29.24  15,295,304   $20.37
   Options exercised.......   (6,956,582)  $ 8.88  (5,045,756)  $10.44    (849,106)  $ 3.51
   Options cancelled.......  (24,551,416)  $27.96  (5,546,826)  $22.75    (535,878)  $ 9.42
                             -----------           ----------           ----------
   Outstanding at end of
    year...................   83,150,244   $21.70  59,610,284   $27.23  20,026,590   $16.72
                             -----------           ----------           ----------
   Options exercisable at
    year-end...............   24,646,685   $23.56  14,846,032   $16.50   3,232,786   $ 3.35
                             ===========           ==========           ==========
</TABLE>

                                       34
<PAGE>

   As of December 31, 2000, there were 10.8 million shares available for grant
under our stock option plans. The following table summarizes information about
stock options outstanding as of December 31, 2000:

<TABLE>
<CAPTION>
                           Options Outstanding          Options Exercisable
                  ------------------------------------- --------------------
                              Weighted Average Weighted             Weighted
     Range of                    Remaining     Average              Average
     Exercise       Number      Contractual    Exercise   Number    Exercise
      Prices      Outstanding   Life (Years)    Price   Exercisable  Price
   -------------  ----------- ---------------- -------- ----------- --------
   <S>            <C>         <C>              <C>      <C>         <C>
   $ 0.01-$ 9.22   7,549,878        7.66        $ 4.28   3,845,329   $ 2.60
   $ 9.31-$10.15   9,446,009        9.79        $10.08     443,800   $10.02
   $10.26-$16.50   9,198,084        8.61        $13.49   2,611,191   $13.33
   $16.53-$16.56  14,938,404        9.31        $16.56   3,216,945   $16.56
   $16.74-$18.25  11,003,891        9.06        $17.83   2,053,194   $17.46
   $18.48-$32.39  11,712,872        8.34        $23.87   5,163,844   $23.11
   $32.61-$37.13  10,410,502        8.69        $34.94   3,604,536   $34.79
   $37.25-$76.50   8,890,604        8.44        $52.38   3,707,846   $53.34
                  ----------                            ----------
   $ 0.01-$76.50  83,150,244        8.80        $21.70  24,646,685   $23.56
                  ==========                            ==========
</TABLE>

   As of December 31, 2000, 0.2 million shares issued under our stock option
plans and 0.6 million shares issued under stock option plans assumed in
acquisitions were subject to repurchase at our option in the event of employee
terminations.

   We recorded deferred compensation of $5.3 million and $51.1 million during
the years ended December 31, 2000 and 1999, respectively, for the deemed fair
value of restricted stock issued and stock options assumed in connection with
acquisitions. We are amortizing these amounts over the vesting terms of the
awards, which range from two to four years. We also recorded $5.3 million of
deferred compensation prior to 1999 related to stock options granted and stock
issued under stock purchase agreements prior to our initial public offering in
July 1997. These amounts are being amortized on a straight-line basis by
charges to operations over the vesting periods of the individual stock options
and stock purchase agreements, which are generally four years.

Employee Stock Purchase Plan

   In July 1997, our board of directors adopted, and our stockholders approved,
our 1997 Employee Stock Purchase Plan (ESPP) to provide employees with an
opportunity to purchase our common stock through payroll deductions. Our board
of directors authorized, and in June 2000 our stockholders approved, an
increase in the number of shares reserved under the ESPP to 5 million shares.
Under the ESPP, our employees may purchase, subject to certain restrictions,
shares of common stock at the lesser of 85 percent of the fair value at either
the beginning of each two-year offering period or the end of each six-month
purchase period within the two-year offering period. As a result of our merger
with Excite, we assumed an obligation to issue shares related to outstanding
offering periods under Excite's ESPP as of May 28, 1999. Shares purchased by
Excite employees under the remaining offering periods of Excite's ESPP are not
deducted from the reserve for issuance of shares under our ESPP. During the
years ended December 31, 2000, 1999 and 1998, employees purchased 0.6 million
shares, 0.7 million shares and 0.5 million shares, respectively, pursuant to
our ESPP plans. As of December 31, 2000, there were 3.5 million shares
available for issuance under our ESPP.

Pro Forma Disclosures of the Effect of Stock-Based Compensation Plans

   Pro forma information regarding results of operations and loss per share is
required by SFAS No. 123, "Accounting for Stock-Based Compensation." Such pro
forma information summarizes our results of operations as if stock-based awards
to employees had been accounted for using a valuation method permitted under
SFAS 123.

                                       35
<PAGE>

   The fair value of our stock-based awards to employees prior to our initial
public offering in July 1997 was estimated using the minimum value method.
Options granted subsequent to the initial public offering have been valued
using the Black-Scholes option pricing model. Among other things, the Black-
Scholes model considers the expected volatility of our stock price, determined
in accordance with SFAS 123, in arriving at an option valuation. The minimum
value method does not consider stock price volatility. Further, certain other
assumptions necessary to apply the Black-Scholes model may differ significantly
from assumptions used in calculating the value of options granted in 1996 and
1997, prior to the initial public offering, under the minimum value method.

   The fair value of our stock-based awards to employees was estimated assuming
no expected dividends and the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                    Options                    ESPP
                            ----------------------- --------------------------
                            Year Ended December 31,  Year Ended December 31,
                            ----------------------- --------------------------
                             2000    1999    1998     2000     1999     1998
                            ------- ------- ------- -------- -------- --------
   <S>                      <C>     <C>     <C>     <C>      <C>      <C>
   Expected life of
    options................ 4 years 4 years 4 years 6 months 6 months 6 months
   Expected volatility.....  0.76    0.82    1.00     0.76     0.80     1.00
   Risk free interest
    rate...................  6.20%   6.46%   4.69%   6.10%    6.01%    4.50%
</TABLE>

   The following summarizes our pro forma results of operations for the periods
indicated had we accounted for our stock-based awards in accordance with SFAS
123 (in thousands):

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                          -----------------------------------
                                             2000         1999        1998
                                          -----------  -----------  ---------
   <S>                                    <C>          <C>          <C>
   Net loss as reported.................. $(7,439,796) $(1,457,638) $(144,179)
   Pro forma net loss.................... $(7,546,132) $(1,583,777) $(166,401)
   Basic and diluted net loss per share
    -- as reported....................... $    (18.73) $     (4.61) $   (0.63)
   Pro forma basic and diluted net loss
    per share -- as adjusted............. $    (19.00) $     (5.00) $   (0.73)
</TABLE>

   The weighted-average fair value of options granted during the years ended
December 31, 2000, 1999 and 1998 was $10.33, $28.70 and $14.01, respectively.
The weighted-average fair value of ESPP rights granted during the years ended
December 31, 2000, 1999 and 1998 was $11.85, 18.80 and $2.67, respectively.

Shares Authorized for Future Issuance

   The following represents common stock authorized for future issuance as of
December 31, 2000:

<TABLE>
   <S>                                                               <C>
   Potentially dilutive shares:
    Preferred stock.................................................   7,621,261
    Stock options...................................................  83,150,244
    Warrants not subject to forfeiture for non-performance..........  35,757,812
    Convertible debt................................................  14,663,506
    Repurchasable shares............................................     766,777
                                                                     -----------
     Total.......................................................... 141,959,600
   Shares reserved for future issuance:
    Stock option plans..............................................  10,814,037
    ESPP............................................................   3,484,335
    Warrants subject to forfeiture for non-performance.............. 113,114,962
                                                                     -----------
     Total.......................................................... 127,413,334
                                                                     -----------
   Total shares authorized for future issuance...................... 269,372,934
                                                                     ===========
</TABLE>

                                       36
<PAGE>

11. Retirement Plan

   We have a retirement plan under Section 401(k) of the Internal Revenue Code.
Under the retirement plan, participating employees may defer a portion of their
pretax earnings up to the Internal Revenue Service annual contribution limit.
We may make contributions to the plan at the discretion of the board of
directors. To date, no such contributions have been made by us.

12. Income Taxes

   Our income tax benefit differed, as of the dates indicated, from the income
tax benefit determined by applying the U.S. federal statutory rate to the net
loss as follows (in thousands):

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                             --------------------------------
                                                2000        1999       1998
                                             -----------  ---------  --------
   <S>                                       <C>          <C>        <C>
   Income tax benefit at U.S. statutory
    rate.................................... $(2,603,929) $(510,173) $(50,463)
   Non-deductible amortization..............   2,474,456    388,144        --
   Acquisition-related costs................      (8,994)    18,305        --
   Valuation allowance for deferred tax
    assets..................................     138,467    103,724    50,463
                                             -----------  ---------  --------
   Income tax benefit....................... $        --  $      --  $     --
                                             ===========  =========  ========
</TABLE>

   Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of our deferred tax assets and liabilities for federal and state income taxes
as of the dates indicated were as follows (in thousands):

<TABLE>
<CAPTION>
                                                              December 31,
                                                           --------------------
                                                             2000       1999
                                                           ---------  ---------
   <S>                                                     <C>        <C>
   Deferred tax assets:
    Net operating loss carryforwards...................... $ 288,981  $ 169,798
    Stock options assumed in acquisitions.................   269,248    269,248
    Cost and amortization of distribution agreements......   197,435    168,877
    Accrued costs and expenses............................    38,784     27,969
    Deferred revenue......................................       438     19,058
    Depreciation and amortization.........................    36,862     12,054
    Research and experimentation credits..................     2,248      2,248
    Capitalized research and development costs............     5,450      4,922
    Other.................................................   (52,956)        88
                                                           ---------  ---------
   Total gross deferred tax assets........................   786,490    674,262
   Less valuation allowance...............................  (702,566)  (528,065)
                                                           ---------  ---------
     Deferred tax assets..................................    83,924    146,197
                                                           ---------  ---------
   Deferred tax liabilities:
    Acquisition-related intangibles.......................    83,924    146,197
                                                           ---------  ---------
   Total gross deferred tax liabilities...................    83,924    146,197
                                                           ---------  ---------
     Net deferred tax assets.............................. $      --  $      --
                                                           =========  =========
</TABLE>

   Realization of deferred tax assets is dependent on future earnings, if any,
the timing and amount of which are uncertain. Accordingly, a valuation
allowance, in an amount equal to the net deferred tax assets as of December 31,
2000 and 1999, has been established to reflect these uncertainties. The
valuation allowance increased by $174.5 million, $435.6 million and $59.3
million during the years ended December 31, 2000, 1999 and 1998, respectively.
As of December 31, 2000, $140.3 million of the valuation allowance was

                                       37
<PAGE>

attributable to stock option deductions, the benefit of which will be credited
to paid-in-capital when realized. As of December 31, 2000, $269.2 million of
the valuation allowance was attributable to deferred tax assets that, when
realized, will first reduce unamortized goodwill, then other non-current
intangible assets of acquired subsidiaries, and then income tax expense.

   As of December 31, 2000, we had net operating loss carryforwards for federal
and state tax purposes of approximately $895 million and $312 million,
respectively. We also had research and experimentation credit carryforwards for
federal and state tax purposes of $1.1 million and $1.6 million, respectively.
These carryforwards will expire beginning in 2002, if not utilized.

   Utilization of the net operating loss and tax credit carryforwards may be
subject to an annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986, as amended, and similar state
provisions. The annual limitation may result in the expiration of net operating
loss and tax credit carryforwards before utilization.

13. Related Party and Other Significant Transactions

   We are involved in transactions with related parties in the ordinary course
of business. These related parties include stockholders and cable partners with
significant investments in our common stock, our joint venture entities and
their partners, and our executive officers and members of our board of
directors.

   Total revenue from related parties was $45.3 million, $28.8 million, and
$10.5 million for the years ended December 31, 2000, 1999 and 1998,
respectively. Revenue from related parties included revenue of $25 million,
$18.6 million and $10.5 million for the years ended December 31, 2000, 1999 and
1998, respectively, related to services such as advertising arrangements,
support services including customer service, local area content development,
development of set-top devices and pre-commercial deployment consulting
provided to our cable partners with significant investments in our common
stock. Revenue from related parties also included revenue of $20.3 million and
$10.2 million for the years ended December 31, 2000 and 1999, respectively,
related to consulting and other services rendered to our international and
other joint ventures, including arrangements on a cost-plus basis; there was no
such revenue for the year ended December 31, 1998.

   Our agreements with cable partners and communications providers for license
and distribution of our services involve significant costs, including payments
under our backbone agreement with AT&T, which amounted to $48.2 million and
$57.1 million during the years ended December 31, 2000 and 1999, respectively.

   We have issued warrants to cable partners and others in connection with
license and distribution agreements as described in Note 10.

14. Segment Reporting

   Our key operating segments are organized around our customers and services
and aggregated into the reported business segments based on how our management
organizes, manages and internally reports our revenues. Key operating segments
and the reported business segments they were aggregated into as of December 31,
2000 were: (1) Consumer Access, which includes the @Home service, premium
broadband services, customers care and set-top development; (2) Commercial
Services, which includes the @Work service and e-commerce applications; (3)
Media/Advertising, which includes the Excite, Bluemountain.com and Webshots
narrowband content services, broadband content services, and targeted and other
advertising services provided by MatchLogic; and (4) International, which
provides our broadband and narrowband services in Europe, Australia and Japan.
Information used by our key operating decision makers (consisting of our
executive management team) in reviewing operations and in allocating resources
includes revenue and for each key operating segment. Information such as
operating costs, loss from operations, net loss and assets and liabilities is
not produced internally for each key operating segment. Although we allocate
limited operating

                                       38
<PAGE>

costs to our segments, a significant portion of operating costs such as
network operations and engineering are not allocated, and thus our key
operating decision makers do not utilize this limited information in reviewing
operations and allocating resources. In addition, we have corporate marketing,
corporate development, general and administrative, and other operations that
generate no revenues and are not part of a key operating segment.

   Our reportable segments have changed from prior years, and the 1999 and
1998 information has been restated accordingly.

   The following represents information for our reported business segments for
the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                      -------------------------
                                                        2000     1999    1998
                                                      -------- -------- -------
   <S>                                                <C>      <C>      <C>
   Revenues:
    Consumer Access.................................. $218,116 $ 91,128 $22,292
    Commercial Services..............................   61,118   35,487  18,739
    Media/Advertising................................  308,006  197,067   5,444
    International....................................   29,135   13,273   1,570
                                                      -------- -------- -------
     Total consolidated revenues..................... $616,375 $336,955 $48,045
                                                      ======== ======== =======
</TABLE>

   Media/Advertising and Commercial Services revenues were derived
predominantly from customers located in the United States during the years
ended December 31, 2000, 1999 and 1998.

   Consumer Access revenue derived from customers located outside the United
States, and excluded from International, consisted primarily of revenue from
our cable partners and their cable customers located in Canada, and accounted
for approximately 16%, 16% and 17% of total Consumer Access revenue during the
years ended December 31, 2000, 1999 and 1998.

   International revenue earned from services provided to our unconsolidated
international joint ventures was $16.4 million and $10.2 million for the years
ended December 31, 2000 and 1999, respectively; there was no such revenue for
the year ended December 31, 1998. International revenue earned by our
consolidated operations outside of North America was $12.7 million, $3.1
million and $1.6 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

   No single customer accounted for more that 10% of total consolidated
revenues for the years ended December 31, 2000, 1999 and 1998.

15. Financial Instruments

   Financial instruments that subject us to concentrations of credit risk
consist primarily of cash, cash equivalents and short-term investments and
trade accounts receivable. We maintain cash, cash equivalents and short-term
investments with domestic financial institutions and broker-dealers with a
high credit standing. We perform periodic evaluations of the relative credit
standing of these institutions and, if warranted, adjust the investment
portfolio maintained with these institutions. Our business involves
transactions that arise in trade accounts receivable with companies in various
industries throughout the United States as well as international locations.
Ongoing credit evaluations of corporate customers and other counterparties are
performed to limit credit risk. While trade accounts receivable generally do
not require collateral, reserves are maintained for potential credit losses.
Credit losses to date have been within management's expectations.

   We use the following methods and assumptions in estimating the fair values
of our financial instruments:

   Cash and cash equivalents: The carrying amount reported in the consolidated
balance sheets for cash and cash equivalents approximates their fair value as
of December 31, 2000 and 1999.

                                      39
<PAGE>

   Short-term investments: The fair values of short-term investments, all of
which have been classified as available-for-sale, are based on quoted market
prices as reported in the consolidated balance sheets. Thus, the carrying
amounts of short-term investments are equal to their fair values as of December
31, 2000 and 1999.

   Accounts receivable and accounts payable: The carrying amounts reported in
the consolidated balance sheets for accounts receivable and accounts payable,
which are presented net of reserves, approximate their fair value as of
December 31, 2000 and 1999.

   Other investments: The fair values of our other investments, which are
accounted for as available-for-sale investments, are based on quoted market
prices for publicly held securities and the lower of cost or estimated fair
value for privately held securities as reported in the consolidated balance
sheets. Thus, the carrying amounts of other investments are equal to their fair
values as of December 31, 2000 and 1999.

   Capital lease and other obligations: We estimate the fair values of our
capital lease and other equipment financing obligations based on the implicit
interest rates for capital lease obligations we entered into recently compared
to the weighted average interest rates in our existing financings. Based on
this analysis, the carrying amounts of capital lease and other obligations
approximate their fair values as of December 31, 2000 and 1999.

   Convertible debt: The fair values of our convertible debentures and notes
are estimated using market rates for similar securities. The $500 million of
4.75% convertible notes issued in December 1999 had an estimated fair value of
$258.8 million and a carrying amount of $500 million as of December 31, 2000;
the $500 million carrying amount of these notes approximated their fair value
as of December 31, 1999. The estimated fair value of our $437 million principal
amount of convertible debentures issued in December 1998 was $141.8 million and
the carrying amount was $243.5 as of December 31, 2000, and the estimated fair
value was $274 million and the carrying amount was $236.3 million as of
December 31, 1999.

16. Subsequent Events (Unaudited)

Write Down of Goodwill and Other Intangible Assets

   In the first quarter of 2001, we identified indicators of possible
impairment of our long-lived assets (principally, goodwill and other acquired
intangible assets) on a basis similar to the impairment indicators identified
as of December 31, 2000. The impairment indicators included continued
deterioration in the business climate of, and reduced levels of venture capital
funding activity for, Internet advertising and other Internet-based companies,
continued significant declines in the market values of our competitors in the
Internet advertising industry, and changes made and announced in April 2001 in
our operating and cash flow forecasts for the remainder of 2001.

   We performed asset impairment tests with the assistance of independent
valuation experts at the business unit level, the lowest level for which we
have identifiable cash flows. The tests were performed by comparing the
expected undiscounted cash flows for a five-year period, plus a terminal value
for future cash flows, to each business unit's carrying amount of the goodwill
and other intangible assets resulting from purchase business combinations in
which the acquired operations have continued to be managed as separate business
units. We determined that the carrying amounts of property and equipment and
other tangible assets without alternate use other than as currently used by the
business units tested for impairment were not significant. Based on the results
of these tests, we determined that the carrying values of business-unit
goodwill and other intangible assets related to Excite, Kendara, DataInsight,
Rucker, iMALL, Bluemountain.com, Webshots, and Worldprints were impaired in the
first quarter of 2001.

   We determined, with the assistance of independent valuation experts, the
fair value of the impaired long-lived assets for the respective business units.
Fair value was determined using the discounted cash flow method and the market
comparison method. An impairment write-down of goodwill and other intangible
assets totaling $600.1 million was recorded in the first quarter of 2001,
reflecting the amount by which the carrying amounts

                                       40
<PAGE>

of the assets exceeded their respective fair values. The write-down consisted
of $569.1 million for goodwill and $31 million for other acquired intangible
assets. These intangibles assets were associated primarily with business units
operating in the Media/Advertising segment.

Work.com

   Our Work.com joint venture discontinued operations on March 31, 2001 as a
result of the current decline in online advertising spending. We invested $15
million in this joint venture in April 2000 and we have fully reduced this
investment by our equity share of the joint venture's losses through March 31,
2001.

Cablevision Distribution Agreement

   On April 23, 2001, we announced that we are formally seeking the termination
of our relationship with Cablevision and the recovery of warrants to purchase
up to 21.9 million shares of our Series A common stock granted to Cablevision
in 1997 and 1998 pursuant to a distribution agreement for the deployment of the
@Home service on an exclusive basis to customers located in Cablevision's cable
markets. We capitalized the cost of these distribution agreements in 1997 and
1998 based on the fair values of the warrants at that time, and we have been
amortizing these balances on a straight-line basis through June 4, 2002, the
term of exclusivity. However, based on our intention to terminate the agreement
and the probability that we will recover the warrants, we recorded a $12.6
million charge to operations which represents the difference between the
unamortized balance of the Cablevision distribution agreement and the $37.4
million fair value of the warrants which was included in other assets. The
remaining balance included in other assets represents the current fair value of
the warrants issued to Cablevision.

Restructuring Plans

   On April 30, 2001, we announced a workforce reduction of approximately 380
employees and the expansion of our operational restructuring announced on
January 23, 2001. The workforce reduction was approved by our board of
directors on April 16, 2001 and impacted all divisions throughout the company,
but was more heavily weighted towards our media operations. Subsequently on
June 6, 2001, we announced that we would complete the shutdown of consolidated
European narrowband operations by July 15, 2001 as contemplated in the April
30, 2001 announcement. Additionally, management determined that several
facilities would not be occupied as a result of the workforce reductions and
the general reduction in our planned employee levels, and these facilities
include recently constructed buildings near our corporate headquarters. We have
significant lease obligations in connection with these recently constructed
buildings representing the substantial portion of our restructuring costs in
the second quarter of 2001.

   On January 23, 2001, we announced a workforce reduction of approximately 250
employees and a related operational restructuring, which was approved by our
board of directors on January 19, 2001. The majority of reductions and
restructuring affected the Excite Network narrowband operations in the
Media/Advertising business segment and the iMALL operations in the Commercial
Services business segment. We substantially completed the winding down of iMALL
activities in the second quarter of 2001. In addition, we sold our Narrative
Communications (Enliven) operations in the first quarter of 2001 in exchange
for a 20% ownership interest in a newly formed entity that plans to continue
the former Enliven operations. We also discontinued our DSL offering to @Work
customers in the first quarter of 2001 due to the dissolution of NorthPoint, a
wholesale provider of DSL connectivity.

   As of June 30, 2001, over 600 positions were eliminated as a result of the
January 23 and April 30 workforce reductions, of which approximately 120
employees remained on staff primarily for the purpose of shutting down our
consolidated European narrowband operations. We plan to complete the exit
activities associated with the January 23 and April 30 workforce reductions
prior to the end of 2001.

                                       41
<PAGE>

   We incurred restructuring costs of $158.7 million in the second quarter of
2001 and $17.1 million in the first quarter of 2001 related to our workforce
reductions announced on April 30, 2001 and January 23, 2001, respectively.

Impairment Write-Down of Software

   In May 2001, several in-progress projects in our Media/Advertising business
segment were discontinued. This resulted in the impairment of capitalized costs
related to these projects, consisting of third-party software recorded in
property, equipment and improvements. The software has no alternate use and
cannot be sold, and therefore, the $10.8 million carrying amount of this
software was written-off in the second quarter of 2001.

Convertible Note Financing

   On June 8, 2001, we issued convertible notes and entered into related
agreements with third party investors under which we received $100 million in
cash financing. The notes do not bear interest and none of the conversion
features discussed below resulted in an initial beneficial conversion feature
requiring accounting treatment as a discount and amortization to interest
expense. However, we incurred approximately $2 million of debt issuance costs
that are being amortized to interest expense over the stated 5-year term of the
notes through June 8, 2006. The notes are convertible at any time into shares
of our Series A common stock at a rate of $4.38 per share, based on 110% of the
weighted-average price of our Series A common stock on June 8, 2001. This
conversion rate is subject to reduction as specified in the agreements upon the
issuance of common stock in future equity transactions. The holders of these
notes may elect to convert the notes at the original issuance price on each
anniversary of the date of issuance starting on June 8, 2002, and therefore we
have included the principal amount in current liabilities. The notes are also
redeemable by us on the second, third and fourth anniversary of the date of
issuance. At each such conversion or redemption date, as well as at maturity,
we have the option of delivering the par amount in cash or Series A common
stock at a rate of 95% of the average of the volume-weighted trading price of
the common stock over the 10 trading days prior to each date of issuance, and
the shares would be issued in eight equal installments over an 80-day period.
However, if we have not met specified conditions for redeeming the notes in
stock, we may be obligated to pay cash rather than stock to satisfy these
redemption obligations. In addition, we may elect to pay cash if redeeming the
notes in stock results in an unacceptable level of dilution to our
stockholders.

   We are required to register the resale of the shares issuable upon
conversion of the notes in accordance with timeframes specified in our
registration rights agreement with the note holders. We are also required to
maintain the listing of our Series A common stock on either the New York Stock
Exchange, the Nasdaq National Market or the American Stock Exchange. We do not
currently meet the Nasdaq's continued listing requirement because our net
tangible assets and stockholders' equity are below the minimum thresholds and
the bid price of our Series A common stock is currently less than the minimum
$3.00 bid price required when such thresholds are not met. If we do not meet
the continued listing requirements of one of these stock markets at any time
after receiving a redemption notice from a note holder, if our Series A common
stock were delisted, or if we fail to meet other specified conditions in our
agreements with the note holders, the notes provide for acceleration of
repayment in cash at that time. Our stockholders have approved a reverse stock
split which would, if our board of directors elects to implement it, increase
the trading price of our Series A common stock above $3.00, but we cannot
assure you that this would result in a sustained increase above the minimum bid
price requirements. In addition, events of default include failure to meet our
payment obligations under these notes or our other outstanding debt
obligations, failure to meet material provisions of the notes for a period of
30 days after receiving notice, or filing for bankruptcy. A default under these
notes could result in the acceleration of the amounts due under our other
outstanding convertible subordinated notes and debentures.

   We have granted holders of these notes a security interest in $100 million
book value of our assets that are not pledged as security to other creditors,
as collateral for the outstanding amounts due under the notes. These notes are
senior to our outstanding subordinated notes and debentures.

                                       42
<PAGE>

Backbone Capacity Agreement with AT&T

   On June 19, 2001, we terminated our backbone capacity agreement with AT&T
and simultaneously entered into a revised agreement. We received $85.2 million
in cash in exchange for granting AT&T a security interest in the capacity
rights under the agreement and we recorded this amount in capital lease and
other obligations. The $85.2 million principal amount, plus interest at a rate
of 8%, is required to be repaid to AT&T in monthly installments of
approximately $0.7 million through April 2020, the term of the revised backbone
capacity agreement. Additionally, we paid AT&T $7 million in June 2001 for
backbone route extensions and this amount, together with the previously
unamortized balance, is being amortized on a straight-line basis to operations
over the term of the agreement. The new backbone capacity agreement generally
preserves the backbone operations and upgrade and expansion rights provided
under the original agreement.

Write-down of Other Investments

   We recorded impairment write-downs of other investments of $10.6 million and
$23.9 million in the second quarter and first half of 2001, respectively,
including $2.2 million and $9 million, respectively, of write-downs on publicly
traded equity securities representing other-than-temporary unrealized losses
included in accumulated other comprehensive income (loss) and $8.4 million and
$14.9 million, respectively, of write-downs on privately held investments
representing a reduction in the investment balance recorded in other
investments. There were no impairment write-downs of other investments recorded
in the comparable periods in 2000. The impairment write-downs related to
publicly traded equity securities resulted from our conclusion that declines in
the fair market values of such investments below their carrying values were not
temporary (generally, the fair market values were below the carrying values for
a continuous period of six months or more). The impairment write-downs related
to privately held investments resulted from our conclusion that the carrying
values of these investments were not recoverable, based on indicators such as
bankruptcy, limited liquidity and low probability of closing required near-term
financing.

Announcement of Need for Additional Funding Prior to December 31, 2001

   On July 24, 2001, we announced that we would need to raise additional
funding prior to December 31, 2001 to support our operations. We made this
announcement because, for the remainder of the year, we do not expect to
experience any recovery in the demand for our online advertising and marketing
services, to secure financing terms from some of our equipment vendors, to
receive standard payment terms from several critical suppliers, or to recover
previously expected amounts in connection with real estate lease commitments,
as well as due to other factors. We plan to take further measures to conserve
cash in addition to the restructuring plans announced in January and April
2001, and we may raise additional funds through strategic means including the
possible sale or restructuring of our media operations, or financing
transactions. We have not yet completed any transactions in this regard and
there can be no assurance that we will be successful in achieving sufficient
cash conservation measures, completing strategic transactions or otherwise
raising sufficient additional funds to finance our operations on a timely
basis. If we are unable to successfully complete the necessary measures, there
would be a material adverse impact on our operations and liquidity.

   In August 2001, we commenced an operational and strategic realignment of our
entire business that has resulted in the elimination of approximately 200
positions. We also eliminated approximately 90 positions at our MatchLogic
subsidiary in order to align expenses with projected revenues reflecting
weakened demand in the media advertising market. We may undertake further
restructuring efforts in the third quarter of 2001 that may result in the
elimination of additional positions, but it is too early to determine the
impact these actions would have on our results of operations.

                                       43
<PAGE>

Quarterly Financial Information (unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended
                                ------------------------------------------------
                                March 31,  June 30,   September 30, December 31,
                                  2000       2000         2000          2000
                                ---------  ---------  ------------- ------------
                                  (In thousands, except per share and stock
                                                 price data)
<S>                             <C>        <C>        <C>           <C>
Total revenue.................  $ 138,063  $ 148,721    $ 160,533   $   169,058
Operating costs:
 Cost of services and
  products....................     57,239     69,363       80,365        83,583
 Product development and
  engineering.................     20,975     26,813       23,818        24,009
 Sales and marketing..........     56,926     74,254       79,244        79,593
 General and administrative...     10,724     17,798       19,535        17,829
 Cost and amortization of
  distribution agreements.....     93,965     28,166       24,350        24,621
 Amortization of goodwill,
  intangible assets and
  deferred compensation and
  other acquisition-related
  costs.......................    573,133    589,317      591,042       588,152
 Write-down of goodwill, other
  intangible assets and other
  assets......................         --         --           --     4,635,687
                                ---------  ---------    ---------   -----------
Total operating costs.........    812,962    805,711      818,354     5,453,474
                                ---------  ---------    ---------   -----------
Loss from operations..........   (674,899)  (656,990)    (657,821)   (5,284,416)
Interest and other income,
 net..........................      3,193        858        5,700           121
Write-down of other
 investments..................         --         --           --      (129,482)
Equity share of losses of
 affiliates...................     (4,815)   (12,131)     (16,589)      (12,525)
                                ---------  ---------    ---------   -----------
Net loss......................  $(676,521) $(668,263)   $(668,710)  $(5,426,302)
                                =========  =========    =========   ===========
Basic and diluted net loss per
 share........................  $   (1.75) $   (1.69)   $   (1.67)  $    (13.43)
                                =========  =========    =========   ===========
Price range per share:
 Low..........................  $   26.75  $   15.88    $   12.88   $      3.88
 High.........................  $   44.88  $   33.19    $   20.94   $     14.25
<CAPTION>
                                              Three Months Ended
                                ------------------------------------------------
                                March 31,  June 30,   September 30, December 31,
                                  1999       1999         1999          1999
                                ---------  ---------  ------------- ------------
                                  (In thousands, except per share and stock
                                                 price data)
<S>                             <C>        <C>        <C>           <C>
Total revenue.................  $  25,098  $  70,542    $ 112,562   $   128,753
Operating costs:
 Cost of services and
  products....................     18,600     29,084       45,260        50,112
 Product development and
  engineering.................      6,467     11,281       16,834        20,223
 Sales and marketing..........      7,676     25,274       48,179        49,596
 General and administrative...      4,103      6,423        9,028        10,722
 Cost and amortization of
  distribution agreements.....     15,020     18,703       43,932       214,312
 Amortization of goodwill,
  intangible assets and
  deferred compensation and
  other acquisition-related
  costs.......................      6,733    199,451      447,569       503,256
                                ---------  ---------    ---------   -----------
Total operating costs.........     58,599    290,216      610,802       848,221
                                ---------  ---------    ---------   -----------
Loss from operations..........    (33,501)  (219,674)    (498,240)     (719,468)
Interest and other income,
 net..........................      2,811      2,472        2,556         2,414
Realized gain on investment
 held.........................     12,566         --           --            --
Equity share of losses of
 affiliates...................         --       (742)      (2,876)       (5,956)
                                ---------  ---------    ---------   -----------
Net loss......................  $ (18,124) $(217,944)   $(498,560)  $  (723,010)
                                =========  =========    =========   ===========
Basic and diluted net loss per
 share........................  $   (0.08) $   (0.76)   $   (1.37)  $     (1.93)
                                =========  =========    =========   ===========
Price range per share:
 Low..........................  $   37.25  $   39.00    $   33.13   $     36.69
 High.........................  $   81.75  $   99.00    $   59.63   $     59.75
</TABLE>


                                       44
<PAGE>

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

   (a) The following documents are filed as part of this annual report:

    1. Financial Statements. See Index to Financial Statements at Item 8 on
       page 2 of this annual report.

    2. Financial Statement Schedules.

       Schedule II--Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                          As of December 31,
                                                         ----------------------
                                                          2000     1999    1998
                                                         -------  -------  ----
       <S>                                               <C>      <C>      <C>
       Allowance for doubtful accounts:
        Balance at beginning of period.................. $ 3,454  $   252  $ --
         Acquired allowance.............................      --    1,705    19
         Bad debt expense...............................  12,220    3,203   190
         Write-offs, net of recoveries..................  (5,674)  (1,706)   43
                                                         -------  -------  ----
        Balance at end of period........................ $10,000  $ 3,454  $252
                                                         =======  =======  ====
</TABLE>

       Omitted schedules are not applicable or the required information is
       shown in the consolidated financial statements and notes thereto.

    3. Exhibits. The exhibits listed in the accompanying exhibit index are
       filed as part of this annual report.

   (b) Reports on Form 8-K.

     We did not file any current reports on Form 8-K during the quarterly
  period ended December 31, 2000.

                                      45
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amended annual report
to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 20, 2001
                                          AT HOME CORPORATION

                                                  /s/ Mark A. McEachen
                                          By: _________________________________
                                                     Mark A. McEachen
                                               Executive Vice President and
                                                  Chief Financial Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to the Annual Report on Form 10-K has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated:

<TABLE>
<CAPTION>
                Name                             Title                    Date
                ----                             -----                    ----


Principal Executive Officer:


<S>                                  <C>                           <C>
         /s/ Patti Hart              Chairman of the Board and      August 20, 2001
____________________________________  Chief Executive Officer
             Patti Hart

Principal Financial Officer and
 Principal Accounting Officer:


       /s/ Mark A. McEachen          Executive Vice President and   August 20, 2001
____________________________________  Chief Financial Officer
          Mark A. McEachen

Additional Directors:


       William R. Hearst III*        Vice Chairman of the Board     August 20, 2001
____________________________________
       William R. Hearst III

       C. Michael Armstrong*         Director                       August 20, 2001
____________________________________
        C. Michael Armstrong

____________________________________ Director
          Matthew J. Hart


            Frank Ianna*             Director                       August 20, 2001
____________________________________
            Frank Ianna
</TABLE>

                                       46
<PAGE>

<TABLE>
<CAPTION>
                Name                             Title                    Date
                ----                             -----                    ----

<S>                                  <C>                           <C>
____________________________________ Director
           David C. Nagel

____________________________________ Director
           Charles Noski

         John C. Petrillo*           Director                       August 20, 2001
____________________________________
          John C. Petrillo

____________________________________ Director
          Edward S. Rogers

         Daniel E. Somers*           Director                       August 20, 2001
____________________________________
          Daniel E. Somers
</TABLE>

    /s/ Mark A. McEachen
*By: __________________________
       Mark A. McEachen
       Attorney-in-Fact

                                       47
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                        Incorporated by Reference
 Exhibit                            ----------------------------------  Filed
 Number     Exhibit Description     Form File No.  Exhibit Filing Date Herewith
 ------- ------------------------   ---- --------- ------- ----------- --------
 <C>     <S>                        <C>  <C>       <C>     <C>         <C>
 3.01    The Registrant's Fifth     S-8  333-79883   4.01   06/03/99
         Amended and Restated
         Certificate of
         Incorporation, filed
         with the Delaware
         Secretary of State on
         May 28, 1999.

 3.02    Certificate of Amendment   S-8  333-44780   4.02   08/30/00
         to the Registrant's
         Fifth Amended and
         Restated Certificate of
         Incorporation, filed
         with the Delaware
         Secretary of State on
         August 28, 2000.

 3.03    Certificate of             10-K             3.03   03/30/00
         Designation of the
         Registrant's Series A
         Non-Voting Convertible
         Preferred Stock, filed
         with the Delaware
         Secretary of State on
         December 13, 1999.

 3.04    Certificate of             S-3  333-31530   4.04   03/02/00
         Designation of the
         Registrant's Series B
         Non-Voting Convertible
         Preferred Stock, filed
         with the Delaware
         Secretary of State on
         February 9, 2000.

 3.05    Certificate of             S-3  333-31530   4.05   03/02/00
         Designation of the
         Registrant's Series C
         Non-Voting Convertible
         Preferred Stock, filed
         with the Delaware
         Secretary of State on
         February 9, 2000.

 3.06    The Registrant's Third     S-3  333-43156   4.03   09/25/00
         Amended and Restated
         Bylaws, adopted as of
         August 28, 2000.

 4.01    Form of certificate        S-1  333-27323   4.01   07/08/97
         representing shares of
         the Registrant's Series
         A common stock.

 4.02    Indenture, dated           10-K            10.38   03/31/99
         December 28, 1998,
         between the Registrant
         and State Street Bank
         and Trust Company of
         California, N.A., as
         trustee (contains form
         of note).

 4.03    Registration Rights        10-K            10.39   03/31/99
         Agreement, dated
         December 28, 1998,
         between the Registrant
         and Merrill Lynch & Co.,
         Merrill Lynch, Pierce,
         Fenner & Smith
         Incorporated, Morgan
         Stanley & Co.
         Incorporated and Goldman
         Sachs & Co.

 4.04    Indenture, dated           S-3  333-32228   4.03   03/10/00
         December 1, 1999,
         between the Registrant
         and State Street Bank
         and Trust Company of
         California, N.A., as
         trustee (contains form
         of note).

 4.05    Registration Rights        S-3  333-32228   4.04   03/10/00
         Agreement, dated
         December 1, 1999,
         between the Registrant
         and Morgan Stanley & Co.
         Incorporated, Goldman
         Sachs & Co., Deutsche
         Bank Securities Inc.,
         Donaldson Lufkin &
         Jenrette Securities
         Corporation, Hambrecht &
         Quist LLC and BancBoston
         Robertson Stephens Inc.
</TABLE>

                                       48
<PAGE>

<TABLE>
<CAPTION>
                                        Incorporated by Reference
 Exhibit                            ----------------------------------  Filed
 Number     Exhibit Description     Form File No.  Exhibit Filing Date Herewith
 ------- ------------------------   ---- --------- ------- ----------- --------
 <C>     <S>                        <C>  <C>       <C>     <C>         <C>
  4.06   Third Amended and          S-1  333-27323   4.01   05/16/97
         Restated Registration
         Rights Agreement, dated
         April 11, 1997, between
         the Registrant and the
         parties indicated
         therein.

  4.07   Amended and Restated       S-1  333-27323   4.04   06/20/97
         Stockholders' Agreement,
         dated August 1, 1996,
         among the Registrant and
         the parties indicated
         therein, as amended on
         May 15, 1997.

 10.01   Form of Indemnification    S-1  333-27323  10.09   05/16/97
         Agreement entered into
         by the Registrant with
         each of its directors
         and executive officers.*

 10.02   The Registrant's 1996      S-1  333-27323  10.10   05/16/97
         Incentive Stock Option
         Plan, as amended on May
         16, 1996.

 10.03   The Registrant's 1996      S-1  333-27323  10.11   05/16/97
         Incentive Stock Option
         Plan No. 2, adopted on
         July 16, 1996.

 10.04   The Registrant's 1997      S-8  333-47878   4.02   10/13/00
         Equity Incentive Plan,
         as amended on April 18,
         2000.

 10.05   The Registrant's 1997      S-8  333-47878   4.03   10/13/00
         Employee Stock Purchase
         Plan, as amended on
         April 18, 2000.

 10.06   The Registrant's 2000      S-8  333-31532   4.06-  03/02/00
         Equity Incentive Plan,                      4.09
         adopted on January 13,
         2000, and related forms
         of agreements.

 10.07   Employment Agreement,      10-K            10.26   03/30/00
         dated May 28, 1999,
         between the Registrant
         and George Bell.*

 10.08   Letter Agreement, dated    10-Q            10.03   11/14/00
         September 18, 2000,
         between the Registrant
         and George Bell.*

 10.09   Employment Letter          S-1  333-27323  10.19   05/16/97
         Agreement, dated July
         19, 1996, between the
         Registrant and Thomas A.
         Jermoluk.*

 10.10   Amendment of Employment    10-K            10.26   03/30/00
         Agreement, dated
         November 23, 1999,
         between the Registrant
         and Thomas A. Jermoluk.*

 10.11   Offer Letter, dated June   10-Q            10.02   11/14/00
         29, 2000, between the
         Registrant and Mark
         McEachen.*

 10.12   Loan and Security          10-Q            10.04   11/14/00
         Agreement, dated August
         17, 2000, between the
         Registrant, Mark
         McEachen and Joanne
         McEachen.*

 10.13   Employment Agreement,      10-Q            10.2    05/15/00
         dated January 4, 2000,
         between the Registrant
         and Byron Smith.*

 10.14   Loan and Security          10-Q            10.05   11/14/00
         Agreement, dated July
         28, 2000, between the
         Registrant, Byron Smith
         and Beth Smith.*

 10.15   Employment Agreement,      10-Q            10.1    05/15/00
         dated December 9, 1999,
         between the Registrant
         and Mark O'Leary.*
</TABLE>

                                       49
<PAGE>

<TABLE>
<CAPTION>
                                        Incorporated by Reference
 Exhibit                            ----------------------------------  Filed
 Number     Exhibit Description     Form File No.  Exhibit Filing Date Herewith
 ------- ------------------------   ---- --------- ------- ----------- --------
 <C>     <S>                        <C>  <C>       <C>     <C>         <C>
 10.16   Form of Retention and      10-Q            10.01   11/14/00
         Severance Agreement,
         dated September 7, 2000,
         between the Registrant
         and each of George Bell,
         Mark McEachen, Mark
         Stevens, Byron Smith,
         and Mark O'Leary.*

 10.17   Letter Agreement, dated    S-1  333-27323  10.20   06/20/97
         May 15, 1997, among
         Registrant and the
         parties indicated
         therein, including as
         exhibits the Master
         Distribution Agreement
         Term Sheet and the Term
         Sheet for Form of LCO
         Agreement.

 10.18   Letter Agreement and       8-K             10.01   10/22/97
         Term Sheet, dated as of
         October 2, 1997 and
         amended as of October
         10, 1997, among the
         Registrant, Cablevision
         Systems Corporation, CSC
         Parent Corporation,
         Comcast Corporation, Cox
         Enterprises, Inc.,
         Kleiner Perkins Caufield
         & Byers and Tele-
         Communications, Inc.

 10.19   Letter Agreement, dated    AT&T            13      04/13/99
         April 7, 1999, among the   13D
         Registrant, AT&T Corp.,
         Tele-Communications,
         Inc., Cox
         Communications, Inc. and
         Cox@Home, Inc.

 10.20   Letter Agreement and       8-K             99.01   04/03/00
         Term Sheets, dated May
         28, 2000, among the
         Registrant, AT&T Corp.,
         Comcast Corporation and
         Cox Communications, Inc.

 10.21   Amendment to Letter        8-K             99.01   06/29/00
         Agreement, dated June
         22, 2000, among the
         Registrant, AT&T Corp.,
         Comcast Corporation and
         Cox Communications, Inc.

 10.22   Term Sheet, dated March    S-1  333-27323  10.06   05/16/97
         18, 1997, between the
         Registrant and each of
         Shaw Cablesystems Ltd.
         and Rogers Cablesystems
         Limited.

 10.23   IRU Capacity Agreement,    10-K            10.33   04/27/99
         dated December 19, 1998,
         between the Registrant
         and AT&T Corp.

 10.24   Form of Amendment to IRU   10-Q            10.01   08/14/00
         Capacity Agreement,
         dated April 30, 1999,
         between the Registrant
         and AT&T Corp.

 10.25   Form of Amendment Number   10-Q            10.01   11/15/99
         Two to IRU Capacity
         Agreement, dated
         September 30, 1999,
         between the Registrant
         and AT&T Corp.

 10.26   Form of Amendment Number   10-Q            10.02   08/14/00
         Three to IRU Capacity
         Agreement, dated March
         29, 2000, between the
         Registrant and AT&T
         Corp.

 10.27   Form of Amendment Number   10-Q            10.03   08/14/00
         Four to IRU Capacity
         Agreement, dated May 17,
         2000, between the
         Registrant and AT&T
         Corp.
</TABLE>

                                       50
<PAGE>

<TABLE>
<CAPTION>
                                        Incorporated by Reference
 Exhibit                            ----------------------------------  Filed
 Number     Exhibit Description     Form File No.  Exhibit Filing Date Herewith
 ------- ------------------------   ---- --------- ------- ----------- --------
 <C>     <S>                        <C>  <C>       <C>     <C>         <C>
 10.28   Loan and Security          10-Q            10.23   11/14/97
         Agreement, dated
         September 30, 1997,
         between the Registrant
         and Silicon Valley Bank.

 10.29   Loan Modification          10-K            10.34   02/19/99
         Agreement, dated October
         19, 1998, between the
         Registrant and Silicon
         Valley Bank.

 10.30   Lease, dated October 17,   S-1  333-27323  10.08   05/16/97
         1996, between the
         Registrant and
         Martin/Campus
         Associated, L.P.

 10.31   Build to Suit Option       10-Q            10.15   05/15/98
         Agreement, dated October
         25, 1996, between
         Registrant and
         Martin/Campus
         Associates, L.P., and
         First Amendment to Build
         to Suit Option
         Agreement.

 10.32   Build to Suit Lease,       10-Q            10.21   05/15/98
         dated September 29,
         1997, between the
         Registrant and
         Martin/Campus
         Associates, L.P. (425
         Broadway, Redwood City,
         California).

 10.33   Build to Suit Lease,       10-K            10.35   02/19/99
         dated September 29,
         1997, between the
         Registrant and Martin/
         Campus Associates, L.P.,
         (440 Broadway, Redwood
         City, California).

 10.34   Build to Suit Lease,       10-K            10.36   02/19/99
         dated July 14, 1998,
         between Registrant and
         Martin/Campus
         Associates, L.P.
         (420 Broadway, Redwood
         City, California).

 10.35   Build to Suit Lease        10-K            10.37   02/19/99
         between the Registrant
         and Martin/Campus
         Associates, L.P. (430
         Broadway, Redwood City,
         California).

 10.36   Triple Net Building        10-Q            10.04   08/14/00
         Lease, dated February
         25, 2000, between
         Registrant and Pacific
         Shores Center LLC
         (Building 7).

 10.37   Triple Net Building        10-Q            10.05   08/14/00
         Lease, dated February
         25, 2000, between
         Registrant and Pacific
         Shores Center LLC
         (Building 8).

 21.01   List of subsidiaries of    10-K            21.01   04/02/01
         the Registrant.

 23.01   Consent of Ernst & Young LLP, Independent                        X
         Auditors.

 24.01   Power of Attorney.         10-K            24.01   04/02/01
</TABLE>
--------
*  Management contracts or compensatory plans required to be filed as an
   exhibit to this annual report.

                                       51